Written By: Apoorv Agarwal, Anushka Koushika, Suvangana Agarwal
Introduction
The rise of digital technology and the internet has produced novel asset classes, most notably Non-Fungible Tokens (NFTs) is a unique token recorded on a blockchain that certifies ownership and authenticity of a virtual or physical asset, that raise substantive legal and financial issues.[1]Although fungible tokens such as utility, security, and payment tokens are freely tradable, NFTs are not financial instruments as the token are not tradable.NFTs, underpinned by Blockchain, establish verifiable ownership and provenance of digital assets but raise significant legal complexities. While they enable innovative monetization in digital art and the Metaverse, issues relating to estate planning, financial regulation, and Intellectual Property Rights remain unresolved.[2] Blockchain is a decentralized distributed ledger technology that records transactions immutably across multiple nodes, eliminating reliance on a central authority. It functions by validating each transaction through consensus mechanisms and permanently storing it in sequentially linked blocks, ensuring transparency, security, and resistance to tampering.[3]Ownership recorded on the blockchain does not automatically confer copyright or reproduction rights, and traditional IP doctrinessuch as the first-sale principlewhich governs the resale of physical goods based on the rationale that if once the primary owner has lost the ownership of his work then the subsequent possessor of the work should not go through the same hassle of negotiating with the primary owner each time the latter contemplates a sale or transfer of the copy, however, the captioned the principles fails to clearly apply to Non-Fungible Tokens (hereinafter NFTs) and digital assets. Similarly, copyright infringement issues are amplified in the digital realm, where unauthorized reproductions can spread globally with little oversight.[1]
The growth of digital transactions is exemplified by the emergence of the Metaverse, which Matthew Ball describes as “a large-scale, interconnected system of real-time rendered 3D virtual spaces, allowing users to interact synchronously and persistently, with continuity in elements such as identity, history, ownership, communication, and payments.”[2]Such legal uncertainty necessitates specialised knowledge for estate planning, transactional drafting, and enforcement strategies to protect creators and investors.
Metaverse: Definition and Development?
The word “Metaverse” is a combination of “Meta” (something beyond) and “Universe” to refer to a computer-created, virtual world that is separate from the real world, where users communicate in this environment using digital personas called as “Avatars” with other users and programs, participating in a wide variety of social, creative, educational, and economic transactions.[3] The Term denotes interoperable, persistent 3-D virtual environments where users interact via avatars in real time. Its antecedents lie in MUDs, early graphical virtual worlds and speculative science fiction of Neal Stephenson such as Snow Crash, which showed prominence by showing a virtual world where participants battle for social status using virtual avatars.[4] Recent advances in Augmented Reality, Virtual Reality and Mixed Reality, blockchain and social platforms accelerate Metaverse commercialisation and social integration.
Additionally the concept inculcates certain key enabling technologies are namely as,Augmented Reality which overlays digital content onto the physical world;Virtual Reality where immersive simulated environments accessed via headsets; and Mixed Reality where hybrid interactions combining digital and physical elements. These technologies facilitate new forms of economic activity and IP expression.[8]
Legal and Commercial Implications with Real Life Examples of Metaverse:
The Metaverse expands global marketplaces and introduces cross-jurisdictional challenges relating to copyright enforcement, piracy, and digital fraud. Virtual goods, land, and services possess real economic value and increasingly function as investment assets, though Small and Medium Enterprises and creators continue to face regulatory and contractual ambiguities. Its practical relevance is evident from large-scale events such as the virtual Marshmello concert on Fortnite, which drew nearly 60 million participants, demonstrating the immersive potential of digital environments. Likewise, platforms such as “Decentraland” facilitate virtual real-estate transactions, including a USD 2.5 million land acquisition by Tokens.com for commercial ventures like fashion shows and virtual retail experiences.[9]
IP Cyber Crimes in the Metaverse: Unveiling Virtual Infringements:
The idea of Intellectual Property is as old as antiquity; for instance, the Byzantine Empire reserved exclusive “Recipes” for some practitioners. IP today safeguards creative and technical work be it inventions, art, music, literature, or designs that are mere ideas at first but become valuable once actualized. Essentially, it converts original ideas into tradable commodities, remunerating creators and stimulating additional innovation and cultural development.[10]In Hermes v. Rothschild (2022)[11], the court ruled that Mason Rothschild’s “MetaBirkin” NFTs virtual versions of Hermès’ signature bags were an infringement of the brand’s trademark, a dilution of its trade dress, and an act of cybersquatting, for which damages were ordered in favour of Hermès. This case highlights the urgent need for transparent, flexible legal structures to navigate IP in constantly changing digital realms.[12]
As virtual worlds such as the Metaverse, NFTs and blockchain assets gain prominence, IP rights remain essential. World Intellectual Property Organization and World Trade Organization seek harmonisation, but enforcement is hindered by cyberspace anonymity, limited cyber-awareness and underfunded enforcement.
