2023.06.21
PROTECTION OF INTELLECTUAL PROPERTY IN METAVERSE –CURRENT STATE OF DISCUSSION AND PROPOSED LEGAL REVISION IN JAPAN–
DESIGN
TRADEMARK
OTHER
PROTECTION OF INTELLECTUAL PROPERTY IN METAVERSE –CURRENT STATE OF DISCUSSION AND PROPOSED LEGAL REVISION IN JAPAN–
1. Introduction
The metaverse is a virtual three-dimensional space built on the Internet. Within the platform, various real or virtual items are traded. In other words, various consumption activities in the real space are being transferred to the metaverse space. Along with this, it is expected that new legal issues, such as protection of designs etc. in the virtual space and ensuring of appropriate transactions of virtual objects, will arise.
In this Newsletter, we report on the current state of discussion and proposed legal revision in Japan regarding the protection of intellectual property in the metaverse.
2. Current State of Discussion
In November 2022, the “Public-Private Partnership Conference on Addressing New Legal Issues Concerning Metaverse Contents” was established in the Cabinet’s Intellectual Property Strategy Headquarters (https://www.kantei.go.jp/jp/singi/titeki2/kanmin_renkei/index.html). The Conference established three subcommittees. The first subcommittee discussed use of intellectual property that intersects the real space and the virtual space, and handling of rights related to designs etc. of virtual objects. The second subcommittee discussed handling of avatar portraits etc. The third subcommittee discussed formation of rules and handling of regulatory measures etc. concerning acts toward virtual objects and avatars, acts between avatars, etc.
Below, we report on issues of design protection and trademark protection discussed by the first subcommittee.
2.1 Design Protection
There have been cases where designs of products in the real space are used in the metaverse without permission. For example, some virtual items imitating designs of mass-produced products with distinctive appearances have been sold on the premise that they are used within the metaverse. There have also been businesses of selling both real and virtual goods based on the same 3D model. There is an issue of how the designs of such goods can be protected.
Regarding copyright protection, what is recognized as a copyright work is subject to the protection, basically regardless of whether it is in the real space or in the virtual space. However, it is difficult for a design of a practical item in the real space to be protected by copyright, because it is hardly recognized to be copyrightable.
A holder of a registered design shall have an exclusive right to “work a design” which is identical or similar. If a third party conducts an act of manufacturing, constructing, using, transferring, leasing, etc. an “article” or “building” pertaining to the design without permission as a business, such an act constitutes an infringement of the design right. However, in many cases, an article and a virtual object (3D data) imitating the shape of the article are different in the function and application. It is believed that use of a design of an article which is a tangible object in the virtual space probably will not fall under the working of a similar design.
The Japanese Design Act protects “image designs,” but images subject to the protection are limited to the following:
(1) images to be used for operating a device (operation images); and
(2) images to be displayed as a result of a device exerting its function (display image).
Images of practical items etc. that are independent of a device cannot be protected. Therefore, it is generally not possible to obtain design registration for both an article etc. and an image for a single original design.
Under the Unfair Competition Prevention Act, an act of transferring etc. goods imitating the configuration of others’ goods constitutes “unfair competition,” and is subject to injunctions, compensation for damages, and criminal penalties. The period of protection against the configuration imitation is limited to three years from the date of the first sale in Japan. Under the current provisions, an act of providing intangible configuration-imitating goods on a network is not defined as a covered act. In this regard, a report prepared by a committee of the Ministry of Economy, Trade and Industry in March 2023 proposes that the Unfair Competition Prevention Act be revised to add to the scope of regulation the act of providing configuration-imitating goods on networks. Further, a proposed revision of the Unfair Competition Prevention Act was submitted to the ordinary session of the Diet in 2023 for deliberation.
The first subcommittee concluded that, with regard to the protection of designs, it would be appropriate to enable the Unfair Competition Prevention Act to regulate the act of providing configuration-imitating goods on networks. Regarding the protection by design rights and the protection by copyrights, it was concluded that further discussion was necessary, and a proposal for legal revision was shelved.
2.2 Trademark Protection
There have been cases where marks of goods in the real space are used without permission in the virtual space. For example, there have been cases where brand names of existing product brands are used without permission in the metaverse, and cases where digital items bearing marks of the brands are sold without permission. In the United States, a person who sold “MetaBirkins,” a digital copy of Hermès’ bag “Birkin,” in a digital space was sued for a trademark infringement etc. and ordered to pay damages.
Any act of using a trademark identical or similar to a registered trademark, without permission, for goods or services identical or similar to the designated goods or services constitutes a trademark infringement. Similarity of goods is judged based on “whether the products are in a relationship in which they may be mistaken as products manufactured or sold by the same business owner when identical or similar trademarks are used with those products, because of a circumstance such as that those products are usually manufactured or sold by the same business owner.” Under the current situation, it is rare that a business owner who manufactures and sells products (e.g., clothes) in the real space also provides virtual versions of the products (virtual space products reproduced by a computer program, such as avatar clothes, for example). Even if a registered trademark for a product in the real space is used for a product in the virtual space, it is assumed that in many cases the similarity of goods is not recognized and thus a trademark infringement is not recognized.
