Spruson a Ferguson Trade Marks E-news. July 2007.

In the previous Trade mark e-newsletter we discussed the difficulties faced by trade mark owners in operating a website, particularly, when the use of a mark on a website amounts to "trade mark use" so as to constitute infringement. What then is the situation where a mark is "used" not only in a virtual store, but used in association with virtual goods which are displayed in a virtual world and consumed by virtual people? Is this virtual use an infringement of the real life owners IP rights? Conversely, does the creation of virtual marks by virtual businesses lead to real life rights? These are the issues that brand owners around the world are trying to grapple with in the face of the virtual world's rapid population growth.

What are virtual worlds?

A virtual world is an online simulated society inhabited by a virtual population carrying out virtual lives. Virtual worlds allow for real life people to create and experience alternate realities where they, through their online alter egos known as "avatars", can achieve things that they could only dream of in the real world. For example, an avatar can teleport to the mall where they can purchase a pair of virtual "Gucci" sunglasses to complement their virtual "Louis Vuitton" bag in which they keep the keys to their virtual "Ferrari" sports car. Whilst some brands such as American Apparel, Toyota and Reebok have embraced this virtual marketplace, opening their own virtual shops, there is an increasing unauthorised use of real life corporate trademarks. Virtual law blog Virtually Blind, notes that virtual world "Second Life" has more than 50 stores selling "Gucci", "Prada", "Rayban" and "Oakely" branded sunglasses, none of which are owned, endorsed or licensed by the real life companies.

Real life rights in a virtual world

In the virtual world of Second Life, which is one of the more popular "worlds", users retain full intellectual property rights over the goods and services they create. This provides for the maintenance of a commercial landscape in which business buy and sell digital assets for Linden dollars, a virtual currency that can be converted to real life American dollars on exchange sites. For brand owners however, this virtual market is a double edged sword. Whilst it opens up a potentially lucrative market for many companies (the virtual world of Second Life alone has more than 7 million "residents") it also provides a vehicle for the misappropriation of valuable real life brands.

Like trade mark usage on websites, there are obvious problems with usage in virtual worlds which relate to questions of jurisdiction, namely, where does the transaction take place? However, there are also further issues relating not only to whether the display of a trade mark in a virtual world constitutes "use," but whether the potentially infringing mark is being used in relation to goods or services that can be said to be "similar" to the real life goods and services for which the mark is registered. For example, does the sale of a pair of virtual "Gucci" Sunglasses for $125 Linden Dollars (Approximately $0.88 AUD) to be worn by a virtual person constitute infringement? Arguably a digital representation of a pair of sunglasses is not use of a mark in relation to eyewear for which (amongst other classes) the mark Gucci is registered. Nor can such use be said to deceive or cause confusion in relation to similar goods given the difference in price between the real and virtual products (virtual "Gucci" sunglasses, worth $400 AUD in real life, are sold in Second Life for $0.88 AUD). In Australia however, infringement may be established for well known marks when used in association with unrelated goods, if the use indicates a connection between the virtual goods and the registered owner of the real life goods, in circumstances where the owner is adversely affected by such use.

Getting real about virtual worlds

The reality is, more and more real people are leading virtual lives. Commentators in the information technology industry have gone so far as to predict that by the year 2011, 80% of internet users will have a virtual presence in some capacity. After all, even major law firms are establishing a presence in the virtual world complete with reception, meeting rooms and impressive city views that are found in many real life firms. As such, it may be time for brand owners to explore the virtual marketplace, not only in the attempt to win more sales and brand awareness, but also to ensure their real life brands are not infringed and consequently diluted by digital representations. This may involve filing applications for existing brands in additional classes, such as computer game programs (class 9) or game services provided online (class 41), or merely establishing a presence in the virtual world in order to monitor the market.