Every once in a while, even though I think nothing will amaze me anymore, there comes a new phenomenon, a reality that makes me wonder what its’ implications are on the intellectual property world.
So, to those who don’t know, besides being an IP attorney, I’m a passionate fashion history and trends observer and so became aware of the most bizarre trend of purchasing virtual clothes for use on online social networks. Just to clarify, these are clothes that cannot be worn in real life and can be used only virtually. The purpose – to look good and sophisticated on your Instagram account.
The idea is to look good in virtual social activity while supporting the environment or as the digital fashion house THE FABRICANT declares: “We waste nothing but data and exploit nothing but our imagination“.
Why waste time on inquiring after this phenomenon you might ask. Well, when someone is willing to pay a five-figure amount (in $) for clothes you don’t actually wear, it’s worth the inquiry. When a fictional virtual influencer (such as Li’l Miquela) has 1.5 million followers on Instagram and is being paid handsomely for representing global brands in “her” account, it’s worth the inquiry. And when the popular international online game Fortnite allows players to buy digital clothing from cult brands, it’s worth the inquiry.
What’s also interesting with digital clothing is that it seems that it is regarded as a blockchain digital asset and that it’s unique existence as a garment makes it both clothing and (crypto) currency.
Here are some interesting intellectual property questions that might arise from creating and selling digital clothing:
Under what kind of intellectual property right should “digital clothing” be classified? Is it a copyrighted work or an industrial design?
Physical clothes are often regarded as Industrial Designs since the design is intended to be used for industrial production. According to the Israeli Copyright Act, 2007 (Article 7), works intended to be used for industrial production will not be granted copyright protection. Therefore, digital clothing that is specifically designed to be purchased as a “one piece” (AKA digital-only couture), might be granted copyright protection and on the other hand, Fortnite digital clothes that can be bought by whomever, might be regarded as an industrial design. If you wonder why bother categorizing these works then you should understand that copyright law grants an exclusive right in a work of 70 years from the death of the author while the protection of an Industrial Design is granted for 25 years, if registered, and if not registered – 3 years only.
Another interesting questions that might rise after reading THE FABRICANT website’s Terms & Conditions according to which “Permission is granted to download, display, make derivative works, and distribute the materials including but not limited to 3D CLO3D project files, OBJ files, FBX files, and PNG/JPEG images from this Site for personal, non-commercial use provided you retain all copyright and other proprietary notices contained in the materials” is with regard to the scope of the protection provided under the current intellectual property regimen.
Focusing on the different uses allowed once a digital clothes item is purchased for use in the virtual world, makes one wonder how far the ownership of the buyer goes and how vulnerable the author of the digital clothes item. Does it grant the author any rights, if, for example, the work was purchased and used by the buyer as part of social media activity along with other works that might be regarded, subjectively, as diluting works or offensive works. If the fashion design was purchased “in real life” the buyer could wear it to whatever event and for any purpose. But can the designer of a digital clothing item widen its control and liability over the work through its terms and conditions thus forbidding the buyer to use it for certain purposes or under certain circumstances?
And what about the moral rights (Droit Moral) in these works? The right for credit and the right to prevent others from altering the work without the artist’s permission. If virtual clothes cannot be regarded as a copyright but rather as an industrial design (such as the Fortnite clothes), can these be altered without the creator’s permission? Can the buyer change or tamper or “hack” the digital code and change it to his/her liking?
Finally, the categorizing of digital clothes as a blockchain digital asset raises even more important and vastly interesting questions. A digital asset is a non-tangible asset that is created, traded, and stored in a digital format. Such are the digital clothes. Should trading it be handled according to rules of cryptocurrency taxation, valuation, accounting practices, regulation, custody, operational risks, structuring, vendor selection and anti-money laundering?
These are just few questions that rise by this somewhat bizarre phenomenon. Traditional fashionistas and fashion designers are horrified and shocked to even consider these digital items as “fashion” or “couture”, but I sense that the first judicial ruling in this matter will not be long in coming and will be fascinating to read.