This article is written by Kabhilakshya D V studying IV BA.,LLB., in Government law college, Madurai during her internship at LeDroit India
Scope of the Article
This article examines the emerging phenomenon of trademark infringement in the metaverse, with particular emphasis on unauthorised use of well-known trademarks in virtual environments such as NFTs, digital fashion, and immersive platforms. It analyses the adequacy of existing trademark laws in addressing infringements involving virtual goods, explores judicial and regulatory responses in India and comparative jurisdictions, and evaluates enforcement challenges in decentralised digital ecosystems.
Abstract
The rapid expansion of the metaverse has transformed the manner in which trademarks are used, perceived, and exploited. Virtual worlds now host digital goods such as branded clothing, accessories, and NFTs, often mirroring real-world luxury brands. While these developments offer new commercial opportunities, they also create unprecedented risks of trademark infringement, dilution, and consumer confusion. Traditional trademark law, designed primarily for tangible goods and territorial markets, struggles to accommodate decentralised and borderless virtual environments.
This article critically analyses trademark infringement in the metaverse through doctrinal, judicial, and comparative perspectives. Using illustrative disputes such as virtual Gucci bags and NFT-based infringements, it evaluates how Indian trademark law can be applied to virtual spaces and draws lessons from international jurisprudence. The article argues for a purposive interpretation of trademark statutes and highlights the need for clearer regulatory frameworks to ensure effective protection of brand identity in virtual worlds.
Keywords
Metaverse, Trademark Infringement, Virtual Goods, NFTs, Digital Fashion, Intellectual Property Law
1. Introduction
The metaverse represents a convergence of virtual reality, augmented reality, blockchain technology, and digital commerce, creating immersive environments where users interact through avatars and trade virtual assets. These environments are no longer limited to gaming platforms but extend to social interaction, entertainment, and commerce. Virtual marketplaces now allow users to purchase digital clothing, accessories, artworks, and branded goods that exist solely in virtual form.
Luxury brands such as Gucci, Nike, and Louis Vuitton have entered the metaverse to capitalise on this emerging market by offering officially licensed virtual products. However, parallel to these legitimate uses, unauthorised virtual replicas of famous trademarks have proliferated. Virtual Gucci bags, for instance, have been sold on NFT platforms at prices comparable to or even exceeding their physical counterparts, raising serious concerns of trademark infringement and dilution.
Trademark law traditionally protects signs that distinguish goods or services in commerce. The core function of a trademark is to indicate source and assure quality. In virtual worlds, where goods are intangible and transactions occur in decentralised digital environments, determining what constitutes “use in the course of trade” becomes complex. This raises fundamental questions about the scope of trademark protection and its applicability to virtual goods.
2. Understanding the Metaverse and Virtual Goods
The metaverse is not a single platform but an interconnected network of virtual environments where users can interact in real time. These environments are often supported by blockchain technology, which enables the creation and transfer of non-fungible tokens (NFTs). NFTs function as unique digital identifiers that authenticate ownership of virtual assets such as digital art, collectibles, and branded items.
Virtual goods may replicate real-world products or exist exclusively in digital form. Digital fashion, virtual sneakers, and branded accessories are now widely traded. While these goods lack physical form, they possess economic value and serve expressive and social functions within virtual communities.
From a trademark perspective, virtual goods perform the same source-identifying function as physical goods. Consumers associate virtual products bearing well-known marks with the brand’s reputation and goodwill. Consequently, unauthorised use of trademarks in virtual environments can mislead consumers and erode brand value, fulfilling the traditional mischief that trademark law seeks to prevent.
3. Conceptual Framework: Trademark Infringement in Virtual Worlds
Trademark infringement traditionally arises when an unauthorised party uses a mark that is identical or deceptively similar to a registered trademark in a manner that is likely to cause confusion among consumers regarding the source, sponsorship, or affiliation of goods or services. Under the Trade Marks Act, 1999, infringement is not confined to identical goods or services; it also extends to dissimilar goods where the mark has acquired the status of a well-known trademark and the impugned use takes unfair advantage of, or is detrimental to, its distinctive character or reputation. This expansive statutory protection reflects the recognition that trademarks embody goodwill, brand identity, and consumer trust that transcend specific product categories.
