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[Metaverse Good Read] Legal issues in the metaverse

There are a variety of legal issues concerning the metaverse, especially given that it is a meeting point for multiple technologies, requiring or linked to servers, hosting, software, platforms, hardware and other peripherals (e.g. VR glasses and haptic gloves for sensing virtual objects), content, graphics, maps, buildings, photos, interfaces, as well as blockchain for acquiring and registering tokenised virtual assets. This diversity also raises a host of legal issues ranging from intellectual property rights to data protection and civil law.

Data Security & Privacy
Intellectual Property
Fintech
M&A and other Investment Activity
Regulation of Virtual Assets
Gambling and Lottery Laws
Regulation of Conduct in the Metaverse
Tax

In this series of articles, we explore the key issues concerning the metaverse, including:

Part 1: Trademarks and copyright, NFTs and civil law principles in metaverse

Part 2: Data protection challenges, the importance of cybersecurity, advertising regulation in metaverse

Part 3: Tax, Regulation

Part 1: Trademarks and copyright, NFTs and civil law principles in metaverse

Users can generate virtual creations in the metaverse by interacting with the digital avatars of other users or brands in the virtual space. This raises the question of who owns the intellectual property (IP) and what protection is provided to the creators?

To quote an example, it may become difficult to conclude the identity of a given work’s creator(s) in the metaverse, especially when the work results from a decentralized collaborative process carried out by users hiding behind avatars.

The metaverse can also experience issues with trademarks. Companies in the metaverse use real-world brands such as Nike, Gucci, CU, etc., to create and sell items/accessories for avatars. Circumstances can arise when:

  • Such items are used within the metaverse,
  • A user creates and sells the same item, or
  • When items gain popularity in the metaverse and are then copied and produced in the real world.

Part 2: Data protection challenges, the importance of cybersecurity, advertising regulation in metaverse

The security and privacy of users’ data will be among the most significant metaverse legal implications issues that platform owners will face. While these concerns are not new to tech companies, Facebook being a very popular example, data in the metaverse will be exponentially more valuable than it already is. Technologies will become closely integrated into almost all aspects of the users’ lives.

The sensors would have real-time insightinto the lives of humans. Gears like AR glasses and headsets can particularly bring major privacy threats by serving as mics and cameras inside homes and offices.

Behavior in the metaverse will have the capacity to reveal intrusive information about people’s interests, including biometric data and head and eye movements. Currently, there are no set guidelines for who and what companies can collect, who owns it, and how it can be used.

Since the metaverse aims to be a global environment, it would be difficult to know which data protection laws apply.

Some of the key questions to consider when it comes to privacy and cybersecurity include:

  • What personal information are you sharing on the metaverse?
  • Who has access to your personal information?
  • How is your personal information being used?
  • Is your personal information being shared with third parties?
  • What security measures are in place to protect your personal information?

Part 3: Tax, Regulation

Digital assets, when purchased and/or sold, may be subject to different taxes like income tax, sales tax, etc. For example, the metaverse allows users to buy virtual land and build settlements or purchase NFT versions of real-world objects needed to construct their world. The growth of Web3 has also created an opportunity for people from all over the world to work together on new business ventures with their own rules.

Finally, regarding the provision of public services, several cities have already started a transition towards a virtual public venue. Virtual reality seems to be the choice picked by these cities for greater efficiency and proximity in favor of their citizens. However, this approach presents a strong risk of massive surveillance and monetisation for host platforms. To protect users, European institutions should ensure the complete application of the GDPR provisions to effectively avoid targeted advertising in such online public venues.
Furthermore, our study underlined the transformation that is going to occur in education. The Metaverse will open new possibilities and opportunities for professors to teach to students and to improve pedagogical support. However, studies already mentioned the danger of screens and social media for young people. Their social identity could be deeply modified creating isolation and behaviour alteration. European authorities and actors of health and digital sectors should open a conversation toward the use of the Metaverse for education and its impact on our children’s health.

References:

https://www.sciencespo.fr/public/sites/sciencespo.fr.public/files/Metaverse-Group-report-final-draft-June-12-1.pdf

https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2022/02/the-metaverse-what-are-the-legal-implications.pdf

https://cms.law/en/int/publication/legal-issues-in-the-metaverse

https://abovethelaw.com/2022/09/the-technology-and-legal-issues-behind-metaverse/?amp=1

(Image credit: “The Good Fight” Season6.)

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