The matrix yesterday, the metaverse today: how to be protected in view of new technologies?

In the first acclaimed film Matrix, released in the distant year of 1999, there is a famous sentence in which the actor Laurence Fishburne (Morpheus) addresses the actor Keanu Reeves (Neo) and asks: “How would you know the difference between the dream world and the real world?”

At the time, many of us certainly immediately reflected: “Will we ever have a mix of the real and virtual worlds?”

Twenty-three years later, everything indicates that we have never been closer to this intersection between the physical and virtual. A new world is being presented to a generation eager for knowledge and increasingly engaged and involved with the virtual world in its most diverse aspects.

The advent of new technologies and the consequent dynamics facing society provoke new discussions under the aegis of intellectual property. How to position and protect ourselves, not only on the domestic but also international stage?

The main premise is to understand that the strategic vision of new technologies (the metaverse, NFTs, blockchain and smart contracts) cannot be restrictive. On the contrary, new technologies must be analysed, pursued and protected as widely as possible, in order literally to “seize” all the opportunities that arise.

BLOCKCHAIN

Blockchain technology can be defined as a data structure which ensures that records are immutable. Through a decentralised data and information registration system, the technology aims to add trust in an environment of distrust and allow the registration of any type of transaction, goods (physical and digital) and/or information, whether of a financial or any other nature.

That said, the technology has applications in virtually all fields of activity, including and especially in the area of intellectual property.

Considering registrations on any blockchain network may be particularly interesting as an alternative form of protecting what are called “creations of the spirit”, which, in Brazil, in accordance with the Copyright Law (Law no. 9,610/98), do not depend on formal registration to deserve protection, but the rights to which often depend on proof of ownership and creation of the work in court to be exercised against third parties.

In addition to protecting creations of the spirit, technology can be useful in judicial and/or administrative proceedings in all areas of industrial property (trademarks, patents and industrial designs, among others). Courts around the world are already starting to accept records made on blockchain networks as a valid means of evidence in court.

In practice, because it is easy to use, accessible to everyone and has a low marginal cost, blockchain has already been used by companies and individuals as a complementary way of protecting their intellectual property assets. The tendency is for it to gain increasingly more space in global strategies for the protection of intellectual property.

SMART CONTRACTS

Smart contracts are a natural result of the popularisation and expansion of the use of blockchain technology.

It is a true evolution of the network, moving from a static network for recording goods and transactions (of a financial or any other nature) to a digital ecosystem that allows interaction between a plurality of parties to transact securely in a virtual environment.

A smart contract is nothing more than a computer program, created in a programming language, containing predefined rules that will be executed automatically after the occurrence of a certain event, which is also previously defined.

It is a contract (computer program) that establishes a set of rules for carrying out certain transactions, which are not just financial and are self-executable, “running” in a secure and decentralised way.

It is not difficult to see the practically infinite potential of applications for contracts of this nature. Far beyond simple financial transactions, which gave rise to the technology, smart contracts can be used and implemented in virtually all segments of the economy, enabling simple purchase and sale transactions to more complex transactions, involving a plurality of parties.

Initiatives in this field are already spreading into areas such as urban mobility, energy distribution, real estate transactions and supply chains. In the area of intellectual property, smart contracts have a wide potential for use, being able to facilitate, for example, the licensing and/or transfer of intellectual property assets, the payment of royalties and the updating of large international portfolios.

It is only a matter of time before this type of contract becomes part of the daily life of those who work with intellectual property, as is already the case in other fields.

NFTs

The technologies explored in the previous topics have enabled the emergence of a third, namely NFTs.

NFTs (non-fungible tokens) are already a “palpable” reality which has been forcing companies to leave their comfort zones, in order to assimilate and follow the new path traced by the increasingly demanding consumer market (highly attentive to new technologies).

Various people and companies have been making their NFTs available, as unique, exclusive and authentic pieces, in the most different market segments (automotive, clothing, dietary (food and beverages), sports, works of art and entertainment, etc.).

Such expansion has been generating transactions worth millions and, consequently, discussions on different ways to protect their creations from the perspective of intellectual property (trademarks, copyrights, industrial designs and software, etc.).

For reference, currently, various marketplaces (Open Sea, OpenBazaar, Neuno, OpsKins, Super Rare and Binance, etc.) are available to act as an interactive link between the creations developed by companies and the consumer public.

It is essential that users and owners are fully aware of the terms of use adopted by each of the marketplaces, as these will directly impact their business models.

