Law Council of Australia

International Law Section

Australian IP Law and the Metaverse: A cross-jurisdictional legal landscape

24 March 2025

The evolution of the metaverse is blurring the line between physical and virtual realities, creating new challenges for intellectual property (IP) law internationally. The metaverse is an immersive and decentralised digital space comprising virtual and augmented realities, allowing users to create, trade, and engage through avatars. One aspect of this – among many – is the unauthorised replication in the virtual world of well-known goods and services in the real world, including in respect of non-fungible tokens.1 This ILS Insight raises the question of the adequacy of national IP frameworks (including Australia) in regulating copyright and trademarks in this cross-jurisdictional digital landscape.

Trademarks

As defined under the Trademarks Act 1995 (Cth), a trade mark is a sign which distinguishes the specified goods or services of a business from those of other businesses. Two particular challenges arise from the unauthorised use of trade marks in relation to virtual goods: one is that, traditionally, a brand owner’s trade marks are registered in relation to real goods, and so to use the brand in relation to virtual goods may not constitute an infringement. Furthermore, a brand owner may face difficulties in registering a trade mark in relation to virtual goods if the owner cannot show use or an intention to use it in relation to those goods.

In this respect it is helpful to be aware that IP Australia has issued guidance categorising digital goods under ‘class 9’, which includes downloadable digital files and now virtual goods. However, that still leaves the second challenge, which is the question of enforcement. The anonymous and cross-border nature of metaverse conduct may have the consequence that trade mark protection in Australia will not sufficiently address the conduct of concern. Thus, while the UFC successfully registered their own trade mark for virtual goods and services in 2022, companies such as Gucci and Nike continue to struggle containing the unauthorised application of their digital trademarks by Non-Fungible Token trolls.

Copyright

The question in copyright law is different, because in that context it is already well accepted that a right arising from the creation of a work in the real world can be infringed by a reproduction of that work in the virtual world. For example, in a landmark South Korean decision, the court ruled that GolfZone, a company that offers virtual golf experiences replicating popular golf courses, constituted an infringement of the copyright in the course designs.2 Australian copyright law, governed by the Copyright Act 1968 (Cth), would operate similarly.

However, a number of difficulties remain. In particular, infringement only arises under the Australian Copyright Act  if the reproduction or communication occurs in Australia. And for conduct occurring elsewhere, the substance of national laws may be different. The U.S case of Solid Oak Sketches v 2K Games3 provides an example. The case involved a tattoo licensing company, Solid Oak, bringing a claim against the developers of NBA 2K based on their depiction of basketballers’ tattoos in the virtual game. Solid Oak owned the rights to the graphic designs featured in the tattoos and argued that the reproduction of the tattoos on avatars in the virtual game was breaching their copyright. United States law contains a generalised fair use defence (a defence which does not exist in Australia), which is potentially available in particular for “transformative” uses. There, the court held that the tattoos replication did not constitute a breach of copyright.

A further difficulty arises where the “original” work is one created purely by artificial intelligence. According to the current law in a number of jurisdictions, including Australia, it appears likely that a purely AI-generated work would not meet the requirement of human originality, and accordingly not attract copyright protection. That is not the case in all jurisdictions; for example, the UK legislation contains specific protection for computer generated works.

Ultimately, while Australia’s current IP regime offers some protections within the metaverse, continuous adaptation is essential. The confluence of challenges posed by the shift toward the virtual world requires international collaboration and refined legislation to ensure that IP rights are appropriately maintained.

1 Non-Fungible Tokens function as digital ownership certificates on blockchain technology.
2 Kye Hwan Rhu and Choong Mok Kwak, Intellectual property Disputes in the Era of the Metaverse: Complexities of Cross-Border Justice and Arbitration Consideration’ (2023) 33(3) Journal of Arbitration Studies 147, 153.
3 Solid Oak Sketches v 2K Games, 449 F. Supp. 3d 333 (S.D.N.Y. 2020).

Disclaimer: This communication presents a spotlight on International Law relating to Intellectual Property and the Metaverse. However, it does not constitute legal advice. It does not represent the position of the ILS or the Law Council of Australia. Please consult wider legal commentary to inform yourself on the subject.

Last Updated on 27/05/2025

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