What Is the Metaverse? Coming to Terms with Its Legal Implications

By Oyetola Muyiwa Atoyebi, SAN, FCIArb. (UK).

While the metaverse can take numerous forms, presence, interoperability, and standardization are three fundamental features. The first and most important factor is presence, which refers to the sensation of actually being in a virtual world with virtual others. Decades of research has demonstrated that having a sense of embodiment – which may be obtained with virtual reality technologies like head-mounted displays – increases the quality of online interactions.

INTRODUCTION

The term “metaverse,” a combination of the prefix “meta” (meaning beyond) and “universe,” is commonly used to describe a communal and interactive cyberspace where content, commerce and networking exist with increasing permeability to the real world. It refers to the increasing permeability of the boundaries between various digital environments and the physical world. Consider entering a cyberworld: The metaverse is a place where you can interact with virtual objects in real-time and receive real-time information.[1]

The Metaverse is generating an innovation that transcends time and space in all aspects of industry and society, thanks to new technical capability and an accelerated cultural transition to online as a result of the COVID-19 catastrophe. Gaming, fashion, and luxury brands, in particular, are collaborating with metaverse platforms to increase their virtual market bases.[2]

In his 1992 novel “Snow Crash,” sci-fi novelist Neal Stephenson coined the term to describe the virtual world in which the protagonist, Hiro Protagonist, socializes, shops, and defeats real-world foes through his avatar. The concept was popularized as “cyberspace” in William Gibson’s seminal 1984 novel “Neuromancer,” which predates “Snow Crash.”

While the metaverse can take numerous forms, Presence and Interoperability are two fundamental features. The first and most important factor is Presence, which refers to the sensation of actually being in a virtual world with virtual others. Decades of research has demonstrated that having a sense of embodiment – which may be obtained with virtual reality technologies like head-mounted displays, increases the quality of online interactions.

Second, Interoperability refers to the capacity to move freely across virtual places while using the same virtual assets, such as avatars and digital objects. For example, ReadyPlayerMe allows users to build an avatar that they can utilize in a variety of virtual worlds, including Zoom meetings via apps like Animaze. At the same time, blockchain-based technologies like cryptocurrencies and nonfungible tokens can make it easier to move digital assets across virtual borders.

LEGAL IMPLICATIONS OF THE METAVERSE

COPYRIGHT RISKS

A copyright is a legal protection given to the creators or originators of creative expressions, whether they are literary, musical, artistic, or cinematographic works, or adaptations of any of these works. It gives the creator of the work an exclusive and assignable right, that while exclusive to the author, is subject to the recognized legal rights of others. It is not enough for an idea or concept to be created in the mind of the creator; it must also be expressed or fixed in some media, such as paper, diskettes, flash drives, CD-ROM, VCD, DVD, and so on, in order to be protected.[3]

Copyright law encompasses a remarkably broad range of creative work. Although the law refers to them as “works of authorship,” copyright protects almost all creative work that can be written down or otherwise captured in a tangible medium. The metaverse offers several potential benefits to copyright holders. Developers, for example, can use first-mover presence in a specific aspect of the metaverse to obtain royalties for the use of copyrighted software from late adaptors who are playing catch-up within a specific space. For instance, in the United States, the Digital Millennium Copyright Act (DMCA) provides copyright holders with an additional layer of protection. The DMCA forbids the removal and alteration of copyright management information, as well as the circumvention of measures controlling access to copyrighted works. The DMCA’s remedies for such violations add to the protection provided by metaverse content that is encrypted, or otherwise shielded from prospective infringers.

TRADEMARK RISKS

A trademark is a word, phrase, slogan, design, or logo that acts as a source indicator for goods or services. Trademark law protects against unauthorized third-party use of a trademark, in a way that would lead a reasonable consumer to believe that the trademark owner was either the source of the goods/services, endorsed, or sponsored such goods/services, or in a way that would dilute the trademark.

Trademarks are important aspects of the virtual landscape, and their use is widespread in the metaverse. As people and businesses continue to create and establish their online and virtual and augmented reality presences, this presents both opportunities and risks. Trademark owners who successfully use the metaverse to engage in cross-promotional branding can reach a larger audience, but they must be aware of the potential liability that comes with that increased reach.

While mixed and augmented reality has allowed brands to reach out to a developing new industry and consumer base, it has also generated challenges for trademark owners and users, particularly in the gaming industry. The use of real-world, third-party trademarks in video games that replicate the actual world, for example, is a prevalent concern at the confluence of the virtual and real worlds.

PATENT RISKS

A patent is a government authority or licence conferring an exclusive right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention in the country it is obtained without permission or consent during the lifespan of the patent.

