Litigating in and about the metaverse

IBA Annual Conference, Paris, Wednesday 1 November 2023

Amina Hassan
Hughes Hubbard & Reed, New York
amina.hassan@hugheshubbard.com

On 1 November 2023, the Litigation Committee, with support from the Technology Law Committee, presented an information-packed session on ‘Litigating in and about the metaverse’.

Moderated by the fantastic Lydia Danon (Cooke Young & Keidan, England) and Robert Schwinger (Norton Rose Fulbright, US), the engaging panel consisted of: Adrien Basdevant (Entropy, France), Sarah Malik (SOL International, United Arab Emirates), Carolina Veas (CMS Carey & Allende, Chile) and Sarah Zadeh (NautaDutilh, Netherlands). Aided by a terrific, short video (see below), the panel attempted to demystify the question of what the metaverse is and addressed some of the issues that litigators will need to confront as this new medium evolves.

What is the ‘metaverse’?

Addressing that complicated question, Basdevant described the metaverse as an online medium that provides a real time, shared, persistent and 3D virtual space in which participants can have ‘immersive experiences’. Basdevant also addressed that the metaverse:

• is not Meta (which is Facebook rebranded);
• is not Web3 (which is the next version of the web); and
• is still in development, that is it does not currently exist as a single, integrated reality.

Although the metaverse does not exist at this time, using a curated video, the panel previewed a host of applications – such as Sandbox, Grand Theft Auto and Earth 2 – that have evolved to give a metaverse-like experience.

The metaverse often tends to be equated with gamification, but, as the panel discussed, its potential is far broader. With a snippet from Lex Fridman’s interview with Mark Zuckerberg in the metaverse[1], the panel gave the audience a glimpse of the power of the metaverse in bringing people separated by hundreds of miles into the same virtual space. As the panel explained, that has exciting and limitless potential in a variety of areas. To name a few: education, medical training and flight simulations.

Veas walked the group through the two types of metaverse platforms: centralised platforms, which, like many traditional digital platforms are controlled and run by a central entity, and decentralised platforms, which are built on blockchains. As the panel discussed, the latter is likely to raise the more novel legal questions.

The legal implications of the metaverse

Although the metaverse does not exist yet, the panel, expertly guided by Danon and Schwinger, gave the audience a taste of some of the exciting legal issues it is likely to implicate – some old and some new:

• While metaverse platforms are likely to record enormous amounts of data that can be used to play back almost anything that occurs in the metaverse, the evidentiary challenge will be in processing that voluminous data and establishing chains of custody to ensure its authenticity.
• That same data will inevitably trigger a host of data privacy and security issues. As Zadeh noted, metaverse platforms will need to address the risk of data breaches and are likely to face class action litigation related to data privacy issues.
• According to Malik, intellectual property litigation will be a ‘massive issue’ in the metaverse. Malik discussed the seminal MetaBirkin litigation in the United States, which illustrates some of the intellectual property issues that are likely to arise at the intersection of the metaverse and the real world. Questions regarding intellectual property that might only exist in the metaverse and are unconnected to any product or property in the real world, will also likely arise.
• Policing the metaverse will be a fundamental issue, especially because many of its users are likely to be younger people. According to Basdevant, the terms of use imposed by metaverse platforms and their enforcement of those terms will likely trigger a ‘new wave of litigation’, and there will inevitably be questions regarding how the laws of different jurisdictions interact to police bad behaviour in the metaverse. Zadeh touched on the possibility of courts within the metaverse to deal with disputes that arise in that environment.

Veas underscored that while the metaverse is likely to raise some novel and interesting legal questions, they are not unsurmountable – the law has adapted to other technological developments, including the internet, and will be able to adapt to questions raised in the context of the metaverse as well.

Malik aptly noted towards the close of the session that her young son has been slaying dragons in virtual games for years! The challenge for lawyers – many of whom might not have grown up around similar virtual experiences as the younger generation today – is first and foremost going to be wrapping our heads around what the metaverse is. The panel did a fantastic job of beginning to unwrap that buzzword and underscoring the need for continued engagement on its legal implications.

Interesting factoid from the ‘Litigating in and about the metaverse’ session

The term ‘Metaverse’ first appeared in a 1992, dystopian science fiction novel, ‘Snow Crash’, in which individuals could connect into a three-dimensional universe.