The emergence of virtual worlds and metaverse platforms has significantly complicated the application of these established principles. In virtual environments, trademark infringement may occur through the sale and commercial exploitation of digital goods bearing unauthorised trademarks, including virtual apparel, accessories, and luxury items that replicate real-world products. The proliferation of non-fungible tokens (NFTs) has further intensified this challenge, as NFTs are often marketed as exclusive digital assets linked to artistic or branded expression. When such NFTs incorporate protected trademarks without authorisation, they may mislead consumers into believing that the digital asset originates from or is endorsed by the trademark owner.
Infringement may also arise through the use of trademarks in virtual storefronts, platform-specific domain names, or immersive brand spaces within the metaverse. These uses mirror traditional commercial practices, such as physical retail stores or online marketplaces, but operate within a digital ecosystem where consumer interaction is mediated through avatars and virtual interfaces. The creation of avatars, skins, or virtual identities incorporating protected logos or brand names similarly raises concerns, particularly where such representations are monetised or used in a manner that capitalises on the reputation of established brands.
Crucially, the absence of tangible, physical goods does not negate the possibility of trademark infringement. Courts and commentators increasingly acknowledge that trademark law protects the source-identifying function of a mark rather than the material form of the goods to which it is affixed. In virtual environments, consumers may attribute the same expectations of authenticity, quality, and brand association to digital goods as they do to their physical counterparts. As a result, unauthorised use of trademarks in virtual worlds can cause confusion, dilute brand distinctiveness, and erode consumer trust in much the same way as traditional infringement.
The metaverse therefore necessitates a functional rather than formalistic interpretation of trademark law. Instead of focusing on the physicality of goods, courts must examine the economic reality of virtual transactions, the commercial intent underlying digital uses of trademarks, and their impact on consumer perception. This approach aligns with the broader evolution of trademark jurisprudence, which has consistently adapted to new modes of commerce, from online marketplaces to social media advertising. By applying established infringement principles to virtual contexts, trademark law can effectively respond to emerging forms of misuse while preserving its core objectives of consumer protection and fair competition.
4. Illustrative Cases: Virtual Luxury Goods and NFTs
One of the most cited international examples is the dispute involving “MetaBirkins,” where digital NFTs resembling Hermès Birkin bags were sold without authorisation. The US courts held that trademark rights could extend to virtual goods where consumer confusion was likely, rejecting the argument that NFTs were merely artistic expressions.
Similarly, virtual Gucci bags sold on gaming platforms without authorisation have highlighted the vulnerability of luxury brands in virtual environments. These digital replicas often closely imitate trade dress, logos, and overall brand identity, thereby misleading consumers into believing they are officially licensed.
Although Indian courts have not yet directly adjudicated a metaverse-specific trademark dispute, existing jurisprudence on online infringement and domain name disputes provides a strong foundation for extending protection to virtual goods.
5. Trademark Protection under Indian Law
The Trade Marks Act, 1999 adopts an intentionally broad and adaptable framework, particularly in its definition of “use” and “goods,” thereby allowing trademark law to evolve alongside changing commercial realities. Section 29 of the Act recognises infringement where a registered trademark is used in relation to goods or services in a manner that is likely to cause confusion, association, or deception among consumers. Notably, the provision does not confine infringement to traditional, tangible goods, nor does it prescribe rigid modes of use. This statutory flexibility enables courts to extend trademark protection to emerging forms of commerce, including digital and virtual environments.
Section 2(zb) of the Act defines a “trademark” in expansive terms as a mark capable of being represented graphically and capable of distinguishing the goods or services of one person from those of others. The emphasis on distinctiveness rather than physical form allows this definition to accommodate non-traditional uses, including digital representations of trademarks in virtual goods, NFTs, and immersive online marketplaces. As virtual products increasingly function as commercial commodities, their association with trademarks performs the same source-identifying function as physical goods, thereby falling squarely within the protective scope of trademark law.
