Stepping into the Metaverse: How NFTS May Present a Loophole for Fashion Copyright Protection

This year NFTs have been all the rage as the world prepares for a metaverse take-over, and with that, litigation bordering our virtual and physical worlds is on the rise. Just this month, Roblox Corp. sued WowWee Group Limited (“WWG”) for copyright and trademark infringement alleging that WWG’s latest physical doll collection entitled “My Avastars” infringes Roblox’s metaverse avatars. While recent IP litigation has already been testing the resilience of existing trademark laws in the virtual arena, this is one of the first lawsuits that may shed light on how current copyright law applies to creations in the metaverse.

Considering that notable fashion brands like Gucci, Ralph Lauren, Dolce & Gabbana are positioning themselves in the metaverse (and some already exhibiting metaverse runway shows) the fashion industry may be particularly piqued to see how copyright law will adapt in these virtual spaces. Other brands like The Fabricant pride themselves in “digital-only clothing.”

Unfortunately, there is little precedent to predict how copyright law may be a resource for virtual apparel. While certain digital looks from video games may have inspired seemingly protectable apparel, this has yet to be tested in the courtroom.

Indeed, fashion has competing interests in the world of intellectual property. On one hand, fashion as an art form pulls from various influences and certain styles tend to repeat after a couple generations. On the other hand, designers and brands care deeply about their unique creations and will often resort to trademark and patent law to prevent unauthorized copying.

In the United States, protection for most fashion items is relatively limited because of their functionality. Specifically, the Copyright Act does not protect useful articles “having an intrinsic utilitarian function that [are] not merely to portray the appearance of the article or to convey information” and “[a]n article that is normally a part of a useful article is [also] considered a ‘useful article’” 17 U.S.C. § 101. Similarly, trade dress and design patents will generally not protect the functional components of a work and are generally more difficult (and costly) than copyright protection to obtain.[1]

It was not until Star Athletica that copyright protection over fashion became slightly more flexible.[2] The Star Athletica decision made it possible for adidas to obtain copyright registration over its Yeezy Boost 350 Version 1, which is limited to the Yeezy Boost’s design “of irregular black lines of various lengths and shapes on a gray fabric with a black semi-circle in the arch and an orange dotted stripe on an off-white heel loop” and its Yeezy Boost 350 Version 2, which is limited to the Yeezy Boost’s design  of “several grey lines in a wave pattern with a thick orange stripe on the outsole that fades toward the heel of the sneaker.” Still, the Star Athletica decision confirms that copyright protection does not extend to the cut, dimensions, or shape of a particular garment or shoe.

Moreover, the Supreme Court clarified that one may not “claim a copyright in a useful article merely by creating a replica of that article in some other medium . . . Although the replica could itself be copyrightable, it would not give rise to any rights in the useful article that inspired it.” Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S.Ct. 1002, 1010 (2017).

Under Star Athletica, a designer may not be able to create an NFT and then use that NFT to enforce protection over fashion items in the real-world. However, this analysis does not preclude a copyright owner of a fashion NFT from enforcing its protection in the virtual world where many brands are now shifting their focus. Importantly, clothing in the metaverse does not serve the “intrinsic utilitarian function” as it does in reality.

It is possible that copyright protection over certain fashion designs may be first come, first served, in the metaverse. Of course, it goes without saying that copyright protection will not cover any ordinary shirt and pants given that the standard for copyright protection still requires a work to be of original authorship.

Virtual apparel by brands like The Fabricant, may actually inspire new takeaways for a copyright analysis, such as the gravity-defying and compelling movement of its garments.

As brands begin to explore their creative options in the metaverse it will be important to take a holistic view of the intellectual property rights available to them.

[1] Trade dress in a product configuration such as a sneaker requires secondary meaning; Design patents must go through a rigorous process to ensure the underlying design is novel and non-obvious.

[2] The Supreme Court in Star Athletica clarified copyright protection over surface decorations on clothing as two-dimensional work of art. See, Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S.Ct. 1002, 1012 (2017).