Metaverse: Litigation Challenges | Blake, Castle & Graydon LLP

The metaverse has been described as the future of the internet. Although its development is still at an early stage, established and emerging companies are spending millions on developing metaverse technologies. While a parallel universe to virtual reality is likely several years away, as we’ve seen with the traditional internet, entirely new legal areas have evolved to deal with the online world. Cyberattacks or mass actions of data breaches are becoming commonplace. No matter what form the metaverse ultimately takes, the canon will evolve in response.

This post is the first in a two-part series that takes into account the unique legal issues the metaverse may raise. Here, we focus on the litigation challenges posed by the metaverse, with an emphasis on potential privacy and product liability litigation. In our next post, we’ll look at key organizational privacy considerations for organizations considering starting in the metaverse.

What is Metaverse?

The term “metaverse” is used in different ways. Here, we use it to refer to a 3D version of the internet — an immersive digital world that exists parallel to the physical world, and which you’ll interact with using a virtual reality headset. Imagine a parallel digital life, where your avatar exists in a digital world and can meet other avatars within a single digital space. You may own virtual real estate in Metaverse. You can visit a store and buy virtual goods – or a virtual office where you attend a virtual meeting with your fellow characters in real life.

In more perfect visions of the future, the metaverse would be fully interoperable. You and your virtual property can seamlessly transition from the digital space held by one platform to that of another. Perhaps the most likely future is where the metaverse exists as a series of “walled gardens,” where each platform’s virtual space is a closed system incompatible with the others.

Privacy Litigation in the Metaverse District

If the metaverse develops as expected, it will involve collecting an unprecedented amount of data about users. The platforms can (as they do now) collect data about what users buy in the metaverse, what they look at, and their conversations with other users. However, since user access to the metaverse would be through a headset, more data could be collected — for example, related to user movements, physiological responses, and possibly even brainwaves — that would give platforms a deeper understanding of their users’ thought patterns and behaviors.

The bulk of traditional Internet privacy lawsuits in common law counties have focused on tort from intrusion in solitude, which deals with the intrusion scenario—where the defendant deliberately interferes with the plaintiff’s private affairs in a way that would be deeply offensive to a reasonable person. In addition to the data breach scenario, other cases of intrusion when isolated are conceivable. If virtual real estate can be purchased in the metaverse, for example, the defendant could be liable for intruding into the hypothetical plaintiff’s home. Or imagine a scenario where the defendant hacks the plaintiff’s earphone so that he can follow his movements, his conversations, and maybe even his thoughts. Given the sensitivity of the data the metaverse can collect, the stakes would be high.

While existing privacy reasons for action can be applied in the metaverse, courts or legislatures may seek to create new reasons for action. Could a metaverse operator be held liable for negligently failing to prevent a cyberattack that compromised user data? If a metaverse user violates another user’s privacy, can the platform be responsible for failing to prevent the breach? Time will tell how the law will evolve in response to these challenges.

Liability for products

The metaverse is expected to result in a broad market for virtual and physical products available for purchase and use by customers. Software, intangible virtual items, and devices such as headphones and eyeglasses are just a few examples. Accordingly, developers, manufacturers, licensors, vendors, and others in the industry may be exposed to the risk of liability claims for metaverse-related products made by participants in the metaverse and users of such products.

Several types of potential product liability claims may arise in connection with future Metaverses. For example, product liability claims can result from scenarios where individuals sustain personal injuries while immersed in the virtual or augmented reality of the metaverse. Furthermore, claims for property damage or economic loss can arise when participation in the metaverse or use of related devices results in a property-damaging accident. Metaverse users may also be sued by other users for their behavior in the metaverse because it relates to another person or avatar.

Complex and new arguments are almost certain to emerge in this emerging field in the context of product liability claims. These may include questions surrounding who is potentially responsible for claims related to the metaverse, choice of laws and forum, and where a claim should be filed when loss or damage occurred while in the metaverse. Given the potential for a range of product liability claims in relation to the metaverse, industry participants will want to obtain legal advice and consider how to limit their liability and seek any other protection through contractual wording, terms of use, warnings, and usage instructions.

conclusion

The metaverse, no matter how it evolves, will undoubtedly raise new questions and legal issues. Above, we’ve summarized the litigation challenges posed by the metaverse, with a focus on privacy and product liability litigation. In our next article on the topic, we’ll look at key organizational privacy considerations for organizations considering launching on the metaverse.

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