Territoriality and intellectual property in the metaverse

Around the world, different laws and principles regulate assets and intellectual property rights. In the metaverse, the absence of geographic boundaries raises concerns about the applicability of principles of law, such as the territoriality principle, as there is still no specific jurisdiction to settle potential disputes.

The territoriality principle applied to intellectual property

In “Propriedade Intelectual: o princípio da territorialidade” (Intellectual Property: the principle of territoriality, in free translation), Thais Castelli, Ph.D. in International Economic Law, clarifies that “[…] while industrial property law requires a local registration (or use) to apply the territorial principle, the same does not occur with copyright, whose ownership must be recognized by the mere exposition of the work in any location.”

Accordingly, intellectual property – whose objective is to protect the creator from undue exploitation, and consequently, enable financial return and generate back value from the intangible asset – is divided into industrial property and copyrights.

While copyright is related to the creative sector, industrial property is associated with the productive sector, including trademarks, patents, and industrial designs.

Works and creations do not need to be registered to be protected by copyright. Consequently, authors may exercise their rights anywhere, especially within the Berne Convention signatory countries.

Unlike them, holders can only exercise rights over their industrial property assets after obtaining the respective registration or patent and at the place where they were registered, as provided, for example, by Articles 6 (patents), 109 (industrial design), and 129 (trademarks) of the Brazilian Industrial Property Law (LPI, in Portuguese).

These provisions are based on the principle of territoriality, first introduced at the Paris Convention for the Protection of Industrial Property, held in 1883, which established the protection for industrial property assets in the territories where they were granted, as mentioned in our article Trademarks in the metaverse: legal challenges for Brazilian legislation.

Territoriality principle and the metaverse

Intellectual property assets are considered intangible movable assets, so they do not have a material existence despite being appropriable assets. Therefore, the ownership of these assets is governed by specific rules that establish their respective rights and duties.

In this regard, the rules pertaining to these intellectual property rights will be closely linked to the legal system in which the owner/author of the asset is located, being, therefore, in harmony with the constitution, other infra-constitutional rules, principles, customs, and local case law.

The territoriality principle is vital for protecting intellectual property rights, whether industrial or copyrights. This raises concerns about the use of such assets in environments related to Web 3.0, such as the metaverse, as this is a virtual space without clearly delimited geographical boundaries.

Industrial property assets

In Brazil, the right to use or exploit assets is granted based on registering these assets with the National Institute of Industrial Property (INPI). In other countries or regions, it is no different, with each jurisdiction being sovereign to grant or not protection to specific assets. As another reflection of the independence between industrial property assets, the same trademark or the same invention can be the object of additional registrations and patents belonging to unrelated companies.

Our previous article highlighted the challenges of having exclusive rights over a trademark in a virtual environment. The exclusive use of a trademark is related to the physical location where it was registered, so the holder of that registration has the exclusive right to use the trademark and prevent others from using it within the territory where it was registered.

The systems already in place by the Internet Corporation for Assigned Names and Numbers (ICANN) concerning domain name registration and dispute resolution – mainly referring to the use of trademarks as part of a domain name – are interesting bases that demonstrate how to deal with the use of industrial property assets granted by jurisdiction, in a context of cross-border exploration. For example, suppose there is any indication of intentional misuse of a third party’s trademark – for instance, a part of a domain name – in any jurisdiction. In that case, the affected party may file a claim demanding reparations.

In the context of metaverses, we should observe how developers will harmonize the rights of different holders, preserving individual rights in each applicable jurisdiction.

Copyrights

When discussing copyright matters, we should emphasize some aspects. One of them concerns the moral right of authors in the face of the difference between the droit d’auteur systems, adopted by countries like Brazil and France, and the copyright system, in force in countries like the United States and the United Kingdom.

The Brazilian Copyright Law (LDA) provides the patrimonial right to the authors of the work and the respective moral right thereof, as established in article 24. Jurist Adriano de Cupis argues that the national legal system protects the author’s right of paternity, represented by the indissoluble spiritual bond between the author and their work, in order to protect their personality rights.

Countries that adopt the copyright system have a greater focus on the economic aspect of the work, and, therefore, the protection of moral copyright is comparatively reduced. Consequently, whoever creates and uses a work within Brazil will have their moral rights better protected than if doing so in the United States, for example.

However, when shifting the analysis of the use and creation of intellectual property assets to the metaverse, issues such as those outlined above have not yet been standardized and are still legally dubious.

This is particularly based on the intangible nature of intellectual property assets, which facilitates the transposition of barriers and the simultaneous multiplication of these assets across several territories.

With the absence of geographic borders and specific legislation, the use of intellectual property assets in the metaverse can give rise to conflicts that still do not have a specific jurisdiction to support them, demanding alternative means, such as the definition of specific rules within each metaverse.

For further information on intellectual property within the metaverse, follow our special series Intellectual Property and the Metaverse.

*With the collaboration of Ana Flávia Marques and Nathalia de Assis Siqueira.