2022 has seen developments in cases at the intersection of fashion and tech.
These fashion NFTs cases stand out because they are expected to be the first to answer new tech questions and indicate future trends in digital assets and brand protection.
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Fashion Brand Protection
The fashion industry is highly competitive, volatile, and affected by trends and seasonality.
It is also difficult to protect.
What you see presented by creative designers and brands is soon copied in mass production and sold cheaply by unauthorized third parties.
Fashion brands fight an ongoing battle to eliminate tangible counterfeit goods in the physical and digital worlds.
They largely protect their intellectual property (IP) rights through trademark law rather than copyrights.
It may seem surprising because fashion is creative and creative works, such as art, film, and literary works, enjoy copyright protection.
But copyrights protect works that are not functional, unlike clothes, footwear, or accessories.
So it is mainly trademarks that help fashion brands protect themselves from counterfeit goods and other infringing merchandise.
They can use trade dress protection to protect the visual characteristics of their items, such as color or patterns.
Just think about the value of a Birkin bag or Burberry’s iconic tartan pattern that marks the brand.
And let’s not forget brand names and logos that are valuable assets that brands protect, such as the Nike name, logo, and “Just Do It” slogan.
To protect their intellectual property, fashion brands can use takedown measures online and rely on technology and expertise offered by brand protection agencies such as Wiser Market.
They can also utilize cease and desist letters, trademark infringement lawsuits, and border enforcement.
What is NFTs
In numerous industries, fashion included, intellectual property protection is affected by new technologies.
So how does intellectual property protection work with NFTs? First, let’s examine what NFTs are.
NFTs (Non-Fungible Tokens) can be anything, from art to memes.
They are metadata files encoded with digital artwork or videos.
When you buy an NFT, you buy the metadata file, not the work itself.
Still, NFTs can have a high value with prices driven by scarcity.
As we see time and time again, value attracts scammers and counterfeiters.
Yet it is not only scammers who offer NFTs that present another party’s intellectual property or work without their permission.
It is also the doing of individuals and brands, NFT marketplaces, and any virtual world exhibiting NFTs – not all with malicious intentions.
Fashion brands are already engaged in the virtual world.
They produce wearable NFTs – virtual clothing or digital accessories such as a Gucci bag or Balenciaga collection that you can use for your avatar in a virtual world.
Adidas, for example, launched its NFT collection, while Nike released its first collection of virtual sneakers, called Cryptokicks, sold as NFTs.
In an interplay between worlds, RTFKT Studios, acquired by Nike, is able to bring its virtual sneaker NFTs to the physical world.
Digital fashion based on existing intellectual property rights offers new opportunities for brands.
Yet, once the world of NFTs exploded, the misuse of a brand’s intellectual property rights through the minting of unauthorized NFTs was inevitable.
Intellectual Property and NFTs
Fake virtual products have the potential to cause brand dilution and damage brand reputation both in the physical and virtual worlds.
As intellectual property owners seek to safeguard what is theirs, they need to establish NFTs as property in and of themselves.
NFTs can be copied, sold, or publicly displayed like other IP assets.
When done without the owner’s consent, it can amount to copyright infringement.
NFTs can also create trademark infringements when an NFT causes consumer confusion regarding the source or when it unfairly uses the owner’s reputation.
With the booming trade in NFTs, the issue of unauthorized use of brands and logos is growing.
A 2022 investigation conducted by the World Trademark Review uncovered numerous NFTs depicting brand names and imagery sold on the OpenSea marketplace.
Either by directly using a brand name or imagery or creating an image that evokes the brand, NFTs can lead consumers to believe it is affiliated with the brand when, in fact, it is not.
NFTs can also create other IP infringements like any other good.
In other cases, they bring up new intellectual property issues, such as the fact that the rights you purchase with an NFT are not always the same and can change based on the NFT or the platform.
For example, an NFT may not come with the right to use it for commercial purposes, and it may even not allow the owner to display it without permission.
Fashion NFTs Cases
In the fast-paced tech and fashion market, NFTs cases are filed for the courts to decide and answer some of the many questions that are still unanswered.
Fashion NFTs: Hermès and the MetaBirkins
Hermès v. Rothschild, 1:22-cv-00384 (S.D.N.Y.)
The case of Hermès vs. MetaBirkins, filed in 2022 and not yet decided, is expected to shed light on trademark law and the world of non-fungible tokens (NFTs).
In this lawsuit, Hermès is suing digital artist Mason Rothschild over a collection of 100 NFTs he created and branded as “MetaBirkins”.
