The term “metaverse” first appeared in Neal Stephenson’s dystopian novel Snow Crash in 1992. Two decades later, the metaverse has evolved from a concept in print into an interactive and immersive reality. Its hyper-realistic nature has appealed to businesses and individual consumers alike looking more and more to leverage the wealth of opportunities that the metaverse presents. Still a relatively emerging technology, what challenges and legal considerations are associated with exploring these opportunities?
In this roundup of key takeaways from Morgan Lewis’s annual Technology Marathon and Asia Technology Innovation webinar series we provide a brief primer on the metaverse and highlight important intellectual property (IP) and antitrust considerations, in addition to some considerations for the Asia market, for those operating or looking to engage in the metaverse.
“Metaverse” is used to generally describe any virtual world where users can interact using digital avatars. There are seven layers to any metaverse: infrastructure, human interface, decentralization, spatial computing, creator economy, discovery, and experience (such as games, social interactions, esports, theater, and shopping). Users create an avatar and can then enter existing metaverses through a virtual reality headset or from a computer, tablet, or phone.
What Should Businesses Consider Before Entering the Metaverse?
In our recent Technology Marathon presentation, “An Introduction to the Metaverse,” we discuss the metaverse – what it is, why you should be paying attention to it, and what legal issues you should be on the lookout for.Media Module - Datasource Item: An Introduction to the Metaverse
The nascent nature of the metaverse leaves certain IP rights largely unsettled. As users can buy and sell goods, services, and property in the metaverse, questions of IP protection, licensing, and enforcement will grow increasingly more complicated, particularly regarding how users will be able to transition across different platforms in the metaverse. Despite the above, below are some patent, copyright, and trademark considerations that owners should be wary of to protect their IP in the metaverse.
Metaverse technologies are wide ranging, triggering a unique set of patent concerns for companies looking to protect their IP in the metaverse. With technology-spanning headsets, controllers, software, user interfaces, networked servers, power, processors, network bandwidth and latency, artificial intelligence and machine learning, and blockchain transactions, it is important to think holistically about your company’s metaverse technology and inventions. As other companies in this space are actively pursuing similar patents at an increasing rate, many early adopters are looking to carve out their protected assets.
Learn MoreMedia Module - Datasource Item: Patents in the Metaverse
Trademarks and Copyrights
For brands that will be active in the metaverse, or promoting and selling digital goods (i.e., high-end, retail, gaming, and entertainment brands), you should consider new filings. Otherwise, this may be a good opportunity to review trademark portfolios and IP licensing agreements to ensure that you have adequate breadth of protection to cover your IP in a virtual world.
Nonfungible tokens (NFTs) are unique blockchain-based digital assets that are associated with images, artwork, videos, games, or other creative content, all of which are generally copyrightable. NFTs often include trademarks as well. While NFTs provide opportunities in the digital marketplace, there are many legal considerations to keep in mind, including the following:
In our recent Technology Marathon presentation, “Trademark and Copyright Issues for NFTs and the Metaverse,” we navigate evolving trademark and copyright issues related to NFTs and the metaverse.Media Module - Datasource Item: Trademark and Copyright Issues for NFTs and the Metaverse
Certain jurisdictions are considering legislation and updated regulatory guidelines that are focused on competition in the digital space. While the metaverse has certainly been a hot topic in tech and gaming, regulators are still wrapping their heads around what it is and what competition looks like in this arena.
The United States
Since the US Congress’s 2020 report on its investigation of competition in digital markets, antitrust legislation has been introduced that, if passed, may influence how the metaverse evolves and the types of antitrust issues that may emerge.
Moreover, both the US Federal Trade Commission and the US Department of Justice aim to modernize their merger guidelines to help assess the competitive effects of proposed deals relating to digital markets.
The United Kingdom and the European Union
In our recent Technology Marathon presentation, “Competition in the Virtual World,” we discuss antitrust considerations in the metaverse – including recent commentary from antitrust regulators across the world – and potential impacts of proposed antitrust legislation on metaverse platforms.
With a Bloomberg analysis projecting the metaverse could be an $800 billion market by 2024, and approximately 60% of the world’s population residing in the Asia-Pacific region, could Asia be a driver for the metaverse’s growth and development?
China’s Regulatory Outlook
Like many jurisdictions globally, China recognizes the importance of developing its digital economy amid rapid developments around the world. Although it does not reference the metaverse directly, China’s Plan for Development of the Digital Economy includes terms and covers concepts that would be applicable to the metaverse, such as blockchain and virtual reality.
Singapore’s Regulatory Outlook
Looking Ahead in Asia
In five to 10 years, it is very likely that there will be additional legislation from the region relating to the metaverse and a possible convergence of approach as more is revealed as to what the metaverse has to offer and how it operates. It is also worth noting that “real-world” regulation, particularly in the financial services space, would likely be sought to be replicated in the virtual metaverse space.
In our recent Asia Technology Innovation presentation, “An Introduction to the Metaverse,” our international team provides an overview of the metaverse, takes a look at how it is being regulated in China and Singapore, and highlights key considerations for engaging with and stepping into the metaverse.
There are opportunities at each of the multiple layers of the metaverse—from developing and advancing its infrastructure to tapping into the creator economy to new types of discoveries, experiences, and advertising networks. However, similar to the internet when it first was developed, new technology comes with few rules and regulations. The foregoing issues are just a handful of legal considerations, as other key issues will come to the forefront as metaverses are developed and more people begin to interact within them.
Asia Tech Innovation Series
The series features a set of tailored webinars focused on hot topics, trends, and key developments in the technology industry that are of essential importance to our friends and clients operating in Asia.
Keeping Up with the Metaverse
Metaverse trends have experienced phenomenal growth, with the emergence of new immersive virtual reality and collaborative spaces for human interactions, transactions, and data exchanges on decentralized networks.
An Immersive Conversation with Dion Bregman on the Metaverse
Dion Bregman provides insight into some important developments, issues, and opportunities, as we all continue to focus on Keeping Up with the Metaverse.
Into the New Frontier: Business & Law in the Metaverse, Washington Lawyer
Dion Bregman shares some insights into changes and challenges law firms might face in the metaverse.
Litigation in the Metaverse: Is IP Fit For Purpose?, World IP Review
Partner Ron Dreben is quoted in a World IP Review article examining if and how litigation over the virtual realm will test the boundaries of existing intellectual property (IP) laws.
Metaverse Health: A Chance to Respawn Data Interoperability, Privacy, and Security
The answers to detangling some sticky wickets of Health 2.0, like ensuring efficient, secure communications and exchanges between participants, may share a common thread.