LawFuel Briefing Add Yours
Ed Mantella* The internet impacts many areas of our lives. Fashion is certainly not immune to such impact and well suited for that medium – information as what we wear, how we wear it, and how to purchase it is accessible to everyone in a plethora of electronic devices.
The internet, however, is evolving. The internet is still a means for searching for information, communicating with anyone else in the world, and interacting in social media platforms such as Facebook®, Instagram®. With the advent of the metaverse, however these interactions are becoming more immersive, enhancing digital interactions with other people on the internet. This is made possible by a combination of multiple elements of technology, including virtual reality and augmented reality where users “live” within a digital universe. In the metaverse, users are part of the action.
The fashion industry is also evolving in the metaverse. For example, anyone can sit in front of their computer, go to a website, and find an article of clothing to purchase – this is an example of a user interacting on the internet. Now, suppose that you could try that article of clothing before purchasing it. In the metaverse, it is possible for a user to “try before you buy” an article of clothing in a digital showroom. Users can take a 360-degree look at a product.
They can zoom in and look at every single detail of that article of clothing. Consumers now can even virtually try on items by dragging one or more products onto photos of themselves. In other words, in the metaverse, one may be able to have to bring the fitting room right into one’s home and have the same look and feel experience as one does in a brick-and-mortar store.
Nowhere is the intersection of fashion and metaverse more apparent than in the current explosion of fashion-related NFTs
NFTs in Fashion
At its most basic level, NFTs or “non-fungible tokens” are cryptographic tokens which are stored in a blockchain. T
hese tokens enable someone to buy, sell, or trade, real items such as artwork or real estate. Please refer to my previous article for fundamental information on NFTs. NFTs are especially apt when they tokenize items that are collectible and unique. In the fashion industry, NFTs now bring a new level of exclusivity and an opportunity to turn digital designs and collections into highly scarce, valuable, luxurious, and unique collector pieces.
For example, Burberry partnered with Mythical Games to launch a non-fungible token (NFT) collection in their flagship title, Blankos Block Party¹. Working with Mythical Games’ Blankos Block Party on a shark, known as Blanko, that can be purchased, upgraded, and sold in-game, the brand moved into the digital space after the success of its own game, B Bounce², launched in 2019.
In late August 2021, Milan-based luxury fashion brand Dolce & Gabbana launched its own collection of NFTs on the Polygon (CRYPTO: MATIC) blockchain. Named Collezione Genesi³ the 9-piece, Domenico Dolce and Stefano Gabbana personally designed a one-of-a-kind collection exclusively for UNXD. It features entirely hand-made, museum-grade items across Alta Moda (women), Alta Sartoria (men), and Alta Gioielleria (high jewelry).
In another example, a “Baby Birkin” NFT, which was an animation of a baby growing in an Hermès Birkin bag, recently sold in a Basic.Space auction for the equivalent of $23,500 ⁴ . It is important to note that Hermés who owns the trademark for the Birkin bag was not involved in the issue of the NFT and has sent a cease-and-desist letter to the creator of the NFT.
Recently, Hermès filed the lawsuit in New York’s Southern District Court claiming trademark infringement and dilution. Hermès claims the artist, Mason Rothchild, was trying to rip off Hermès’ famous Birkin trademark by adding the generic prefix “meta” and calling the NFT “Metabirkin.”
From creating their own games to fashion in the metaverse, these fashion houses are establishing a new world of engagement with a digital experience with users. Memorable items can increase customer loyalty. Customers may capture, exchange, and treasure one-off experiences and unique moments in time, which is something that all these companies could use to establish a much more permanent tie with their clients.
Any fashion house or anyone desiring to launch an NFT needs to be aware of the potential issues that may arise regarding NFTs. For instance, for an issuer, there may be intellectual property rights involved, such as a copyright in a design of an article of clothing. Typically, the issuer retains copyright and other intellectual property rights, and the buyer receives a right of use of the underlying asset. The issuer may be licensing the rights to use the NFT rather than transferring the ownership of the intellectual property. The issuer should exercise caution regarding licensing through the sale and subsequent transfer of the NFT. The issuer may prohibit any modification or exploitation of the asset subject to an NFT.
Buyers should be aware of terms contained in the “smart contract” which are the collection of code and data that effectively function as self-executing programs that may stipulate the required terms of the NFT. The purchaser should be aware of the rights and obligations acquired, particularly if they might impact the current or future value of the NFT and the underlying asset.
In terms of trademarks, fashion houses that have or seek a presence in the Metaverse should register their trademarks and service marks at the USPTO and at foreign offices. A physical and a metaverse strategy may be of utmost importance to protect exclusive rights and avoid issues that may affect a brand such as a trademark dilution.
Who owns the rights to an image residing in the metaverse? In December 2020, the USPTO requested comments on a change to what constituted statutory subject matter for a design patent as the design must be for an article of manufacture ⁵. The PTO requested comments since “certain new and emerging technologies, such as projections, holographic imagery, or virtual/augmented reality do not require a physical display screen or other tangible article to be viewable.” Guidance on this subject may be forthcoming.
We stand on the threshold of yet another digital revolution. NFTs and the metaverse are opening up new worlds of economic opportunity and risk. The fashion industry is at the forefront of many of these new developments.
Ed Mantilla has deep experiences with industries such as pharmaceuticals, software development, chromatography, and medical devices to build strong patent portfolios. Ed helps his clients to identify, protect, and optimize the value of their intellectual property with a focus on patent prosecution and counseling, as well as post-grant proceedings.