In addition, the “rules” linked to each specific NFT must be known, since creators can, through smart contracts (agreements of will between parties that bring about security and transparency in the formalisation of the transaction), establish considerations due in future reproductions or sales of the content (a percentage of profit earned, for example).

The logic of NFTs is directly associated with a digital certificate of ownership, which carries with it the entire history of ownership and transactions, allowing the existence of said rules. The history via blockchain, in turn, is fully preserved, ensuring that no information will be lost or altered.

In addition to associating considerations with future reproductions or sales, the rules involving NFTs can go much further. The purchase of digital collectibles (exclusive and limited) can be linked to obtaining tickets for shows or exclusive clubs also held in the virtual environment. There are also those who link the purchase of NFTs with the physical delivery of the object. By way of illustration, users buy an NFT for a hamburger or trainers and receive their product directly at home.

In short, everything that happens in the physical world can happen in the virtual world in the blink of an eye, but with a plurality, depth and even more diverse alternatives compared to the physical world. At the same time, purchases and transactions carried out in the virtual world can have a result in the physical world as well.

Given the high values achieved through NFTs, it can be stated that the monetisation of intellectual property in the virtual world is reaching levels never previously imagined. The trend is that this level will still increase exponentially to incalculable figures, in view of the intellectual creations and technologies that diversify and develop increasingly every day.

Intellectual property, with NFTs, gains new and hitherto unimaginable strength in the hands of companies. The success and profit in the exploitation of assets, however, will depend exclusively on the way in which companies will protect themselves in the field of intellectual property and related areas.

THE METAVERSE

And so we arrive at the “world” of the metaverse. Land purchases (virtual real estate speculation can already be seen), spaces to watch shows and events of different natures, specific spaces for the sale of articles from different segments, spaces for schools and universities, among other functionalities, are already a reality in this new world.

The metaverse allows interaction and total socialisation between users. It is a new ecosystem in which people will be able to enjoy in the virtual world the same benefits (or even better) as in the physical world. It is already possible to open bank accounts, hold work meetings, buy items (clothes, cars and apartments, etc.), go to restaurants, visit museums and even be in countries that have never been physically visited. The very same activities already carried out in the physical world can therefore be carried out in the virtual world, but now more easily.

Currently, there are already several well-known platforms that work with the metaverse, such as: Descentraland, Fortnite, Roblox, Sandbox and Minecraft, among others. Such platforms have been taking big steps towards an increasingly real interaction between the physical and virtual worlds.

What was impossible only a few years ago will become increasingly possible. All sensory perceptions (smell, taste, vision, hearing and touch) can be made possible through the metaverse. Most likely, countless people will live longer in the virtual world than in the physical world. In fact, technology is being developed so quickly that we are closer to the complete merger of the physical world with the virtual world. There is, therefore, the possibility that, in the future, the two worlds will no longer be so identifiable, but rather the perfect interaction between both.

This interconnection will make us face countless creations, which will result in new trademarks, patents, industrial designs, software, copyright and agreements, among other intellectual property assets and related rights. A new reality for which companies must be prepared right away.

From the above scenario, numerous questions arise regarding how to properly protect intellectual property rights, monetise them and create a greater link with consumers, among which we highlight the following:

a) How and in what way should I protect my intellectual assets to safely enter this new virtual world?

b) Are there safe mechanisms to guarantee the effectiveness of my intellectual property rights within the virtual world?

c) Is there the possibility of creating “robots” within the virtual world in order to scan for possible infringements of my intellectual property rights?

d) How will my intellectual property rights be defended within this new virtual world?

e) What is the scope of agreements for the protection of my intangible assets in the face of this new world that is emerging?

f) What business models can be strengthened, and how can they be used to monetise my intellectual property assets?

All these issues converge to the need for companies to immediately seek the protection of their intellectual property assets (trademarks, copyright, industrial designs and software, etc.), in order to ensure the effectiveness of their rights in this new market.

New business models have been established within the Metaverse and NFTs. In a short period of time, this market has been opening up new business opportunities, resulting in high values. Likewise, the importance of signing new agreements of different magnitudes is revealed, aiming to protect intellectual property assets and create an increasingly solid link between trademarks and consumers.

The most important thing here is not just entering the Metaverse/NFT world but having prior knowledge of all the necessary protections within the intellectual property area to leverage this new business model, which is no longer virtual and has become real.