By Sarah Malik and Margery Adricula

Summary
The metaverse has gained immense popularity in recent years, revolutionising the way people interact, work, and even express
themselves through fashion. As individuals increasingly participate in virtual worlds, fashion in the metaverse has become a
significant industry. However, this new virtual realm raises important legal questions, especially in the areas of intellectual property,
consumer protection, and advertising. Taking account of the UAE’s forward-thinking approach to technology and the metaverse,
coupled with its robust fashion and e-commerce industries, this article examines fashion law in the metaverse and explores its legal
implications within the UAE.

Analysis
Fashion in the Metaverse
To understand the legal implications of fashion in the metaverse, it is essential to define what the metaverse is.
The metaverse refers to a collective virtual shared space where people can interact with each other and their digital
surroundings in real-time (Metaverse). It encompasses virtual reality (VR), augmented reality (AR), and various online
platforms, creating a seamless and immersive experience for users. Think of it as the 3D version of the internet.

As a platform that offers limitless possibilities, the Metaverse enables the fashion industry to expand its reach by allowing
individuals to create, buy, and trade digital apparel for their avatars. Brands such as Balenciaga, Prada, Nike, Adidas, and Zara
have leveraged the Metaverse to create virtual wearables and NFT (non-fungible token) collections that enhance customer
engagement and add value to the physical counterparts of their products.[1]

Closer to the region, Splash Fashion collaborated with Boredpuma to create an NFT collection that fused technology and
fashion-driven art.[2] UAE-based fashion startup ‘The Rebels’ have utilised the Metaverse to break into the global fashion
industry without having to build supply and production chains required in the traditional fashion industry.[3]

Through the Metaverse, virtual fashion designers and brands are gaining recognition, and are real money is being invested in
purchasing virtual clothing items to enhance virtual identities. Whilst this marks a revolutionary change in the fashion
industry, it also raises important legal questions regarding ownership, intellectual property rights, and consumer protection.

Intellectual Property (IP) Law in the Metaverse
This year, significant trademark disputes that consider the application of IP laws in the Metaverse were heard in the US courts.
The well-known Hermès’ case brought against the creator of the MetaBirkins NFT is one of the first cases to examine the scope
and application of trademark protection for digital assets.[4]

The New York Federal Court applied established intellectual property laws to works in the Metaverse and made no distinction
on how such laws have been applied to physical works. This is favourable as protecting IP rights is crucial in the Metaverse
where products may be replicated with ease. Virtual fashion designers require legal frameworks to safeguard their creations
and prevent unauthorized use or replication.

In the UAE, intellectual property law is set out in three key legislations. First, the Federal Decree-Law No. 38/2021 on
Copyrights and Neighbouring Rights (Copyright Law) protects innovative production in the fields of literature, arts, or
science, of whatever type, manner of expression, significance, or purpose. This gives the author perpetual moral rights over
their work that allows them to decide the first publication of the work, claim the right of paternity over the work, and prohibit
modification of the work. Fashion can be protected by a copyright as work of drawing, sculpting on fabric or applied arts can be
protected. The Copyright Law also protects smart applications, computer programmes, databases, and visual works, which may
be extended to apply to Metaverse fashion. However, Article 5(d) of the Copyright Law does not give the author the right to
withdraw smart applications and computer programmes from circulation.

This may apply to Metaverse fashion if it is considered as a smart application or computer programme and may create issues
when counterfeit virtual fashion has already been circulated in the Metaverse. Further, Article 2 of the Copyright Law
specifies that copyrights may only be enforced when such rights are violated within the UAE. As no country has jurisdiction
over the Metaverse and the UAE has yet to determine whether the Metaverse is a separate jurisdiction, the application of UAE
copyright law in the Metaverse remains to be seen.

The second law, Federal Decree-Law No. 36/2021 on Trademarks, assists brands that create digital counterparts of their
products in protecting their brands’ products in the Metaverse and protects names, words, and symbols that take a distinctive
shape. Once the trademark is registered, the person who registered it will be the sole owner for at least five years from the date
of registration. The UAE Trademarks Office has classes of trademarks that apply to Metaverse-related application. Class 9
protects virtual and digital goods for use online and in virtual worlds and downloadable virtual goods such as articles of
clothing. Class 35 also protects virtual environments for selling such virtual goods and any virtual tokens or NFTs that may be
attached to clothing in the Metaverse.[5]

Although patents are rarely used for fashion as it only protects novel inventions, fashion in the Metaverse may require patent
protection considering the novel nature of the Metaverse and the limitless possibilities for reinventing fashion. In such cases,
Federal Law No. 11/2021 on the Regulation of Industrial Property Rights can protect inventions or design related to
Metaverse fashion.

