Community design regulation (CDR) dictates that “A community design shall not subsist in features of appearance of a product which are solely dictated by its technical function” (Article 8(1) CDR). The rationale behind this, as indicated by the EU Design Directive, is to prevent technological innovation being hampered by design protection – such innovation should instead be protected by patents, which of course enjoy a shorter term, and are required to undergo substantive examination before grant.

It goes further to say that a design shall not subsist in features whose “exact form and dimensions” are required for the product “to be mechanically connected to or placed in, around or against another product so that either product may perform its function” (Article 8(2) CDR). This allows for free competition to provide and purchase products which fit to other products.

However, the situation becomes a little more complex when considering modular products, which can be assembled in a variety of manners. An important aspect of the design of such products naturally relates to how they can be fitted together. The Regulations therefore include an exemption that a design shall “subsist in a design serving the purpose of allowing the multiple assembly or connection of mutually interchangeable products within a modular system” (Article 8(3) CDR), a caveat which has gained the moniker ‘the LEGO Exemption’.

However, a product can fall under the remit of several of these paragraphs, and it may not always be clear just what can be registered. A recent judgement by the EUIPO’s Board of Appeal (following a judgement by the General Court) has considered the relationship between the technical function of a design and its modular nature – fittingly – in relation to LEGO bricks.

A design relating to a LEGO building block was previously declared invalid by the EUIPO Board of Appeal as its features were considered to be “solely dictated by their technical function”. The General Court since annulled this decision, stating that the Board of Appeal must consider the exemption for modular products (Article 8(3) CDR).

Upon reconsidering the case, the Board again decided that the design did indeed fall within the scope of both Article 8(1) CDR and Article 8(2) CDR, as its features are “solely dictated by its technical function” and having exact “form and dimensions … to be mechanically connected to or placed in, around or against another product so that either product may perform its function”. However, this time it was not the end of the matter.

The Board was then compelled to determine whether the design fulfilled the exemption of Article 8(3) CDR relating to modular systems. Citing that the bricks “can be assembled with, and disassembled from, other bricks of the set in different ways to build numerous varying creations”, it was decided that this exemption was indeed fulfilled, and therefore the design registration was deemed to be valid.

This decision is perhaps unsurprising, the Board themselves even stating that “LEGO bricks are probably the best-known example of such a modular system”. It therefore seems likely that LEGO systems will continue to act as a guiding example of when this exemption may be applied, and it will be interesting to see what other modular systems will also be considered to fall within this ‘LEGO exemption’. From a broader perspective – this decision also seems in line with the intended purpose of Article 8(3) CDR – as, indeed, it seems only just that designers of clever and complex interconnecting systems be fairly rewarded.

Data provided by Mathys & Squire has featured in articles by City A.M.  and The Patent Lawyer providing an update on the launch of the Unified Patent Court.

An extended version of the release is available below.

Europe’s new one-stop shop for IP enforcement – the Unified Patent Court – took a major step forward on Friday 8 July 2022, as 90 new judges began to be informed that their applications to sit on the court have been successful. Mathys & Squire, the leading intellectual property law firm, says that the Unified Patent Court is no longer a distant prospect but an imminent reality for businesses and inventors in the UK and across Europe.

The Administrative Committee of the Unified Patent Court received over 1,000 applications from judges across Europe. Of these, 90 have been selected to serve on the court.

The new court will serve as a single point of contact for litigation of IP infringement within participating countries – which could potentially save businesses thousands in legal costs.

After many years of delay, the Unified Patent Court is finally taking shape. First agreed in 2013 – but subject to numerous delays in domestic ratification – the court will soon clear one of its last major hurdles on the road to full implementation.

Andreas Wietzke, Partner at Mathys & Squire says: “The letters being sent out from now onwards will give the Unified Patent Court what a court needs most – judges. The UPC has been on the horizon for decades but now finally is taking shape.”

“UK & European businesses which have long been looking forward to a simplified and cost-efficient patent litigation system can now be increasingly confident that this is just around the corner.”

“Businesses now need to prepare for the UPC to become a reality and work out their strategy for maximising their IP protection across Europe.”

