Trademark Protection in the Metaverse: Challenges of Virtual Goods, NFTs and Digital Brands under Indian Law

Introduction

The internet is no longer limited to websites, social media and online shopping. With the development of the metaverse, people can now enter virtual environments, interact through avatars, attend events, purchase virtual products and even visit virtual stores. Brands have also started entering these spaces by offering digital clothes, virtual shoes, accessories, avatars, virtual shops and NFTs.

For example, a fashion company may sell a virtual handbag that an avatar can carry, or a sports company may sell digital shoes that can be worn by an avatar. These products may not physically exist, but people can still spend real money to purchase them. This raises an important legal question: if a person uses a brand's name or logo on a virtual product without permission, can the brand take legal action under Indian trademark law?

The answer is not entirely straightforward. India already has the Trade Marks Act, 1999, which protects trademarks against unauthorised use, but the Act was drafted at a time when concepts such as NFTs, virtual clothing and metaverse stores did not exist. Therefore, the challenge is not necessarily the complete absence of law, but how the existing law should be applied to this new digital environment.

Understanding the Metaverse, Virtual Goods and NFTs

The metaverse can broadly be understood as an online three-dimensional environment where users interact with each other and with digital objects through avatars. It can include virtual shopping, gaming, entertainment, concerts and social interaction.1

Virtual goods are digital items that exist only in an online environment. These may include virtual clothes, shoes, bags, cars, furniture, jewellery, cosmetics or accessories for avatars. Even though these goods cannot be physically touched, they may have considerable commercial value because users are willing to pay money for them.

An NFT (Non-Fungible Token) is different from a traditional digital file. It is a unique token recorded on a blockchain that can be associated with a digital asset such as artwork, clothing, a collectible or another virtual object. Importantly, buying an NFT does not automatically mean that the buyer obtains ownership of the trademark or copyright contained in the underlying asset.2

This distinction becomes particularly important for brands. A person may purchase an NFT depicting a famous branded handbag, but that does not necessarily mean that the person has received permission from the trademark owner to use the brand name or logo commercially.

Existing Protection under Indian Trademark Law

The primary legislation governing trademarks in India is the Trade Marks Act, 1999. The Act defines a trademark broadly and includes words, names, devices, labels, shapes, packaging, colours and combinations of these elements.3

Section 28 gives the registered proprietor the exclusive right to use the trademark in relation to the goods or services for which it is registered.4

The most important provision in the metaverse context is Section 29, which deals with infringement of registered trademarks. Section 29(1) provides protection where an identical or deceptively similar mark is used in the course of trade in relation to the registered goods or services.5

Section 29(2) further deals with situations where the similarity between the marks and goods or services is likely to cause confusion or association in the minds of consumers.6

This provision can become relevant in the metaverse. Suppose a person creates a virtual store called “Nike World”, uses the Nike logo and sells virtual shoes while giving consumers the impression that the store belongs to Nike. Even though the store exists only in a virtual world, the activity is clearly commercial. If consumers are likely to believe that the virtual store is connected with Nike, a claim of trademark infringement could potentially arise.

The Problem of Virtual Goods

One of the biggest difficulties is determining whether a physical product and its virtual version should be treated as the same or similar goods.

Suppose a company owns a trademark for physical shoes. Another person uses the same trademark on virtual shoes designed for avatars. The physical shoes and virtual shoes are obviously not identical. However, they may be commercially connected because both are marketed as footwear and consumers may reasonably believe that the virtual product has been authorised by the original brand.

Indian trademark law does not expressly contain a separate category called “virtual goods”. However, the definition of “goods” under the Trade Marks Act is broad.7 This provides some room for courts to interpret the law according to changing forms of commerce.8

International trademark classification has also started responding to this development. WIPO's Nice Classification has introduced and recognised terminology relating to NFTs and virtual goods, showing that trademark systems are gradually adapting to digital commerce.

Therefore, Indian businesses that intend to commercially exploit their brands in virtual environments should consider seeking protection not only for their traditional products but also for relevant digital goods and services.

Unauthorised Use of Brand Names and Logos in the Metaverse

The most obvious problem arises when someone uses a famous brand's name or logo without permission.
Consider a hypothetical example. A person creates a virtual store called “Gucci Official Metaverse Store” and sells digital handbags carrying the Gucci logo. The store has no connection with Gucci. A consumer entering the virtual store may believe that it is an official Gucci store.

This is not simply a case of someone mentioning a brand. The trademark is being used to attract customers and commercially exploit the reputation of the brand. Such use may therefore fall within the scope of trademark infringement or passing off, depending upon the facts.