Indian courts have consistently demonstrated a willingness to apply trademark principles to online and digital environments. In domain name disputes, courts have unequivocally recognised domain names as business identifiers entitled to trademark protection, acknowledging that they serve as indicators of source and goodwill in the digital marketplace. This jurisprudence reflects a functional approach, focusing on consumer perception and commercial impact rather than the medium of use. The same reasoning can logically be extended to virtual goods and metaverse platforms, where brand identifiers perform comparable commercial and communicative functions within immersive digital spaces.
The doctrine of dilution under Section 29(4) of the Trade Marks Act assumes particular significance in the context of metaverse-related infringement. This provision protects well-known trademarks against unauthorised use even in the absence of direct competition or likelihood of confusion. In virtual environments, the unauthorised use of famous marks on digital goods may dilute their distinctive character by blurring the association between the mark and its legitimate source, or by tarnishing the brand’s reputation through association with inferior or inappropriate virtual products. Such harm is especially acute in the metaverse, where rapid replication and widespread dissemination of digital content can magnify reputational damage.
By invoking Section 29(4), Indian courts are empowered to restrain virtual uses of trademarks that unfairly exploit brand reputation, even where the goods involved are purely digital. This provision thus serves as a crucial legal tool for addressing metaverse-specific infringement, ensuring that trademark owners retain control over the commercial and reputational dimensions of their marks across both physical and virtual domains. The application of dilution principles in this context underscores the adaptability of Indian trademark law and its capacity to respond to the challenges posed by immersive digital economies.
6. Intermediary Liability and Platform Responsibility
Metaverse platforms, NFT marketplaces, and virtual world operators function as digital intermediaries by facilitating user-generated content, commercial transactions, and immersive brand interactions. In India, the liability of such intermediaries is primarily governed by the Information Technology Act, 2000, with Section 79 providing conditional safe harbour protection against third-party liability. This statutory immunity is not absolute; it is predicated upon the intermediary observing due diligence and acting expeditiously to remove or disable access to unlawful content upon obtaining actual knowledge of infringement.
Where a platform merely plays a passive role in hosting content, safe harbour protection may continue to apply. However, the legal position shifts where platforms exercise active control over content, promote infringing virtual goods, algorithmically amplify branded NFTs, or derive direct commercial benefit through commissions, advertising revenue, or transaction fees. In such circumstances, the intermediary may be deemed to have participated in or facilitated infringement, thereby forfeiting statutory protection.
Judicial precedents concerning online marketplaces and social media platforms reveal an emerging accountability-based regulatory approach. Courts have increasingly emphasised that intermediaries cannot claim immunity while simultaneously benefiting from infringing activities. This reasoning assumes heightened significance in the metaverse, where platform operators design virtual environments, regulate access, and control economic ecosystems. As a result, courts may impose affirmative obligations on metaverse platforms to monitor, prevent, and remove trademark-infringing virtual goods, balancing innovation with the imperative of intellectual property protection.
7. Comparative Jurisprudence
Comparative jurisprudence plays a crucial role in shaping the legal response to trademark infringement in the metaverse, particularly in the absence of explicit statutory frameworks governing virtual environments. Courts across jurisdictions have increasingly recognised that virtual goods, digital assets, and NFTs are not merely abstract representations but constitute commercial products capable of affecting consumer perception, brand value, and market competition. This recognition has enabled the adaptation of traditional trademark principles to virtual commerce without undermining the doctrinal foundations of trademark law.
In the United States, trademark disputes involving virtual goods have been assessed under the Lanham Act, which governs trademark protection for “goods and services in commerce.” American courts have acknowledged that NFTs and virtual items fall within this definition when they are marketed, sold, or traded in a manner that influences consumer behaviour.
The traditional likelihood of confusion test, which evaluates factors such as similarity of marks, consumer sophistication, and intent of the infringer, has been recalibrated to account for digital environments where consumer interaction occurs through avatars, virtual marketplaces, and online platforms. Courts have emphasised that consumer confusion in virtual spaces is no less real merely because the goods lack physical form, particularly where virtual products are marketed as extensions of real-world brands.