A possible countermeasure by a trademark right holder is to apply for trademark registration while designating goods for virtual space products (e.g., class 9; computer program etc.). However, if the trademark right holder uses the trademark only for products in the real space, the right may be rescinded by a non-use revocation trial for products in the virtual space.
Under the Unfair Competition Prevention Act, the following acts constitute “unfair competition” and are subject to injunctions, compensation for damages, and criminal penalties:
(1) acts that cause confusion with others’ goods etc. by use of indication of goods etc. identical or similar to well-known indication of goods etc. (acts of causing confusion with well-known indications); and
(2) acts such as using indication of goods etc. identical or similar to others’ famous indication of goods etc. as own indication of goods etc. (acts of misappropriation of famous indication).
The objects of protection under these provisions are limited to “well-known” or “famous” indications of goods etc. However, similarity of goods and services is not required as in the case of trademark infringement. The infringement can be established if there is similarity in the indications of goods etc. used.
Regarding the trademark protection, the first subcommittee proposed to publicize the scope of protection under the Trademark Act and the Unfair Competition Prevention Act, and publicize practical countermeasures that right holders can take. A proposal for legal revision was shelved.
3. Trends in Legal Revision
As mentioned in the previous section, a proposed revision to the effect that the act of providing goods imitating others’ goods configuration in the digital space also falls under the act of unfair competition was submitted to the ordinary session of the Diet in 2023 for deliberation (https://www.meti.go.jp/press/2022/03/20230310002/20230310002.html). The proposed revision was unanimously approved by the House of Representatives on May 18, 2023 and is awaiting deliberation by the House of Councilors.
4. Summary
There are no national borders in the metaverse space, and people from all over the world can participate therein simultaneously through the Internet. The above-mentioned Public-Private Partnership Conference states that the role of cross-border versatile soft law (e.g., terms of service for platform operators) will be important in the formation of rules in such a space.
In Japan, large companies, such as ANA (https://www.ana-neo.com/en/), NTT (https://www.nttqonoq.com/en/), KDDI (https://www.au.com/5g/virtualcity/), and NISSAN (https://www.nissan-global.com/EN/INNOVATION/DESIGN/DESIGNWORKS/VR-CROSSING/), have entered the metaverse. Further, events utilizing the metaverse, such as Virtual Osaka (https://www.virtualosaka.jp/en/), Virtual Shibuya (https://vcity.au5g.jp/shibuya), VIRTUAL MARKET (https://winter2021.vket.com/en), and JAPAN CULTURAL EXPO 2.0 (https://japanculturalexpo.bunka.go.jp/en/), have been held.
We hope that the rules will be properly developed, the cultural and economic spheres of the metaverse will be activated, and Japan and the world will develop more prosperously.
The metaverse is a virtual three-dimensional space built on the Internet. Within the platform, various real or virtual items are traded. In other words, various consumption activities in the real space are being transferred to the metaverse space. Along with this, it is expected that new legal issues, such as protection of designs etc. in the virtual space and ensuring of appropriate transactions of virtual objects, will arise.
In this Newsletter, we report on the current state of discussion and proposed legal revision in Japan regarding the protection of intellectual property in the metaverse.
2. Current State of Discussion
In November 2022, the “Public-Private Partnership Conference on Addressing New Legal Issues Concerning Metaverse Contents” was established in the Cabinet’s Intellectual Property Strategy Headquarters (https://www.kantei.go.jp/jp/singi/titeki2/kanmin_renkei/index.html). The Conference established three subcommittees. The first subcommittee discussed use of intellectual property that intersects the real space and the virtual space, and handling of rights related to designs etc. of virtual objects. The second subcommittee discussed handling of avatar portraits etc. The third subcommittee discussed formation of rules and handling of regulatory measures etc. concerning acts toward virtual objects and avatars, acts between avatars, etc.
Below, we report on issues of design protection and trademark protection discussed by the first subcommittee.
2.1 Design Protection
There have been cases where designs of products in the real space are used in the metaverse without permission. For example, some virtual items imitating designs of mass-produced products with distinctive appearances have been sold on the premise that they are used within the metaverse. There have also been businesses of selling both real and virtual goods based on the same 3D model. There is an issue of how the designs of such goods can be protected.
Regarding copyright protection, what is recognized as a copyright work is subject to the protection, basically regardless of whether it is in the real space or in the virtual space. However, it is difficult for a design of a practical item in the real space to be protected by copyright, because it is hardly recognized to be copyrightable.
A holder of a registered design shall have an exclusive right to “work a design” which is identical or similar. If a third party conducts an act of manufacturing, constructing, using, transferring, leasing, etc. an “article” or “building” pertaining to the design without permission as a business, such an act constitutes an infringement of the design right. However, in many cases, an article and a virtual object (3D data) imitating the shape of the article are different in the function and application. It is believed that use of a design of an article which is a tangible object in the virtual space probably will not fall under the working of a similar design.
The Japanese Design Act protects “image designs,” but images subject to the protection are limited to the following:
(1) images to be used for operating a device (operation images); and
(2) images to be displayed as a result of a device exerting its function (display image).