Mathys & Squire is delighted to be ranked in the latest edition of the IAM Patent 1000: The World’s Leading Patent Professionals 2022 directory – the ‘go-to’ guide identifying ‘top patent professionals in key jurisdictions around the globe’. The guide is compiled based on feedback following an extensive research process involving around 1,800 interviews over five months.

Aside from our firm ranking, ten of our Mathys & Squire attorneys have been recognised as Recommended Individuals: Partners Paul Cozens, Martin MacLean, Alan MacDougall, Jane Clark, Chris Hamer, Andrew White, Dani Kramer, Anna Gregson, Craig Titmus, as well as James Pitchford.

Our attorneys have been praised as a “forward-thinking and technically skilled team with a dedication to premium client service”. We are pleased that “Mathys & Squire has maintained its position as a top choice for patent prosecution across the United Kingdom and Europe.”

Data and commentary provided by Mathys & Squire has featured in an article by City A.M. and Tech Register highlighting a surge in patents for wireless communications technology.

An extended version of the press release is available below.

Patents for wireless communications technology filed by the Top 20 carmakers* have jumped to a record high of 991 in the past year**, finds new research by leading intellectual property (IP) law firm Mathys & Squire. The figure is up from 945 in the previous year and up three-fold from 323 patents five years ago.

Wireless communications technology is expected to be a key component of driverless cars – allowing autonomous vehicles to communicate with other vehicles and objects, therefore avoiding collisions with those objects.

Mathys & Squire says the automotive industry has begun to generate its own wireless communication patents in order to avoid possible clashes with the telecoms industry. The telecoms sector is seen as being more litigious than the automotive sector in the protection of its intellectual property.

By owning their own driverless car technology carmakers can avoid protracted legal battles with telecoms companies over the licensing of wireless technology owned by telecoms companies.

One example of where the sectors have already clashed is the high-profile dispute between Nokia and Daimler over wireless technology. Nokia had claimed that Daimler should pay licensing fees for its use of their navigation technology. Daimler had claimed that the supplier of the part which used the technology should pay the license fee, potentially decreasing the total level of fees paid to Nokia. The case was settled with Daimler paying Nokia an undisclosed amount.

Andrew White, Partner at Mathys & Squire explains that the automotive industry is used to a culture where it can fit parts from suppliers into its vehicles without worrying about being sued by other automakers. The sudden dependence of automakers on wireless technology in their autonomous vehicles, that might be owned by a telecoms companies, moves them into a much more unfamiliar legal landscape.

Andrew White says: “The automotive industry knows access to wireless communications technology is vital to its future. They fear that telecoms companies might frustrate their access to this technology.”

“They’ve decided the best way to have access to this technology is to develop and own their own IP in this area – hence the increase in these patents filed by carmakers.”

“Owning wireless communications patents is a win-win for the automotive industry. It gives them valuable IP in a growing field and reduces the risk of legal battles with telecoms firms.”

Andrew White adds that carmakers are increasingly subscribing to driverless vehicle patent pools to avoid IP conflicts. Patent pools enable companies to group together to allow access to a given list of patents which the members have agreed to share.

Andrew concludes: “The next-best option to owning your own IP is to belong to a patent pool, which gives relatively risk-free access to a range of patented technologies in a given field.”

*Top 20 carmakers by volume, worldwide

**Year ending December 31

(C) Naomi Korn Associates & Mathys & Squire 2022. Some Rights Reserved. These case studies are licensed for reuse under the terms of a Creative Commons Attribution Share Alike Licence.

The following case study has been taken from the “Implications of Covid-19 on SMEs – reassessing the role of IP in multiple sectors and industries” report written by Naomi Korn Associates and Mathys & Squire Consulting, November 2021. This case study reviews the impact on SMEs (small, medium enterprises) of the COVID-19 pandemic since its appearance in early 2020 through the first quarter of 2021. It focuses on the industries most affected by the crisis and whether intellectual property (IP) and IP management may have helped mitigate its impact through adaptation and change.

Sector overview

The impact of COVID-19 on the cultural heritage sector will most likely permanently affect it, changing cultural practice and engagement as we know it.