Contours of Copyright Infringement:
Copyright infringement in virtual spaces includes unauthorized minting of NFTs, unlicensed derivatives and unlawful reproduction, distribution and broadcasting.Unauthorized minting of NFTs constitutes copyright infringement, as seen in the case of artist Qinni’s“Bird Cage,” where her work was minted on Twinci without permission, violating the copyright holder’s exclusive reproduction rights under U.S. law and necessitating takedown procedures compliant with theDigital Millennium Copyright Act.[13] Similarly, NFT-derived works that replicate protected elements of collections such as CryptoPunks or Bored Ape Yacht Club without a license amount to unlawful use of underlying IP, a concern highlighted in Miramax v. Tarantino[14], where disputes over “Pulp Fiction” NFTs underscored the need for clear licensing terms. In the metaverse, unauthorized reproduction, distribution, or broadcasting of digital works violates Sections 14(1)(a) to (d) of the Copyright Act, 1957, and contravenes Article 9 of the Berne Convention.
The reasoning in AM General LLC v. Activision Blizzard, Inc.[15] demonstrates that using real-world designs in virtual environments can infringe copyright and trademark rights, illustrating that digital misuse of protected works is treated by law much like physical-world infringement.
Trademark Infringement and Digital Counterfeiting:Unravelling Brand Misuse in Virtual Realms: Unauthorized use of registered trademarks in NFTs arises when marks are applied to digital assets without consent, creating consumer confusion regarding origin or endorsement, as illustrated in Nike, Inc. v. StockX LLC[16], where Nike alleged that StockX’s Nike-branded NFTs falsely suggested sponsorship. Digital counterfeiting which is prohibited under § 29(1)(e) of the Trade Marks Act, 1999[17] and actionable under § 51 of the Copyright Act, 1957[18], occurs when virtual goods imitate protected designs, as exemplified by Hermès International v. Mason Rothschild[19], where “MetaBirkins” NFTs were found likely to mislead buyers by copying the famous Birkin trade dress. Trade-dress infringement similarly extends to virtual spaces when the distinctive “look and feel” of a product or environment is replicated, a principle reinforced in the case of AM General LLC which held that depicting the Humvee’s recognizable design in video games could infringe proprietary visual identity, demonstrating that copying a brand’s appearance in the digital world is treated by law as seriously as copying its physical products.
Design and Trade Dress Infringement: Protecting Aesthetic Identity in Digital Spaces:
Design infringement in the Metaverse unauthorised copying of registered designs in NFTsavatars or virtual items falls within India’s Designs Act, 2000 under §2(d), 5, 22, implying actionable design piracy. Courts applying traditional IP to virtual assets include Hermès v. Mason Rothschild and Nike v. StockX, urging proactive registration and enforcement measures.[20]
Patent Infringement: Emerging Conflicts in an Innovation-Driven Digital Era:
Patents covering VR or AR engines, avatar-interaction protocols and smart contracts can be infringed online. Patentee rights and remedies are codified in Patents Act under § 48 and § 104–107. Utherverse Gaming LLC v. Epic Games[21]involving the case of virtual concertsexemplifies patent disputes in immersive-event technologies.[22]
Conclusion:
The rapid expansion of NFTs and the Metaverse creates valuable digital assets but introduces complex IP, contractual, and jurisdictional challenges. Courts increasingly apply traditional IP laws to virtual infringements, as seen in Hermès, Nike and Utherverse cases, underscoring the urgent need for clearer regulatory frameworks to safeguard creators, investors, and digital commerce.
