The Metaverse and the Future of the Law

Metaverse technologies. I will discuss a few technologies that are considered likely building blocks for the future Metaverse. Augmented reality (AR) is the most basic of the Metaverse technologies. AR enhances a user’s perception of physical reality. AR technologies enable the overlay of computer-generated content onto physical world objects. Users access AR functions by use of video monitors, smartphones or tablets with cameras, or special see-through AR glasses or headsets. The level of augmentation can vary from a simple informational display to the addition of virtual objects. AR technology displays information or objects in a user’s real-world environment.

Virtual reality (VR) technology provides an immersive, three-dimensional (3D), computer-generated artificial environment, replicating either the real world or an imaginary world. In a VR environment, a user may interact from the user’s perspective or as an avatar. A user’s hardware for a VR experience requires a head-mounted visual display. Also, it may include an audio system, hand-held controllers, gloves, and other body sensors and movement-tracking hardware.

Mixed reality (MR) users not only see 3D images; they also interact with the 3D virtual objects, touching and moving them around. This addition of virtual objects within a real-world environment creates a hybrid environment where digital and physical elements coexist. Within MR, a user can touch, feel, and manipulate digital objects. MR requires input technologies that can capture a user’s head, hand, finger, and other body movements and provide haptic feedback to the user through the body sensors.

And finally, extended reality (XR) is a term commonly used interchangeably when referring to AR and MR. XR is an environment beyond the VR experience of merely seeing and traveling around the computer-generated environment. It includes seeing or sensing physical interaction with virtual images.

Coming attractions of legal and practical issues in the Metaverse. Currency/purchasing/disruption of digital assets. What digital currency will be used in the Metaverse to purchase digital products—a cryptocurrency such as Bitcoin, a credit or debit card, PayPal, Cash App, or Venmo? What are the sales and income tax implications? Is the user taxed in the real world or the virtual world? Because the Metaverse, avatars, and all Metaverse goods and property will be nothing more than computer data, to what extent can a successful cyberattack disrupt Metaverse operations or restrict users’ access to their avatar or digital possessions? Who has access to that data, and what are the privacy protections? How does one prove ownership of digital goods or property purchased in the Metaverse? Is all this dependent on blockchain technology and non-fungible tokens (NFTs)?

A non-fungible token is a one-of-a-kind digital identifier. “Non-fungible” means that it cannot be replaced with something else. Because of its use of blockchain technology, a non-fungible token is self-authenticating. Each NFT contains all the information related to the creator, ownership, and authentication of that NFT. There is no separate title document or certificate of authenticity. Currently, NFTs are used to create and authenticate ownership of digital assets such as music, video clips, apparel, virtual real estate, photographs, trading cards of elite athletes and other notables, and more. Lastly, what is the remedy if there is dissatisfaction with virtual goods or property purchased in the Metaverse?

Identity theft/trademark infringement. If you decide that your personal avatar should look like an existing real-life person, or if you are smitten with the looks of an avatar created by someone else in the Metaverse, what are your risks of incurring an identity theft violation? Entertainment stars and elite athletes have been very successful in their real-world lawsuits for unauthorized use of their likenesses. Will they have a remedy when their likeness is misappropriated in the Metaverse? I see no reason to expect a different result in the Metaverse. Similarly, I expect trademark owners such as Amazon, Walmart, Nike, Gucci, Vera Wang, and Costco to pursue every available remedy to enforce their property rights.

Criminal conduct. Another major issue concerns the legal limits of conduct in the Metaverse and identifying the enforcement authority. What is the remedy if one avatar engages in cyberbullying or commits other criminal conduct against other avatars? This is not a far-fetched issue. There are frequent complaints about such behavior on social media platforms. In fact, there exist a concerning number of reported cases of online harassment. Roblox, a gaming platform, filed a lawsuit against one of its content creators, alleging that he engaged in harassing behavior against other users.

What is the Metaverse? The Metaverse is a rapidly evolving idea. Describing the Metaverse in 2023 is akin to explaining air or space travel to residents of the horse-and-buggy era. From our personal experience, every year, we see new technological advancements that a decade before would have seemed like science fiction.

The Metaverse has been referred to as the 3D Internet and the future of the Internet. My description of the future Metaverse, distilled from numerous opinions by others, involves a digital universe (which may be real-world or imagined images) that your avatar enters to interact with other avatars. An avatar is a digital representation of a person or creature that can be customized to look like its user.

In the Metaverse, an avatar may join other avatars at a digital office to perform real-life work or go to a digital amusement park, a stadium for a ball game or entertainment event, a club for a social night out, or any other event that might occur in your real or imagined life. An avatar may purchase digital products, including clothes for its use or as gifts for other avatars, purchase digital land, buy or build a digital home, and host planned and impromptu gatherings with other avatars.

To access the Metaverse, the user needs a computer programmed to access the computer-generated environment, a head-mounted visual display or goggles to see the virtual environment, an audio headset, and hand- and body-tracking, motion-detecting controllers and sensors to provide a sense of touch and feel while traveling within the environment.

Final thoughts. Whatever its future evolution, the Metaverse will bring about substantial legal and practical issues.

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This article is an abridged and edited version of one that originally appeared on page 36 of The Judges’ Journal, Winter 2023 (62:1).

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