Trademark infringement in the creation and commercialization of virtual assets within the metaverse

Abstract

The paper examines the distinctive features of the criminal-legal qualification of the unlawful use of means of product individualization (trademarks), regulated by Article 180 of the Criminal Code of the Russian Federation (CC RF), concerning the issuance (minting) and circulation of virtual assets (Non-Fungible Tokens, or NFTs) within decentralized environments. The objective of this research is the investigation and subsequent development of conceptually substantiated proposals aimed at resolving systemic legal conflicts that arise when applying the norms of substantive criminal law to acts involving the infringement of exclusive trademark rights within the context of the transboundary, anonymous, and speculative digital economy of the metaverse. As key findings, the study puts forward reasoned solutions that seek to adapt both the principle of jurisdiction and the corpus delicti to the realities governing the circulation of NFTs. Firstly, concerning the determination of the place where the crime was committed, it is proposed to abandon the practice of basing jurisdiction on the physical location of the perpetrator's device. Instead, the principle of jurisdiction by effect should be applied, whereby the territory of the Russian Federation is recognized as the place of the crime if the rights holder who incurred major damage is registered in Russia. Secondly, for the qualification of the repetition element, the mass minting of NFTs accomplished through a single smart contract is proposed to be qualified as a single continuous offense. Thirdly, regarding the calculation of major damage, the necessity of excluding the speculative market value of the NFT is substantiated. Consequently, the damage should be definitively calculated as the aggregate sum of the potential licensing remuneration (royalty) and the documented costs associated with suppressing the infringement. As an alternative de lege ferenda proposal, it is suggested that the legislative provision «major damage» within the disposition of the article 180 CC RF be substituted with «extraction of illicit income in a large amount».