UAE authorities look at how to police 'dark side' of the metaverse

Issues around trademarks, patents and intellectual property need proper legislation to be able to decide on legal disputes in the virtual world, experts told a conference in Dubai.

Companies should ensure their trademarks are protected in the new virtual world and make sure their unique assets are protected in the metaverse, a senior prosecution official said, speaking at the 12th Regional Intellectual Property Crime Conference for the Middle East and North Africa region.

Ali bin Khatam, senior advocate general at Dubai Public Prosecution, said protecting IP in the metaverse "is not an easy issue legally speaking".

“The metaverse raises questions such as who is protecting the trademarks in virtual reality and if companies need to register their trademarks in the metaverse. We must have legislation and solutions to these issues,” he added.

“For now it is easy to counterfeit items in metaverse by copying an existing trademark in real life to metaverse.

“The most difficult situation is if there is a trademark in a certain virtual reality and someone copies it in another virtual reality, we must have legislation and protection for this issue.”

'MetaBirkin' landmark case

A court in New York provided some clarity on the issue earlier this month when luxury brand Hermes International won a lawsuit against the digital artist behind 'MetaBirkin' nonfungible tokens.

In the case — believed to be the first to consider how NFTs should be viewed through the lens of IP law — a Manhattan federal jury decided that Mason Rothschild’s sale of the NFTs violated Hermes’ rights to the “Birkin” trademark, Bloomberg reported.

Physical Birkin bags can range in price from $12,000 to close to $200,000. Rothschild first sold the NFTs for around $450 each but their resale value rocketed to tens of thousands of dollars.

A blockchain expert testified during the trial that Rothschild made around 55.2 Ethereum tokens — worth about $87,700 today.

The nine-person jury awarded Hermes $133,000 in total damages.

Mr bin Khatam said prosecutors have issues with deciding the jurisdiction of a criminal or civil case that happens in the metaverse.

“We don’t know which jurisdiction to use if the crime was in UAE or in another country. This causes legislation void,” he said.

He said collaboration between countries through an international policing body like Interpol would help bring some certainty in being able to decide cases.

Brig Jassim Al Antali, from the Abu Dhabi Police Academy, said the growing use of the metaverse means there's a need for proper legal mechanisms to resolve issues that may arise.

“Metaverse has a dark side and it needs regulation, legislation and execution procedures, such as how to arrest a person in virtual reality, as we don’t know where the person is in the case of a dispute," said Brig Al Antali.

“We need to have security, legal and judicial mechanisms and train the law enforcement on the combating crimes in virtual reality.”

Counterfeit items recycled

Ahmed Musabih, director general of Dubai Customs, said that protecting the rights of intellectual property is gaining greater importance with the growth of the UAE’s non-oil foreign trade reaching Dh2.2 trillion in 2022 — up more than 17 per cent compared to the previous year.

“Dubai Customs dealt with around 400 intellectual property disputes that involved 15 million counterfeit items, with a street value of Dh110 million,” said Mr Musabih.

Around 173,000 counterfeit items - such as luxury bags, mobile phones and watches - were destroyed and recycled by the authority last year.

The UAE updated its legislation and increased the punishments in 2021 to crack down on counterfeit items.

The fines for IP crimes range between Dh100,000 to Dh1 million - up from the previous range of between Dh5,000 to Dh10,000.