Every Restaurateur Should Care About NFTs and the Metaverse

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You’ve seen digital art renderings of monkeys sell for thousands, if not millions of dollars. You may have heard of McDonald’s and Panera, among other major hospitality and retail brands, filing trademarks in the metaverse. And recently, NFT-based dining experiences have crept into the industry lexicon, from NFT food halls and exclusive members-only restaurants to a single brand, Chick’nCone allowing investors to use NFTs to buy a share of franchise fees and brand royalties.

But what exactly is the metaverse? And are NFTs just a fad, or should restaurateurs invest in them as the “next big thing” for the industry?

Nation’s Restaurant News spoke with Michael Kondoudis, a Washington, D.C.-based attorney specializing in federal trademarks and patents, about the basics of NFTs, crypto, the metaverse and why the restaurant industry should sit down and pay attention.

How would you describe NFTs from a layman’s perspective?

NFT stands for non-fungible token. These are digital tokens. When something is fungible, it is easy to replace it with something of the same quality or value. A non-fungible token is unique. And this technology was developed to protect crypto– that’s where this blockchain technology comes from. The blockchain protects you from someone coming in and copying a bitcoin and saying “Well, now I have two bitcoins”. The blockchain keeps it unique and non-fungible. […] NFTs lock in and ensure that the token is unique, so that the crypto asset, or sometimes even a real-world asset, is owned by only one person. That’s what an NFT does.

How do NFTs differ from cryptocurrency?

Cryptocurrency is going to be the main digital currency of the metaverse. Whether it will be Bitcoin or another crypto or state-backed currency remains to be seen. But in many ways, it’s like a credit card transaction on steroids. That’s how it will be. And so, again, NF Ts are protected by the blockchain against copying unique digital assets. This is where the keystone between NFTs, crypto and the metaverse is – this is where everyone is filing their trademark applications.

Why are NFTs controversial?

They are controversial because they are not as environmentally friendly as people like to think. When mining a blockchain, we are talking about traversing these NFTs using blockchain technology to track the unique property: the code that accompanies all of these tokens. Someone needs to keep track of ownership and then transfer from one person to another [and those end up getting mined from] these huge anonymous servers.

Can you explain what the metaverse is? And do you need a VR headset to experience it?

Right now, the metaverse is driven by the game world: Unity, Roblox, and all those open-world game systems, which allow for the most advertising and product placement. Many of them are currently played without virtual reality headsets. We’re at a point where technology doesn’t allow us to realize what we can conceive of as the metaverse, and even a VR headset doesn’t make it real yet.

[Currently], the experience is somewhat limited (looks like a game). Facebook is considering the use of VR headsets and AR glasses to achieve a more “immersive” feel and it will happen in the near future.

So we haven’t actually experienced the metaverse?

The Metaverse will ultimately be a nicer, cleaner, brighter, and funnier version of The Matrix. […] That’s the point. And it will eventually happen: it could take five years, or it could be 10 years, but it will happen, because the players want it, and everyone is going to join them. So for now, to get closer to an immersive online experience, you need a headset.

Why should a restaurateur care about all this?

The first reason they should care is that big famous brands are interested and even a small restaurant should be wondering why McDonald’s is filing trademarks for NFTs. […] Even famous brands have realized that their brands are not 100% protected and they are exposed to trademark counterfeits that they cannot stop. [within the metaverse]. They are trying to address this weakness in protecting their brand because technology has gotten a little ahead of the law.

So if someone has the brilliant idea of ​​going into the metaverse and selling code that when rendered makes your avatar look like they’re wearing Nike shoes, is that really infringing the trademark registration held by Nike? It’s code, not shoes. […] So what did Nike do? […] They realized that the most cost-effective way to close this gap in their protection was to file trademark applications.

Is this what McDonald’s does?

McDonald’s has taken a similar approach, but it’s a little different because they’re in foodservice. They know the metaverse […] is a few years away, but they didn’t want a trademark infringement issue, so they did it now. […] The next reason they decided to do this I believe is cross-promotion. Their exposure or imprint in the metaverse will almost certainly carry over into the real world.

