Clifford Chance

International fashion weeks are an opportunity for fashion brands to display their latest collections to members of the public, media, and fashion buyers. Although typically hosted in the "physical world" in the key host cities of London, Milan, New York, and Paris, there has been a recent trend for hosting virtual fashion events following COVID-19 restrictions and recent technological developments.

The shift to hosting events in the digital world creates a fresh set of considerations for rightsholders operating within the fashion industry, particularly with regards to protecting and enforcing their IP rights against third parties. This article examines these issues and sets out key concerns for rightsholders planning to participate in virtual fashion events.

Fashion weeks in the metaverse

In March 2022, Decentraland (a 3D "virtual world" metaverse platform), launched Metaverse Fashion Week ("MFW"). MFW featured digital runway shows from major fashion brands and included a virtual luxury shopping area where guests could purchase digital and physical goods. Although many luxury brands have taken steps to protect their IP rights in the digital world, hosting events in the metaverse is still a novel concept and will require several fresh considerations from rightsholders. In June 2022, the organisers of Miami Fashion Week revealed a new partnership with the Metaverse Group (a metaverse real estate company), which saw it host several digital events during Miami Fashion Week 2022. Ahead of New York Fashion Week (scheduled to take place in September 2022), Tommy Hilfiger announced that his eponymous brand would host a digital-physical hybrid show, by presenting live in New York whilst simultaneously live streaming on Roblox, a multiverse gaming site. All of these examples demonstrate an appetite in the fashion industry for virtual events.

IP and cyber considerations in the metaverse

IP ownership

In the UK and the EU, designers operating in the fashion industry can rely on several IP and proprietary rights to protect their fashion designs and brand.

Design Rights – Design rights allow designers in the fashion industry to protect unique clothing and accessories. However, there is ongoing discussion as to how such rights will transfer to the virtual world.

In the real world, clothes designers have long been able to apply for registered design rights lasting up to 25 years or instead rely on unregistered design rights, which last for 3 years. Whilst the vast majority of designs relate to physical goods, and although computer programs are not 'products' under the applicable UK and EU legislation, it is well-recognised that digital designs for items such as computer icons, screen displays, and video game characters can be protected by design rights. Digital versions of physical garments can therefore be protected as designs.

During MFW (and other virtual fashion events), brands transposed versions of real-world products (and fresh designs) into digital formats. However, some attendees of MFW reported that some of the on-screen 3D design capabilities of Decentraland were restrictive. Vogue Business reported that "high-fidelity 3D versions had to dramatically simplify aesthetics to translate into Decentraland". Simplification of a design could lead to a "different overall impression", making it more difficult to enforce any design rights.

Design rights give the proprietor the exclusive right to use their design and "any design which does not produce on the informed user a different overall impression". It has yet to be tested whether a digital garment would create the same "overall impression" as a design registration for its physical counterpart, although this is clearly arguable. To minimise the risk, and budget permitting, it is open to designers to seek protection for both the physical and virtual versions of their designs.

Copyright – copyright protects "original" pieces of work involving independent skill and labour and cannot be obtained if the work in question is a copy of pre-existing work. Development of most products in the fashion industry – clothing, jewellery, and other accessories (whether physical or virtual) will involve some element of creativity and independent skill. However, in relation to physical fashion products in the UK, copyright protection will often be limited to products involving a sufficient element of "craftsmanship, with design rights being the more useful IP right. In the digital environment, copyright protection may provide designers with stronger and more flexible protection, covering both the graphical representation of an item and the software code in which the item is implemented.

Trade Marks – trade marks act as an indicator to consumers that a product or service originates from a particular source. In the fashion industry, the most common trade marks are brand names and slogans. Trade mark protection will continue to be important in the metaverse. In recent times, luxury brands have demonstrated that trade mark protection in the metaverse is a strategic priority, expanding their portfolios to include virtual goods:

• 8 January 2021 – Chanel applied for the CHANEL word mark, which was granted by the French Intellectual Property Office on 9 April 2021. The application for Class 9 goods included "virtual outfits and accessories used in video games, in particular virtual reality games".
• 18 January 2022 – Prada S.A. applied for the PRADA trade mark, which was granted by the Benelux Office of Intellectual Property. This registration included Class 9 goods, under which Prada obtained protection for "virtual online environments, and extended reality virtual environments", as well as Class 14 "precious metals and their alloys, jewellery, charms, earrings, clocks", and "the aforementioned products to be used as well in the virtual world"; as well as Class 41 "providing an interactive website for virtual reality game services".

Whilst it is likely that a trade mark registered only in respect of physical clothing could be enforced against a digital representation of clothing, this has yet to be tested, and leading designers are already taking steps to remove the risk of their trade mark rights being unenforceable in the Metaverse.

