The metaverse is fast becoming a competitive playground for big brands, most notably, fashion brands. Digital goods such as digital clothing items intended to be worn in the metaverse are sold in the form of Non-Fungible Tokens (NFTs). The metaverse will be populated by digital avatars which need to be clothed, triggering the development of a new industry called digital fashion. Fashion NFTs are tokens governing the ownership of digital clothes and accessories that consumers can purchase through digital retail outlets or other online platforms.
Digital fashion could offer several advantages. For one, it democratizes fashion design and aspiring designers have the power to design digital clothes using their computers at home without having to worry about physical fashion issues such as sustainability, mass manufacture or supply chains, resulting in new “creator” economies. More importantly, the bonds between consumers and brands will strengthen due to a new means of engagement through fashion NFTs to the point where consumers become an integral part of the brand.
The influx of several fashion brands ranging from luxury brands to fast fashion into the metaverse and the high trading values of fashion NFTs at this early stage has big implications for worldwide commerce and consequently, trademark rights of these brands. After all, consumers must still have the ability to clearly distinguish digital clothes of one brand from the others. So far, trademark law has had to deal with physical goods and services but digital clothes bearing marks being sold as NFTs will challenge the very foundational aspects of trademark law. The tests for infringement and dilution, the role of intermediaries and artistic use will test courts in the coming years and at the time of writing this thesis, there are no answers.
Using a combination of statutory principles, EU/UK case law, trademark office guidelines and academic literature, this study finds that existing laws of trade mark infringement and the common law of passing off shall be sufficient to tackle the problem of physical fashion brands being usurped by digital counterfeiters in the metaverse. In terms of trade mark infringement, this study identified tests for similarity of goods to be potentially problematic and in need of advancements to cope with the rise of digital goods. This study unearthed inconsistencies in the standards required to determine a likelihood of economic injury via blurring, tarnishment and free-riding-based infringements but nevertheless, these anti-dilution provisions shall serve physical fashion brands ably in their disputes. Lastly, the centuries-old common law tort of passing off was found to be the most robust tool to aid physical fashion brands in their fight against digital counterfeiters.
This research project was conducted by MIPLM graduate Sachin Seshadri and supervised by Prof. Dr. Alexander Wurzer and Dr. Thibaud Lelong both CEIPI.
Sachin Seshadri (MSc, MIPLM) is a biologist turned IP professional. He holds Masters degrees in Engineering and in Science from India and Singapore respectively with 3 publications to his name. He works as a Senior IP and Licensing Manager at Duke-NUS Medical School in Singapore, where he helps build the Singapore biotech ecosystem by leveraging the school’s intellectual property. Previously, he was a scientist at Temasek Life Sciences Ltd. in Singapore and specialized in synthetic biology. He has a keen interest in all IP things and has cleared the patent drafting paper in the Singapore Patent Attorney Qualifying Examination, which had a pass rate of less than 20%.
Here is a description of the research project: