This article is authored by Manreet Kaur, a fourth year B.A. LL.B. (Hon’s) student at the West Bengal National University of Juridical Sciences, Kolkata.
Introduction
Change and Evolution are driving forces of the fashion industry. For any brand or designer aiming to enjoy lasting success and relevance, it becomes absolutely essential to stay consistently up-to-date, launching fresh, updated couture to its followership for enjoying success. New trends are almost instantly born in today’s fast-paced world due to the drastic coverage of digital environments that occurred after the Covid era. The digital world is becoming a reality that need to be embraced if one wants to live as part of the community. The fashion industry took cue well and settled into this new age of style by establishing itself on this ‘new’ frontier through establishment within the creation of seemingly novel pieces of digital fashion items that reflect its acceptance of this new frontier.
Digital clothing, accessories, and cosmetics are items of design created digitally, for use and interaction primarily within the virtual and digital. Digital fashion is an intangible existence within virtual spaces in the form of avatars, unhindered by physical constraints as compared to traditional clothing.
This digital leap by the fashion industry raises questions relating to Intellectual Property (herein referred to as ‘IP’) over digital fashion items. The current regulatory framework regarding IP in fashion is developed with the physical understanding of the fashion world. The digital change in the industry is something that might require certain changes in this regulatory framework. This blog tries to question the applicability and adequacy of the current legal regulatory framework for IP in physical world fashion to digital fashion.
Reading into the terms in Fashion Meta-verse
In the ever-changing world of fashion where trends often revisit and repeat the past, emergence of the fashion meta-verse has been around to smash the conventional limits of physical clothing. The start of Meta-verse Fashion has introduced one major revolution superseding the nostalgia of styling from imagination and previous styles.
Non-Fungible Tokens (herein referred to as ‘NFTs’) have reshaped the fashion-industry dynamics bringing with it the contours of creativity and interpretation, pushing what could be experienced and engaged with regard to style inside of this burgeoning panopticon.[i]
Virtual fashion brings amazing digital couture into the picture, while NFTs place ownership and authenticity alongside it. This fusion turns virtual fashion into all-pervasive canvas for limitless creativity and endless imagination.
NFTs bring into the digital realm rare and authentic collectibles. While based on blockchain technology, NFTs trace ownership and uniqueness over virtual fashion items, allowing collectors and enthusiasts to get exclusive digital wearables and take part in a new kind of fashion commerce.[ii]
The major global fashion brands have utilized this digital space to make a mark for their brand products. Gucci harnessed the virtual space by partnering with Roblox, an online gaming platform. Louis Vuitton, wanting to bet its claim, entered the Non-Fungible Tokens world by launching a collection of NFTs that consist of animated characters and 3D sculptures.[iii] Similarly, all the major brands like Balenciaga, Burberry, Ralph Lauren have made use of various digital platform.
The fusion of metaverse and fashion will bring in new and different range of disputes. This makes it necessary to analyze the adequacy of current IP protection framework for digital fashion as well.
Hermès International, et al. v. Mason Rothschild
Hermès gained attention in December 2021 when it sent a cease-and-desist letter to artist Mason Rothschild over his “MetaBirkins” NFTs, which depicted digital versions of the iconic Birkin bag.[iv] According to the letter, the sales of NFTs called MetaBirkins by Rothschild infringed on Hermès federally registered trademarks.
This was after he refused to heed to the demands made through the letter which included taking the NFTs off the market that the luxury brand, Hermès, filed a lawsuit against Mason Rothschild in federal court in New York on January 14.[v] Hermès accused Rothschild amongst others of federal and common law trademark infringement, counterfeiting, and harming business reputation.[vi] The lawsuit sought monetary damages, including profits from NFT sales, as well as an injunction to cease the further use of its trademarks. The court has ruled in favour of the luxury brand and placed an injunction on Rothschild from issuing any more such NFTs. This case is very important as it is one of the first case laws involving the applicability of physical IP protection rights in digital world.
This case has established a precedent in favour of the global brands that have registered trademarks over their products in the metaverse as well. However, it is not safe to assume that it will be that easy to get the protection in the metaverse. Metaverse has no boundaries and has no governing authority. Anyone and everyone have access to this world without even showing their faces. This anonymous and border less nature of metaverse will raise a lot of obstacles in giving traditional IP protection in the metaverse. This ruling by the court is very specific to the present fact situations where the infringer was easy to track and identify. With times to come, the disputes will become more and more complex which will become very difficult to be solved by traditional IP rights.
