October 17, 2022

The Metaverse: Artistic Uses of Trademarks in Virtual Spaces

Holland & Knight IP/Decode Blog
Jacob W. S. Schneider
IP/Decode Blog

The metaverse provides new opportunities to engross consumers in branded environments. A brand can, for example, produce an entire curated, virtual world for the consumer to explore. As a real-world analogy, such virtual spaces are like immersive displays at industry trade shows: consumers step into a space that is defined in all respects by the brand owner. The metaverse can be a powerful tool to push brand messaging, but it can also be a space where your brand is used against a company's wishes. This post explores an "artistic expression" defense to trademark infringement that could be prevalent as the metaverse evolves, and could also provide a lawful defense to using others' trademarks online.

I. Trademark Law Basics

As background, trademarks are source-identifying marks (e.g., logos, product names and even colors) that indicate to consumers from where a product or service originated. Trademark law's goal is to avoid consumer confusion and promote fair competition. In a marketplace, it is critical that consumers know from where goods and services originate so they know what they are getting when they make a purchase and brands are incentivized to establish good reputations for providing quality goods.

As an example, Holland & Knight's name and logo are trademarks, and they indicate that legal services are originating from our firm. If another law firm started using the Holland & Knight logo to provide legal services, clients would be misled as to whether they were receiving legal counsel from Holland & Knight or someone else. In that case, the real Holland & Knight would have a claim for trademark infringement at least under the Lanham Act.

II. Fair Uses of Trademarks

While the owner of a trademark has a right to use it in commerce and exclude others from doing so, there are "fair use" defenses to infringement that prioritize fair competition and other rights above the trademark holder's interests. Below are a few fair use defenses, but there are numerous others:

  • It is a fair nominative use to discuss a trademark while describing a branded product or comparing it to another brand. In New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992), the defendant newspaper was allowed to use the trademark "New Kids on the Block" to conduct a survey about the boy band (from Boston).
  • It is a fair expressive use to parody trademarks in creative works. In Mattel v. MCA Records, 296 F.3d 894 (9th Cir. 2002), a band was permitted to produce a song that "pokes fun at Barbie and the values that [the band] contends she represents." at 901.

All of these fair uses apply to the metaverse. The metaverse, like other forums, is a place where people can discuss, compare and parody brands.

III. Using Trademarks in Metaverse Artistic Works

Another fair expressive use of trademarks is in artistic works. Whether such use is permitted is governed by the "Rogers test." Rogers v. Grimaldi, 875 F. 2d 994 (2d Cir. 1989). Famed actress Ginger Rogers sued the producers of the "Ginger and Fred" film, which was named after Ginger Rogers and her often co-star Fred Astaire. The U.S. Court of Appeals for the Second Circuit summarized the film:

The film tells the story of two fictional Italian cabaret performers, Pippo and Amelia, who, in their heyday, imitated Rogers and Astaire and became known in Italy as "Ginger and Fred." The film focuses on a televised reunion of Pippo and Amelia, many years after their retirement. Appellees describe the film as the bittersweet story of these two fictional dancers and as a satire of contemporary television variety shows.

Id. at 996-97. Ginger Rogers sued for false designation of origin, among other claims, under the Lanham Act. Id. at 997.

The Second Circuit found for the defendants and established the Rogers Test for uses of trademarks in artistic expressions. The test seeks to balance artistic expression protected under the First Amendment with the rights of the trademark holder. The Rogers Test has two steps, and clearly tilts the scale in favor of the First Amendment:

  1. Does the use of the trademark have any "artistic relevance to the underlying work whatsoever"?  at 999. This is a very low threshold to overcome, and some courts have stated that any artistic relevance above zero will clear Step 1. If there is no artistic relevance, however, then the question of infringement remains (and no need to proceed to Step 2). See Parks v. LaFace Records, 329 F. 3d 437 (6th Cir. 2003) (reversing a finding that Outkast's use of civil rights icon Rosa Parks's name did have artistic relevance to their "Rosa Parks" song).
  2. If the use of the trademark has some artistic relevance to the underlying work, then the next question is whether the use "explicitly misleads as to the source or the content of the work." Rogers, 875 F. 2d at 999. Effectively, will consumers mistake the use of the mark for sponsorship from its owner? If so, then the question of infringement remains.

Trademarks use in the metaverse is a relatively new issue, but analogies can be drawn to earlier cases involving video games. Because the Rogers Test is so tilted toward free expression, these cases largely favor the artists:

  • AM General v. Activision Blizzard, 450 F.Supp.3d 467 (S.D.N.Y. 2020): Activision's Call of Duty video game included drivable AM General Humvees to better simulate warfare. The court concluded that video games are artistic works that cleared Rogers Step 1 because the inclusion of the Humvees helped build the game's theater of war. Step 2 examined the likelihood of confusion using the Polaroid Factors, and the court found for Activision.
  • S.S. Entertainment 2000 v. Rock Star Videos, 547 F.3d 1095 (9th Cir. 2008): Rock Star's Grand Theft Auto: San Andreas video game mimicked the appearance of Los Angeles, including E.S.S.'s "Play Pen" strip club, by including a "Pig Pen" strip club. Remarking that, under Rogers, the "level of relevance merely must be above zero," the court found that the video game's depiction of Los Angeles was artistic and the "Pig Pen" was relevant to the work. Proceeding to Step 2, the court concluded that "[a] reasonable consumer would not think a company that owns one strip club in East Los Angeles, which is not well known to the public at large, also produces a technologically sophisticated video game like San Andreas."
  • Dillinger, LLC v. Electronic Arts Inc., No. 1:09-cv-1236 (S.D. Ind. Jun. 16, 2011): EA's Godfather video game included a gun called the "Dillinger" that mimicked the infamous criminal's "Tommy Gun." Finding the case "analogous to S.S.[,]" the court stated that "[t]he gentleman-bandit, commonly known for his public persona as a 'flashy gangster who dressed well, womanized, drove around in fast cars, and sprayed Tommy Guns,' . . . has above-zero relevance to a game whose premise enables players to act like members of the mafia and spray Tommy Guns." Turning to Step 2, the court found that the plaintiff could not produce evidence of consumer confusion.

Because the Rogers Test is so favorable to artists, a threshold question will be whether an experience in the metaverse could be fairly characterized as an artistic work. Like video games, virtual worlds are often creative experiences designed to invoke some feeling for their audiences. (Think of a peaceful virtual garden composed to soothe its guests with beauty and serenity.) Other virtual worlds tend to be much less creative, and are instead mostly functional. (Think of a virtual, Brutalist building that houses classrooms in the metaverse.)

Even if a virtual world is deemed artistic, the analysis does not stop there. Courts will next ask whether the use of another's trademark has artistic relevance to the work. Again, this threshold is extremely low, and must be just north of zero to qualify. Using marks that have no connection to the work at all may not qualify.

Finally, even artistic uses of trademarks cannot lead to consumer confusion. If the peaceful virtual garden contains hundreds of branded candles, consumers may rightfully assume that the candle company owned or sponsored the virtual space. In such a case, the protections that Rogers provides would not apply.

Because the metaverse is evolving, the use of trademarks in virtual spaces is likely to evolve with it. As in the real world, there will be a motivation to use others' trademarks to piggyback on their goodwill in the metaverse. We can expect brand owners to bring infringement suits based on metaverse activity, and for defendants to invoke Rogers in their defense.

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