Brands are rushing to capitalise on the fast-growing metaverse fashion market by registering trade marks
In just one year, brands registered 2,146 trade marks for virtual clothing and virtual clothing stores, up 35% on 1,589 from 2021, according to WIPO data for year ended March 31, 2022. The data was provided to the Luxury Law Alliance by intellectual property firm Mathys & Squire.
Digital clothing or ‘metafashion’ is a fast-growing market, which investment bank Morgan Stanley predicts could be worth $50bn by 2030. According to Mathys & Squire, brands are taking action to protect their digital brands just as they would physical goods, given the enormous growth potential and huge sums of revenue at stake. Mathys & Squire partner and trade marks practice co-head Gary Johnston explained: “Fashion brands are rushing to protect their IP in the metaverse leading to a spike in trade mark registrations.”
In the metaverse, consumers may interact with items of clothing, trying them on virtually before buying them, either in real life or digitally. These virtual versions of fashion items are often in the form of non-fungible tokens (NFTs). NFTs can be created cheaply, with relative ease, making it easier for clothing brands’ designs to be exploited by copycats, leading to a number of high-profile cases between brands over alleged IP infringement. For example, French design house Hermès is currently involved in a dispute with an American artist over a collection of 100 virtual designs inspired by its Birkin bags. The artist had previously sold a one-off NFT ‘Baby Birkin’ for $23,500 compared to $9,500 the French brand charges for a physical bag.
So-called 'trade mark squatting' is another growing concern. This is the practice of registering trade marks associated with another brand, often with a view to selling them to the true brand owner at a premium. Mathys & Squire commented that as the metafashion market grows, more opportunists are likely to try to snap up these high-end and valuable trade marks.
“Registering trade marks for virtual assets will give luxury brands legal ammunition to protect their intellectual property, which accounts for a considerable proportion of their value," said partner Gary Johnston. "Ensuring that their brand value does not become diluted in the metaverse will be a major concern. High-end brands are extremely protective about where their clothing is stocked in the real world, so they will be equally determined to exert control about how they appear in the metaverse.”
Metafashion is already generating significant amounts of revenue within the video game market. Luxury brands including Balenciaga, Ralph Lauren and Lacoste have all launched in-game clothing options. Gucci has partnered with Roblox, the metaverse gaming platform, enabling players to purchase items using the platform’s Robux currency.
Brands that have registered trade marks for ‘virtual clothing’ include Nike, which has filed applications to protect its ‘Just Do It’ slogan and swoosh logo in the metaverse. Fashion brands YSL, Gucci, Prada and Off White have also registered trade marks.