The luxury design house issued a statement where it calls the meta bags “fake”: “These NFTs infringe upon the intellectual property and trademark rights of Hermès and are an example of fake Hermès products in the metaverse.”
In the lawsuit, it claims trademark infringement, trademark dilution, cybersquatting, false designation of origin and description, misappropriation of the BIRKIN trademark, and injury to business reputation.
The case begins with the creation and sale of NFTs depicting digital Hermès Birkin bags covered in fur and decorated with polka dots and artworks such as the Mona Lisa.
The artist who created the NFTs also used the domain name www.metabirkin.com and social media handles such as @metabirkins.
Hermès claims the defendant, who had sold over one million dollars worth of these NFTs, never received Hermès’ permission and challenges both the use of the Birkins name and the depiction of the bag.
Rothschild pushed back, arguing that his MetaBirkins are artistically relevant and do not mislead about the source.
The litigation also addresses the issue of disclaimers.
Rothschild claims a disclaimer is included on the metabirkins.com site, stating that the MetaBirkins are in no way officially connected with Hermès.
According to Hermès, the disclaimer is not included in any other sales and advertising channel or social media accounts.
The case, which has now moved to trial, raises questions about trademark protection for tangible goods extending to virtual goods.
At this point, it seems likely that Hermès will need to show a likelihood of confusion by consumers who were led to believe that the MetaBirkin NFTs have the same source as the Hermès Birkin bags, creating a link between physical and virtual.
Fashion NFTs: Nike vs. StockX
Nike, Inc. v. Stockx LLC, 1:22-cv-00983 (S.D.N.Y.)
Another NFT lawsuit is the case filed by Nike against StockX, an online marketplace where consumers can buy and sell goods to each other.
In the lawsuit, Nike claims that StockX minted NFTs as part of “Vault NFTs” – a collection of NFTs that users purchase from StockX and can then trade with each other.
Nike asserts that the NFTs, with images of Nike sneakers, use Nike’s trademarks without the company’s authorization or approval.
Furthermore, Nike claims that StockX used Nike’s reputation to sell the NFTs at inflated prices.
This, alleges Nike, constitutes trademark infringement and dilution. Nike further says that StockX is confusing consumers who believe or are likely to believe that the NFTs are authorized by Nike.
StockX responded by claiming that the NFTs are used to “track ownership of a specific physical Nike product that StockX has authenticated.”
It asserts that since the NFTs are a way to authenticate physical shoes that the marketplace is selling, the NFTs are like “digital receipts” used to sell products rather than digital art.
Therefore, what they do in the resale marketplace is protected by the first sale doctrine.
In this connection, Nike claims that the marketplace has authenticated and facilitated the sale of dozens of fake Nike shoes.
What’s interesting about this lawsuit, like the MetaBirkin lawsuit, is the legal discussion on the nature of NFTs, and how intellectual property rights are viewed for digital and physical assets.
The outcome of both cases will set precedents that will affect NFTs in fashion.
The Wiser Online NFT Protection Solution
The NFT industry is new and still largely unregulated.
Due to the ease of creating fake NFTs and infringing on intellectual property rights, brands must remain proactive and vigilant about protecting their intellectual property in the virtual world.
Wiser Market online brand protection agency has the advanced technology and world-class expertise to help your brand monitor virtual platforms and fight the unlawful sale of infringing and counterfeit goods on online marketplaces, social media, apps, websites and any other digital platforms.
Wiser Market offers an online brand protection solution to fight IP infringements and bring real value and measurable results to your brand protection efforts.
Whether you wish to fight counterfeiting, prevent trademark and copyright infringements, combat gray market selling, or protect your domain name – Wiser Market can do it for you with a custom-tailored strategy, superb service, and unrivaled results.
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WiserTip: Protect virtual aspects of your marks like you protect your rights in the physical world.
Does NFT ownership give you rights in the underlying asset?
In most cases, the answer is no. When you buy an NFT, you have no right in the underlying asset or intellectual property.
Do all NFTs have IP protection?
You can create an NFT with public domain art that is free to use, avoiding IP challenges.
How do scammers use NFTs to steal?
The most popular way scammers have been conducting digital art theft is through creating NFTs and publishing them on different NFT marketplaces.
Does OpenSea have fake NFTs?
According to OpenSea, many of the NFTs presented on the platform are fake.
Can I take down a fake NFT on OpenSea?
If your art is counterfeited as an NFT on OpenSea, you can send the marketplace a DMCA takedown request. To continuously monitor and eliminate fake NFTs of your intellectual property, check out the Wiser Market services.