Cultural organisations and the arts in general faced unprecedented challenges, forcing sudden and widespread closures, with almost 80% of UK heritage organisations, for example, experiencing a sharp decrease in visitor numbers[1] and many fearing permanent closure due to the loss of fragile income streams. Creative industries in the UK alone are estimating a turnover loss of £74 billion in 2020, with job losses of over 100,000 as well as almost 300,000 job losses amongst self-employed workers from supporting industries. Thus, the impact of COVID-19 on the cultural sector will bring about long-lasting changes in cultural practice and engagement as we know it.

Analysis

During the coronavirus pandemic, many cultural institutions and museums made an increased amount of cultural content freely available[2]. Exemplifying an increased awareness of the benefits of digitisation, including the building of a digital strategy into business models, by taking advantage of new or existing digital assets, has played and will play an important role in the survival of cultural heritage institutions. While digitisation efforts by small and large heritage organisations may differ widely due to funding, large organisations which already had a digital footprint and plan in place before the pandemic were better placed to modify their operations and to push more of their activities and their collections online. Unfortunately, many smaller and rural heritage organisations have neither the facilities, nor skills or finances to put them in place[3]. Ultimately, digitisation and the pro-active creation of new digital content may be the route for survival for impacted cultural heritage organisations. Digital assets will, broadly speaking, be protected by copyright, and in specific cases these organisations may have opportunities for patent or trade secret protection and the incorporation of VR and AI into experiences. As an example, ‘Inside Bruegel’ is an online experience developed by the Kunsthistorisches Museum Vienna (KHM) to share digital photography and the findings of scholars. Another example is the 360-degree virtual tour of the Bode Museum, Berlin.

Following coronavirus lockdowns and restrictions, museums used digitised assets to pivot creative digital programming including online exhibitions, virtual tours, livestreams, and even VR games, to reach their audience remotely. As a result, their reach in terms of diversity and inclusion was in many cases increased despite social distancing. Many museums have switched to producing video content. The Stedelijk Museum in Amsterdam is just one example of a museum that offered live tours with the museum director or curators, or even ‘silent tours’ (the Metropolitan Museum in New York City) through the collection galleries of their museums.  Some of the most creative museums combined dance or music in a gallery setting, demanding the creation and strategic management of new forms of IP, as well as exploration of licensing opportunities for copyright protected content. Likewise, musicians and performing arts organisation have seized upon the online video format to remain relevant and reach both their traditional audiences and new ones globally.

In addition, arts organisations and museums have had to rethink revenue models like memberships and subscriptions, considering how membership can relate to an organisation’s digital programming, making it relevant locally and globally.

Interestingly, the closure of heritage and performing arts venues along with the increasing demand for digital content, benefited some areas of the broader entertainment industry.  For example, Netflix gained as many as 16 million new subscribers during the COVID-19 lockdowns. Large film and TV businesses with their own distribution channels and those with richer catalogues of digitally distributable IP faced less severe economic loss, particularly valuable at a time when new production wasn’t possible.  Smaller, independent production companies suffered because they typically had fewer accumulated IP assets to fall back on. Given the disproportionate importance of microbusinesses to the creative industries (94.7% of the sector in 2018), a significant loss of these businesses would be extremely damaging to the sector.

Fortunately, many cultural heritage organisations throughout the UK have received grant aid through the £50m National Lottery Heritage Emergency Fund, and with this critical help have sought to pivot their activities towards producing digital content, benefiting from their established brand presence and essentially reminding the public that they are open for business albeit in a new format.  Without such a revised approach and without the necessary financing, many heritage organisations, closed for months, will struggle financially throughout and after the pandemic.

It is also important to remember that the cultural heritage sector naturally attracts innovators, who have developed new innovative technologies and have protected those intellectual assets accordingly. Companies that succeeded in the area include Milan-based Junior, Dexibit, Clio Muse Tours in Greece, and Cuseum.com in the U.S., the latter holding patents for smartphone memberships management and location-based media delivery systems facilitating a more interactive museum experience. By partnering with companies like these and with other cultural institutions that have high-quality image, video, and other content collections, the creation of new programming and opportunities can be achieved relatively quickly. 

