Buy it: Nike Wants to Bring Sneaker Lovers Into the Metaverse

look at your feet. Many of you (hands up) are wearing Nikes right now. Nike reported a 19% increase in revenue to $44.5 billion for the fiscal year ending May 31, 2021. But this is in the real world. So what about in the metaverse?

Why Nike is interested in the Metaverse

For those of you who aren't already familiar with the concept, the easiest -- but deeply incomplete -- way to imagine the Metaverse is to imagine yourself existing in a real-life video game. Nike is going to come in and offer a really cool meta product.

This is no joke. Nike is taking the metaverse very seriously.

Patent filings dating back to the pre-Metaverse in 2018 reveal that Nike has been seriously stockpiling tools for doing business in the Metaverse. These digital tools will 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 make you want to own them), but its metaverse plans will revolve around the entire digital universe.

Is this why Nike becomes Nike? Sure, but if we choose to define it as creating entirely new revenue streams, as it has historically done, then that's good for it. Someone is going to have a metaverse item, it could be Nike.

The rules of the metaverse will be brand new for Nike

Nike needs to prepare for the disruption that replication will bring. In the real world, Nike has been littered with intellectual property (IP) litigation lately. In the Metaverse, however, duplication will transcend the current notion of what is legal. The value of a Nike meta product will definitely be affected by what the company considers a bootleg and what others call an artist.

In the real world, a recent art project called the "Museum of Forgeries" has important commercial applications. In short, the Brooklyn-based art collective Mschf bought an original Warhol painting for $20,000 and made 999 exact forgeries. It then mixed up the originals and sold all 1,000 "probably real" Warhols for $250 each, for a total of $250,000 and a $230,000 profit.

The same thing happens in the metaverse. Some of the rare Nike drops (what we sneakerheads call newly released shoes, or even the colors of the shoes — called “colorways”) will be real, some may be real, and some may be intentional or Unintentional counterfeit.

The metaverse is new to the court

As for how the courts will ultimately approach these Metaverse disputes, Miami attorney and Miami-Dade County cryptocurrency task force appointee Samir Patel recently tweeted:

The lack of understanding of blockchain technology by judges is something that developers who think their inventions circumvent the law are completely unaware. Judges judge based on what they know, not what you know.

— Samir Patel (@SamirPatelLaw) October 26, 2021

Patel and I discussed the realities of the New Metaverse and what a quick and brutal discovery it will be when judges realize that common law precedent will be more of a hindrance than a help when deciding Metaverse cases. As Patel puts it:

"Legal principles like real property rights, breach of wet contracts, and copyright infringement of human derivative works will govern relationships in the Metaverse (MV)."

He continued: "So, when Nike wants to participate in the Metaverse, whether through virtual storefronts, virtual character outfits, or creating new products specifically for the Make connections between the real world."

The fact that few judges (or even lawyers) use or hear the term "meatspace" is a problem in itself. The term refers to our physical world, not cyberspace or virtual environments such as the Metaverse.

So yes, the Metaverse claim will need to be simplified for the judges, at least at first in an ordinary way, using traditional wording so the judges don't get lost.

Could Nike Help Create a Metaverse Legal Structure?

Patel saw a real opportunity. "Nike has the resources to educate judges through trials because they can pay their lawyers to delay proceedings, but other smaller petitioners will have a hard time convincing judges that they have virtual property that exists in a virtual land registry, managed by a decentralized standardized blockchain maintenance,” he said.

Patel explained to me that if he were to buy virtual land in the Metaverse, the judge would likely treat the transaction as a sale of goods, not a transfer of real estate. Since the statute does not include or take into account the concept of virtual real estate, virtual land cannot be registered in a virtual land registry, which is not administered by a municipality or a sovereign 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 the contract to sell the sneakers. But the bargained value exchange would still need to be articulated in the real world, and possibly documented. Come down," Patel explained.

This poses a difficult problem for judges in practice, since there is no evidence that a contract was made in the metaverse, such as a verbal contract between two fictional characters. So how does a judge decide for one side in this dispute? This is exactly like a verbal contract in the real world. If the virtual characters can demonstrate reliance on verbal contracts in the metaverse, as they can in the real world, there may be evidence to support the plaintiff's claim.

The Metaverse Could Be Just as Litigation-Located as the Real World

There will be a large number of claims. If Nike had a problem with its creations being modified in the real world without its permission, and the defendants in the Nike lawsuit had the audacity to reply that modification is art, not intellectual property theft, imagine the Metaverse. Patel points out:

"Intellectual property laws will be put to the test in the metaverse if artificial intelligence is used to create landscapes or other virtual items."

He added: "This is because AI-derived works are not protected under US copyright law. So, if I deploy an AI in the metaverse, and the AI creates something cool, I don't have any rights to that derivative work." , others could imitate the work and claim copyright for themselves. Protecting one's copyright would be extremely difficult, as the Metaverse could be vast, and the infringer could be an entity deploying AI. Judges would use real-world copyright law to deal with these issues.”

This leaves us with the only viable way to change the way judges see and decide metaverse cases: by changing our existing laws to accommodate virtual reality. Without this change, in the eyes of the judge, everything is the real world, and virtual reality does not exist as a legal reality.

The real legal reality, as Patel points out: “It would be prudent for Nike to hire lawyers who are proficient (and I mean really proficient) in real estate, the Uniform Commercial Code, and experts in blockchain technology.”

The Metaverse offers a new virtual world with opportunities to create, sell, buy, and sue, and it will be fascinating to view through social, business, and legal lenses. The mere fact that Nike is ready to create, sell, and litigate in this new realm means you, too, should be ready for the reality of the Metaverse, which will soon be on your computer or phone next to you.

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