“Metaverse” seems to be the latest craze in technology and is often seen as a form of cyberspace. Like the Internet, it is a world, or a reality, that is basically beyond our physical world. One of the main differences is that the metaverse offers us the ability to immerse a version of ourselves, an avatar, through augmented reality “AR” or virtual reality “VR”, which humans are and will be able to access using tools such as VR goggles. Although everything seems very interesting, it is worth asking: who or what governs the metaverse? What are some of the key areas that are legally unclear at this point?
Here are the top 3 legal challenges that stand out when it comes to metaverse:
1. A Market with no limitations
Metaverse transactions are monetized using Non-Fungible tokens “NFTs”. An NFT is a unique digital asset: it can be an image, a piece of music, a video, a 3D object, or some other creative work. The NFT market is booming – in some cases we are talking about sales equivalent to millions of dollars. Although it is difficult to point whether this is simply a trend or a new and interesting form of capital investment, these types of transactions raise some interesting legal issues in the context of the metaverse.
For instance, in the “Real” world, when it comes to buying a piece of art, the law of property dictates that property is double. First, the property can be attributed to the actual physical work of art. And secondly, the buyer may or may not own the intellectual property (IP) of the artwork, depending on the terms of the sale. But what kind of property is included in a digital art transaction? The international law firm Reed Smith said that “ownership” in metaverse is nothing more than a form of licensing or service provision. In such cases, the actual ownership (i.e., ownership of the underlying work itself) remains with the owner.
This might mean that, for example, the purchaser may not make commercial use of the item without the permission of the copyright owner or the trademark holder. Virtual real estate has also become an NFT-related asset, with individuals and companies spending huge sums to own “property” in metavers. Does the complexities of land law apply here? For instance, will real-world legislation governing private offenders be applied in metaverse? Or, on a different note, can you take out a mortgage on your virtual property?
In the worst case scenario, the metaverse may be likely to host a virtual marketplace, Silk Road, which was a dark web marketplace dealing with illegal drugs, weapons and, presumably, “murder on its own.” What kind of laws can be enforced to protect against this happening in metaverse? Hence, there should be a global regulator overseeing the metaverse, although this would be difficult to implement.
2. Data and Data Protection
Another possible legal issue concerning the metaverse is related to data and data protection. The metaverse will expose new categories of personal data for processing. This could include facial expressions, gestures, and other reactions that an avatar might produce during metaverse interactions. The European Union’s General Data Protection Regulation (“GDPR”) could apply to metaverse, as could the UK Data Protection Act.
Given the unique nature of the metaverse, in order to ensure that users’ rights are protected, the processes governing informed consent to data processing may need to be reviewed. In addition, the “limitless” nature of the metaverse means that, although we might like to assume that the GDPR will apply, the clauses dealing with the transfer and processing of data outside the EU could need to be clarified.
The GDPR applies depending on the location of the subject when its data is processed, not the country of origin or nationality. So can we determine the location based on the person operating the avatar or is it more appropriate to look at the avatar itself, because the avatar data is what will be processed? And if we look at the location of the avatar, how do we decide which jurisdiction the metaverse falls into?
3. User interactions
At last, when users interact using their avatars, we may have situations where there is some sort of altercation that would amount to breaking the law if it took place between people in the real world. Such incidents could be a violation of tort law, which covers civil claims, such as negligence or displeasure, or criminal law, which involves illegal acts and offenses. Imagine that one avatar assaults another: could we apply the criminal laws of aggression and aggression in this situation? How can we make an avatar responsible for their actions in metaverse?
This would be complicated because it would mean that we have to assign a legal person to the avatar, giving him rights and duties within a legal system; and thus, allowing them to sue or be sued. Demonstrating aggression or aggression would also be much more difficult, as it usually requires “actual bodily harm.”
In metaverse, these legal issues become more nuanced, as there will naturally be no actual bodily harm, and it would therefore be difficult to prove the injury, loss, or harm suffered by an avatar. Worryingly, sexual predators are already appearing in metaverse, masking their identity behind an avatar that cannot be easily traced back to its real-world operator. For example, we’ve seen incidents of groping, according to the MIT Technology Review, because users of metaverse may wear haptic vests or other technologies that actually allow them to feel if they are touched or groped. Sexual harassment laws do not require physical contact to constitute sexual harassment, but are existing laws appropriate to address this issue?
In VR and gaming, for instance: Who is responsible for ensuring the safety of users? There is no doubt that sexual harassment issues will take place in metaverse, especially if unscrupulous users know that this is a gray area.
To believe that their actions cannot be proven or that they cannot be held responsible for the events that take place in metaverse, could encourage such behavior, which brings us back to the question of the legal characters of the avatars: is a legal person necessary to create avatars, responsible for their actions in metaverse? And what kind of standards must exist to differentiate between a “legal” avatar and the true legal entity that operates that avatar?
To know more about News about the Metaverse, check out Lexyom’s Legal News publications.
Legally Yours,
