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Image: 3DLook

The “metaverse” seems to be the latest buzzword in tech. In general terms, the metaverse can be viewed as a form of cyberspace. Like the internet, it is a world – or reality, even – beyond our physical world. One of the primary differences is that the metaverse allows us to immerse a version of ourselves – as avatars – in its environment, usually through augmented reality (“AR”) or virtual reality (“VR”), which people are and will increasingly be able to access using tools like VR goggles. While it all seems very exciting, it is worth asking: who or what governs the metaverse? What are some of the key areas that, at this stage, are legally murky? Here are three legal issues that stand out when it comes to the metaverse … 

1. A boundless marketplace

Transactions in the metaverse are generally monetized using cryptocurrency or non-fungible tokens (“NFTs”). An NFT is a unique digital asset: it could be an image, a piece of music, a video, a 3D object, or another type of creative work. The NFT market is booming – in some cases we are talking about sales equivalent to millions of pounds. While it is difficult to say whether this is simply a trend, or a new and exciting form of capital investment, these kinds of transactions raise some interesting legal issues in the context of the metaverse. For example, in the “real” world, when it comes to purchasing a piece of art, property law dictates that ownership is two-fold. First, ownership can be attributed in the actual physical artwork. And second, the buyer may or may not own the intellectual property of the artwork, depending on the terms of the sale. 

But what kind of ownership is precisely included in a transaction of digital art? International law firm Reed Smith has said that “ownership” in the metaverse is nothing more than a form of licensing, or provision of services. In such instances, true ownership (i.e., ownership in the underlying work, itself) still lies with the owner. This may mean, for example, that the buyer cannot make commercial use of the item without permission from the copyright owner or relevant trademark holder. 

Virtual real estate has also become an asset tied to NFTs, with individuals and companies spending enormous sums to own “property” in the metaverse. Do the intricacies of land law apply here? For example, will real-world legislation that governs trespassers on private land apply in the metaverse? Or on a different note, can you take out a mortgage on your virtual property?

In a worst-case scenario, the metaverse may also be susceptible to hosting a virtual marketplace somewhat like Silk Road, which was a dark web marketplace dealing in illegal drugs, weapons and, allegedly, “murder for hire.” What kinds of laws can be put in place to safeguard against this happening in the metaverse? It would be ideal to have a global regulatory authority overseeing the metaverse, although this would be difficult to implement.

2. Data

Another one of the possible legal issues in regards to the metaverse is around data and data protection. The metaverse will expose new categories of our personal data for processing. This might include facial expressions, gestures, and other types of reactions an avatar could produce during interactions in the metaverse. The European Union’s General Data Protection Regulation (“GDPR”) could arguably apply to the metaverse, as could the United Kingdom’s Data Protection Act. Given the novel nature of the metaverse, in order to ensure that users’ rights are protected, the processes governing informed consent around data processing may need to be revisited.

Further, the ultimately-envisioned “no-boundaries” nature of the metaverse means that while we might want to assume the GDPR will apply, the clauses dealing with transfer and processing of data outside the EU may need to be clarified. The GDPR applies based on the location of the subject when their data is processed, not on their home country or citizenship. 

So, can we determine location based on the person operating the avatar, or is it more appropriate to look at the avatar itself, since it is the avatar’s data that will be processed? And if we look to the avatar’s location, how would we decide which jurisdiction the metaverse falls under?

3. User interactions

Finally, when users interact through their avatars, we may have situations where some kind of altercation occurs that would equate to breaking the law if it took place between people in the real world. Such incidents could be in breach of tort law, which covers civil claims such as negligence or nuisance, or criminal law, iinvolving illegal acts and crimes. Imagine one avatar assaults another: Could we apply criminal laws of assault and battery to this situation? How could we make an avatar responsible for their actions in the metaverse? This would be complicated because it would mean that we need to attribute a legal persona to the avatar, giving them rights and duties within a legal system; and thus, allowing them to sue or be sued. 

Proving assault or battery would also be much more difficult because it usually requires “actual bodily harm.” In the metaverse, these legal issues become more nuanced, as there will naturally be no actual bodily harm, and therefore, it would be challenging to prove harm, loss or injury suffered by an avatar.

Worryingly, sexual predators are already emerging in the metaverse, masking their identity behind an avatar that may not easily be traced back to its operator in the real world. For example, we have seen incidents of groping, according to MIT Technology Review, as users in the metaverse can wear haptic vests or other technologies that actually allow them to feel the sensations if they are touched or groped. Sexual harassment laws do not require physical contact to constitute sexual harassment, but are existing laws adequate to deal with this issue? Within the environment of VR and gaming, for example, who is responsible for ensuring the safety of users? 

There is little doubt that issues of sexual harassment will make their way into the metaverse, particularly if unscrupulous users know this is a grey area. Believing that their actions cannot be proved, or that they cannot be held responsible for events that take place in the metaverse, might embolden such behavior, which brings us back to the question of legal personas of avatars: Is a legal persona necessary to make avatars responsible for their actions in the metaverse? And what kind of standards and criteria need to be in place to distinguish between a “legal” avatar and the true legal person who operates that avatar? These issues should all be addressed before the metaverse becomes mainstream.

Pin Lean Lau is a Lecturer in Bio-Law at Brunel Law School, and the Centre for Artificial Intelligence and Social & Digital Innovations at Brunel University London. (This article was initially published by The Conversation.)