The UAE is also a party to various international IP treaties such as the Berne Convention for the Protection of Literary and
Artistic works, the WIPO Patent Cooperation Treaty, the Agreement on Trade-Related Aspects of Intellectual Property Rights,

and the Madrid Protocol which allows trademarks to be registered and protected internationally. Other GCC countries such as
Saudi Arabia, Qatar, and Kuwait are not yet parties to the Madrid Protocol but instead rely on national systems of trademark
registration.

Virtual Goods and Consumer Protection
The Metaverse has opened a platform that allows brands and traders to sell NFTs attached to physical products (physical
NFTs).[6] However, it also provides opportunities for Metaverse users to create counterfeits of the products.[7] Nike’s
ongoing case against StockX for physical NFTs connected to allegedly counterfeit Nike sneakers is an example of how fashion
in the Metaverse raises legal issues related to advertising and consumer protection.[8]

Dubai established the world’s first specialised virtual assets regulator Virtual Assets Regulatory Authority (VARA) in March
2022.[9] It established ‘The Sandbox’ as its official presence in the Metaverse that is home to numerous brands in fashion,
gaming, culture, finance, retail, and entertainment.[10]

VARA released Dubai Administrative Order No. 1/2022 that provides regulations on the marketing, advertising, and
promotion of virtual assets. This is applicable to virtual fashion items sold in the Metaverse as the regulation defines virtual
assets as “a digital representation of value that may be digitally traded, transferred, or used as an exchange or payment tool, or
for investment purposes.” It sets out rules that prevent all entities, domestic or foreign, licensed or unlicensed by VARA, from
misleading potential customers in Dubai to purchase virtual assets.

If an entity breaches the regulations, it will be subject to a cease-and-desist warning from VARA and an AED 200,000 fine. Any
entity that posts or presents paid content on physical or virtual media platforms must also disclose that such content is paid
for as non-compliance with this rule will lead to an AED 150,000 fine. This regulation provides wide protection to consumers
of virtual fashion in the UAE and facilitates fashion law in the Metaverse as it ensures transparency, accuracy, and protects
consumers from misleading information. As VARA also regulates cryptocurrencies, its regulations assist in combatting money
laundering and terrorist financing through trading virtual fashion items.

Federal Law No. 15/2020 on Consumer Protection may also apply to virtual fashion within the UAE as it applies to goods
and services in the UAE.[11] However, for goods and services sold through electronic commerce to be protected under this
law, the supplier must be registered in the UAE. Considering how the Metaverse operates across borders, the application of
UAE consumer protection law in the Metaverse is limited as it may be enforced only against suppliers of virtual fashion in the
UAE.

Conclusion
As the Metaverse continues to grow and virtual fashion becomes increasingly significant, it is imperative to address the legal
implications of this new frontier. The UAE, with its focus on embracing technological innovation, has taken steps to adapt its
legal framework to accommodate the emerging field of fashion law in the Metaverse. By further developing comprehensive
regulations, protecting intellectual property, and ensuring consumer protection, the UAE can foster a thriving and legally
sound Metaverse fashion industry within its borders.

SOL undertakes work connected to both fashion law and the metaverse and is happy to deal with any queries in respect of the
same.

Notes
1. ^ https://sensoriumxr.com/articles/fashion-brands-in-the-metaverse.
2. ^ https://campaignme.com/boredpuma-joins-forces-with-splash-fashions-to-create-an-nft-collection-thecelestial-
collection/.
3. ^ https://www.arabianbusiness.com/industries/technology/uae-metaverse-sector-gets-flashy-with-entry-offashion-
startups-like-the-rebels.
4. ^ https://www.lexology.com/library/detail.aspx?g=c043ba9c-9541-4727-b398-5d3a9ca30cb9.
5. ^ https://www.lexismiddleeast.com/eJournal/2022-11-18_3/.
6. ^ https://www.binance.com/en/blog/nft/physical-nfts-bridging-the-gap-between-digital-and-physical-worlds-
7460772280213595786.
7. ^ https://gowlingwlg.com/en/insights-resources/articles/2022/the-metaverse-a-brief-overview-tmconsiderations/.
8. ^ Nike Inc v StockX LLC; https://www.complex.com/sneakers/court-orders-nike-to-give-info-on-counterfeitshoes-
stockx-lawsuit.
9. ^ Dubai Law No. 4/2022 Regulating Virtual Assets in the Emirate of Dubai.
10. ^ https://gulfbusiness.com/dubais-virtual-assets-regulatory-authority-enters-the-metaverse-with-sandbox-hq/
; https://www.lexismiddleeast.com/pn/Dubai/Marketing_of_Virtual_Assets/.
11. ^ Article 5 of Federal Law No. 15/2020 on Consumer Protection.

Also published on LexisNexis Middle East.