NFT hype spreads to the fashion industry

by Vanessa Guzek

The convergence of blockchain technology and creative intellectual property via non-fungible tokens (“NFTs”) is the trend of this year. In the media, articles about artwork, tweets and other digital media, represented by NFTs, which are sold on blockchain marketplaces for millions of dollars, are piling up.

This Hype is finally coming to the fashion sector as well, as reported by VOGUE Business yesterday. According to VOGUE, Gucci had recently confirmed that it was “only a matter of time” before it launched an NFT, as well as other luxury fashion brands that are reportedly on the verge of launching their own NFTs. Likewise, the founder of blockchain platform Lukso, which works with fashion brands, confirmed to Vogue that the NFT hype has spread to the fashion industry and that there is a lot of interest in experimenting with new technologies such as blockchain to sell virtual fashion. They state that scarcity and the ability of NFTs to create value can bring digital fashion closer to real fashion.

Although it seems like something new this year, digital fashion house Fabricant pioneered the topic of digital fashion using NFTs by working with blockchain startup Dapper Labs-the company behind the NBA’s NFT Top Shot project. They created a digital dress represented by an NFT in 2019, which was sold for $9,500.

What exactly is an NFT and how does it work?

A non-fungible token is a cryptographic token that has the ability to be a unique and unrepeatable token, which cannot be split but can be used to represent real or digital world objects along with its own characteristics, as well as ownership of the token, while keeping it all within a blockchain representation. This gives NFTs the attributes of originality that make them so appealing. NFTs are written with software codes called “smart contracts” that governs actions such as verifying ownership and managing the transferability of them. So when someone creates an NFT, they write the underlying smart software code that governs the properties of the NFT and add those properties to the corresponding blockchain on which the NFT is managed.

NFTs govern the ownership of the token, but not the underlying intellectual property rights.

The buyer of an NFT does not automatically receive all of the underlying intellectual property rights to the work associated with the purchased NFT. The terms of the license agreement attached to the sale determine the buyer’s specific intellectual property rights. A distinction must be made between ownership of an NFT as a unique token and ownership of the content to which that NFT may be linked. When someone acquires an NFT linked to a piece of content, they do not automatically acquire the underlying intellectual property rights to that content. As with copyright transfers, ownership is only transferred if the author of the original work expressly provides for it and consents to it. Without such express provision, the buyer of an NFT acquires by this purchase an implied non-exclusive license to display the associated media in its electronic wallet solely for its personal use, but does not own the underlying copyrights in the content with which the NFT is associated or the right to display such media on any third-party product, website or platform.

An NFT does not guarantee the authenticity of a product.

NFTs alone cannot attribute the creation or ownership of a NFT to a real person in the physical world, and cannot confirm that the creator of the NFT has the underlying rights to associate that NFT with a particular creative work. Although NFTs can authenticate the work and the chain of ownership, the problem remains that if the original ledger entry is false or contains errors from the outset, NFTs simply confirm and perpetuate that falsehood, so in the world of NFTs as well, we will encounter the counterfeit problem.

Protection of the NFT

As with cryptocurrencies, if the creators of an NFT decide to give proper names to their tokens, these can be protected as trademarks.


From Fashion Business Lawyer we will follow with interest the digital fashion evolution of fashion companies creating their own NFTs, especially those announced by Gucci.

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