Images of practical items etc. that are independent of a device cannot be protected. Therefore, it is generally not possible to obtain design registration for both an article etc. and an image for a single original design.
Under the Unfair Competition Prevention Act, an act of transferring etc. goods imitating the configuration of others’ goods constitutes “unfair competition,” and is subject to injunctions, compensation for damages, and criminal penalties. The period of protection against the configuration imitation is limited to three years from the date of the first sale in Japan. Under the current provisions, an act of providing intangible configuration-imitating goods on a network is not defined as a covered act. In this regard, a report prepared by a committee of the Ministry of Economy, Trade and Industry in March 2023 proposes that the Unfair Competition Prevention Act be revised to add to the scope of regulation the act of providing configuration-imitating goods on networks. Further, a proposed revision of the Unfair Competition Prevention Act was submitted to the ordinary session of the Diet in 2023 for deliberation.
The first subcommittee concluded that, with regard to the protection of designs, it would be appropriate to enable the Unfair Competition Prevention Act to regulate the act of providing configuration-imitating goods on networks. Regarding the protection by design rights and the protection by copyrights, it was concluded that further discussion was necessary, and a proposal for legal revision was shelved.
2.2 Trademark Protection
There have been cases where marks of goods in the real space are used without permission in the virtual space. For example, there have been cases where brand names of existing product brands are used without permission in the metaverse, and cases where digital items bearing marks of the brands are sold without permission. In the United States, a person who sold “MetaBirkins,” a digital copy of Hermès’ bag “Birkin,” in a digital space was sued for a trademark infringement etc. and ordered to pay damages.
Any act of using a trademark identical or similar to a registered trademark, without permission, for goods or services identical or similar to the designated goods or services constitutes a trademark infringement. Similarity of goods is judged based on “whether the products are in a relationship in which they may be mistaken as products manufactured or sold by the same business owner when identical or similar trademarks are used with those products, because of a circumstance such as that those products are usually manufactured or sold by the same business owner.” Under the current situation, it is rare that a business owner who manufactures and sells products (e.g., clothes) in the real space also provides virtual versions of the products (virtual space products reproduced by a computer program, such as avatar clothes, for example). Even if a registered trademark for a product in the real space is used for a product in the virtual space, it is assumed that in many cases the similarity of goods is not recognized and thus a trademark infringement is not recognized.
A possible countermeasure by a trademark right holder is to apply for trademark registration while designating goods for virtual space products (e.g., class 9; computer program etc.). However, if the trademark right holder uses the trademark only for products in the real space, the right may be rescinded by a non-use revocation trial for products in the virtual space.
Under the Unfair Competition Prevention Act, the following acts constitute “unfair competition” and are subject to injunctions, compensation for damages, and criminal penalties:
(1) acts that cause confusion with others’ goods etc. by use of indication of goods etc. identical or similar to well-known indication of goods etc. (acts of causing confusion with well-known indications); and
(2) acts such as using indication of goods etc. identical or similar to others’ famous indication of goods etc. as own indication of goods etc. (acts of misappropriation of famous indication).
The objects of protection under these provisions are limited to “well-known” or “famous” indications of goods etc. However, similarity of goods and services is not required as in the case of trademark infringement. The infringement can be established if there is similarity in the indications of goods etc. used.
Regarding the trademark protection, the first subcommittee proposed to publicize the scope of protection under the Trademark Act and the Unfair Competition Prevention Act, and publicize practical countermeasures that right holders can take. A proposal for legal revision was shelved.
3. Trends in Legal Revision
As mentioned in the previous section, a proposed revision to the effect that the act of providing goods imitating others’ goods configuration in the digital space also falls under the act of unfair competition was submitted to the ordinary session of the Diet in 2023 for deliberation (https://www.meti.go.jp/press/2022/03/20230310002/20230310002.html). The proposed revision was unanimously approved by the House of Representatives on May 18, 2023 and is awaiting deliberation by the House of Councilors.
4. Summary
There are no national borders in the metaverse space, and people from all over the world can participate therein simultaneously through the Internet. The above-mentioned Public-Private Partnership Conference states that the role of cross-border versatile soft law (e.g., terms of service for platform operators) will be important in the formation of rules in such a space.
In Japan, large companies, such as ANA (https://www.ana-neo.com/en/), NTT (https://www.nttqonoq.com/en/), KDDI (https://www.au.com/5g/virtualcity/), and NISSAN (https://www.nissan-global.com/EN/INNOVATION/DESIGN/DESIGNWORKS/VR-CROSSING/), have entered the metaverse. Further, events utilizing the metaverse, such as Virtual Osaka (https://www.virtualosaka.jp/en/), Virtual Shibuya (https://vcity.au5g.jp/shibuya), VIRTUAL MARKET (https://winter2021.vket.com/en), and JAPAN CULTURAL EXPO 2.0 (https://japanculturalexpo.bunka.go.jp/en/), have been held.
We hope that the rules will be properly developed, the cultural and economic spheres of the metaverse will be activated, and Japan and the world will develop more prosperously.
