4 Ways to Protect your Fashion Business in the Metaverse

Metaverse gained popularity after Mark Zuckerberg renamed the parent firm Facebook to Meta and established Metaverse. Metaverse is a multi-user virtual reality suite seamlessly blends physical existence with the digital world.

Thus, with Virtual Reality (“VR“) and Augmented Reality (“AR“) gadgets, users may play games, work, communicate, and conduct other things in this virtual environment.

In addition to its development, Metaverse allows its users to display digital assets such as Non-Fungible Tokens (“NFT“), which may be bought and sold using blockchain technology and whose ownership confirmation cannot be modified.

An NFT, despite having the same value, cannot be traded for another NFT due to its non-fungible characteristics because each NFT has its own distinct identity. As a result of the presence of NFT, users have complete ownership of digital assets such as photos, audio, video, real estate, and other digital assets in the Metaverse.

Given that the Metaverse is a virtual representation of the actual world, this occurrence presents a huge enough potential for corporate entities to expand their businesses. This is an excellent chance for various trademarks, including fashion brands.

 

NFT and Fashion Brand

Numerous fashion brands have expressed interest in the Metaverse by registering trademarks and patents for their virtual items. Nike, Balenciaga, and even Victoria’s Secret have created NFTs that users may buy and wear through their avatars.

Meanwhile, luxury brands such as Louis Vuitton and Burberry have introduced their own proprietary in-game wearable NFT devices on the Metaverse.

The ownership of NFT in the Metaverse is divided into 2 (two) aspects, namely, the legal agreement between the intellectual property owner and the NFT holder and the legal relationship between the two parties and the Metaverse infrastructure provider. In addition to the license agreement between the intellectual property owner and the NFT holder, the terms of use relating to the Metaverse as an NFT deployment location will be essential.

Suppose individuals and companies invest large sums of money to create, monetize and leverage digital assets in the Metaverse. In that case, the regulations that these infrastructure providers have drafted will significantly affect the value of those assets.

Those who desire to utilize NFT on the Metaverse should be aware that they function in a legal environment.

Therefore, to freely enjoy and utilize infrastructure providers’ property under the authority of third parties may be contrary to their expectations and interests as users. By dealing with NFTs on Metaverse, this third-party risk must be addressed.

 

The Metaverse’s Intellectual Property Polemic for Fashion Brands

According to a World Trade Review (“WTR”) investigation, quite a few NFT brand names are being traded on the OpenSea market, including one fashion brand logo that went for more than USD 3 million or equivalent to or equivalent to IDR 43.1 billion.

While the utilization and selling of virtual fashion in the Metaverse open up new potential for brand owners, it also opens new paths of disagreement in the intellectual property sphere.  Hermes also took legal action in the form of a cease and desist letter against Mason Rothschild.

The New York artist is accused of violating the law by selling Hermes Birkin bags in NFT form and rebranding them as MetaBirkin. The item is a classic Hermes line named after British actress Jane Birkin and first published in 1984.

As a result, Hermes believed that the existence of MetaBirkin in the form of NFT might mislead the public. As a result of this breach, OpenSea, as an infrastructure provider, removed Mason Rothschild’s MetaBirkin collection.

 

Tips for Protecting a Business on the Metaverse

Following the Hermes v. Rothschild dispute, partners may take the four actions outlined below to protect your fashion business’s intellectual property on the Metaverse:

 

  • Specified Trademark and Patent Registration

 

Many legal issues need to be explored further in the Metaverse, such as the doctrine of the zone of natural expansion.

The zone of natural expansion doctrine is a doctrine that can be used to extend previous trademark rights to new geographic areas or new product lines. This doctrine applies when a company already uses its trademark in one place, and the newly expanded space is a natural extension of the previous usage.

For example, traditionally, trademarks and patents for a product have been applied to physical goods. However, given the advent of the Metaverse, the present trademark registration application must be specified in terms of its digital existence.

 

  • Drafting the License and Distribution Agreement

In the Metaverse, a corporate entity engaged in the fashion sector must be more imaginative in watching and designing license and distribution arrangements. Given the Metaverse’s dynamic evolution, licensees want greater freedom to promote development and engagement.

The licensee will need to give broad enough rights to adapt to the ever-changing Metaverse environment without updating the license regularly. Furthermore, the request must cover a certain degree of inescapable risk in both the physical and Metaverse worlds. As a result, licensors can foresee and analyze threats to reduce potential issues.

 

  • Developing and Patenting Supporting Technologies

Furthermore, fashion brands must consider supporting technologies in the development of their business in the Metaverse that can be patented. The haptics feature, for example, is a technique for applying touch sensation as a kind of human connection with a computer that operates to create a feeling for users to feel the touch and feel of fashion items.

 

  • Preparing Legal Strategies in Anticipation of Violations

Although the infringement has not occurred yet, the fashion brand must establish legal procedures and strategies if one has occurred. Proper planning and a good approach may be a step to protect the rights and dignity of the trademark owner and demonstrate firmness that the fashion brand reacts to and will take serious action against various parties who breach their rights and inflict both material and immaterial loss.

The intellectual property initiatives can be considered a preventive strategy in limiting infractions, which will undoubtedly bring efficiency in pursuing legal action in the future.

In conclusion, it is possible to infer that Metaverse is advancing in practice as a technology. As a result, it will be interesting to monitor its progress on an ongoing basis. There seems to be no question that the Metaverse will influence brand owners, regardless of whether they choose to participate in the real and virtual worlds.

It is critical for fashion industry brands to not only take defensive steps in defending their intellectual property rights but also to take proactive steps by beginning to register trademarks and patents as part of virtual objects, drafting license and distribution agreements, developing and patenting supporting technology, and preparing the necessary legal steps and strategies in the event of a violation.

If Partners require further intellectual property information and services to secure your business, please get in touch with us at marketing@ambadar.co.id

 

Source:

  1. World Trademark Review
  2. US Legal
  3. Vogue
  4. Mondaq
  5. Economic Times
  6. Kompas
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