Navigating the metaverse

By Laura Brown
BridgeTower Media Newswires

The terms “blockchain” and “NFTs” and “metaverse” are increasingly showing up in news feeds, but they are a source of confusion for a lot of Americans — lawyers being no exception.

Apparently, it is time for lawyers — particularly those serving businesses — to quickly become literate in what has been termed Web3.

Web 3.0 is the newest iteration of the internet. Web 2.0 reflected the increase in interactive, collaborative websites, distinguishing itself from Web 1.0, which was back when the internet was more “read-only” and consisted mostly of webpages joined by hyperlinks.

Web3, however, is based on blockchain technology. It is a digital ledger consisting of blocks, which record transactions across several computers. The result is a decentralized and more transparent experience. Essentially, the upshot of all this is that this appears to be the future of the internet, whether the majority understands it or not.

Recently, some law firms have started to take notice of this trend.

William Schultz is partner at Merchant and Gould, an intellectual property law firm, as well as chair of the Internet, Cybersecurity, and E-Commerce practice group. He focuses on Internet and Technology law, with expertise in legal issues in online marketplaces. Schultz is equally competent in law and technology, already coding websites in the 1990s.

Schultz is adamant that Web3 is here to stay, and advises brands to get wise to it or else potentially face major future intellectual property issues.

“The technology that underlies the NFTs and the metaverse is the blockchain. The blockchain is a technology that can be used by many companies who are transacting business and reporting business,” Schultz explains. “There is a lot of technology that’s being developed on that ledger right now, which is why it’s important for companies to take note of the industry and make sure that their brands are taken care of now before it’s too late and somebody else has used your brand in the metaverse, used your brand as part of an NFT. Then you’re losing control.”

Asked about the scope of the harm that could befall companies that do not pay attention, Schultz was clear that infringement was not a future possibility but already rampant.

“Third parties are putting the brands, characters of the brands, into NFTs, and are making profits,” Schultz says. “Big companies do not even know this is happening because they don’t even know of the space, so they have not looked.”

Schultz believes that there is infringement happening to nearly every Fortune 500 Company that is a brand name.

“If they don’t take care of that, the way trademark law works, they run the risk of losing their trademark, because you have to enforce your trademark.”

When advising companies, he begins with educating them about the digital space.

“The first step is education. You may think, ‘Why education?’ It’s education not only to the executives who are in the company, but it’s education to the daily workers who are the employees in the company because they are a very good source of being able to understand what is going on in the marketplace,” Schultz says.

“[Companies] need to understand what the risks are,” Schultz advises.

He says this involves analyzing what products are being sold, and what products are currently being developed to be sold, and then discerning whether those products will be problematic in the Web3 space. “Where are you going? What are you going to do? Then, you take mitigation steps to strengthen it.”

“The companies should at least consider taking proactive steps,” Schultz suggests. “If the company has no desire to be in the metaverse, it should take the approach of how do I enforce or prevent somebody else from doing it, but they may not put in the effort of getting all of the intellectual property in the space.”

What action companies take ultimately depends on their goals and identity, something that Schultz helps to tease out when advising clients.

“We take a look at what the client is doing in the non-metaverse, non-NFT space and say, what could you do in the future?”

The firm has developed patent-pending software called “InnovaShield Brand Protection Index.” Clients take a survey about their products, where they are manufactured, and where they are sold. It then considers four factor areas — intellectual property protection, enforcement, policies and programs, and strategic coordination — to give companies a tailored analysis of risk, which then allows companies insight on how to address it.

Schultz says that the program is a culmination of questions he has asked clients over the last 20 years, but that the beauty of the software is that it allows clients to see a visual representation of risk.

“[Clients] are able to understand it so much quicker and better because it’s a visual analysis of what your risk is and it’s a visual analysis of what you can do to mitigate it.”

Schultz is clear that this is a new space, under development, with a small community of early adopters: “Only 1% have actually gotten into this space. But it’s that the big companies have experimented. And that’s why it’s causing such a boom in the industries.”

Schultz cited Nike’s move into the space as an example of a large company’s activities piquing the interest of other companies and causing them to take a look into the space.
Still, Schultz does not see this as a passing fad.
“I think it’s going to be a permanent part of business operations,” Schultz said. “For any company who is looking for a new target audience, the metaverse and NFTs and this technology as a whole is a new way to gather customers. If an entity chooses to display or advertise its products in the metaverse, it’s hitting another demographic.”