Real Trademarks Used in Virtual Worlds

In April 2009 the world’s largest maker of stun guns (“Company 1”) sued the owner of  one of the most popular “Virtual World” web sites (“Company 2”).   Company 2’s web site enables players, called Residents, to interact with each other by avatars. Residents can analyze, meet other residents, socialize, participate in individual and group activities, and create and trade virtual character and sets with one another, or travel throughout the world, which residents refer to as the grid.  In its lawsuit, Company 1 claimed that Company 2 and other defendants damaged Company 1’s reputation and hurt its sales by allowing virtual weapons to be sold online under its brand name.  Not only did Company 1’s complaint alleged that Company 2 was infringing its trademarks but also that it was damaging its reputation by selling the virtual weaponry in the same online stores that included pornographic content.

The case was dismissed in May 2009, presumably because the parties settled their argument.  Nonetheless, the lawsuit should raise concerns about policing trademarks in the digital world.  The law imposes on trademark owners the duty to police their trademarks.  Should your trademark be infringed and you permit the infringement to continue without action, you may be faced with an argument that you have abandoned your trademark.  Traditionally, policing your trademarks meant monitoring online and offline publications and other places where your trademark may be infringed.  Now that actual commerce is occurring in virtual communities such as Virtual World, the scope of policing has widened.  The purported population of this particular Virtual World is more than 2 million although opinions differ.  Nevertheless, there are a lot of people “playing the game” and various companies from Reuters to IBM have set up storefronts in Virtual World.   It’s unclear what the annual GDP of Virtual World is — estimates range from 64 to 200 million USD — but at all event it is, it’s not small.

With the commercialization of Virtual World by real companies, concern about the protection of intellectual character rights has grown. Copyright owners can protect their rights by the procedures of the Digital Millennium Copyright Act (DMCA), which Virtual World states it will enforce.  The DMCA requires service providers upon notice from copyright owners to take down and ban repeat infringers.  It is to Virtual World’s assistance to conform with the DMCA or otherwise it too may be unprotected to liability for its users’ infringing activities.

Unfortunately, there is no such protections for trademarks.  The DMCA does not apply in this area, only the provisions of the Lanham Act, which prohibits trademark infringement.  Although Virtual World could enforce trademark rights by application of its Terms of Service, it specifically states that users are responsible for complying with intellectual character law but has no provision, like that of Facebook, for reporting violations.  seemingly, however, there are violations aplenty.  One commentator observed:

“Ultimately, [Company 2] the creator of [Virtual World], relies on the vigilance of SL community residents to monitor trademark and copyright abuses. in addition one boutique nevertheless sells a virtual reproduction of the complete Ikea catalog. Virtual computers with the Apple logo have been sold without Apple’s permission. Residents walk the streets of [Virtual World] wearing knockoff clothes and are solicited by black-market vendors selling complete lines of counterfeit goods. [Company 2] may not actively be seeking out offending material, but many of the infringing acts are so rampant and blatant that ignoring these abuses nearly amounts to willful ignorance.” Chilling Effects.Org

Sounds like the wild west so be vigilant.

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