Ownership of rights

During MFW, brands presented collections and reinterpreted fashion pieces in a digital format via the metaverse. Where physical products are replicated or reinterpreted into a digital format, the digital version of the product may have been created by digital developers and/or graphic designers who used software to digitally recreate 3D images of the physical products. If those individuals are not employed by the fashion house that created the original design, there is a risk that ownership of the rights subsisting in a digitally recreated item may vest with the individual or consultant responsible for its creation, and not the fashion house, unless legal assignments have been granted by these individuals.

Territorial considerations

IP rights are limited to real world territories. The transition to the metaverse raises several jurisdictional issues, and IP rights such as registered and unregistered designs do not exist in many countries or have a very different scope.

Clothing manufacturers can rely on trade mark rights to prevent items put on the market in one territory being imported into another territory. For example, a brand owner can prevent jeans first sold in Mexico from being imported into the EU. As the metaverse does not exist in any single physical location, new difficulties for the enforcement of IP rights arise.

Further, when licensing brands or clothing designs, designers may be prudent to expressly exclude or include the metaverse when defining the territorial extent of the licences being granted.

Digital runway models

During MFW, goods were modelled by virtual avatars. Virtual fashion models are not an entirely new concept. In April 2017, fashion photographer Cameron-James Wilson created a virtual fashion model with the Instagram handle "@shudu.gram" and in February 2022, fashion brand 'Pretty Little Thing' unveiled a virtual model, said to "bridge the gap between the Metaverse and real life".

Use of virtual models raises issues regarding which party owns the IP rights to virtual models (which have ultimately been designed by software designers) and how these rights should be protected and enforced. As above, if a computer-generated model is created by software developers and graphic designers, a fashion house or modelling agency will need to ensure that the copyright in the virtual model is expressly transferred by the developer.

Individual virtual models may generate recognition and goodwill among consumers. That goodwill may be protectable via passing off to prevent third parties taking advantage of the image and reputation of a well-known virtual model, which may have been built up via significant investment.

Rightsholders must also ensure that any CGI models used do not bear excessive likeness to or incorporate any iconic element of a real-life celebrity. In 2020, actress and singer Selena Gomez sued the developers of the "Clothes Forever Styling Game" for $10 million for using her likeness without permission. Although the outcome of this case was not publicised, brands should avoid the negative public connotations of being named in such matters by avoiding use of CGI models bearing a recognisable likeness to real world public figures.

Risk of cyber attacks

Although MFW remained free of cyber-attacks, historically, fashion week has been an avenue for protesters to crash the runway to make socio-political statements, including campaigns against the use of animal fur, unethical business practices and low pay for garment workers. Brands have addressed these issues in the physical world by including enhanced security checks before events and creating lists of repeat offenders. However, rightsholders should be aware that protesters may adopt cyber protest tactics to disrupt virtual fashion shows. Decentraland is browser-based and can be accessed by any internet user. Although we are not aware of any specific vulnerabilities, virtual fashion shows may be targets for attacks by black-hat hackers. In September 2021, a cyber-attack on the artist Banksy's website led to a collector paying over £300,000 for a counterfeit NFT. Accordingly, rightsholders will need to make additional investment to ensure that appropriate cybersecurity policies and processes are in place to mitigate the risk of a cyberattack by virtual protestors.

The future of virtual fashion events?

In February 2022 Fédération de la Haute Couture et de la Mode (the governing body for the French fashion industry) filed an application at the EU Intellectual Property Office for PARIS FASHION WEEK covering:

• Class 9 – “downloadable virtual goods for use in virtual computer environments, namely clothing, shoes, headgear, clothing for gentlemen, ladies and children, fashion items”
• Class 35 – “organization of fashion shows for promotional purposes, including within virtual computer universes (metaverse)”
• Class 41 – “arranging of competitions relating to education or entertainment which may be provided online and/or within virtual computer worlds (metaverses)”.

In May 2022, Gucci announced that it has started to accept more than 10 cryptocurrencies in its brick-and-mortar stores, marking a validation for virtual currencies by luxury brands. In June 2022, the organisers of Miami Fashion Week announced its Metaverse debut titled "L'ATELIER BY Miami Fashion Week." Guests were able to gather in the dedicated Miami Fashion Week metaverse space and attend virtual events. 

The benefits of a move to the virtual world for MFW and other events are clear. After the COVID-19 pandemic and the consequent global shift to virtual meeting rooms and events, MFW and other virtual fashion presentations have the ability to side-step many of the constraints that would be faced by traditional fashion week organisers (i.e., limited ticketing, geographical distance between visitors and the event, and carbon footprint resulting from guests travelling to the event and production of physical clothing and accessories). Despite the benefits, to achieve a successful and sustainable metaverse strategy, brands must proactively balance their interests to ensure that IP rights are protected.

For further discussion around key legal considerations in the digital fashion industry, please see "Co-Branding Partnerships in The Physical And Digital Worlds – A Masterclass From Balenciaga And Fortnite Protecting IP rights in the virtual world".