Metaverse is set to remain a dominating buzzword in 2023. Although there is currently no unified definition of a single "metaverse", the main elements of this early space revolve around creating persistent virtual environments, instantaneous and immersive interactions between users as avatars, interoperability, and adopting Virtual Reality (VR) and/or Artificial Reality (AR) technologies.

Various companies have started their own metaverse. Some operate as a closed centralised metaverse where the digital assets and characters remain in platform, while others utilise Web 3.0 and blockchain technology for decentralised features incorporating cryptocurrency and digital assets that are interoperable, creating a virtual economy of its own.

The value of the metaverse economy and its potentials continue to grow exponentially. Not only tech companies, but myriad other multinational brands have marked their presence in the metaverse. The amount invested in the metaverse space in 2022 doubled from what it was in 2021, accounting for more than US$120 billion. It is estimated that the market value of the metaverse economy could reach up to US$5 trillion by 2030[1].

Dubai Metaverse Strategy

In the UAE, Dubai has set up an independent regulator for virtual assets (the Virtual Assets Regulatory Authority "VARA"), and announced its Metaverse Strategy in July 2022 aiming to become a global hub and one of the world's top 10 metaverse economies[2].

The strategy aims to create and support more than 40,000 jobs in the virtual world by 2030 for Dubai-based entities. The plan is to foster talent, innovation and encourage research and development  collaborations through accelerators and incubators. The strategy also supports the development of Web 3.0 technologies and applications in important sectors including tourism, education, retail, health care and the legal sector.

In line with their strategy, at the inaugural Dubai Metaverse Assembly event held in September 2022 at the Museum of the Future, the UAE Ministry of Economy promoted its headquarters in the metaverse, with Emirates airlines also sharing plans to hire cabin crew that would be trained in the metaverse through real life simulations.

With the opportunities and challenges ahead, we will be seeing more companies interested in leveraging and realising the potential growth of this new economy in the UAE. As a firm, Gowling WLG are already assisting international companies looking at registration through VARA in Dubai.

How should you protect your Intellectual Property (IP) rights in UAE to prepare for the metaverse?

Similar to the physical world, all logos, banners, exhibitions, games, signage, avatars, virtual product designs and packaging in the metaverse would give rise to IP rights. It is therefore vital that UAE-based brand owners and/or brand owners intending to conduct business in the region ensure their IP rights are well protected before promoting their presence in the space.

Brand protection

Since there is no centralised registrar or system for trademark registration in the metaverse, UAE entities or brand owners targeting the UAE market are advised to protect trademarks. A smooth trademark registration in the UAE will take around six to nine months to process, so rights holders should plan ahead and launch filings earlier on.

To ensure that you would be entitled to use your proposed brand in the region, clearance searches should be completed. Official searches usually take around two to three working days, while logo searches are not available via the official database. It is possible to conduct preliminary knock-out searches against other third party private databases, however, their trademark records are not always up to date (as they do not have direct real-time access to official data).

Prior to conducting the official searches, we suggest first conducting simple internet searches. If these searches return something obvious, you may wish to select other names before proceeding with the official trademark searches, to save both time and costs. Internet searches only provide an indication of a likely "no go", but official legal trademark searches are still necessary to affirm the availability of your proposed brand.

If you plan to use any form of design or 3D logo in your metaverse, or if, for example, you have an iconic building you would want to try and stop others from copying or reproducing in a metaverse, you may consider filing 3D trademarks in the UAE. As outlined in our earlier article, 3D mark protection is relatively straightforward to obtain in the UAE and you are able to enforce your rights based on such registrations in the UAE.

Other than registering your brand in your local language, you should also consider devising and protecting the Arabic version of your mark (either the translation, transliteration, or a combined version) when engaging in business in this region. Even if you do not intend to adopt the same in the metaverse, opportunities may arise when you need to promote your brand both online in the metaverse and in physical locations and events, where the registration of your Arabic mark would be useful.

