30 May 2022

Fashion in the metaverse: virtual clothing trade marks jump by a third to 2,146 in past year

Data provided by Mathys & Squire has featured in an article by City A.M. and the Scotsman highlighting a surge in fashion trade marks in the metaverse.

An extended version of the release is available below.

Brands are looking to capitalise on the fast-growing metaverse fashion market by rushing to register trade marks for virtual clothing and virtual clothing stores, with 2,146 registered this year, up 35% on 1,589 last year*, shows a new study by leading intellectual property law firm, Mathys & Squire.

Digital clothing or ‘metafashion’ is a fast-growing market, which investment bank Morgan Stanley predicts could be worth $50bn by 2030. Last month saw the first Metaverse Fashion Week take place, with shows from luxury brands such as Dolce & Gabbana and Etro.

Mathys & Squire says 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.

Gary Johnston, Partner and Co-head of trade marks practice at Mathys & Squire says: “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).

The firm says these NFTs can be created cheaply, with relative ease, making it easier for clothing brands’ designs to be exploited by copycats. This has led to a number of high-profile cases between brands over alleged IP infringement.

The 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 Baby Birkin bag.

Another IP matter that brands are likely to encounter in the metaverse is ‘trade mark squatting’. 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 says that as the metafashion market grows, more opportunists are likely to try to snap up these high end and valuable trade marks.

Gary Johnston explains: “Registering trade marks for virtual assets will give luxury brands legal ammunition to protect their intellectual property (IP), which accounts for a considerable proportion of their value.”

“Luxury brands will be particularly keen to control their brand identity and taking action against unauthorised use of their IP by copycats looking to profit from the equity its owners have built up is likely to increase.”

“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.

*WIPO. 2021/22 vs 2020/21, March 31st year end.