Much of the last couple of decades has gone towards tackling regulations and legal issues surrounding the internet and allied technologies. The metaverse is one of the latest advancements that has begun – and, in all likelihood – will continue to challenge regulators and policymakers. Indeed, the metaverse shares a lot of legal issues with its well-known cousin, the internet, but what’s unique is the convergence of technologies in the metaverse.

The metaverse is widely understood to be a simulated virtual environment that enables social interactions similar to that of the real world. The technology is being used in a plethora of sectors, including gaming, medicine, education, and entertainment, to name but a few.

The metaverse, in most of its forms, will employ VR (virtual reality) and AR (augmented reality) while depending on blockchain technology and various elements of the Internet of Things (IoT). Haptics is also well on its way, and quantum computing could become mainstream in the near future. Given the sheer scale of convergence of technology, however, and the immersive experience that the metaverse provides, there are a few unique issues as well.

Here are some key legal challenges that the metaverse might face in the near future.

Regulating User Behavior

It is critical that user behavior is regulated, whether through laws applicable to platforms or to users.

This is especially true since the metaverse typically encourages creativity by users in designing their own spaces and interactions with other users. For example, a user might create an outfit with lewd graphics and heckle others on the platform. They could reappear in different avatars and engage in stalking or impersonate a third person and try to elicit sensitive information.

There may be real-life consequences of such actions. But how does one regulate such behavior?

Enforcement of these laws would be a challenge, especially in the case of cross-border offenders. Blocking users may be ineffective since they might create numerous profiles without being verified. Platform policies could help to an extent, but it would not be feasible for platforms to pursue litigation against individuals.

Re-evaluation of the legal provisions might be necessary to deter such behavior online — especially the liability of a person controlling an avatar and the impact on the victim.

Attention may then turn to the role of intermediaries — a strategy that was deployed by numerous jurisdictions for regulating the internet.

Intellectual Property Ownership And Other Rights

Creativity in the metaverse would likely be limited only by human imagination. The more creativity and functionalities platforms enable, the more content will be developed by users. Therefore, it will be important to ascertain if what users create on a platform is intellectual property, and if yes, who owns it? If a platform owns it, does the user have a license to it? If yes, what is the extent of that license? 

Platforms must answer questions like these in their terms of use. This would also determine how commercially viable or accessible a metaverse platform is.

Creativity by users would be bound by rules of IP infringement. For example, if a user modifies their avatar to resemble Iron Man, would that violate Marvel’s copyright in the franchise or Robert Downey Jr’s personality rights? Who would they bring an action against — the user for infringing the copyright or the platform for enabling such infringement?

Another aspect is the content created by the platform itself. Say a metaverse contains a replica of the Connaught Circus or Times Square; the platform would probably need to take permission to replicate facades of iconic buildings and brand names of stores.

There is no shortage of infringing content on the internet, and IP owners will often forgo actions against various parties because of the costs involved in pursuing every infringer. Therefore, it is crucial that metaverse participants think carefully about the IP strategy that they would like to adopt and how they can best balance creativity and commerce.

Interoperability

Interoperability is a technical problem as much as it is a legal one. The metaverse is not a unified virtual 3D world where all platforms come together. Just like we see with social media websites, there will probably be big players and smaller ones.

Users will likely purchase assets on the platform to enhance their virtual appearance, residence, and abilities with virtual money earned on the platform itself, or with real money.

In any case, many users would be spending considerable time and effort in building their metaverse lives and will be possessive about it. What happens if they finally decide to move to another platform or if the platform itself decides to shut down?

On the one hand, it wouldn’t be in the interest of a platform to make users’ lives transferrable to another platform from a forcible user retention perspective. Nonetheless, data portability requirements under protection and privacy laws may compel platforms to enable seamless data transfers.

There might also be a coalition of various service providers who provide more value to users by enabling them to transition from one platform to another.

This would naturally require certain standardized software as well as hardware. It will also certainly lead to a lot of complications, especially from a contractual and IP perspective — for instance, which platform’s terms of use will prevail with user transitions, and how will IP licenses work across platforms? In the case of a dominant platform refusing to make its contents interoperable, could there be a competition law concern?

These are just a few amongst many more interesting legal barriers and questions that will inevitably come up when the metaverse becomes more ubiquitous. The internet is said to have an open architecture, but many metaverse platforms are being shaped by private parties.

As a result, commercial considerations will likely be the top priority, and platforms will need to take into consideration various other factors, such as user experience, principles of fairness, and morality. Platforms can demonstrate through self-regulation how they would make the right choices, and if not, the law could be used to nudge them in the right direction.