A crucial factor discovered by cultural heritage institutions too often and too late is a lack of orderly recording of collaboration agreements, contracts and content licensing for past productions, preventing their reuse or reinvention in a timely manner.  While the creation of copyright-protected content and the use of digital content by culture and arts organisations is likely to be the best route to their continued survival and a source of potential revenue, it is important to remember that many heritage organisations such as museums and galleries have very well-established brands with significant goodwill attached to the brand internationally, including the British Museum, the Rijksmuseum and MoMA. For such organisations, the arrival of the pandemic required rethinking and pivoting of their brand strategy and an appraisal of their use of brand assets, including trade marks, designs, domains and associated reputation. For example, Guinness used its connection with Irish culture and heritage to encourage people to celebrate St. Patrick’s Day in their own way while obeying national pandemic regulations. Similarly, many museums produced free online content such as lectures and workshops aimed at global community service, while maintaining and strengthening brand recognition and loyalty: the Frick Collection in New York City began hosting Cocktails with a Curator, inviting the public to a virtual happy hour once a week as a Frick curator offered insights on a work of art. Brand heritage foundations and exhibition spaces have been a highly effective way to use IP for communicating a company’s legacy connection with the arts and social causes.  Exhibiting their collections has supported visibility and reputation by emphasising history and dedication. Examples include Armani Silos, as well as the Burberry Foundation, with its emphasis on brand and heritage and partnerships with The Royal College of Art, Oxfam, and others.

The global licensing industry was worth US$292.8 billion in 2019, and although dominated by character and entertainment licensing, it was encouraging to see that the fastest growing licensing sectors last year were Art (+10%) and Non-Profit (+18%). The licensing industry started 2020 with a strong, profitable business model, and it is confident that it will weather the current storm. Brand licensing has seen positive growth and looks set to become more desirable as licensors look for ‘evergreen’, trusted brands which consumers want to support. For SMEs, branding licensing revenue can be a valuable income stream at a time when every penny counts. For example, the “I love NY” slogan and logo was developed to promote tourism in New York State. Created by graphic artist Milton Glaser, it was first used in 1977. It is owned by New York State Department of Economic Developmentand generates about $30 million annually. Even when physical sites are closed, the I Love NY registered trade mark in association with products, provides valuable income during the COVID-19 crisis.

Realisation that the proper management of IP assets will prove to be a clear advantage for organisational survival during and after COVID-19 shut-downs will be an advantage, as will an entrepreneurial mindset and a willingness to fund and staff the exploitation of existing content. 

[1] ONS (2020): In the last two weeks how has Covid-19 affected your businesses footfall compared to normal expectations for this time of year, ONS

[2] (European Parliament, 2020)

[3] Europa Nostra (2020): Covid-19 & Beyond: Challenges and opportunities for cultural heritage, Europa Nostra

As part of an overall strategy to strengthen the UK’s position as a “global science and tech superpower”, the UK government have recently released a policy paper focusing on their digital strategy. The aim is to develop the UK as the best place in the world to start and grow a technology business. Already, the UK has seen exciting growth in digital businesses, and the paper cites that a new technology business was launched in the UK every half an hour throughout 2020.

Recognising that “ideas and intellectual property are at the heart of innovation which feeds digital businesses”, the strategy incorporates a strong focus on intellectual property. Currently, the UK ranks fourth on the World Intellectual Property Organisation’s Global Innovation Index, which measures a country’s innovative capacity and output. The government’s aim is to develop this further, and the report outlines the following ways in which they plan to encourage innovation:

Supporting universities to develop new ideas and technologies

The government have announced an increase in funding for UK Research and Innovation, which includes Innovate UK. In particular, they wish to invest in university spinoffs, citing that the Higher Education Innovation Funding programme generates £8.30 for every £1 of funding, plus a further £1.80 through investment in spinoffs. There will be a particular focus on AI and quantum technologies, as well as advanced semiconductor research, which form part of the seven technology families identified as of particular interest in the Innovation Strategy published last year.  

Incentivising businesses to innovate

There are currently several incentive schemes in place to encourage innovation, including R&D tax relief and a reduced rate of corporation tax paid on income to profits earned from patented inventions via the Patent Box scheme. The government plan to review these further and have already announced that they will expand R&D tax reliefs to cover cloud computing and data acquisition.