[1]GEEKS FOR GEEKS, https://www.geeksforgeeks.org/non-fungible-token-nft-and-how-it-works/ (last visited No. 27, 2025)
[2]Ryan D. Tosto, Unpacking the Digital Vault: Estate Planning Considerations for Non-Fungible Tokens, 49, ACTEC. LJ. 203, 203, 2024
[3]MINISTRY OF ELECTRONICS & INFORMATION TECHNOLOGY NATIONAL INFORMATICS CENTRE CENTRE OF EXCELLENCE IN BLOCKCHAIN TECHNOLOGY, https://blockchain.gov.in/Home/BlockChain?blockchain=blockchain#:~:text=Blockchain%20is%20a%20shared%20immutable,shared%20over%20a%20computer%20network., (Last Visited Nov. 27, 2025)
[4]EUROPEAN ARLIAMENT, https://www.europarl.europa.eu/RegData/etudes/STUD/2022/737709/IPOL_STU(2022)737709_EN.pdf (last visited Nov. 23, 2025)
[5]KoentoPinandito N Irianto, Digital Asset and Personal Data Protection in the Metaverse: Analyzing the Implementation of Indonesian Laws in Addressing Challenges in the Virtual Era, 16, ILJ. 137, 137, 2023
[6]Mustafa Metin, Neslihan Durmus, Merve Nur Durmus and Ebru EzberciCevik, Multidisciplinary Catalyst Research for Education and Social Sciences, 3, 2023
[7]Ibid
[8]Emre, The Concept of Metaverse [Beyond The Universe] Produced by Digital Technologies and A Discussion on Ethics, 12, GMJ. 263, 263- 266, 2022
[9]Kashif Laeeq, Metaverse: Why, How and What, RESEARCH GATE, https://www.researchgate.net/publication/358505001_Metaverse_Why_How_and_What, (Nov. 23, 2025, 08:52 PM)
[10]MR. MD JIYAUDDIN, AND DR. SUNITA BANERJEE, A Critical Analysis of the Safeguarding Of Intellectual
Property Rights in India Through Cybercrime, 12, JRHSS., 71, 72, (2024)
[11]HERMES INTERNATIONAL and HERMES OF PARIS, INC. v. “MASON ROTHSCHILD” a/k/a SONNY ESTIVAL, S.D.N.Y., 1:22-cv-00384 (2022)
[12]Ashish Deep Verma, Intellectual Property Rights in the Metaverse: Protecting Digital Assets and Virtual Real Estate, BAR & BENCH, (Mar. 28, 2025, 11:07 AM.), https://www.barandbench.com/law-firms/view-point/intellectual-property-rights-in-the-metaverse-protecting-digital-assets-virtual-real-estate
[13]European Union Agency for Criminal Justice Cooperation, https://www.eurojust.europa.eu/publication/non-fungible-tokens-and-intellectual-property-rights-can-use-ntfs-lead-ip-infringements, (last visited Nov. 27, 2025)
[14]Miramax LLC v Quentin Tarantino, 2:21-cv-08979-FMO-JC
[15]AM General LLC v. Activision Blizzard, Inc., S.D.N.Y. 2018
[16]Nike, Inc. v. StockX LLC, (2022), 1:22-cv-00983, S.D.N.Y.
[17]The Trademark Act, 1999, § 29(1)(e), No. 47, Acts of Parliament, 1999 (India)
[18]The Copyright Act, 1957, § 51, No. 14, Acts of Parliament, 1957 (India).
[19]HERMES, Supra note 11
[20]FINNEGAN, https://www.finnegan.com/en/insights/articles/could-a-real-design-solve-a-virtual-problem-protecting.html (last visited No. 23, 2025)
[21]Utherverse Gaming LLC v. Epic Games Inc, (2023) No. 2:2021cv00799, (W.D. Wash.)
[22]Nicole Carpenter, Ariana Grande and Travis Scott Fortnite concerts at the heart of patent lawsuit headed to trial, POLYGON, (Apr. 25, 2025, 08:59 PM.) https://www.polygon.com/gaming/565188/epic-games-ariana-grande-travis-scott-fortnite-avatars