Nike Inc. v StockX LLC
This is another ongoing case involving IP protection in the digital space and interpretation of NFTs by the courts. The case involves famous sporting apparel brand, Nike Inc. Another company, StockX LLC is selling NFTs that prove ownership over physical item, such as sneakers, stored in its physical “vault.” Among these NFTs, StockX minted and sold NFTs featuring Nike’s well-known trademarks like ‘swoosh’ and ‘jump man’ logo, showing ownership over Nike shoes stockpiled in its vault.[vii] Nike filed a complaint in a District Court in New York and sued StockX, citing trademark infringement among other charges.[viii]
This case may dramatically define the scope of a trademark owner’s authority to prevent unauthorized use of its marks in NFTs, marking a major moment in the development of metaverse law.[ix] It raises fundamental questions about the relationship between merchants and manufacturers through examination regarding the types of NFTs that may be authorized and the availability of the “fair use” defense.[x]
If the court decides in favor of Nike, the NFTs would be covered under the IP framework and would be given trademark protection. However, if the court sides with StockX, then NFTs would be seen as digital receipts for physical products only and would not be eligible for trademark protection. Many brands have already started registering their digital apparels and products for IP protection.
Inadequacy of the current IP framework
As seen in Hermès case, the court has applied the traditional IP framework for protecting the rights of the luxury brand. However, the current IP framework involving trademarks, design, copyrights, and patents are territorial in nature and are framed as per the reality of the physical world. It is easy to demarcate the geographical jurisdiction of the dispute and it is easy to identify and track the infringer in the physical world. All of this will not be easy in the digital world. The anonymity of the metaverse has always been a major debating ground involving lot of issues including criminal matters as well. It is not economical for the brands to apply for IP protection in every country of the world. The territorial aspect of the IP rights will also pose an obstacle for the protection in the digital realm. Moreover, the jurisprudence involving the intersection of IP and fashion metaverse is minimal. There are no guidelines or regulations catering to IP in the metaverse.
Potential Solutions
The IP protection organizations namely World Intellectual Property Organization (WIPO) have acknowledged the need of bringing in guidelines or regulations regulating the use of fashion in the metaverse and providing IP protection the brands or designers using this interface. Until IP guidelines are established, stakeholders in IP can play a crucial role in protecting intellectual property content. The digital platforms offering a forum to these contents can formulate content moderation policies which can act as a checkpoint in scrutinising the content posted for any violation of IP rights. Furthermore, the fashion brands can opt for advanced means for their IP protection.
Blockchain technology is one such precautionary measure that can be utilised to protect their rights. There is an instance of using this technology to ensure the protection of the authorship of the designer. Fabricant, in 2022, launched a platform for users to mint their designs on the blockchain giving them recognition for their design in a transparent manner.[xi] Metaverse by its characteristics is difficult to regulate. It is difficult if not impossible for authorities to come with regulations that could regulate something that is ever changing and anonymous. It becomes indispensable for the designers to use precautionary measures such as blockchain technology or smart contracts to protect their interests.
Conclusion
The complexity of the metaverse will pose major implications for the traditional IP framework and therefore it is important to frame regulations for governance of the metaverse. It is not only important for the fashion industry but also for all other industries like gaming, manufacturing and entertainment.
The metaverse has huge potential which if harnessed will help in bringing development and innovation in the fashion industry. The protection available to global brands and designers in physical world should also be replicated in the digital space. The fashion metaverse is bound to boom more and more with coming times and it is therefore important to protect the brands, designers from IP infringement and also the users from counterfeit products.
Endnotes:
[i] https://doi.org/10.1177/0887302X241283504
[ii] https://doi.org/10.1016/j.chb.2022.107407
[iii] https://www.voguebusiness.com/technology/louis-vuitton-to-sell-euro39000-nfts
[iv]https://www.thefashionlaw.com/hermes-v-rothschild-a-timeline-of-developments-in-a-case-over-trademarks-nfts/
[v] https://patentco.com/hermes-v-rothschild-a-landmark-case-for-trademarks-in-the-visual-world/
[vi] https://www.meshiplaw.com/litigation-tracker/hermes-v-rothschild
[vii] https://www.meshiplaw.com/litigation-tracker/nike-v-stockx
[viii]https://www.ipandlegalfilings.com/nike-v-stockx-an-analysis-of-the-trademark-infringement-in-the-metaverse/
[ix] https://nftnow.com/features/the-nike-v-stockx-lawsuit-could-determine-what-type-of-nfts-can-be-created/
[x] https://nftnow.com/features/the-nike-v-stockx-lawsuit-could-determine-what-type-of-nfts-can-be-created/
FASHION LAW 
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