Patents are frequently used by companies, developing metaverse-related technologies to protect their inventions. The majority of metaverse-related patents are in the VR or AR space[4]. Since 2010, the number of new patents filed for AR/VR has increased at a 33 per cent annual rate worldwide. This exponential increase in the number of filings indicates increased R&D spending on metaverse-related inventions. Furthermore, research and development of metaverse-related inventions are no longer limited to the realms of entertainment and science fiction. Patents relating to augmented reality and virtual reality are now being used in a range of industries, including online retail, workplace training, health care delivery and real estate.

Patent use in the metaverse, like other intellectual property, presents both opportunities and risks. Potential licensing revenue is a particularly lucrative benefit of owning an AR/VR patent. Identifying potential licensees, on the other hand, may be difficult.

DATA AND PRIVACY

Participation in the Metaverse will necessitate the collection of unprecedented amounts and types of personal data. Presently, smartphone apps and websites enable organisations to understand how people navigate the Web or use an app. Organizations will be able to collect information about individuals’ physiological responses, movements, and potentially even brainwave patterns in the Metaverse in future, allowing them to gain a much deeper understanding of their customers’ thought processes and behaviours. Users who participate in the Metaverse will most likely be “logged in” for an extended period of time. This means that patterns of behaviour will be constantly monitored, allowing the Metaverse and the businesses (vendors of goods and services) that participate in the Metaverse, to understand how to best serve the users in an incredibly targeted manner.

Achieving adequate data protection compliance will undoubtedly remain a concern for those dealing with consumers in the Metaverse. For example, AR/VR demands the processing of significant amounts of personal data – including, in some instances, biometric data (such as body-tracking data) – giving rise to considerations under data protection legislation, including the General Data Protection Regulations (GDPR). Generally, the processing of biometric data demands explicit consent where it is used for identifying a natural person, but there are concerns over whether consent can be freely given in circumstances where the AR/VR technology cannot be used in the absence of such processing. 

SOCIAL MEDIA REGULATION

Will social media regulation impact upon Metaverse stakeholders? It is difficult to speculate, so far in advance, on what the legal position will be in relation to the Metaverse when social media itself is not yet much regulated globally. BigTech, as incumbents, have a particular interest in the evolution of the Metaverse. Some commentators are calling for tougher regulation in order to make BigTech more accountable for the content that appears on their platforms.

CONCLUSION

The concept of metaverse is seen to be progressing and projected to be the future of the internet space. With it comes a reasonable number of opportunities as well as challenges, as the new innovation is an unexplored phenomenon.[LE1]  It is sure to unlock new creative, socio-economic opportunities.

The unfolding of the Metaverse will see the emergence of certain legal issues bordering on intellectual property rights infringement, data and privacy risks, cybercrime and security, social media regulations and many more. If the metaverse will fulfil the promises of the benefits it proffers, a commensurate apt legal response to these legal issues as they arise will be required.

While the metaverse can take numerous forms, presence, interoperability, and standardization are three fundamental features. The first and most important factor is presence, which refers to the sensation of actually being in a virtual world with virtual others. Decades of research has demonstrated that having a sense of embodiment – which may be obtained with virtual reality technologies like head-mounted displays – increases the quality of online interactions.

AUTHOR: Oyetola Muyiwa Atoyebi, SAN, FCIArb. (UK).

Mr. Oyetola Muyiwa Atoyebi, SAN is the Managing Partner of O. M. Atoyebi, S.A.N & Partners (OMAPLEX Law Firm) where he doubles as the Team Lead of the Firm’s Emerging Areas of Law Practice.

Mr. Atoyebi has expertise in Technology, Media and Telecommunications Law and this has seen him advise and represent his vast clientele in a myriad of high level transactions.  He holds the honour of being the youngest lawyer in Nigeria’s history to be conferred with the rank of a Senior Advocate of Nigeria.

He can be reached at atoyebi@omaplex.com.ng

CONTRIBUTOR: Love Ebekhile.

Love is a member of the Corporate and Commercial Law Team at OMAPLEX Law Firm. She also holds commendable legal expertise in Technology, Media and Telecommunications Law.

She can be reached at love.ebekhile@omaplex.com.ng.

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[1] Reed Smith, ‘Reed Smith Guide to the Metaverse’ (2021) https://www.reedsmith.com/-/media/files/perspectives/2021/metaversewhitepaperv2.pdf Date accessed: 5th November, 2021

[2] Korea Herald, ‘[Law Talk] Trademark issues in the world of the metaverse’ (2021) http://www.koreaherald.com/view.php?ud=20211017000101 Date accessed: 5th November, 2021.

[3] Sandra Eke, ‘Fundamental Elements Of Copyright Ownership And Protection Under Nigerian Law’ (2019) https://www.mondaq.com/nigeria/copyright/866284/fundamental-elements-of-copyright-ownership-and-protection-under-nigerian-law-sandra-eke Date accessed: 8th November, 2021

[4] ‘AR’ and ‘VR’ are acronyms for ‘Augmented Reality’ and ‘Virtual Reality’

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 [LE1]Meta verse is currently being explored by most companies in the world.