The importance of Intellectual Property in the relationship between fashion and the metaverse

By Isabela Magnanti e Kamille Trindade Machado
27/10/2022

Virtual reality is nothing new, but for many, it may seem like a distant and even difficult idea to understand. This niche market has been gaining momentum over the years with the evolution of the internet and technology and, with a post-pandemic scenario and discussion about the metaverse, we see that physical and virtual reality are getting closerand closer.

With the rise of the metaverse, we have seen several industries increasingly plunging into the digital world. The fashion industry, for example, is being remodeled as major luxury brands come to digital fashion, selling their products from digital platforms, games, NFT's, among other means.

For an industry that has always relied heavily on physical interactions, the metaverse seems to have brought several advantages to this market.

For example, in 2021, the RTFKT marketplace sold 600 pairs of digital sneakers in just seven minutes, racking up $3.1 million in sales. In June of the same year, a gucci digital handbag was sold on the digital gaming platform Roblox for more than $4,000, a higher value than its physical handbags.[1] In addition to selling luxury products such as NFTs, major brands have also entered the world of virtual gaming. The Spanish brand Balenciaga, created a game exclusively to present its collection of autumn-winter 2021. The game Afterwold: The Age of Tomorrow allowed users to have an immersive catwalk experience, featuring unusual pieces in their avatars. The format was the same used by Gucci, which in 2020 launched the game Animal Crossing: New Horizonswhich contained designer pieces from brands such as ValentinoChanel and Jacquemus. [2]

Not only foreign companies, but also Brazilian companies, have already explored this new virtual environment. Brands such as Reserva, which launcheda new collection of sneakers in NFT[3] and that of the influencer Boca Rosa, which made a launch of its brand within the metaverse[4]are examples of the use of this technology as a strategic tool for its business.

With all this growth and, given that the fashion world is the target of counterfeits and copies, it is essential that brands obtain protection in the virtual environment. Unauthorized use of an NFT of trademarks, for example, can contribute to the dilution[5] of a trademark, especially in the metaverse where digital products often exceed the value of physical products.

In practice, companies have already sought to protect their assets by registering before the PTO and foreign agencies. As an example, nike and vans have made specific registration requests for the protection of the products it sells in its virtual format:

 

 

Cases of conflict of trademarks and assets exploited in the metaverse have already arrived, even in the courts, which further reinforces the need for protection. The French luxury brand Hermèsteve violated its rights when the artist Mason Rothschild, created the project MetaBirkin, which consisted of a collection of 100 NFTS, where the french brand's handbags were sold at prices of up to R $ 248 thousand.[6] The brand sued the artist, claiming that at no time consented to the commercialization of the bags in the virtual environment and that he would be infringing the rights of the brand. The artist in turn claimed that the MetaBirkins would be works of art and not forgeries. The case is still being tried by the New York Court. In August of that year, the Hermès brand already requested from the USPTO (United States Trademark and Patent Office) the registration of the brand for the protection of non-fungible tokens (NFTs), as well as the negotiation of cryptocurrencies and virtual goods markets, such as clothing, accessories and footwear. [7]

Another case that gained prominence involved the luxury brands Gucci and Prada, in which individuals Fenesha Holmes and Reath Mohammed submitted, in November 2021, applications for registration of the Gucci and Prada brands in the metaverse. USPTO examiners immediately dismissed the requests because of a possible risk of confusion, claiming that, under Trademark Act Section 2(a), trademarkregistration of trademarksthat may "falsely suggest" a connection to a company is proi b. It was understood that,and Mbora Holmes and Mohammed "are not connected to the goods and/or services" provided by Gucci and Prada, fashion brands are "so well known that consumers would assume a connection" when it does not exist. [8]

Given this scenario, we can conclude that, with the growth and consolidation of the metaverse, there is a high chance that unauthorized third parties violate the right of brands and other intellectual property rights consolidated in the market, especially when it comes to the fashion market. As much as there are still many uncertainties within this new reality, it is important that companies anticipate risk by registering their brands and protecting their products for virtual environments.

 

By Isabela Magnanti (Lawyer of the Department International of Trademarks, Copyrights and Contracts of Lion Intellectual Property. Postgraduate in Fashion Law at Presbyterian University Mackenzie. E-mail: isabela.magnanti@leao.adv.br) and Kamille Trindade Machado (Lawyer and Coordinator of the Department of Trademarks, Copyrights and Contracts of Leão Intellectual Property, Master in Intellectual Property and Technology Transfer for Innovation by PROFNIT/IFRS, Postgraduate in Business Law from The Getúlio Vargas Foundation - FGV. E-mail: Kamille.machado@leao.adv.br)

 

[1] Gonzalez, Pilar. Digital Fashion in Metaverse. Pg 30. https://www.politesi.polimi.it/handle/10589/188809

[2] See: https://www.lilianpacce.com.br/desfile/balenciaga-transforma-seu-desfile-em-um-jogo-online/

[3] Ver https://forbes.com.br/forbes-tech/2022/09/reserva-evolui-aposta-no-metaverso-com-nova-colecao-de-sneaker-phygital/

[4] Ver https://exame.com/pop/boca-rosa-revela-proximo-lancamento-assinado-por-avatar-no-metaverso_red-01/

[5] A diluição, em resumo, seria o enfraquecimento da força distintiva de uma marca famosa, através do uso por terceiros.

[6] See: https://www.bicharaemotta.com.br/hermes-processa-criador-de-nfts-inspiradas-na-bolsa-birkin/

[7] See: https://www.metropoles.com/colunas/ilca-maria-estevao/apos-polemica-com-bolsas-digitais-falsas-hermes-entra-no-metaverso

[8] See: https://www.thefashionlaw.com/no-metaverse-trademark-registration-no-problem-says-uspto-over-gucci-prada-applications

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