The government also encourage innovation through the Innovate UK Knowledge Transfer Network, and plan to ensure there is adequate provision of, and access to, large-scale, high-performance computing, for example Hartree Centre in Warrington. The government also want to focus on the innovative nature of digital media and highlight the issue of ensuring that artists are fairly remunerated from music streaming, an issue being explored by the UK Intellectual Property Office alongside digital streaming platforms and the music industry.

Innovation in the NHS

The policy paper recognises that, as the largest integrated health system in the world, the NHS hold enormous potential to develop digital and data-driven technologies to improve treatments, models of care, and how the health and care system functions. To ensure the security of patient data, Secure Data Environments, including Trusted Research Environments, will be used to provide researchers and analysts with secure access to appropriate levels of data. In particular, the NHS ‘AI Lab’ supports the safe, ethical and effective adoption of AI in health and care and has committed over £100 million to accelerate testing and evaluation of over 80 AI technologies. An additional £200 million funding has been announced between NHS England, the Department of Health and Social Care and the Department for Business, Energy and Industrial Strategy, for the NHS data infrastructure to support data-driven research and innovation.

Innovate UK has now opened a DASA competition to support proposals which use synthetic biology to overcome challenges in the defence and security sectors. The total funding available for the whole Phase 1 of the competition is £1.5 million (ex VAT), split into Phase 1a and a costed optional Phase 1b.

Phase 1a seeks technologies starting at a low technology readiness level (TRL, TRL 1-2) and rising to a higher TRL (minimum TRL 3) by the end of Phase 1a over a period of 12 months. There is a total maximum of £750,000 of funding available for Phase 1a, with Innovate UK looking to fund around 7-8 proposals at approximately £100,000.

Phase 1b also has a maximum of £750,000 available. Phase 1b projects are intended to run for a maximum of 12 months and are intended to take the technology to TRL4. A Phase 2 competition is planned, but no timings or details of maximum funding have yet been released.

In 2016, Innovate UK ran its first competition looking for inventions that apply synthetic biology developments to improve the defence sector. Previous projects included increased energy for flexible body armours, tough recombinant spider silk/graphene multifunctional nanofibers for wearable personal protection and lignin-based metallic nanoparticles as anti-corrosion agents.

In the new competition, proposals addressing one or more of the following challenges are invited:

• exploiting engineering biology for a step change in power and energy technologies
• materials for defence
• sensing and sensor technologies

Innovate UK are looking for proposals that involve cutting edge, multidisciplinary research with the synthetic biology as a core component. Proposals should seek to apply these tools and techniques to provide solutions reflecting a defence relevant need and that will benefit end users working in UK Defence and Security.

Applications are open now until 26 August 2022. For more information, visit the KTN website here.

According to the United Nations’ Global e-waste monitor, e-waste is the world’s fastest-growing domestic waste stream. The Waste Electrical and Electronic Equipment Forum recently estimated the combined mass of discarded electrical and electronic equipment in 2021 alone to be more than 57 million tonnes, and it is predicted that by 2030 global e-waste will reach 74 million tonnes annually.

The Royal Society of Chemistry is running a campaign to draw attention to the unsustainability of continuing to mine all the precious elements needed to produce consumer electronic equipment.  Researchers say that current reserves of some key elements are running out, and that there is a risk of exhausting the supplies of these elements. In particular, experts warn that supplies of the following elements could run out in the next century:

• Gallium: Used in medical thermometers, LEDs, solar panels, telescopes and has possible anti-cancer properties;
• Arsenic: Used in fireworks, as a wood preserver;
• Silver: Used in mirrors, reactive lenses that darken in sunlight, antibacterial clothing and gloves for use with touch-screens;
• Indium: Used in transistors, microchips, fire sprinkler systems, as a coating for ball-bearings in Formula One cars and solar panels;
• Yttrium: Used in white LED lights, camera lenses and can be used to treat some cancers;
• Tantalum: Used in surgical implants, electrodes for neon lights, turbine blades, rocket nozzles and nose caps for supersonic aircraft, hearing aids and pacemakers.