Section 29(4) is particularly important for famous trademarks. It provides protection even where the later goods or services are not similar, provided the registered mark has a reputation in India and the unauthorised use takes unfair advantage of, or is detrimental to, its distinctive character or reputation.9

This is significant because a famous fashion brand may have trademark protection for clothing, while another person may attempt to use the same mark for virtual clothing, digital collectibles or a virtual entertainment platform.

NFTs and Trademark Infringement

NFTs create another layer of difficulty. An NFT may contain a brand's name, logo or representation of a branded product. The person selling the NFT may argue that they are only selling a digital token and not a physical product.

However, the mere fact that the asset is digital does not automatically make trademark law irrelevant. What matters is how the trademark is being used and whether that use is commercial and likely to mislead consumers.

A useful example comes from the United States. In Hermès International v Mason Rothschild, the artist Mason Rothschild created and sold “MetaBirkins”, NFTs depicting digitally modified versions of Hermès Birkin bags. Hermès argued that the NFTs exploited its famous trademark and created confusion regarding their connection with the brand. The court ultimately found in favour of Hermès on the trademark claims.10

Although this is an American case and therefore not binding in India, it is important because it demonstrates the type of dispute that Indian courts may increasingly face as NFTs and virtual products become commercially popular.

Similarly, Nike v StockX involved NFTs connected with Nike shoes. Nike alleged that StockX used Nike's trademarks on NFTs without authorisation and that consumers could be misled into believing that the NFTs were connected with Nike. The dispute was eventually settled in 2025.11 These cases show that the question is no longer theoretical. Major brands are already using trademark law to challenge unauthorised digital uses of their brands.

What Indian Courts Can Learn from Internet Trademark Cases

Although Indian courts have not yet developed extensive jurisprudence specifically dealing with metaverse trademarks, Indian courts have already dealt with similar problems arising from the internet.

A landmark case is Satyam Infoway Ltd v Siffynet Solutions Pvt Ltd.12 The Supreme Court recognised that a domain name can have the characteristics of a trademark because it identifies and distinguishes the source of goods or services on the internet. The Court also recognised the possibility of confusion when consumers are diverted to a similarly named website.
This principle can be useful in the metaverse. A virtual store, virtual marketplace or digital brand identity can similarly become a means through which consumers identify the source of goods or services.

Another important decision is Yahoo! Inc v Akash Arora, where the Delhi High Court restrained the defendant from using a domain name deceptively similar to Yahoo.13 The case demonstrated that traditional principles of passing off could be applied to new forms of internet-based commercial activity.

More recently, in Google LLC v DRS Logistics (P) Ltd, the Delhi High Court considered the use of trademarks as keywords in Google's advertising system. The Court held that the use of a trademark as a keyword could amount to “use” under Section 29(6) of the Trade Marks Act, while also clarifying that such use would not automatically amount to infringement without confusion, unfair advantage, dilution or other relevant factors.14

This decision is particularly useful for understanding the metaverse because it shows that Indian courts are willing to interpret existing trademark provisions in light of technological developments rather than treating the internet as completely outside the scope of trademark law.

Passing Off and Unregistered Marks

Protection is not limited only to registered trademarks. Section 27(2) of the Trade Marks Act preserves the common-law remedy of passing off. This can become important for digital brands and businesses that have developed significant goodwill without having registered their trademarks for every possible category of digital goods.

For example, suppose a company has become widely known under a particular brand name but has not specifically registered that mark for virtual goods. If another person creates a virtual store using the same name and makes consumers believe that it is associated with the original business, the company may potentially rely upon passing off.

The basic idea behind passing off is simple: one person should not be allowed to take advantage of another person's goodwill by making consumers believe that his goods or services come from, or are connected with, the original business.

Well-Known Trademarks and Digital Brands

Well-known trademarks may receive broader protection under Indian law. Section 11(2) prevents registration of a mark for dissimilar goods or services where the earlier mark is well known in India and use of the later mark would take unfair advantage of, or harm, its distinctive character or reputation.16

This can be particularly valuable for brands entering the metaverse. For example, if a globally recognised luxury brand has developed substantial reputation, another person should not necessarily be able to escape liability simply by saying that the brand is being used for “virtual handbags” rather than physical handbags.