European Union jurisprudence reflects a similar doctrinal evolution. Under the EU Trade Mark Regulation, trademark protection extends to digital goods and services, including those offered through online platforms and virtual environments. European courts have focused on whether the unauthorised use of a trademark in virtual spaces takes unfair advantage of the distinctive character or reputation of a well-known mark. The assessment of infringement continues to centre on consumer confusion, dilution, and unfair competition, with particular attention to the reputational harm caused by unauthorised digital replicas of branded products. This approach reinforces the principle that trademark law protects not only the source-identifying function of a mark but also its economic and reputational value in emerging digital markets.
Across jurisdictions, a consistent theme emerges: courts are reluctant to treat the metaverse as a legal vacuum. Instead, they have adopted a functional approach that views virtual commerce as an extension of traditional markets, subject to established trademark doctrines. This comparative consensus underscores the adaptability of trademark law and affirms that the fundamental objectives of preventing consumer deception, protecting goodwill, and maintaining fair competition remain relevant in virtual environments. While doctrinal nuances vary across legal systems, the underlying recognition that trademarks must be protected against unauthorised virtual exploitation reflects a shared global commitment to ensuring that intellectual property law evolves in tandem with technological innovation.
8. Enforcement Challenges in the Metaverse
Trademark enforcement in virtual worlds faces several challenges:
- Jurisdictional ambiguity due to decentralised platforms
- Anonymity of infringers
- Rapid replication and dissemination of virtual goods
- Lack of uniform international regulation
Blockchain-based transactions further complicate enforcement, as ownership records are immutable and often pseudonymous. Traditional remedies such as seizure of goods or border enforcement are ineffective in virtual contexts, necessitating innovative legal responses.
9. Remedies and Preventive Strategies
Civil remedies constitute the most practical and immediate mechanism for addressing trademark infringement in virtual environments. Injunctions remain the most significant relief, as they prevent ongoing and future misuse of trademarks. Indian courts have consistently recognised that injunctions serve a preventive function by preserving the exclusivity of trademark rights and protecting consumer interests. In the context of the metaverse, courts may grant permanent or interim injunctions restraining the creation, sale, display, or promotion of unauthorised virtual goods, NFTs, or digital assets bearing protected trademarks.
In addition to injunctive relief, courts may order the takedown or delisting of infringing NFTs or virtual goods from digital marketplaces. This remedy is particularly relevant where infringing content is hosted or facilitated by intermediaries such as NFT platforms or virtual world operators. Drawing from online intermediary jurisprudence, courts may direct platforms to disable access to infringing content upon receiving actual knowledge, thereby preventing further dissemination and consumer confusion.
Monetary remedies such as damages and accounts of profits also play a crucial role in deterrence. While quantifying damages in virtual environments poses challenges due to fluctuating digital asset values, courts may award compensatory damages based on loss of goodwill, dilution of brand reputation, or unjust enrichment derived from unauthorised virtual sales. In appropriate cases, courts may order an account of profits, compelling infringers to disgorge profits earned through exploitation of the trademark in virtual markets. This remedy ensures that infringers do not benefit financially from unlawful conduct, even where direct loss to the trademark owner is difficult to establish.
10. Conclusion
The metaverse represents both an opportunity and a challenge for trademark law. While virtual worlds offer innovative avenues for brand engagement, they also expose trademarks to new forms of infringement that transcend traditional legal boundaries. The unauthorised sale of virtual luxury goods, such as digital Gucci bags, demonstrates that trademark harm in virtual spaces is neither hypothetical nor trivial.
Indian trademark law, though not explicitly designed for the metaverse, possesses sufficient doctrinal flexibility to address these challenges through purposive interpretation. Provisions relating to infringement, dilution, and unfair advantage can be effectively applied to virtual goods, provided courts recognise the economic and social realities of digital commerce.
Comparative jurisprudence indicates a global trend towards extending trademark protection to virtual environments while balancing innovation and expression. Moving forward, legislative clarification, judicial innovation, and international cooperation will be essential in ensuring that trademark rights remain meaningful in an increasingly virtual economy. Protecting brand identity in the metaverse is not merely a legal necessity but a prerequisite for sustaining consumer trust and commercial integrity in the digital age.