As a result, there is an increasing focus on improving recycling processes to mine e-waste. The potential value of the rare elements contained e-waste is vast. According to a 2019 report by the World Economic Forum, the world’s e-waste has a material value of $62.5 billion (£46 billion) – more than the GDP of most countries. The director of UN’s Sustainable Cycles (SCYCLE) programme points out that a tonne of discarded mobile phones is richer in gold than a tonne of gold ore. 

Increased innovation in the area of e-waste mining and recycling has driven a corresponding increase in patenting activity. A patent landscaping report on e-waste recycling technologies, published by the World Intellectual Property Organisation, found that there has been a large increase in patent activity relating to the recovery of rare earth metals as well as extraction or recovery of noble metals from e-waste streams. Rare earth metal recovery is not only a fast growing area of patenting activity, but it is also the most widely protected aspect of this technology in terms of the geographic extent of protection, suggesting that this field is a major emerging topic of interest to patent applicants.

The patent landscaping report also found that the majority of patenting activity in e-waste originates in Asia – primarily in Japan and China – followed by activity originating in Europe and the United States.  The patent applicants in this area of technology were found to be relatively ‘top heavy”’, in that a large proportion of the total number of patents in this area are owned by relatively few large entities.  In fact, more than one quarter of the patent families in the collection derive from just 21 patent applicants, all of whom have 40 or more e-waste patents in their portfolio.

More generally, with initiatives such as the EU’s Circular Economy Action Plan, adopted in March 2020, it seems likely that patenting activity in e-waste mining and recycling technologies will continue to grow in the years to come.

(C) Naomi Korn Associates & Mathys & Squire 2022. Some Rights Reserved. These case studies are licensed for reuse under the terms of a Creative Commons Attribution Share Alike Licence.

The following case study has been taken from the “Implications of Covid-19 on SMEs – reassessing the role of IP in multiple sectors and industries” report written by Naomi Korn Associates and Mathys & Squire Consulting, November 2021. This case study reviews the impact on SMEs (small, medium enterprises) of the COVID-19 pandemic since its appearance in early 2020 through the first quarter of 2021. It focuses on the industries most affected by the crisis and whether intellectual property (IP) and IP management may have helped mitigate its impact through adaptation and change.

Sector overview

One of the few areas of significant growth during the COVID-19 pandemic has been the software industry. Indeed the development of contract tracing applications is wholly due to the crises, with, and indicated below, many countries globally deploying contact tracing software, to varying levels of success.

Figure 4 Which Countries Are Deploying Coronavirus Tracing Apps? Source: MIT Technology Reviews / Statista.

Recent reports have suggested that even at low levels of use such apps may make significant contributions in the fights against COVID-19. Simulations looking at notifications systems estimated that with up to 75% using a suitable contact tracing app, deaths could be reduced by up to 78% and infections by 81%, while a lower uptake of 15% would still result in 12% fewer deaths and 15% fewer infections.

Many of the companies developing these contact tracing software solutions have been SMEs. A success story in this context has been an Irish based software development company NearForm. The company was originally contracted to build the “Covid Tracker Ireland” application by the Irish government. Following initial development, the company began working with Apple and Google in mid-2020 to access the Exposure Notification System that both companies had developed, allowing the app to work while guaranteeing user anonymity. The technology works by exchanging an anonymised key code between the mobile phones of two people in close proximity. If one of them becomes infected, they update their status on the app. The next step can be centralised or decentralised. Under the decentralised option, the phone provides its own anonymised ID to a centralised database. The phone then downloads the database, does contact matching, risk analysis and alerts the user if required. Under a centralised option the phone sends its own anonymised ID plus other codes gathered from other phones to a centralised database, which then does contract tracing, risks analysis and alerting if required.

The company has developed similar systems in Northern Ireland, Scotland and several US states including New York. This work offers a significant boost for the company both in terms of revenues and reputation. Close management and protection of their IP forms an important aspect of this successful business model. By protecting the copyright in their code, NearForm can release the application source-code available under a permissive MIT license, which is a free permissive software license type originating at MIT. At the same time, they offer additional services, like consultancy, training and bespoke digital product development for which they charge. This business model is not unusual across the development of digital products, but it can only be facilitated by identification, close management and protection of important IP.

