We’re not in Kansas anymore: Metaverse and all the not answered legal questions

Photo by Madeleine Ragsdale on Unsplash

This article was written by Ilvana Dedja, who participated in qLegal as part of her Criminal Justice Masters studies at Queen Mary University of London. She is a Silver Award Winner of qLegal’s Blog Writing Competition 2021–2022. Please note the content of this paper does not constitute legal advice and should not be relied upon as a source of legal advice. **

In The Wizard of Oz, Dorothy says to her dog “Toto, I’ve a feeling we’re not in Kansas anymore.” The magical land of Oz seemed, well, magical to Dorothy, who was swept away from her home in Kansas by a tornado. The tornado to the legal community has been the announcement by Facebook, now known as META,’s founder Mark Zuckerberg in October 2021 of this new Back-to-the-Future concept named Metaverse.

As a person who appreciates tech but understands that it has become too complicated in recent years, it took a giant gust of breath to type in Google: “What is Metaverse?”. Fundamentally, the Metaverse is a three-dimensional world where people love, live, and spend money. All users have a digital twin — a customized avatar that represents them in the virtual world, and they interact with each other in a similar way as they would in the physical world.

Sigh — Good, I had a slight idea of what it was. However, the Curious George in me went to explore more on Metaverse. With one eyebrow up and eyes slightly wider than usual, I was trying to understand how it works, where do I sign up, and what can I do in the Metaverse. Basically, starting from the bottom, a human in the Metaverse can become an owner of real estate, create games and experiences, express individuality through an avatar, meet colleagues and socialize with friends, buy, sell, and invest in digital artwork. As I read through the list, I was channelling Jake Peralta from Brooklyn Nine-Nine mumbling “Cool, cool, cool, cool, cool. No doubt, no doubt, no doubt”, but the lawyer in me was pondering on all the legal questions:

1. Who rules in this realm?

As a student lawyer, there are two concepts that you learn on the first year of your law degree: Sovereignty and Jurisdiction. In layman’s terms, sovereignty is the power to make laws by a sovereign — the one who exercises this power beyond the power of others to interfere, and jurisdiction is the territory within which this sovereign may rule. In the real world, there is an abundance of legislation, treaties and rules that have regulated the limits of one’s jurisdiction and sovereign. In the Metaverse? It remains to be seen in the future.

Photo by Tom Sodoge on Unsplash

Metaverse works with a blockchain technology, which is defined as “a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.” Basically, it works on the idea that this version of the world is based on decentralization, and it is a reality where everyone will own their digital assets, personal data, and identity. The blockchain is a system that sits independently of any central authority. Everyone working with the blockchain essentially owns part of it. Following this reasoning, there is a new concept emerging in recent years: the idea of self-sovereign identity (SSI).

SSI are digital identities managed by users themselves, without relying on any third-party providers. SSI is verified using public-key cryptography, eliminating the need to maintain the information on a central database and giving the individual control over what information they store and share. This level of decentralized and verified trust has sparked the idea of a reality with no laws, regulations or taxes that extends beyond territory-based states. Right now, real-word governments are still wary on their approach to the Metaverse, and the Metaverse itself is not making it easier for them to think about a governing possibility (even if we were to think of countries buying land on the Metaverse). It will be interesting to see how everything will unfold.

2. My identity in the Metaverse

Self-sovereign identity facilitates a world where an individual can choose how they want to be represented in the Metaverse. But differently from the identity we represent on social media, where we provide the verifiable information to the service providers that gather, store, and control the data, in the Metaverse our identities may be anonymous.

An individual uses an avatar, or a digital twin, which is defined as an extension of a person and the entirety they represent in the virtual world. There is a flexibility on how a user chooses to be represented on the Metaverse, without restraining to the concepts of race, gender, sexual preference, or physical ability. The problem is what happens when a user enters in illegal activity in the Metaverse, like cyberbullying, sexual harassment, and other types of cybercrimes. As this is a relatively unregulated area, it falls to the willingness of the businesses with Metaverse models to be mindful on reporting, mapping, and preserving the evidence for law enforcement agencies.

And what if I want to look like the Queen in the Metaverse? In the real world, personality rights are recognised — meaning that a person cannot appropriate the name or likeness of another for commercial gain. This applies in the Metaverse as well. A user may choose to look like a famous personality, but they should not use this avatar to advertise products or gain profit from an unlawful infringement of another person’s identity and/or identity theft.

3. More or less privacy in the Metaverse?

Web-based or mobile platforms have struggled with the gathering and use of personal information due to their obligation to gather just the necessary data for a purpose. The strategy in the Metaverse is to pursue tougher, more open privacy norms. Blockchain technology provides security and anonymity, but due to user growth and the permeation of the virtual world into the physical world, privacy needs to be carefully observed.

4. Is the Metaverse a well-regulated market? Safe? Fair?

The Metaverse has a functional economy similar to the real world, where people use a currency, and they engage in the transactions of goods and property. This whole thing works on blockchain-based exchanges grounded in cryptocurrency — the currency of the Metaverse.

In the Metaverse, users can enter in a contractual agreement. The contracts can involve anything from selling virtual goods to renting virtual property. If two people enter a contract in the Metaverse, both parties must abide by the terms of the agreement. If one party fails to do so, the other party may be able to sue for breach of contract. The legal question revolves around NFTs (which stands for “non-fungible token”) — a digital collectible on a blockchain that has some particularities. For instance, unlike another virtual currency, they are assets for a user. It can exist on the blockchain forever after it is minted, people can access the records and confirm the provable scarcity without relying on someone else for authenticity, and the history of the ownership is recorded. By using the “smart contracts” technology, NFTs can be traded between players, games, and worlds, and since it is a decentralized authority — there is no central economy to enforce the contracts. For this reason, a person would have to raise a claim in the real-world court for any contract breaches.

Photo by Lucrezia Carnelos on Unsplash

5. Intellectual property:

NFTs are particularly regulated on the Metaverse, but what happens when real work is reproduced, performed, exhibited, distributed, or rented on the Metaverse platform?

Intellectual property laws protect authorship of user-created content in the Metaverse, like avatars, virtual buildings, and digital artwork. However, misappropriating real-world brands like GUCCI or Nike, is presumed to fall under the copyright laws. If an avatar steals a digital ‘Gucci bag’ in the Metaverse, this might raise issues relating to property rights, theft, and intellectual property law. In the scenario where the real-life person suffers financial problems or damage to their reputation, there might be a sufficient legal basis to warrant a real claim in a real court of law.

6. Conclusion:

There continues to be uncertainty regarding the rule of law in the Metaverse. As the legislator needs to catch up with the technological development, the extension of the real-life laws to the virtual worlds are seen more as a given, than truly enforced by law. This entails that businesses need to be wary of the legal implications of providing a medium to facilitate crime, and users need to be informed about what would particularly be a problem with their avatar behaviour, if they convey consequences in the real world.

It would be a clever idea to call Saul (or qLegal) before considering doing something illegal in the Metaverse.

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**qLegal provides pro bono legal advice and legal education to start-ups and entrepreneurs on intellectual property, data protection, corporate and commercial law. See the qLegal website for more details and to book your appointment. Follow us on Twitter and LinkedIn for regular updates on issues relevant to your business.



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