Fashion in the Metaverse: How NFTs Are Changing the Fashion Industry   | Caldwell Intellectual Property Law

Internet Fashion vs. the Metaverse

The internet impacts many areas of our life. Fashion is certainly not immune to such an impact and is well suited to that medium: information such as what we wear, how we wear it and how to buy it are accessible to all in a plethora of electronic devices.

The Internet, on the other hand, is evolving. The internet is still a means of searching for information, communicating with anyone else in the world and interacting on social media platforms such as Facebook®, Instagram®. With the advent of the metaverse, however, these interactions are becoming more engaging, enhancing digital interactions with other people on the internet. This is made possible by the combination of multiple technological elements, including virtual reality and augmented reality in which users “live” within a digital universe. In the metaverse, users are part of the action.

The fashion industry is also evolving into the metaverse. For example, anyone can sit in front of their computer, visit a website and find a piece of clothing to buy – this is an example of a user interacting on the Internet. Now, let’s assume you can try on that item of clothing before buying it. In the metaverse, it is possible for a user to “try before you buy” an item 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 piece of clothing. Consumers can now also virtually try on items by dragging one or more products onto their photos. In other words, in the metaverse, you may need to bring the dressing room straight into your home and have the same look and feel as a brick and mortar store. Nowhere is the intersection of fashion and the metaverse more evident than in the current explosion of fashion-related NFTs

NFT in fashion

At its most basic level, NFTs or “non-fungible tokens” are cryptographic tokens stored on a blockchain. These tokens allow someone to buy, sell, or trade real items such as works of art or real estate. Please refer to my previous article for basic information on NFTs. NFTs are particularly well suited when tokenizing items that are collectible and unique. In the fashion industry, NFTs now bring a new level of exclusivity and an opportunity to transform digital designs and collections into extremely rare, precious, luxurious and unique collectibles.

For example, Burberry has partnered with Mythical Games to launch a collection of non-fungible tokens (NFTs) in their flagship title, Blankos Block Party¹. Working with Mythical Games’ Blankos Block Party about a shark, known as Blanko, which can be bought, upgraded and sold in the game, the brand has moved into the digital space following the success of its own game, B Bounce², launched in 2019.

In late August 2021, Milan-based luxury fashion brand Dolce & Gabbana launched its NFT collection on the Polygon (CRYPTO: MATIC) blockchain. Named Genesi³ Collection the 9 pieces, Domenico Dolce and Stefano Gabbana personally designed a unique collection exclusively for UNXD. It presents museum objects entirely made by hand high fashion (women), Haute couture (men), e High Jewelery (high jewelry).

In another example, a “Baby Birkin” NFT, which was the animation of a child growing up in a Hermès Birkin bag, recently sold at a Basic.Space auction for the equivalent of $ 23,500 ⁴. It is important to note that Hermés, the owner of the brand for the Birkin bag, was not involved in the NFT issue and sent a termination and waiver letter to the creator of the NFT. Hermès recently filed a lawsuit in New York Southern District Court claiming trademark infringement and dilution. Hermès claims that the artist, Mason Rothchild, was trying to steal Hermès’ famous Birkin brand 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 creating a new world of engagement with a digital experience with users. Memorable items can increase customer loyalty. Customers can acquire, exchange and cherish unique experiences and unique moments over time, which all of these companies could use to establish a much more permanent bond with their customers.

Legal framework

Any fashion house or anyone wishing to launch an NFT needs to be aware of the potential problems that can arise regarding NFTs. For example, for an issuer, intellectual property rights may be involved, such as a copyright on a design of a garment. Typically, the issuer retains the copyrights and other intellectual property rights, and the buyer receives a right to use the underlying asset. The issuer could license the rights to use the NFT rather than transfer ownership of the intellectual property. The issuer should be careful with regards to licensing through the sale and subsequent transfer of the NFT. The issuer may prohibit any modification or exploitation of the NFT asset.

Buyers should be aware of the terms contained in the “smart contract” which are the collection of code and data that actually function as self-executing programs that can stipulate the required terms of the NFT. The acquirer should be aware of the rights and obligations acquired, in particular whether they could have an impact on the present or future value of the NFT and the underlying asset.

In terms of brands, fashion houses that have or seek a presence in the Metaverse should register their brands and service marks with the USPTO and foreign locations. A physical strategy and a metaverse can be of the utmost importance to protect exclusive rights and avoid issues that could affect a brand, such as brand dilution.

Who owns the rights to an image residing in the metaverse? In December 2020, the USPTO requested comments on a change to what was the subject of law for a design patent as the design must be for a manufacturing item ⁵. The PTO requested comments as “some new and emerging technologies, such as projections, holographic images or virtual / augmented reality do not require a physical screen or other tangible items to be visible”. Guidance on this topic may be available.

Conclusion

We are on the threshold of another digital revolution. NFTs and the metaverse are opening up new worlds of economic opportunities and risks. The fashion industry is at the forefront of many of these new developments.

1. https://www.burberryplc.com/en/news/brand/2021/Blankos.html

2. https://us.burberry.com/b-bounce/

3. https://unxd.com/drops/collezione-genesi-618a389640e4bb41a264c102

4. https://www-voguebusiness-com.cdn.ampproject.org/c/s/www.voguebusiness.com/technology/the-baby-birkin-nft-and-the-legal-scrutiny-on-digital- fashion / amp

5. https://www.govinfo.gov/content/pkg/FR-2020-12-21/pdf/2020-28110.pdf

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