By now, many have probably heard of the Metaverse, a network of digital environments where individuals can use avatars to, among other things, interact and make purchases. The metaverse is undoubtedly one of the hottest topics of recent years. So, while still in its infancy, it’s no surprise that fashion brands have shown interest in the potential of the metaverse.

One of the reasons why fashion brands have become interested in the metaverse is probably due to the creative freedoms it allows. In the metaverse, creatives aren’t limited by supply chain issues or travel delays, they can simply produce a product that’s instantly and freely available to consumers. But with that freedom comes an easier way for counterfeiters to infringe on valuable trademark intellectual property (IP).

For example, Roblox users can buy authentic Virtual clothing and accessories from Gucci and Ralph Lauren, but there are also countless unauthorized products available for purchase, including Cartier LOVE bracelets, Supreme hoodies and Chanel blazers.

Many fashion brands have also started offering non-fungible tokens (NFTs), unique digital assets that can be used to represent things, such as artwork, videos, and even digital (or physical) clothing. . For example, Gucci, Rimowa, Dolce & Gabbana, Givenchy and others have launched NFTs to interact with the digital community. On the other hand, NFTs have provided new support for copycats. A fairly high-profile example is the MetaBirkins NFTs – colourful, hyper-realistic, furry depictions of Hermès’ famous Birkin bag – which are the subject of an infringement, dilution and cybersquatting suit brought by Hermès. Mason Rothschild, the creator of MetaBirkins, recently decided to dismiss Hermès’ lawsuit, arguing that its use of “MetaBirkins” was artistic expression protected under the roger test – under which use of a third-party mark with a creative work is not infringing unless the use (1) has no artistic relevance, or (2) is explicitly misleading. Although the U.S. District Court for the Southern District of New York (SDNY) has agreed that NFTs may be subject to the roger test – which until then had been an open question – he denied Rothchild’s motion to dismiss because Hermès’ amended complaint sufficiently alleged that its use of “MetaBirkins” was explicitly misleading.

Beyond that, courts have yet to provide meaningful guidance on what is or is not infringing or dilutive in the virtual world. Additionally, in denying Rothschild’s request for dismissal, the SDNY suggested in dictation this roger might not apply, for example, to a practically wearable Birkin handbag since the name “MetaBirkins” would then be used with a non-expressive commercial product. These virtual bags could potentially be subject to other fair use defenses, but in light of the open questions and potential risks posed by the metaverse and other virtual offerings, brands should consider expansive trademark filings expressly covering digital products and NFTs, which can improve the application. efforts and facilitate expansion plans in the metaverse. First, a trademark registration provides proof of the owner’s exclusive rights to the registered trademark. Accordingly, a registration covering NFTs and virtual goods will strengthen enforcement, anti-infringement and trademark removal efforts against infringing virtual offers. For example, many metaverse platforms and NFT marketplaces have takedown procedures, under which they can remove counterfeit virtual goods in response to evidence of protected rights infringement – ​​the latter of which can be more easily established with a record. trademark covering goods or services.

Products from unauthorized creators on Roblox demonstrate consumer demand for branded virtual goods in the metaverse. In turn, brands can satisfy this demand and weed out violators by introducing their own virtual goods and NFTs. Trademark registrations may also be exploited when entering into licensing agreements with NFT coiners, metaverse platforms and other virtual world operators.

Many big brands have taken notice, as evidenced by the 2,600 trademark applications for virtual goods filed from January to May 2022 alone. The same goes for clothing and footwear brands, in particular. Nike was one of the first to register several of its trademarks for virtual goods and services starting in October 2021, including NIKE, JUST DO IT, and Nike’s iconic swoosh logo, among others. Other major brands, such as Valentino and Saint Laurent, followed soon after. Interestingly, many major fashion retailers have even applied to register their brands for virtual real estate services, perhaps in anticipation of the omnichannel potential of the metaverse.

Take away food

Beyond trademark registrations, fashion brands need to monitor popular metaverse and NFT platforms for unauthorized use of their intellectual property. Many infringements are likely to be resolvable by “informal” enforcement action through demand letters, business-to-business discussions, and/or takedown requests, although, as mentioned, trademark registrations for virtual goods will reinforce these efforts. Trademark owners should engage a trusted intellectual property advisor to develop registration, monitoring and enforcement plans to combat current and future infringements in the digital world.

The authors would like to acknowledge the contributions of Summer Associate Megan Kilduff to this update.

© 2022 Perkins Coie LLP