Series: "Intellectual Property in the Digital Space – Metaverse, Blockchain, NFT & Co"

The Metaverse – opportunities and risks

The Metaverse: Ever since Mark Zuckerberg announced that he was renaming his company from "Facebook" to "Meta", everyone's been talking about it. Major technology companies such as Microsoft and Google have announced that they will be investing billions in building the Metaverse over the coming decades, and other companies from a variety of industries have also begun to see the Metaverse as a potential new market. The rise of the Metaverse promises to usher in a new era and fundamentally change the way we interact, communicate and do business. Experts predict that the Metaverse will one day be worth trillions of dollars.

But what is the Metaverse anyway?

In the strictest sense, the Metaverse – according to the vision of the major technology companies – is intended to create an interoperable network of virtual 3D worlds in which we humans can network, learn, interact and also do business. Simply put, the Metaverse is the evolution of the Internet as we know it today. The Internet will become three-dimensional, and instead of consuming content on computer or mobile phone screens, we will be able to immerse ourselves in that content through virtual reality glasses.

So instead of scrolling through the online stores of our favourite retailers on our computer or mobile phone screens, we could, for example, stroll through the virtual stores of these 3D worlds with our avatar programmed with our seam lengths, shoulder and hip measurements, try on clothes virtually and then have them delivered to our homes. Or instead of travelling around the world to meet business partners or friends, or only seeing them via Zoom meetings and FaceTime, we could invite them into virtual offices and virtual rooms.

Admittedly, this sounds more like fiction than reality, and in fact the Metaverse does not exist in this form. At least not yet. While experts are still arguing about when the Metaverse will actually arrive, everyone seems to agree that we are well on our way to this "Metaverse Age".

In fact, there are already independent – i.e. non-interoperable – 3D virtual worlds that might best be described as "Metaverse prototypes". Examples include gaming platforms such as Roblox and Fortnite, which have long been used not only for gaming but also for simply "hanging out" with friends or making new contacts. Fortnite, for example, regularly hosts virtual concerts, for example by singer Adriana Grande or rapper Travis Scott, and sells virtual goods.

What are the opportunities for companies?

The Metaverse opens up a whole new market with enormous growth opportunities for companies. The sale of virtual goods or virtual services offers a new source of revenue. Unlike physical goods, virtual goods do not require raw materials, expensive manufacturing processes or physical distribution. As a result, production and distribution costs are significantly lower, allowing high profit margins. Travis Schott's concert on the gaming platform Fortnite, for example, lasted just eight minutes but generated revenues of around USD 20 million. In some cases, virtual goods even fetch higher prices than their real-life counterparts. For example, a virtual Gucci handbag sold for USD 4,000 on the Roblox gaming platform, while its real-life counterpart is being sold for USD 3,400.

The emergence of the Metaverse also represents a great opportunity for companies to tap into a new and, above all, younger consumer group. This is because children and young adults in particular – the so-called "digital natives" – are the first to engage with this new medium. The gaming platform Roblox, for example, has around 50 million daily users, 67% of whom are under 16. This demographic holds immense potential, because they are the customers of the future, not only in virtual worlds but also in the real world.

In addition, the Metaverse transcends physical boundaries and allows companies to reach a global audience without being tied to one location, offering businesses a new and immersive way to engage with their customers. Through virtual environments, companies can create interactive experiences, virtual events and personalised interactions that lead to greater customer engagement and loyalty.

Where are the risks?

While the Metaverse offers exciting opportunities for businesses, it also presents certain risks and challenges that companies need to consider as they move into this new digital world.

Because the Metaverse enables user-generated content and virtual experiences, there is a risk of infringement and misuse of proprietary intellectual property rights. This may include unauthorised use of trademarks, copyrighted material, or patented technologies within the Metaverse.

When immersing themselves in the Metaverse, companies should also ensure that they themselves own or are assigned the appropriate intellectual property rights for the respective virtual activities. For example, a key task is to identify the emerging IP rights in the virtual goods created and have them assigned by the digital designers.
In addition, intellectual property and unfair competition laws and regulations vary from country to country. However, the Metaverse is a global and decentralised environment without national borders. This can lead to challenges in enforcing intellectual property rights in different jurisdictions and legal risks, e.g., in connection with unfair advertising.

Companies are therefore well advised to be aware of the importance of the Metaverse and to consider taking proactive steps now to protect their IP rights and comply with the legal framework in this new digital space.

Over the coming months, we will be exploring these specific legal aspects in further articles in the series "IP Protection in the Digital Space – Metaverse, Blockchain, NFT & Co". The next article, "Intellectual property: The Metaverse – how do I protect my brand identity in the virtual world?" is already online.

See also the other articles of our series „IP Protection in the Digital Space – Metaverse, Blockchain, NFT & Co“:

The Metaverse – how do I protect my brand identity in the virtual world?

The Metaverse - three key tips for companies to avoid becoming infringers