Law in the Metaverse

“Law? We don’t need no stinkin’ law” will scream internet denizens to the idea that the metaverse will need to be regulated and operated under a legal framework. However, because of the inevitability of multinational corporations and possibly nation states constructing, maintaining and profiting off of the metaverse (or metaverses) we can just as certainly predict that there will be legal rights and legal consequences applied to the metaverse. While there will be pushback to regulations and restrictions in the metaverse, as seen with attempts to regulate and tax cryptocurrencies, if the metaverse is going to thrive and prosper it will need some form of metaverse law.
 
Let’s backup first and discuss “what is the metaverse?” or “what will the metaverse be?” Most likely it will be some form of communal interactive virtual reality. Unquestionably these already exist, such as online multiplayer games (Call of Duty/Fortnite), videoconferences (Zoom/Google Meet), and virtual world simulations (Sims/Second Life). The metaverse will be a more immersive version of the prior examples likely supplemented by physical equipment such as the Oculus VR goggles and gloves being marketed by Meta (formerly Facebook). Eventually immersive suits or some form of full body interactive system will provide a more complete connection to the metaverse. Individual will be represented in the metaverse by an Avatar that can either mimic the individual or provide a fantasy persona. A pop culture representation of the metaverse can be found in Ready Player One, a great movie and an even better book (particularly for kids raised in the 80’s, read it, you’ll see).
 
So where will legal issues arise? Short answer: everywhere. Because this is a blog post and not a treatise on metaverse law I’ll focus on two overarching topics, jurisdiction and intellectual properly, each of which will someday be their own law school class.
 
Jurisdiction
 
If someone gropes you (or more specifically your Avatar) in the metaverse what is your cause of action, where do you bring your claim, and what are your remedies? The preceding hypothetical is actually being discussed and debated in view of incidents in Meta’s Horizon Worlds and Horizon Venues. Meta’s current response has been to create a default “4-foot bubble” around avatars to prevent unwanted virtual contact (potentially resulting in unwanted hepatic stimulation). Assuming the participant wanted to sue over the unwanted “touching” where do they go for redress? There are a host of possible answers. The first, and likely the situation in the Meta scenario, is that individuals that engage with Meta’s virtual worlds have “read and agreed” to user agreements that establish where, if anywhere, legal claims can be brought. It is likely that participants have waived most claims against Meta and are limited to arbitration proceedings (if any) for actions against third parties. Punishment or liability will likely be limited to suspension or expulsion from the metaverse.
 
However, this concept of user agreement control of all jurisdictional and liability issues in the metaverse starts to breakdown when we look at interactions between different virtual realities within a unified metaverse as well as conflicts with or between the metaverse platform companies. Different virtual realities, or metaverses will likely exist in a macro metaverse. Meta’s Horizon World is one metaverse, and we will likely see independent metaverse platforms from at least Apple, Google, Amazon, and Microsoft (as well as companies yet to be named). All of the different virtual realities/metaverses will exist in a unified metaverse allowing avatars to travel and interact in each of the distinct platforms. Will you be required to accept user agreements for each and every metaverse? Most likely. But what is even more likely is that there will be some form of agreed up default jurisdiction where all potential actions can be brought. This could be an arbitration forum, a currently defined jurisdiction, such as New York, San Francisco, Tokyo or London, or it could be a newly created general purpose metaverse court. A general purpose metaverse jurisdiction could be very attractive to international technology companies that may not want to be bound solely by U.S. law and hope to achieve some form of international jurisdiction for the metaverse (e.g., the International Criminal Court or the Hauge).
 
Whether jurisdiction within the metaverse is limited to arbitration forums (via user agreements), general jurisdictions (via current procedural law), or an international metaverse court system will be left to future legal battles, but we can be assured those battles will be fought. Additionally, when things go “really wrong”, such as intentionally willful criminal actions, it is unlikely any user agreement would keep plaintiffs in arbitration forums, so these issues will eventually need to resolved.
 
Intellectual Property
 
IP rights will be front and center in the metaverse from patent and copyright issues related to the hardware and software that support the metaverse to trademark and copyright issues related to the content offered in the metaverse. These are just a fraction of the possible IP issues that will be raised in the metaverse, but for now let’s use these as starting points.  
 
From the trademark perspective we have already seen brands affirmatively marketing and protecting their trademark properties in the metaverse. NFTs (non-fungible tokens) have also soared in popularity in connection with copyrighted or trademarked material online. If your avatar will be wearing clothing or carrying a pocketbook, why shouldn’t those items be Polo Ralph Lauren and Louis Vuitton? If they are, we know that owners of those brands will want to control use of their trademarks in the metaverse as they do in the real universe. If you are attending a virtual concert in the metaverse featuring Lil Nas X you can bet that a license for the music as well as rights to use his physical likeness will be needed or their will be copyright violations. Additionally, if you are moving your avatar from one metaverse to another there will need to be rules for transferring trademarked or copyrighted material from one metaverse to another. While you should be allowed to sell your virtual trademarked item to another user, this does not mean you can sell virtual copies of a trademarked item, but only the specific one you previously purchased. In addition to NFT’s, these transactions can be covered by smart contracts backed by blockchain. Applications of new technology like blockchain will potentially effect almost every experience in the metaverse.  
 
Patents will not just be focused on hardware (goggle/gloves/suits) and software (platforms for the new metaverses), but will have additional use in the area of design patents and method of use/method of doing business patents applicable to metaverse transactions.
 
Jurisdiction will again be an issue. While there are international systems for filing patents that cover most of the industrialized world, there is no one “international patent” (or trademark/copyright). All IP rights are ultimately national and can only be applied to individuals or corporate entities that are subject to the jurisdiction of that nation state via agreement or current jurisdictional rules. User agreements can only go so far if there is no system to verify the identity of each user and provide some ability to apply liability beyond exclusion. It’s possible that the threat of exclusion will be sufficient to enforce many IP rights early on, but as individuals and companies become more immersed in the metaverse there will be a greater and greater need for a system of monetary or equitable penalties to enforce laws within the metaverse.
 
Of course, there will also be some darknet version of the metaverse. A dark metaverse (not hosted by multinational corporations/nation states) will eventually be a reality, but applying the norms of IP law in such a scenario will likely be as difficult as forcing law and liability on the current darknet.                 
 
We do not know exactly what the metaverse of the future will look like, who will be the greatest major platform provider, and exactly what the rules of the game will be, but we can guarantee there will be some rules. To enforce those rules we will need metaverse law. As we have seen with the internet, many laws can be adapted from existing frameworks, but that is just a starting point. Changes in technology, commerce, and human behavior will influence how the metaverse law evolves and adapts. We can make some starting assumptions on how things will begin, but the future will be always advancing, and metaverse law will need to change and adapt to keep up.   

If you have any questions about patents, trademarks or copyrights, and would like to discuss protection and registration please contact me at [email protected] or visit my website at www.chiaraiplaw.com
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