In addition to another year of the pandemic, 2021 brought with it several key developments in the realm of intellectual property (IP) that BakerHostetler has covered in this blog series. We hope readers have found these posts informative and entertaining thus far. Looking forward to 2022, there are a number of issues already teed up that the IP bar will need to closely follow in the new year. To that end, below is a brief overview of a few known or emerging issues to keep an eye on.

Copyright

[1]       In April 2021, the Supreme Court issued a closely followed opinion in Google v. Oracle, in which the Court found that Google successfully demonstrated “fair use” of approximately 11,500 lines of Oracle’s source code, reasoning inter alia that the purpose and character of Google’s “use” (creating a new mobile platform) was sufficiently transformative and used only the bare minimum of code and tasks familiar to the coding community. In the months that followed, lower courts began applying Google’s fair use precedent in other contexts. For example, in Andy Warhol Found. for Visual Arts, Inc. v. Goldsmith, the Second Circuit hinted in its fair use analysis that the Supreme Court’s recent precedent from Google (finding transformative use where Google “sought to create new products” and “expand the usefulness” of established goods like smartphones) is “perhaps a less useful metric where, as here, our task is to assess the transformative nature of works of visual art that, at least at a high level of generality, share the same overarching purpose.” Understanding how – and whether – other circuit and district courts interpret, apply and expand on SCOTUS’ Google precedent where the allegedly infringing work is not “transformative” will be an ongoing process in 2022.

[2]       The U.S. Copyright Office recently published a note in the Federal Register that it is soliciting information and responses from copyright holders, online service providers and copyright users alike on how the government can implement infringement-curbing tools to better protect online copyrighted works. According to the Copyright Office, there is a renewed interest in “identifying, developing, cataloging, or communicating about existing or future technical measures for identifying or protecting copyrighted works online.” Responses from those who wish to submit comments are due Feb. 8, signaling that online copyright infringement will receive much higher scrutiny in the near future.

Patent

[1]       After SCOTUS requested input from the solicitor general on whether to grant a petition for certiorari in the case of American Axel & Manufacturing v. Neapco, many believe the Court is poised to reconsider or reshape its patent ineligibility framework under 35 U.S.C. § 101. Applying SCOTUS’ existing two-step test for determining patent ineligibility, the district court in American Axel found the patent claims ineligible, as they were directed to, and merely an application of, “natural law, or otherwise elements of well-understood [and] routine” activities already implemented by the scientific community. This decision was affirmed on appeal to the Federal Circuit, finding that American Axel’s patent claims simply “instructed the reader … to achieve a claimed result” and were also conventional activities already in practice.

In its petition for certiorari, American Axel argued to the Supreme Court that patent seekers are “desperate” for guidance in this area, and urged SCOTUS to resolve conflicting authority on this issue from the Federal Circuit, the United States Patent and Trademark Office and other industry insiders. If Solicitor General Prelogar and her staff recommend that SCOTUS grant American Axel’s petition, it is likely the Court will at least provide some clarification on the patent ineligibility framework under Section 101. Or it is possible the Court will rework its two-step framework used most recently in Alice Corp. v. CLS Bank International altogether.

‘Real’ property in the Metaverse?

In 2021, several Big Tech companies highlighted their commitment to focus on and build out the digital “metaverse” – an entirely online virtual world where people can do just about anything, from socializing and attending work meetings to playing games or just exploring. For example, Justin Bieber, Ariana Grande and the Weeknd all recently gave performances in the metaverse through their digital avatars. The growing list of companies focused on the metaverse seems to align with the ever-expanding frontiers of virtual/augmented reality, cryptocurrencies and nonfungible tokens (NFTs).

Despite being an intangible online world, however, real-life investors (or maybe, better yet, “prospectors”) have been quick to put their money into this early success by focusing on metaverse “real estate” (e.g., concert venues, shopping centers, business parks, casinos or entire swaths of prime “city” real estate), where it is expected that large volumes of metaverse travelers will come to play, shop, socialize and do business. As explained by one metaverse developer, “You can buy locations that you love, whether it’s Central Park or the pyramids in Egypt. … What you’re buying is the virtual land that covers the earth at those locations.”[1] Another insider explained investor interest as follows: “Imagine if you came to New York when it was farmland and you had the option to get a block of SoHo …. That same experience is going to happen in the metaverse.”[2]

These transactions are relying on NFTs and cryptocurrencies as consideration – aspects whose prevalence is only expected to grow and reach new applications in 2022 and beyond. And the IP bar will need to closely follow how new and existing laws and regulations will impact the wave of clients turning their attention to digital assets and digital commerce in the metaverse.

[1] See Debra Kamin, “Investors Snap Up Metaverse Real Estate in a Virtual Land Boom,” The New York Times (Nov. 30, 2021), https://www.nytimes.com/2021/11/30/business/metaverse-real-estate.html.

[2] Id.