View | Key legal challenges that the metaverse could face in the near future

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

While there are numerous understandings of what the metaverse means, it is widely understood to be a simulated digital environment which enables social interactions similar to the real world. Importantly, the technology is being used for a plethora of sectors including medicine, gaming, education, and entertainment only to name a few.

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

Here are some of the key legal challenges that the Metaverse could face in the near future.

In no particular order of priority, the first pertains to regulating user behaviour. With numerous unfortunate incidents of sexual harassment on the metaverse already reported, it is critical that user behaviour would need regulation, whether through laws applicable to platforms or to users.

This is especially so since the metaverse would typically encourage creativity by users in designing their own space and interactions with other users. For instance, a user may create an outfit with lewd graphics and heckle other individuals on the platform. They may reappear in different avatars and engage in stalking. They may also impersonate a third person and try to elicit sensitive information.

There could be many such examples and given the immersive experience of the metaverse, innocent users are likely to feel harassed and tormented, and there may be real-life consequences of such actions. The question then is, how does one regulate such behaviour?

The Indian Penal Code, 1860 (IPC), which is still very much applicable, in most circumstances envisages victims to be natural persons and not virtual avatars. Hence, an avatar who gets attacked in the metaverse may not really be a victim under the IPC, despite the fact that the person controlling such an avatar may have been traumatized by the experience.

Moreover, for numerous offences such as criminal use of force and rape, the IPC envisages a physical impact — whether through physical touch or involvement of physical organs. This would naturally be absent in a virtual world. However, some offences such as cheating by personation are more broadly worded and may be interpreted to include a person pretending to be another person by imitating their avatar. Nevertheless, enforcement of these laws would still be a challenge, especially in the case of cross-border offenders.

Blocking a user may be ineffective since users may create numerous profiles without being verified. Platform policies may help to an extent but it will not be feasible for platforms to pursue litigation against individuals, even if they are Indian residents.

A re-evaluation of the legal provisions may thus be necessary to deter such behaviour online — especially the aspects of liability of a natural person controlling an avatar, and the impact on the victim. Nevertheless, even penal statutes will have limited efficacy against users who are based in another jurisdiction.

The attention of the law may then turn to the role of intermediaries — a strategy which has been deployed by numerous jurisdictions for regulating the internet.

Creativity within the metaverse would likely be limited only by human imagination. The more creativity and functionalities a platform enables, the more content will be developed by users. Hence, it would be important to ascertain if what a user creates on a platform is IP, and if yes, who owns it? If the platform owns it, does the user have a license to it? If yes, what is the extent of that licence? Platforms must answer these questions in their terms of use. This would also determine how commercially viable (and profitable) or accessible (in terms of open source) any metaverse platform is.

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

The other aspect is content created by the platform itself. If a metaverse contains the replica of the Connaught Circus or Times Square, the platform would likely need to take permissions for replicating the facades of iconic buildings, and the brand names of the stores.

In case of collaborations with other service providers, say, a Burger King store or a Ferrari outlet in the Metaverse, the manner in which rights over the burger or the car would be owned is also an interesting question. When this is combined with IP created by AI, the question of ownership and rights takes an even more intriguing turn, since it is unclear if AI can own any IP.

Then, of course, is the issue of enforcement — there is no shortage of infringing content on the internet and IP owners often forego actions against various parties due to the costs involved in pursuing each and every such infringer. It is crucial, therefore, that industry participants in the metaverse critically think about the IP strategy that they would like to adopt, and how to best balance creativity and commerce.

Interoperability is as much of a technical problem as it is a legal one. The metaverse is not one unified virtual 3D world where all platforms come together. Just like social media websites, there are likely to be big players and smaller ones — and the presence of one’s peers on a particular platform may compel one to join in as well.

The same individual may also be on multiple platforms leading similar or wildly different virtual lives. A user may own a sports club in virtual Dubai while leading the life of a school teacher on Mars on another platform.

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

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

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

There may 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 standardised software as well as hardware. It will also lead to a lot of complications, especially from a contractual and IP perspective — for e.g., which platform’s terms of use will prevail when user transitions, and how will IP licenses work across platforms? In case a dominant platform refuses to make its contents interoperable, could there be a competition law concern?

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

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