Nike desires to deliver sneakerheads into the Metaverse
Look at your feet. A lot of you (raise your hand) are wearing Nikes right now. For the fiscal year ended May 31, 2021, Nike announced that sales for the year rose 19% to $ 44.5 billion. But this is here. What about the metaverse?
Why Nike cares about the Metaverse
For those unfamiliar with the concept, the easiest – but very incomplete – way to imagine the metaverse is to imagine yourself existing in a real video game. Nike gets in and delivers very cool meta-stuff.
That’s no joke. Nike takes the metaverse very seriously.
Patent applications dating back to the pre-Metaverse universe in 2018 show that Nike seriously stocks the tools to do business with in the Metaverse store. These digital tools include sneakers, but also avatars and other forms of virtual branding. Sure, Nike intends to sell you digital products (and you’ll buy them because Nike knows how to get them to want them), but the metaplan revolves around entire digital worlds.
Is that just Nike that is Nike? Sure, but if we choose to define this as creating new net income streams, as has been the case throughout its history, then that’s fine. Someone is going to own the Metaverse swag, and it might as well be Nike.
The Metaverse has new rules for Nike
Nike needs to be prepared for the concept of destruction through reproduction. In this temporal world, Nike has been very contentious about its intellectual property (IP) lately. But in the metaverse, replication will exceed our current conceptions of what is legal. The value of Nike’s meta-goods is absolutely influenced by what the company views as pirates, while others refer to artists as artists.
In the real world, there is an ongoing art project called the Museum of Counterfeits that has significant commercial application. In short, Brooklyn art collective Mschf bought an original Warhol for $ 20,000 and made 999 exact fakes. It then mixed up the originals and sold all 1,000 “could be real” Warhols for $ 250 each for a grand total of $ 250,000, of which $ 230,000 is in profit.
Related: Digital becomes physical: Top NFT galleries will be visited in person in 2021
The same will happen in the metaverse. Some rare Nike drops (what we sneakerheads 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 will be either knowingly or unknowingly fake.
The Metaverse is new to courts
How courts will ultimately deal with these metaverse disputes, Samir Patel, a Miami attorney and a representative of the Miami-Dade Cryptocurrency Task Force, recently tweeted:
A judge’s lack of knowledge of blockchain technology is completely overlooked by developers who think their inventions are bypassing 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 realities of the new Metaverse and that it will be a quick, hard find when judges realize that common law precedents will be more of an obstacle than an aid in resolving Metaverse cases. As Patel said:
“Legal doctrines such as real estate rights, violating wet contracts, and copyright infringement on human-derived works will govern relationships in the Metaverse (MV).”
He continued: “So if Nike wants to participate in the MV, be it with virtual shop windows, equipment for avatars or to develop new products exclusively for the MV, then its lawyers have to establish a connection between the MV infringement or the claim and meat room. “
The very fact that few to no judges (and very few lawyers) have used or even heard the term “meatspace” is itself a problem. The term refers to our physical world as opposed to cyberspace or a virtual environment like the Metaverse.
So, yes, metaverse claims need to be dumbfounded for judges, at least initially in such a banal way and in such traditional language, so that judges are not lost.
Can Nike Help Build a Metaverse Legal Structure?
Patel sees a real opportunity here. “Nike has the resources to train judges through legal process because they can afford to pay their attorneys to drag litigation on a decentralized blockchain,” he said.
Patel explained to me that if the judge were to buy virtual land on the Metaverse, the judge would likely view the transaction as a sale of goods rather than a transfer of real estate. Since legal regulations neither contain nor maintain the concept of virtual real estate, this virtual land cannot be entered in a virtual land register, since this register is not administered by a municipality or a state.
“So if Nike were to sell a pair of virtual sneakers but didn’t deliver the sneakers to the buyer, then that would be a breach of contract when selling sneakers. But the negotiated exchange of values still has to be articulated and possibly recorded in the Meatspace, ”explained Patel.
What this will mean in practice is a mystery to Richter when there is no evidence that a contract was made in the Metaverse, such as an oral contract made by two Avatars. So how can a judge take sides in this dispute? It is exactly the same as an oral contract that is made in the Meatspace. If an avatar can prove they are relying on the verbal contract in the Metaverse, similar to what they can do in the Meatspace, then there can be evidence to support a plaintiff’s allegations.
Related: To work for everyone, the Metaverse needs to be decentralized
The metaverse can be as process-like as Meatspace
And there will be many claims. If Nike has a problem with their creations being modified in Meatspace without their permission, and the defendants in Nike lawsuits boldly respond that modifications are art and not IP theft, just imagine the metaverse. Patel noted:
“In the MV, IP laws are tested when landscapes or other virtual objects are created with artificial intelligence.”
He added, “That’s because AI-derived works are not covered by US copyright laws. So if I put AI in MV and the AI does something wonderful, I have zero rights to the derivative work and someone else can imitate the work and claim the copyright. It will be extremely difficult to protect your copyrights as the MV could be so large and the infringer could be an AI-powered entity. The judges will address these issues using Meatspace’s copyright laws. “
This leaves us with the only viable 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 point of view of the judges, everything flesh room and virtual reality does not exist as legal reality.
The real legal reality, as Patel pointed out, is that “Nike would be advised to hire lawyers who are familiar with real estate, the Uniform Commercial Code, and experts in blockchain technology, and I mean, are really well-versed.”
As the Metaverse offers a new virtual world of opportunities to create, sell, buy and sue, it will be fascinating to look at it through the social, commercial and legal perspective. The very fact that Nike is preparing to create, sell and litigate in this new space means that you should also prepare for the reality of the metaverse that is about to appear on a computer or phone very close to you will.
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The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
Aron Solomon is Chief Legal Analyst at Esquire Digital and has taught entrepreneurship at McGill University and the University of Pennsylvania. Solomon was voted in Fastcase 50, honoring the 50 best legal innovators in the world. His work has been featured in CBS News, CNBC, USA Today, TechCrunch, The Hill, BuzzFeed, Fortune, VentureBeat, Yahoo! and many other leading publications.