The Trade Marks Rules, 2017 also provide a mechanism through which a trademark can be recognised as a well-known trademark.17

Major Challenges in Protecting Trademarks in the Metaverse

1. Uncertainty regarding classification: The first major challenge is deciding which classes should cover virtual goods and services. A company may have a trademark registered for physical clothing but may not have specifically considered downloadable digital clothing, virtual retail services or NFT-related services. Therefore, brands need to carefully plan their trademark portfolios instead of waiting until infringement occurs.

1. Difficulty in identifying infringers: In the physical world, it is relatively easy to identify a shop selling counterfeit products. In the metaverse, an infringer may operate through an anonymous username, cryptocurrency wallet or digital identity. The person may also be located outside India, making identification and legal proceedings more difficult.

1. Jurisdiction: The metaverse is not restricted by national borders. A virtual store may be operated by a person in one country, hosted on a platform in another country and accessed by consumers from India. Indian trademark rights are territorial. Therefore, determining which country's law applies and whether an Indian court has jurisdiction can become complicated. The Supreme Court's observations in Satyam Infoway are relevant here because it recognised that the borderless nature of the internet creates difficulties that are not present in traditional trademark disputes.18

1. Difficulty in proving consumer confusion: Trademark infringement often depends upon whether consumers are likely to be confused or believe that there is an association between the two businesses. In the metaverse, the situation can be even more complicated. A consumer may know that a virtual product is unofficial but still purchase it because it resembles a famous brand. Whether this amounts to infringement will depend upon the circumstances and the manner in which the mark is being used. The Supreme Court's approach in Cadila Health Care Ltd v Cadila Pharmaceuticals Ltd shows the importance of considering the overall circumstances while determining the likelihood of confusion.19

2. Counterfeit virtual goods: Counterfeiting is no longer limited to physical handbags, shoes and watches. Fake versions of branded digital goods can also be created and sold. WIPO has specifically recognised that virtual environments and NFT marketplaces can create problems involving counterfeit goods and consumer confusion.20

3. Intermediary liability: Another question is whether the platform hosting the virtual store or NFT marketplace should also be responsible for trademark infringement. This issue becomes important where a platform merely provides the technological infrastructure, but users upload and sell infringing products themselves. Indian law already provides intermediary safe-harbour principles under Section 79 of the Information Technology Act, 2000, but the extent of protection depends upon the role played by the intermediary.

The decision in Google LLC v DRS Logistics is useful here because the Delhi High Court examined whether Google's involvement in its advertising system was sufficiently active to affect its claim to intermediary protection.21 Therefore, future metaverse cases may have to distinguish between a genuinely passive platform and one that actively promotes, recommends or profits from infringing content.

How Can Brands Protect Themselves?

Brands should not wait for the metaverse to become completely developed before taking action. They should adopt a preventive approach.

• First, businesses should review their existing trademark portfolios and consider protection for relevant digital goods and services.

• Second, brands should regularly monitor NFT marketplaces, virtual worlds, gaming platforms and digital marketplaces for unauthorised use of their names and logos.

• Third, companies should maintain clear licensing agreements when allowing their trademarks to be used by virtual-world developers, game developers or NFT creators.

• Fourth, platforms should establish effective notice-and-takedown mechanisms so that infringing digital products can be removed quickly.

• Finally, brands should educate consumers about their official virtual stores and authorised digital products. This can reduce the possibility of consumers being misled by fake virtual stores.

Is the Existing Indian Law Enough?

The existing Indian trademark framework is broad enough to provide protection in many metaverse-related situations. Sections 28, 29 and 30 of the Trade Marks Act provide a framework for dealing with unauthorised use, while Sections 11 and 27 provide additional protection through refusal of conflicting marks, well-known trademark protection and passing off.22 However, the law still has grey areas.

The Trade Marks Act does not expressly provide a detailed framework for virtual goods, NFTs, avatars or metaverse marketplaces. As a result, courts will have to apply existing
concepts such as “goods”, “services”, “use in the course of trade”, “likelihood of confusion” and “unfair advantage” to situations that were not specifically contemplated when the legislation was enacted.

Therefore, India may not necessarily need an entirely new trademark law for the metaverse. What is more important is developing clear administrative guidelines and judicial interpretation regarding digital goods, NFTs, virtual services and platform liability.

Conclusion

The metaverse has changed the way brands interact with consumers. A trademark that was once seen on a physical shop, product or advertisement can now appear on an avatar, virtual handbag, NFT, digital sneaker or virtual store.

The basic principle, however, remains the same: a person should not be allowed to commercially exploit another person's brand in a way that causes confusion or unfairly takes advantage of its reputation.

