Look at your feet. Many friends (raise your hand) is currently wearing Nikes. For the fiscal year ended May 31, 2021, Nike reported a 19% increase in sales to $ 44.5 billion for the year. But this is here. What about the metaverse?
Why Nike is interested in Metaverse
For those unfamiliar with the concept, the simplest – but incomplete – visualization of the Metaverse is to imagine yourself existing in a real video game. Nike comes in and delivers some very cool stuff.
That’s no joke. Nike is serious about the Metaverse.
Patent filings prior to the Metaverse in 2018 showed that Nike was seriously stocking up on tools to trade on the Metaverse. These digital tools include sneakers, but also avatars and other forms of virtual branding. Sure, Nike intends to sell you digital products (and you’re going to buy them because Nike knows how to get them to want them), but the master plan revolves around the entire digital world.
That’s just Nike, is Nike? Sure, but if we choose to define this as entirely new sources of net income, as has been the case throughout his history, that’s good for him. Someone is going to own the Metaverse swag, and it could be Nike, too.
Metaverse has new rules for Nike
Nike needs to prepare for the concept of destruction by copying. In this temporary world, Nike is very late with its intellectual property rights (IP). In the metaverse, however, replication goes beyond our current conceptions of what is legal. The value of Nike’s super product is completely influenced by what the company considers pirates but others refer to as artists.
In the real world, there is a current art project called Blacksmiths Museum that has significant commercial application. In short, the Mschf art collective in Brooklyn bought an original Warhol for $ 20,000 and made 999 precision forgings. It then mixed in with the original, selling all 1,000 “likely real” Warhols for $ 250 each for a total of $ 250,000, of which $ 230,000 was in profit.
Related: Digital becomes physical: Top NFT showrooms with personal visits in 2021
The same will happen in the metaverse. Some of the rare Nike water drops (what we call a remake of a shoe, or even a color known as a “colorway” – of a shoe) will be real, some may be real, and some are intentionally fake or unintentional.
New metaverse for dishes
How the courts will ultimately resolve these conflicting disputes, Miami attorney Samir Patel and representative of the Miami-Dade Cryptocurrency Task Force recently tweeted:
The judge’s ignorance of blockchain technology is completely ignored by the developers who believe their invention bypasses the law. Judges judge by what they know, not what you know. https://t.co/QDnLihGu9e
– Samir Patel (@SamirPatelLaw) October 26, 2021
I spoke with Patel about the reality of the new metaverse and that it will be a quick, blatant find as judges realize that common law precedents will be more of an obstacle than an aid in decision making. As Patel said:
“Legal teachings such as property rights, breaches of contract and piracy of man-made works regulate the relationships in the Metaverse (MV).”
He continued: “So if Nike wants to get involved in the MV, be it with a virtual shop front, equipment for an avatar or the development of new products specifically for the MV, the lawyers must establish a connection between the legal violations of the MV or complaint- and meat room. ”
The fact that very few judges (and very few lawyers) have used or even heard of the term “meat room” is itself a problem. The term refers to our physical world as opposed to cyberspace or virtual environments like the Metaverse.
So yes, the metaverse statements would have to be underestimated for the judges, at least initially written so banally, with such a traditional language, so that the judges do not get lost.
Can Nike help build Metaverse’s legal structure?
Patel sees a real opportunity here. “Nike has the resources to train judges through trial because they can afford to pay their own lawyers to trial, but other smaller litigants will have a hard time convincing the judge. Says they have virtual assets, which are available in a virtual land register “, it is said further through a decentralized blockchain,” he said.
Patel explained to me that if the judge were to buy virtual land on Metaverse, the judge would likely treat the transaction as a sale of goods rather than a transfer of real estate. Since the legal provisions neither contain nor maintain the concept of virtual real estate, these virtual properties cannot be entered in a virtual land register, as this register is not kept by a municipality or a sovereign.
“So if Nike sells a pair of virtual sneakers but doesn’t deliver the shoes to the buyer, that’s a breach of contract when selling the sneakers. But the negotiated exchange of value must still be clearly presented in the meat sector and, if necessary, documented, ”explains Patel.
What this means in practice is a mystery to judges when there is no evidence of a contract made in the Metaverse, such as an oral contract signed by two Avatars. How can a judge choose a party to a dispute? It’s just like an oral contract in the meat sector. If avatars can demonstrate confidence in an oral contract in the Metaverse, as they can in Meatspace, there could be evidence to support plaintiffs’ claims.
Related: To work for everyone, Metaverse needs to be decentralized
Metaverse can be as serious as the meat room
And there will be many claims. If Nike has a problem with their meat creations being modified without their permission, and the defendants in the Nike lawsuit boldly respond that the modifications are art and don’t have to steal IPs, imagine Metaverse. Patel Notes:
“In the MV, the right of intellectual property is checked when landscapes or other virtual objects are created with artificial intelligence.”
That’s because AI-powered work isn’t covered by U.S. copyright law, he added. So if I implement AI in an MV and the AI does something amazing, I don’t have the rights to the derivative work and other people can imitate that work and claim the copyright for themselves. It would be extremely difficult to protect its copyright as the MV could be very large and the infringer could be an AI implemented entity. The judges will address these issues using the Meatspace Copyright Act. ”
This leaves us with the only way to change the way judges view and decide cases in the Metaverse: by changing our existing laws to accommodate virtual reality. Without this change, from the judges’ point of view, everything is space travel and virtual reality does not exist as a legitimate reality.
The real legal fact, as Patel points out, is that “Nike would be advised to hire a lawyer who is familiar with real estate, the Uniform Commercial Code, and the real estate industry, and I think they are really knowledgeable.” for blockchain technology. ”
As Metaverse offers a new virtual world with opportunities to create, sell, buy, and sue, it will be interesting to see through social, commercial, and legal perspectives. The fact that Nike is ready to create, sell and litigate in this new space means you should also be ready for the reality of Metaverse, which will soon have a computer or phone very close to you.
Aaron Solomon is Principal Legal Analyst at Esquire Digital and has taught entrepreneurship at McGill University and the University of Pennsylvania. Solomon was voted into the Fastcase 50, which recognizes the 50 best legal innovators in the world. His work has been featured in CBS News, CNBC, Usa Now, TechCrunch, The Hill, BuzzFeed, Fortune, VentureBeat, Yahoo! and many other leading publications.