Video conferencing software has benefited from an explosive growth in users during the pandemic. The video conferencing tool Zoom, which had limited use prior to the pandemic saw its use explode by almost 40% in the initial weeks of March 2020 as millions of people worldwide faced lockdowns and were required to work remotely or from home. With localised lockdowns firmly in place, people not only use Zoom or similar platforms for office calls but birthday parties, office parties and even court proceedings. Similarly, another innovation to arise during the pandemic is Krisp, the AI powered app that removed background noise and echo in online meetings, leaving behind the human voice only. Due to AI-based noise filtering, all the background noise is cancelled. During the lockdown, Krisp introduced its Chrome extension, allowing users to cancel background noise during conference calls with a single button.

Whilst the NearForm and other businesses like Red Hat offer access and reuse of their software (and its code) for free, the business model used by Zoom uses licensing to create a tiered structure of uses, enabling royalty-free licenses to underpin the use of basic access to Zoom, whilst enhanced uses, such as access for longer to the platform for increased participants, attracts a charged for license. During the COVID-19 pandemic, the charged for Zoom software packages have seen a rapid increase in growth, due to the required replication of business and personal interactions in safe online spaces.

Data provided by Mathys & Squire has featured in an article by City A.M. and the Scotsman highlighting a surge in fashion trade marks in the metaverse.

An extended version of the release is available below.

Brands are looking to capitalise on the fast-growing metaverse fashion market by rushing to register trade marks for virtual clothing and virtual clothing stores, with 2,146 registered this year, up 35% on 1,589 last year*, shows a new study by leading intellectual property law firm, Mathys & Squire.

Digital clothing or ‘metafashion’ is a fast-growing market, which investment bank Morgan Stanley predicts could be worth $50bn by 2030. Last month saw the first Metaverse Fashion Week take place, with shows from luxury brands such as Dolce & Gabbana and Etro.

Mathys & Squire says brands are taking action to protect their digital brands just as they would physical goods, given the enormous growth potential and huge sums of revenue at stake.

Gary Johnston, Partner and Co-head of trade marks practice at Mathys & Squire says: “Fashion brands are rushing to protect their IP in the metaverse leading to a spike in trade mark registrations.”

In the metaverse, consumers may interact with items of clothing, trying them on virtually before buying them, either in real life or digitally. These virtual versions of fashion items are often in the form of non-fungible tokens (NFTs).

The firm says these NFTs can be created cheaply, with relative ease, making it easier for clothing brands’ designs to be exploited by copycats. This has led to a number of high-profile cases between brands over alleged IP infringement.

The French design house, Hermès, is currently involved in a dispute with an American artist over a collection of 100 virtual designs inspired by its Birkin bags. The artist had previously sold a one-off NFT ‘Baby Birkin’ for $23,500 compared to $9,500 the French brand charges for a physical Baby Birkin bag.

Another IP matter that brands are likely to encounter in the metaverse is ‘trade mark squatting’. This is the practice of registering trade marks associated with another brand, often with a view to selling them to the true brand owner at a premium. Mathys & Squire says that as the metafashion market grows, more opportunists are likely to try to snap up these high end and valuable trade marks.

Gary Johnston explains: “Registering trade marks for virtual assets will give luxury brands legal ammunition to protect their intellectual property (IP), which accounts for a considerable proportion of their value.”

“Luxury brands will be particularly keen to control their brand identity and taking action against unauthorised use of their IP by copycats looking to profit from the equity its owners have built up is likely to increase.”

“Ensuring that their brand value does not become diluted in the metaverse will be a major concern. High-end brands are extremely protective about where their clothing is stocked in the real world, so they will be equally determined to exert control about how they appear in the metaverse.”

Metafashion is already generating significant amounts of revenue within the video game market. Luxury brands including Balenciaga, Ralph Lauren and Lacoste have all launched in-game clothing options. Gucci has partnered with Roblox, the metaverse gaming platform, enabling players to purchase items using the platform’s Robux currency.

Brands that have registered trade marks for ‘virtual clothing’ include Nike, which has filed applications to protect its ‘Just Do It’ slogan and swoosh logo in the metaverse. Fashion brands YSL, Gucci, Prada and Off White have also registered trade marks.

*WIPO. 2021/22 vs 2020/21, March 31^st year end.