If ink were still being spilled to write about things, tanker loads would have been exhausted speculating about the trademarks metaverse in association with blockchain endeavors, most particularly NFTs.
There is a general sense that trademark rights will still be governed by traditional laws, and that anyone using a trademark in the metaverse or in any other cyberspace-type application will still be subject to the usual laws if, say, you are confusing consumers, or in the case of very certain strong trademarks you are somehow diminishing or blurring the relationship between the trademark and its owner, you are an infringer and violating their rights. Whenever a new technology has come along, there has been a clamor about “fair use” and why using someone else’s property is not confusing or not infringement. In the case of the metaverse – or most online uses – there is always someone who claims that a well-known brand has no presence in the online arena, and so no one can be confused.
Whoever thinks that all brands – not just major brands – are not going to jump into any new technology that comes along just has not been paying attention. Always, the association between a brand and new uses has been shown to be incredibly strong. Do consumers forget their brands when they show up in a new place – or do they say, “nice to see you here”? Almost always, it’s the latter.
But over time there has been one exception, and it has been beyond monumental. There is a cautionary tale which comes out of the domain name world. It has proven resoundingly that the only productive way to regulate the use of trademarks in new technologies is to adapt all the existing trademark principles of trademark law into the new technology and treat it for what it is – an extension of existing streams of commerce. Otherwise, you end up with the domain name landscape. Let me explain.
For almost three decades now, businesses have been trying to bring some fairness to the domain name universe. Ultimately, the process has been a catastrophic failure except for those who have made buying and selling of domain names a business of their own.
I remember speaking about domains during first part of the 1990s and, honestly, it was hard to even get a panel of people together, because rules had not yet been written, and much of what had to been said was still a guess. I thought it was an educated guess – but a guess is a guess. Perhaps this tells you more about the nature of lawyers than of the domain name business, but we literally had difficulty finding people willing to speak on a panel with me because there were no laws and no interpretations of what to do about someone taking your trademark and registering it as a domain name, and no court rulings which could at least be analyzed and critiqued.
Back then, part of my message was that we did not need special rules for domain names because we already had trademark law, and that domain names were to be used as trademarks. So, we could adapt. In part, I think I hit it spot-on; in the other part, not only did I miss the target, but I could not even see it.
The problem was that without use in commerce, there is no trademark. The argument that simple registration of a domain name was not like using a trademark won out. What very few saw coming was the gold rush to grab up both trademark and ordinary dictionary words, then hold them in inventory until some business came along which really needed that name – and was willing to pay fair market price to obtain it. That land grab never happened with trademarks because unless you had actual use – and legitimate use at that – the law would not protect the trademark. That was not the case for registration of domain names.
From the vantage point of trademark law, Internet domain names have largely been a lost cause. The U.S. federal registration system was eventually enacted to allow trademark owners to document their use. Eventually (not until late 1980s), a law was passed to allow companies to apply to register their trademarks even before they had use – on the condition that no registration would issue until the owner could actually prove use.
The Internet governors could have elected associated domain name rights with use, but they never did. Speculators jumped out and registered words and trademarks as domain names. Trademark owners can still wrestle back their marks where they can show that the other side registered in bad faith. But it is not just about trademarks. Today, unknown untold millions of domain names consist of names and phrases which have been registered by people willing to pay a few dollars a year to maintain those names, just waiting for someone to come along with an offer to buy them. It is a bit of a gamble, and like most gambling, the vast majority of domain name owners probably lose. They make little if any net profit, and many of the losing hands will never even get their money back.
It is difficult to argue the way the domain name system has evolved has been good for business. The amount of time and money businesses devote to avoiding domain name conflicts often seems disproportionate to the value of any given domain name. In the very recent past, it was science fiction to think any small and medium-size businesses could create an online store and sell products to the world on demand. The metaverse, in part, enabled by the creation of NFTs, is truly the stuff of science fiction. Trademarks in the metaverse are different from domain names, but if there is a lesson to be learned, it is that – this time – adapting existing rules does not make new ones.
