Increased development of virtual reality (“VR”) technology brings a host of legal questions surrounding both the intellectual property (“IP”) of the actual technology as well as unlawful activity within the VR space itself. For example, VR creators could face lawsuits for right of publicity (using a famous person’s likeness without permission), defamation and false light invasion of privacy (making a person look bad by way of false information or false portrayal), intentional and/or negligent infliction of emotional distress (in cases of cyberbullying, for example), and copyright claims (where content under copyright, or content substantially similar to copyrighted content, is used in the VR). It has even been suggested that certain activities within VR could encourage more crime in the real world. This post focuses specifically on the trademark law implications that may arise in VR spaces, by providing a framework for understanding potential claims that may arise when an entity uses a mark in VR spaces without the registrant’s permission.
What are the elements of a trademark infringement claim? For a mark to be eligible for trademark protection, it must be: (1) distinctive and (2) used in commerce. To establish infringement of a protected mark, a plaintiff must show: (a) it has a mark that is eligible for trademark protection, (b) it owns the mark, and (c) the defendant’s use of the mark causes a likelihood of confusion as to the origin or sponsorship of goods or services. See generally 15 U.S.C. §§ 1051 et seq.
Depending on the facts of the case, a mark owner may have potential causes of action against two separate defendants: a user of the platform or the platform itself. If the alleged infringer is a user of the platform – and recreates a registrant’s trademark within the VR space of his/her own volition – the registrant would likely want to name that user as a defendant. One consideration for plaintiffs in this scenario is that most users don’t have deep pockets to pay damages in the case of an adverse infringement judgment. A more legally relevant issue is that when a user is not earning, or even seeking, a profit from playing the game, his/her use could fall under the “no commerce” exception. As discussed above, because a mark needs to be used in commerce to be eligible for trademark protection, even if the same use by the VR platform company may have constituted a use in commerce, a user may argue that his/her use of the trademark was not a use in commerce as it was merely for personal enjoyment.
The second option for plaintiffs is to sue the platform company itself. Plaintiffs may sue under a theory of either primary or secondary liability. Primary liability will arise where the company itself decided to use a mark in the VR without permission, whereas secondary liability will arise where the company has somehow assumed liability for infringing uses by VR users. As a procedural matter, companies are not yet immune from the trademark infringements that users commit on their platforms. Section 220 of the Communications Decency Act protects online platforms from liability for other unlawful activity by their users but specifically exempts intellectual property claims. The Digital Millennium Copyright Act also provides protection to online platforms but only applies to copyright infringement, not trademark infringement. In addition, as the platform company receives a commercial benefit from users’ infringing activities, courts are less likely to apply the “no commerce” exception and instead find vicarious liability.
Turning to primary liability of platforms, if the company is using the trademark for commentary or criticism, the nominative fair use doctrine protects the company’s use. What about when the platform company does not criticize or comment on the trademark but incorporates the mark into the VR as an artistic use? In Rogers v. Grimaldi, although the platform was not VR, the court provided some insight into the intersection of trademark infringement and the First Amendment right to free expression. The Second Circuit held in Rogers that “in general the Act should be construed to apply to artistic works only where the public interest in avoiding consumer confusion outweighs the public interest in free expression.” Id. To balance these two considerations, the Second Circuit articulated the widely used two-factor Rogers test, which requires that the trademark use have “no artistic relevance to the underlying work,” or “explicitly mislead” as to the source of the work for a finding of infringement. Id.
As there are not yet many cases involving trademark infringement in VR spaces specifically, it may help to look to courts’ treatment of trademark claims in videogames, a possible predictor. There is a case currently pending in which AM General, LLC (“AM General”), the maker of HUMVEE vehicles, is suing Activision Blizzard, Inc. for putting HUMVEE vehicles into their Call of Duty videogames without a license. The trademark and trade dress rights of HUMVEE vehicles are owned by AM General, and as such, they sued for infringement of trademark and trade dress, dilution, and other related claims. In the VR context, it is unlikely that a consumer would be confused into thinking that the vehicles were actually originating with AM General, since the entire world is virtual. However, the court may find a likelihood of consumer confusion as to whether the company approved Activision’s use of its products in the game. If so, the confusion element is still satisfied. Regarding the commercial use requirement, there is no question that Call of Duty is a game sold for profit. Even in situations where the game is free, courts could still find commercial use, especially if VR users pay real or virtual money to buy a virtual product under trademark. We need not reach that question here, since Activision’s use of the HUMVEE trademark and trade dress are claimed to enhance the marketability of a game sold for profit.
This isn’t the first time Activision has been sued for alleged trademark violation in Call of Duty. In Mil-Spec Monkey, Inc. v. Activision Blizzard, Inc., the court found for Activision, holding that its use of the plaintiff’s mark on a patch that users could choose to wear in the game had an expressive purpose, protected by the First Amendment, and that Activision had never made it seem like it had a relationship with the plaintiff. The outcome of this case weighs in favor of Activision winning again in its case with AM General.
In this relatively new technological field, we wait to see how courts will answer these questions. Whether you’re an avid gamer, an owner of a trademark, or a game developer, this is just an overview of some of the legal issues to be considered in the ever more exciting VR context.
* Margaret Mantel is an Associate Editor on the Michigan Technology Law Review.