Indian trademark law already provides several tools that can potentially deal with these problems. The Trade Marks Act, 1999, along with the principles developed by Indian courts in internet and trademark cases, provides a reasonable starting point.

The real difficulty lies in applying these principles to a borderless and rapidly changing digital environment. Questions relating to classification of virtual goods, consumer confusion, anonymous infringers, jurisdiction, NFTs and intermediary liability will require courts to interpret existing law carefully.

The experience of cases such as Hermès v Rothschild and Nike v StockX shows that these disputes are already emerging internationally. India is therefore likely to face similar questions as its digital economy develops.

Ultimately, the metaverse does not make trademark law irrelevant. Instead, it tests whether existing trademark principles are flexible enough to protect brands when the marketplace itself is no longer physical. Indian law appears capable of dealing with many of these situations, but clearer rules and consistent judicial interpretation will be necessary to provide certainty to both businesses and consumers.

REFERENCES

[1] WIPO, ‘Trademarks in the Metaverse’ (WIPO Magazine, 12 March 2022), explaining the metaverse as a virtual environment involving activities such as gaming, shopping, entertainment and interaction through avatars.

[2] WIPO, ‘The Metaverse, NFTs and IP Rights: To Regulate or Not to Regulate?’ (WIPO Magazine), explaining the distinction between ownership of an NFT or digital object and ownership of the underlying intellectual property rights.

[3] Trade Marks Act 1999, s 2(zb). The Act defines a “trade mark” broadly to include marks capable of distinguishing goods or services.

[4] Trade Marks Act 1999, s 28.

[5] Trade Marks Act 1999, s 29(1). The provision deals with use of an identical or deceptively similar mark in the course of trade.

[6] Trade Marks Act 1999, s 29(2). The provision covers situations involving likelihood of confusion or association with the registered trademark

[7] Trade Marks Act 1999, s 2(j), which defines “goods” as anything that is the subject of trade or manufacture. The Supreme Court also considered the broad statutory definition

[8] WIPO, Nice Classification, which has progressively introduced terminology relevant to NFTs and virtual goods and services. WIPO has noted that changes concerning NFTs and the metaverse entered the Nice Classification framework from 2024.

[9] Trade Marks Act 1999, s 29(4). The provision protects registered marks having a reputation in India against certain unauthorised uses involving unfair advantage or detriment to the mark's distinctive character or reputation.

[10] Hermès International v Rothschild, 1:22-cv-00384, US District Court, Southern District of New York (2023). The dispute concerned “MetaBirkins” NFTs depicting Birkin handbags.

[11] Nike Inc v StockX LLC, 1:22-cv-00983, US District Court, Southern District of New York. Nike alleged unauthorised use of its trademarks in connection with NFTs; the parties subsequently settled the dispute in 2025.

[12] Satyam Infoway Ltd v Siffynet Solutions Pvt Ltd (2004) 6 SC

[13] Yahoo! Inc v Akash Arora 1999 PTC 201 (Del). The Delhi High Court restrained the defendant from using a deceptively similar domain name and recognised the relevance of trademark and passing-off principles in the internet environment.

[14] Google LLC v DRS Logistics (P) Ltd 2023 SCC OnLine Del 4809. The Delhi High Court considered the use of trademarks as keywords in Google's advertising system and held that such use could fall within “use” under s 29(6), while emphasising that use of a mark as a keyword does not automatically establish infringement in every case.

[15] Trade Marks Act 1999, s 27(2), which preserves the common-law remedy of passing off.

[16] Trade Marks Act 1999, s 11(2). The Act provides enhanced protection to well-known trademarks even against certain uses concerning dissimilar goods or services.

[17] Trade Marks Rules 2017, r 124, which provides the procedure for determination of a trademark as a well-known trademark by the Registrar.

[18] Satyam Infoway Ltd v Siffynet Solutions Pvt Ltd (2004) 6 SCC

[19] Cadila Health Care Ltd v Cadila Pharmaceuticals Ltd (2001) 5 SCC

[20] WIPO, ‘Trademark Enforcement Issues in the Metaverse’ (26 January 2023), noting the problem of counterfeit goods bearing trademarks being traded through NFTs and virtual environments.

[21] Google LLC v DRS Logistics (P) Ltd 2023 SCC OnLine Del 4809. The Delhi High Court considered Google's role in its advertising programme and the applicability of intermediary protection under s 79 of the Information Technology Act 2000.

[22] Trade Marks Act 1999, ss 11, 27, 28, 29 and 30. The Act is administered by the Trade Marks Registry under the Office of the Controller General of Patents, Designs and Trade Marks.