FinTech

Is the metaverse the fashion world’s new intellectual property rights revolution?

The definition of the strategy for protecting intellectual property rights in the metaverse for fashion companies is very complex, but we try to give some helpful guidance on the matter.

Neal Stephenson coined the term “metaverse” in his 1992 novel Snow Crash.  He referred to a 3D virtual world inhabited by avatars of real people, sometimes facilitated by the use of virtual and augmented reality devices, which would increasingly blur the line between online and offline.

No other industry has embraced the metaverse like fashion.  Brands like Gucci, Balenciaga and Burberry are creating clothes and accessories in the metaverse that probably no one will ever wear in the real world.  Millions of users are buying clothes and skins for their digital avatars, and many fashion brands have partnered with the video game industry to launch digital capsule collections, which in some cases could even be sold in actual stores.

Such a phenomenon has several legal consequences, especially in intellectual property.

Will use in the metaverse by a fashion brand constitute genuine use of the mark in its core classes under intellectual property law, or will new filings be required?   Assuming that use in the metaverse does indeed amount to use as a trademark, companies will need to re-examine their filing strategies and assess whether sufficient protection is afforded to the mark in a meta-environment.  This could lead to redefining the trademark portfolio and considering filings in, for example, classes 9 and 41.  In the case of meta-squatting phenomena, consideration should be given to the possibility of providing evidence of the brand’s reputation by accessing enhanced protection against different products.

Fashion brands will also need to assess the scope of their rights to the products they wish to introduce into the metaverse.  This may be easier in the case of works created by employees that will be transformed into digital or NFT assets but less straightforward concerning works created by independent contributors.  In standard license agreements or collaboration agreements, it is necessary to pay particular attention to the “new technology clauses” that generally extend the right of exploitation to all technologies known at the time and to be developed in the future.  In any case, the best strategy is to draft clauses assigning all intellectual property rights to the works involved, which will then include the various forms of exploitation in the metaverse.

Another issue concerns the principle of territoriality of intellectual property rights in the metaverse.  On this point, it is reasonable to assume that the general principle of ubiquity, already used for the Internet, will allow people to sue for infringement in all the forums where the infringing content is made accessible, with the possibility of claiming more damages for breach worldwide in the forum where the infringer or any hosting or service provider is headquartered.

Furthermore, if we talk about potentially connected virtual worlds, what about interoperability between the various programs on which the metaverse architecture will be based?  If we aim for a virtual space accessible to all, the notion of FRAND (Fair, Reasonable and Non-Discriminatory) licenses and data portability, developed in other areas of law, could play a role and help create common standards available to all operators.

Stephenson probably couldn’t have imagined it, but the metaverse is already here.  If companies in every industry want to be part of it, they should be ready to redefine their strategy to ensure the extension of their intellectual property rights to this new virtual space.

On a similar issue, the following article might be of interest “The liability regime of an NFT marketplace for infringing contents“.

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