In June 2023 a USA Federal judge ruled that MetaBirkin NFTs sold by Mason Rothschild broke the Trademark rights of the French fashion brand Hermes. A February ruling had awarded Hermes $133,000 in damages but Rothschild had continued to market his product. He is now banned from marketing his MetaBirkin range. Note that this is an issue of a Trademark not a copyright. Although copyright could apply here it is easier to enforce trademark legislation.
Hermes allege that Rothschild’s motives were to defraud the brand and make money out of their reputation. Rothschild countered arguing that the works ‘are an absurdist statement on luxury goods’, possibly making his works an example of ‘fair use’. He did, however, trade over $1 million worth of these NFTs in late 2021 and early 2022. This would be seen as profiting from the works of others in copyright terms but remember the case was decided under Trademark not copyright legislation.
Fashion brands themselves are moving into the metaverse marketplace. Digital representations of real goods are available to purchase with the aim that players will want to dress up their avatars and virtual worlds. The representations maintain the look if not the feel of the real brands but are only of use within those closed worlds. Gucci had been listing their digital versions of their products on Roblox for 475 Robux (roughly $6 at the time). These traded well and a Gucci Dionysus virtual handbag later sold for the Robux equivalent of $4,115, some $700 more than the real thing. Gucci are not losing out here; the Roblox model is that virtual goods can be sold on with both the original creator, the seller and Roblox getting a share of the sale value. Selling virtual goods is an easy money earner for the brands. Creating a virtual product is significantly cheaper than manufacturing physical goods. Worries concerning ethical production materials and trading are eliminated and all the core design work has already been done with the original product.
It is perhaps surprising that a market exists within worlds such as Roblox for high end goods. Someone who uses or aspires to use these high end brands might be expected to invest in their digital equivalent. Such a user would be expected to go out and display such items not sit alone within a virtual world. There must be some crossover between these lifestyles to make the virtual fashion brand business model work. The virtual world Decetraland is clearly committed having run a metaverse fashion week in 2023 featuring high end brands. Their self-styled Luxury District advertises store fronts for brands including Amorepacific, Ben Bridge and DKNY.
Customer interest is evidenced by specific NFT sales engines such as UNXD. Fashion brands dropping NFTs onto UNXD include Valentino, Jacob & Co and Dolce&Gabbana. The NFTs are often linked to physical goods or experiences. For example the NFT ‘The Impossible Tiara’ sold for $132,123.31 in 2021. The buyer also received 1 year’s access to Dolce&Gabbana events in Italy and a tour of their workshop in Milan. The ‘DGFamily Realtà Parallela’ NFTs were linked to physical goods such as hoodies, shoes and T-shirts. Such rewards might partially offset the purchase value of a NFT. The experiences, however, once used could not be sold on.
The Fabricant is a digital marketplace for fashion related NFTs. It boasts itself as an environment where designers can showcase work, collaborate and as a shop window for new designers. It also markets to existing brands attracting involvement with Vogue, Highsnobiety, Weekday and Virgil Abloh. Suggested use cases for The Fabricant’s NFTs include wearable apparel in Unreal Engine and Ready Player Me. In some of these cases possession of the NFT would provide proof of ownership for the underlying art which would be adapted for in-world use.
Many high end brands are running on relatively low sales volumes at substantially high prices. In turn these prices attract outright fakes or debateable homages. With physical goods the quality of manufacture and supply trail makes it relatively easy to spot fakes. Digital art works are much easier to copy or re-create. An initial design or theme may be a copy but the quality and expected lifetime of a digital copy will be the same as an original. Any promised rewards would be worthless as would the long term re-sale value. Bona fide creators need to search for possible copies and clamp down on them through the marketplace hosts to avoid a loss of reputation and potential future revenue.