There will be places where they can advertise in the metaverse, and it will be as effective as advertising in the real world, maybe even more because it could be cheaper since everything is done digitally. […] McDonald’s has also filed trademarks for McDelivery and McCafe, which is open to several commercial services, including virtual concerts and online events where you pay with crypto for NFT-backed tickets.

They even applied for a virtual restaurant with home delivery. In other words, you can order your food in the metaverse and they will deliver it to you in the real world.

What about restaurants whose brand is less recognized than McDonald’s?

The next reason restaurants should pay attention is revenue. Not all restaurants have enough recognition or cachet to be able to sell branded virtual goods […] But virtual restaurants also serve as meeting places. A cafe could have a place in the metaverse where it could sell advertising for other companies, Coke could pay them to offer co-branded products in their virtual NFT restaurant. But the last one, and the one that really matters, is that there are two reasons, two last reasons.

It will take time to figure this all out, but it never hurts to dive into it and start early, which is what all of these big brands are doing.

The other thing they do is protect their brand from damage. Let’s say someone other than Panda Express opens a Panda Express in the metaverse and they’re selling virtual food, and they come up with the idea of ​​having virtual fortune cookies with racy fortunes written on them ? How to stop them? It’s code, it wouldn’t be real.

Everyone wants a foothold in the metaverse so they have a chance to fight back in case something happens.

How do trademarks for NFTs work in the metaverse?

It takes about 12 months minimum to get a trademark through the Patent and Trademark Office. Moreover, these companies register these trademarks based on their intention to offer virtual services in the future. You can purchase time extensions after your trademark is cleared for up to three years. So these companies have four years to start using their trademark within the metaverse.

[…] My prediction is within a year, you’re going to see virtually every major brand filing for metaverse protection. They don’t want to be left behind. The cost of a new trademark registration application is a few thousand dollars. […] But if, God forbid, you had to fight a lawsuit or a patent trademark office proceeding, you’re talking tens of thousands of dollars: that’s an ounce of prevention for a pound of cure.

So if I’m a restaurant owner with a few locations, would I want to create an NFT program?

I’m not even sure NFTs are in their future. For most operations, you’ll want to have a metaverse presence. You’re going to want to offer virtual goods and services, or at least virtual dating and ordering/online delivery. Without presence, it is very difficult to fight even an innocent trademark counterfeiter. […] Let’s say you have a competitor in your town who is opening a similar restaurant with the same name. But now what if the same thing happens in the metaverse, how to reach them? Where are they even located? […] If you give [the metaverse host] your trademark registration number, and you say, “this other entity is infringing on this trademark,” they will step in and stop it.

Also you’re going to want some exposure because it’s going to be inexpensive because it’s digital […] And exposure in the metaverse can clearly translate to traffic in the real world.

But if my restaurant already has virtual restaurants, why should I also be present in the metaverse?

There will always be a need for real-world restaurants, but there are huge opportunities in the metaverse, like cross-promotion and brand assurance. […] Do you remember the days when businessmen didn’t want to have websites? And now, if you don’t have one, people are suspicious. […] Right now the metaverse is the Wild West, but soon it will be settled, and it will be the logical place you want to advertise now like on Facebook or Google ads. […] You need to plan ahead and realize that there is a reason the competition is doing this.

Do you think restaurants will benefit more from just being part of the metaverse rather than selling or trading NFTs?

I see a lot of brands filing apps for NFTs and for cryptocurrency exchanges and marketplaces, where you can transfer cryptocurrencies and NFTs. And there’s no way in the world they’re doing that.

When it comes to restaurants, I don’t think restaurants will trade NFTs: I think they will focus on virtual goods and services. […] Sometimes when I talk to a client, explain to them, they want to make a home run, but if you really push the limits, it’s harder to get the trademark registered. [..] McDonald’s therefore did not file an NFT application.

Don’t get bogged down in those cryptocurrency/NFT details: focus on virtual products and services. Opportunities for cross-promotion through meeting spaces like virtual cafes are plentiful.

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