Only a few years ago, combining a luxury fashion brand with artificial intelligence ("AI") systems and blockchain might have appeared audacious. This is no longer the case for most fashion houses and retailers, which are now focusing on innovation and new technologies as key drivers to grow their business.

In this post we will address five examples of "Fashion and tech" legal issues, as also discussed last week at the course in Fashion Law at the University of Milan.

1. Fashionable (smart) accessories

One of the latest trends for fashion stylists is to design "smart" fashionable accessories, including, for instance, bracelets and watches as special collection items. These smart (IoT) objects are equipped with sensors, which are able to record and transmit a large amount of personal data. This raises a number of concerns from a data protection perspective, especially considering that special categories of personal data (pursuant to Article 9 of Regulation no. EU/679/2016, "GDPR") may be processed, including health and certain lifestyle data. The main concerns range from risks of intrusive profiling, repurpose and secondary uses, quality of users' consent, lack of control over data sharing and potential uncontrolled disclosure of data. This necessitates setting up adequate data governance and, among other things, strict security measures to minimize the risks of unauthorized access and processing of personal data (for more information on smart objects, including the safeguards and security, please also refer to this post).

2. AI marketing, from CRM to virtual assistants and influencers

AI systems are now used also to "manage" the customer base, from advanced CRM systems, which allow more efficient marketing campaigns, agile made-to-order production and inventory management, to virtual assistants, including virtual tailors, shopping assistants and influencers (if you want to read more about virtual influencers see our post here).

As for CRMs, legal issues are not limited to the "usual" GDPR regulations that need to be taken into account. When CRMs are fed through AI-powered databases, other matters will have to be considered, including antitrust, insider law, product safety, dual use, insurance law, etc. For more information you can read our posts on Artificial Intelligence vs Data Protection: which safeguards? and AI Data Lakes: top five issues to consider.

Furthermore, there may be questions over who is actually liable for actions carried out by AI systems, including virtual assistants and influencers. There is no specific legislation on this point, although the current trend confirms that there is a strict liability to be applied to fashion companies using virtual influencers. For more information on liability and "robots", see our post on this topic.

3. AI creations

AI systems have also recently been used for the creation of fashion collections (if you want to read about the latest collection presented by Huawei in Milan and designed by AI systems see this post. One of the main legal issues relates to the need to grant adequate IP protection to fashion collections designed by (or with the contribution of) AI systems. Can computers and robots be legally considered as creators of a fashion design? From a copyright, design and patents law perspective, creativity is only attributed to a human being. But there is some freedom for allowing some distinctions. If you want to know more on this, you can also read our post on AI – What kind of IP Protection?.

4. Blockchain against counterfeit property

Blockchain is currently used in many sectors and industries (for more information on the use of blockchain to protect digital content, see this post). Luxury brands benefit from a number of blockchain's applications for anti-counterfeit purposes. This includes, for instance, the ledger recording of the clothing production and supply chain, including protection of registered and unregistered IP rights with a secure tamper-proof and time-stamped certification. In Italy blockchain has also been embraced by the Italian Ministry of Economic Development (Ministero dello Sviluppo Economico), which recently launched a new project to ensure traceability of the "Made in Italy" textile chain. As discussed in our previous posts, blockchain may not be adequate from a GDPR perspective as, among other things, the data subjects' rights may not be adequately exercised. If you want to know more about this, you can also read this post.  

5. Enhanced logistics and distribution

Blockchain and AI are being used for logistics and distribution. For instance, blockchain and AI provide for, respectively, automated tracking of deliveries through complex distribution chains, and for more efficient supply chain automation and material handling schemes. This is leading fashion outfits to regularly deal with third parties relying on blockchain and AI, or directly providing AI-based services. This is leading to a new approach also for outsourcing contracts, with logistics services contracts becoming increasingly similar to complex technology sourcing contracts. There is a trend of shaping new standards, with software, IP, audits and insurance clauses playing an increasingly important role. For more information on AI and contracts, you can also read this post.

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