Tony Iliakostas
Adjunct professor of Entertainment Law and IP at New York Law School

Why the Metaverse Creates Brand Identity and Authenticity Issues for Fashion Companies

Have you ever scrolled through eBay, StockX, Facebook Marketplace, or some other secondary marketplace and come across a pair of sneakers that catches your eye? Maybe there’s that luxury handbag that is normally outside your budget but a seller is selling the item for a significantly cheaper price. You pull the trigger and make the purchase, only to wait a week for the item to arrive and realize that the product was not truthfully advertised. In fact, upon further inspection, you realize that you bought a “dupe” – a fake.

The Battle Against Counterfeit Goods in Secondary Marketplaces is Significant

This is the unfortunate reality of secondary marketplaces. Some sellers will blatantly sell fake versions of real fashion products under the façade of the product being genuine. A 2018 study by the US Government Accountability Office found that about 40% of goods purchased on e-commerce websites are counterfeit products. This same study also determined that of the 32 million shipments processed by US Customs and Border Protection (USCBP) in the year 2016, over 31,000 of them were seized containing products that infringed on the copyright, trademarks, or other IP rights belonging to major brands, including fashion-oriented brands. The estimated value of these seizures was over $1.3 billion. That’s nearly 3 times the valuation of the top 10 luxury fashion brands in 2023.

The sale of counterfeit goods has been a battle USCBP has consistently engaged in for years. USCBP recognizes the transport and sale of counterfeit goods as a federal offense that is punishable by a fine, prison time, or both if one is convicted of engaging in criminal copyright infringement or criminal trademark infringement. But aside from government intervention and enforcement, secondary marketplaces have come to recognize the growing trend of counterfeit goods sales on their platform. Thankfully, they have addressed this issue front and center. In addition to having a counterfeit goods policy, eBay has created authentication protocols that would ensure that any watch, handbag, or piece of jewelry sold is authenticated by a professional. Similarly, StockX (a marketplace known for selling sneakers) has its own verification process to ensure that any sneaker sold is legitimate. 

The biggest victims of counterfeit goods sales on secondary marketplaces are brands. In particular, fashion brands have been prone to infringement-worthy activity for decades. Behavior like this is well documented in “House of Gucci” when counterfeit Gucci products were being sold for a significant fraction of the cost during Gucci’s meteoric rise to fame. Fashion brands recognize that people are quick to flock to secondary marketplaces or even take a walk to places like Canal Street and get a fake product and compromise quality for the sake of saving money. 

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