Next is to consider what are the intended virtual goods and services you will be offering in the metaverse. Currently, the UAE Trademark Office ("UAE TMO") has not yet published a set of designated terms and descriptions for trademark applications targeting the metaverse, or block chain related goods or services. However, the UAE TMO has accepted terms in Classes 9, 35, 41 and 42 which would be relevant to metaverse related goods and services. Access our earlier article for examples on the accepted descriptions in the UAE.

Despite the relatively high official fees for trademark registration in the UAE, it is important to have your registrations in place at the outset. As well as protecting your own use, it can also make enforcement against potential infringers easier and more cost effective to undertake.

Copyright

Due to the potential territorial issues around infringements in the metaverse, for example, if the platform or infringer is based in the United States and you only have UAE rights, copyright must be considered in any metaverse protection strategy.

Copyright protection would be relevant to metaverse software applications, images, artwork, designs and music, for example avatar characters, virtual accessories, in-platform music, and virtual landscape and building designs, applied in the metaverse. It may also assist in relation to underlying copyrights in logos, or stylised marks, which could be relied on if issues arise in a country where you do not have registered trademark rights.

Companies operating in the UAE should ensure that any and all commercially important copyright works vest in the company, in order that it can look to rely on those works where the need arises. An audit is recommended to identify the rights, and the creator(s) of the rights, in order to ensure that all underlying copyright of the works created on your behalf have been legally assigned to you based on the relevant UAE copyright laws. Similarly, where works have been created by employees, that this is also recorded and can be proven, should the need arise. Appropriate confirmatory assignment agreements should be in place for the transfer of rights to avoid any disputes in the future. Access our article for more information.

Moreover, you may consider recording copyright over your important artworks or designs with the Ministry of Economy ("Ministry") in the UAE as proof of your rights. This is not a mandatory requirement for copyright enforcement, but as you will receive an official certificate, it can ease enforcement and put third parties on notice of your recorded rights.

Companies should also be aware that copyright laws still apply in the metaverse. It is vital to exercise due care not to copy or imitate other parties' works even in the metaverse, which may constitute copyright infringement. For example, if you wish to construct a building in the metaverse with the same appearance as an actual building, it is necessary to consult your legal advisors and consider whether it is necessary to obtain a license from the relevant copyright owner for such use. Under the UAE copyright law, strong protection is given to owners of certain buildings.

If you commission other service providers to help with the design, relevant warranties and indemnity clauses should be included in the service agreements. This is to ensure that the service providers hold the relevant rights and do not infringe any third party rights. In case of any claims of infringement, the service providers should bear the relevant responsibilities and damages claimed.

Business owners should also avoid copying and producing physical products of any images or characters located in the metaverse. Heineken has launched its first virtual canned beer in their digital brewery in Decentraland. This was registered as a trademark as well as a physical beer can design in the EU[3]. The protection of virtual goods as a registered design should allow the brand owner to stop other entities from copying or offering a similar design in the physical world.

In another case, Roblox has initiated a copyright infringement claim against WowWee Group Limited[4] for manufacturing and selling figurines that feature a similar appearance to Roblox's avatars in the name of "Avastars". The claim is ongoing and it will be interesting to see whether the Court views that the copyright of the virtual avatars may stop similar physical products. In any event, if you would like to commercialise any third party IP from or into the metaverse, it is advisable to approach the rights holders for an appropriate license arrangement before taking any further steps.

Conclusion

Brand owners and businesses should take advantage of the Dubai Metaverse Strategy and the momentum in the UAE to grow their presence in the metaverse. Before doing so however, it is crucial for businesses to formulate a suitable IP strategy and protection measures from the outset, seeking the appropriate legal advice. Our IP team at Gowling WLG UAE has over 30 years of experience in the IP field with various IP experts to assist you on your needs. Please feel free to reach out to us on any of the above points for more detailed advice.

Footnotes:

[1] Value creation in the metaverse: The real business of the virtual world, McKinsey & Company, June 2022
[2] Dubai Metaverse Strategy, 23 Sept 2022
[3] EU design no. 008914931-0001
[4] Roblox Corp v. WowWee Group Ltd, U.S. District Court for the Northern District of California, No. 3:22-cv-04476