Fashion In The Metaverse : The Law And Protection

Introduction

The concept of the metaverse is developing and has already made its way into a number of fields, including architecture, media and entertainment, as well as the legal system. It has also given “trendsetters,” fashion companies, and fashion shops a large number of opportunities. The Covid-19 pandemic and lockdowns had a detrimental influence on fashion companies, which further motivated them to grow their business on the Metaverse. Metaverse, which includes virtual or augmented reality and can be accessed through a browser or headset, enables them to directly communicate with their clients due to this paradigm change, which is quite advantageous to them.  It provides an unmatched degree of design and layout possibilities.

[Image Sources : Istock]

Metaverse- a Magnet to Fashion Brands

Virtual worlds provide fashion brands with the opportunity to significantly cut down on the excessive resource consumption of lifestyle and create sustainability. Not to mention, it allows for almost infinite expansion, allowing marketers to design apparel of any size. The Italian brand Gucci, created a digital showroom for Gucci Garden to go along with its multimedia, real-world “Gucci Garden Archetypes” display in Florence. The gaming and metaverse platform Roblox helped Gucci develop a variety of immersive themed locations that were inspired by the brand’s various advertising campaigns. Louis Vuitton developed “Louis- The Game” where the character goes through a journey which shows the brand’s history until now. The players can collect up to 30 NFTs in the game, 10 of which are designed by the artist Beeple[i].

Challenges in Metaverse

The introduction of fashion in the metaverse highlights how important it is to consider intellectual property rights holistically. The main assets of any fashion firm that are virtual designs, may need to be protected as trade dress under trademark law. For undisputed ownership of virtual designs, Intellectual Property (IP) laws must be thoroughly handled with. Brands will need to re-evaluate their filing strategies and determine if the mark is given enough protection in the meta-environment, provided that usage in the metaverse does actually amount to use as a trademark. As a result, the trademark classes might need to be redefined. Fashion companies will also need to evaluate the extent of their legal rights to the products they want to sell in the metaverse. This may be simpler in the case of employee-created works that will be converted into digital or NFT assets, but less so when an independent contributor is involved.

It is important to pay close attention to “new technology clauses” in standard licensing terms or collaboration agreements since they typically extend the right of exploitation to all currently existing and future technology. A recent study[ii] by the World Trade Mark Review revealed that several brands and logos were being illegally sold on the NFT platforms for hefty sums of money. For instance, unauthorised Chanel blazers and Cartier’s “love bracelets” were on sale on the Roblox Metaverse. Fashion brands are no strangers to the continuous fight against fake and counterfeit items in the real world. However, since the fake virtual product is much easier to acquire in the metaverse, it can seriously harm the reputation of the brand.

In the recent case of Hermès International v. Mason Rothchild[iii], Hermès, a high-end fashion brand, encountered a problem with NFTs modelled after their well-known Birkin bags. The “MetaBirkins” have made roughly $450,000 so far, with the average selling price of these digital bags being around $3,000.

In the Southern District of New York, Nike v. StockX[iv] is also an ongoing case. Interestingly, StockX contends that it is not selling the NFT as digital art but rather as a “claim ticket” to the authentic Nike sneakers that the brand sells and holds in its facilities.  Yuga Labs v. Ripps[v], which involves trademark infringement concerning the Bored Ape Yacht Club NFTs, and Hunley v. Instagram[vi] are two further intriguing cases to study that are currently ongoing (copyright infringement case involving embedded photographs).

Expansion of Legal Protections

By deterring imitated products, trademarks safeguard a company’s identity and the image of its brand(s), especially in the Metaverse. The trademark registration safeguards the owner’s rights and establishes the business’s legal standing. As a consequence, the registered trademark’s owner will have the sole right to use it and can use necessary legal resources to stop its illegal use by other parties. It will also lower marketing costs and  strengthen brand identity as brand distinctiveness and identification will be essential in the virtual reality of Metaverse. Any brand that wants to have exclusive rights to a mark in a country must register its trademark. The law secures the trademark against any infringement not just in the physical world but also in the Metaverse. Therefore, trademark owners may file a lawsuit against infringement of virtual products in the same way as they may do so to stop the sale of counterfeited items on online marketplaces. However, it is crucial to remember that a trademark for clothing does not cover virtual clothing, thus the mark’s owner should register the mark for digital products and services.

Contrary to trademarks, copyrights do not need to be used in commerce for the owner to be able to enforce their ownership. However, in order to file a lawsuit of infringement, copyright registration is required. Copyright safeguards the original digital work and gives its creator some exclusive rights, such as the ability to duplicate and distribute the work. Therefore, if the specific artistic work sold as an NFT satisfies the specified conditions, such as originality and innovation, it may be qualified to be secured by copyright.

Conclusion

The metaverse might present a trillion-dollar business opportunity if it turns out to be an advanced version of the Internet. Fashion brands must therefore decide, how and when to participate in the metaverse. Brand owners must make sure their IP portfolio is in check before doing so, especially for businesses that are thinking about NFT-based offerings or other commercial components of the metaverse.

In order to ensure that there is strong brand protection, this involves looking over current trademark and copyright registrations as well as taking into account new trademark and copyright applications that expressly address uses in the metaverse. Moreover, Brand owners must enhance monitoring tools to find potential unauthorized uses of their brands. Informal security tactics like demand letters, business-to-business conversations, and/or take-down requests will help resolve most of these IP issues. However, as previously indicated, trademark registrations for virtual commodities will strengthen those attempts.

Author: Areena Kausar, a Student of Symbiosis Law School, Hyderabad, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or   IP & Legal Filing.

[i] Jacob Kastrenakes, Beeple sold an NFT for $69, The Verge (Oct. 21, 2022, 11 AM), https://www.theverge.com/2021/3/11/22325054/beeple-christies-nft-sale-cost-everydays-69-million

[ii] Bridget Daikun, Hermès takes on NFT artist, World Trademark Review (Oct 21, 2022, 11:10 AM), https://www.worldtrademarkreview.com/enforcement-and-litigation/hermes-takes-nft-artist-meta-marks-sold-60-million-retailers-push-inform-consumers-act-news-digest

[iii] Id.

[iv] Brooks Kushman, Nike v. StockX case highlights many unanswered questions about IPs and NFTs, JDSupra (Oct 22, 2022, 11:22 AM), https://www.jdsupra.com/legalnews/nike-v-stockx-case-highlights-many-9205701/

[v] Yuga Labs v Ripps, 15 U.S.C. § 1114 (United States of America).

[vi] Hunley v Instagram, 21-cv-03778-CRB (United States of America).