VR/AR

Legal Guide to DAOs in the Metaverse

 1000 648 David Hoppe
By:
0

Decentralized autonomous organizations (DAOs) are rapidly gaining popularity in the metaverse. Creating and hosting a DAO in the metaverse offers organizations numerous benefits, such as increased participation, visibility, efficient interaction with other applications and organizations, access to global audiences, and opportunities to take advantage of the growth of this relatively new landscape. Additionally, a DAO can provide an equitable, transparent governance structure due to its decentralized nature. Moreover, smart contracts allow for automated processes which can save time and reduce the risk of errors or abuse. Finally, since many DAOs are distributed across multiple borders, they also offer users unprecedented global mobility within the virtual world.

It is important to understand and comply with the relevant laws and regulations when conducting business within the metaverse. That’s where web3 lawyers who specialize in blockchain and decentralized technologies come into play – providing support when it comes to understanding and navigating legal issues related to a DAO’s activities.

DAOs in the Metaverse: Use Cases

Businesses, associations, and other groups seeking to avail themselves of the benefits of DAOs within the metaverse will need to structure their organizations to meet the legal requirements of their jurisdictions and protect their finances, reputations, and intellectual property. Executed properly, metaverse DAOs can present an attractive option for businesses seeking to enrich the user experience and gain a competitive advantage in today’s landscape.

  • Virtual Assets – DAOs are being increasingly used to track ownership and transactions involving metaverse real estate and virtual assets such as in-game items, NFTs, and digital collectibles. These assets need to have clear ownership and transfer mechanisms, comply with local tax laws, and adhere to securities laws if applicable. Smart contracts used by DAOs must also comply with local contract laws and protect sensitive data such as ownership records and financial transactions. It is important to have a mechanism for transparent and fair dispute resolution in accordance with local laws.
  • Event Management – Concerts, competitions, and real-money gaming tournaments must comply with local jurisdiction laws and have clear governance mechanisms in place. Smart contracts must comply with local contract laws, and sensitive data such as details of ticket sales must be protected. Dispute resolution must also be transparent and fair, in accordance with local laws. DAOs can provide virtual services such as virtual currency exchange, in-game item rental, and prize awards.
  • Data Security – Metaverse-based organizations can manage sensitive data such as ownership records, financial transactions, and voting records using the assets particularly prevalent in DAOs. For instance, metaverse DAOs can leverage blockchain technology to store data in a decentralized manner, reducing the risk of a single point of failure or data breaches. The use of smart contracts is especially useful in automating data security processes, such as overseeing permissionless protocols governing access to data, monitoring for suspicious activity, and triggering alerts and action when necessary.
  • Content Creation and Distribution – Users can participate in the metaverse economy through ownership and management of in-game assets, NFTs, and virtual goods. However, it’s crucial to ensure that the content complies with local content regulations and doesn’t infringe on any copyrights or trademarks. DAOs must also comply with securities laws if applicable and understand and fulfill their tax obligations. In the event of disputes, transparent and fair dispute resolution is necessary, and anti-money laundering and counter-terrorism financing regulations must be followed. Moreover, DAOs themselves may create and distribute content, including images, videos, and music. It’s critical to ensure that this content doesn’t infringe on any copyrights or trademarks.
  • Dispute Resolution – It is important to have a mechanism for resolving disagreements within organizations that is equitable, transparent, and compliant with local laws. DAOs can provide a fair and secure platform for community members to make decisions and manage resources in the metaverse. DAOs often operate using smart contracts, and it is important to ensure that the contracts comply with local contract laws and are enforceable. DAOs may also need to enter into licensing and distribution agreements with creators and distributors of content, and it is important to ensure that these agreements are legally binding and enforceable.

Legal Issues and Challenges

Creating and managing a DAO in the metaverse also presents hurdles that must be overcome. This new frontier also comes with potential legal issues and implications. As there is no central authority to regulate metaverse activity, illegal activities may go unnoticed, leaving victims of fraud or other malicious behavior unable to recover their losses. Additionally, setting up a compliant and secure DAO requires technical expertise, while interoperability issues can make it difficult for DAOs to interact with each other or other metaverse applications.

Although these challenges exist, a lawyer can help protect all stakeholders involved by providing essential guidance and support at every step. Engaging a lawyer brings an added competitive advantage that will benefit any organization looking to build success within this digital landscape.

A lawyer with Web3 experience can help ensure the DAO operates efficiently and transparently, protecting the interests of all stakeholders involved. This consultant can provide valuable guidance on complying with national or international laws and regulations specific to a given metaverse environment. Having access to legal counsel during the process of setting up a DAO also provides essential advice when it comes to contract negotiation, helps structure the DAO’s governance mechanisms appropriately, and enables risk management geared towards avoiding potential issues once it’s operational.

This specialized knowledge can be highly advantageous in today’s competitive market, enabling organizations to make informed decisions while ensuring transparency and fairness throughout their operations. Additionally, web3 lawyers are equipped to aid with various tasks such as designing smart contracts for use within the metaverse or aiding with dispute resolution proceedings.

A good Web3 lawyer will not only have expertise in relevant laws and regulations applicable to creating a DAO but also possess a comprehensive knowledge of how virtual realities function differently than their physical counterparts. This is especially true when dealing with intellectual property rights or global tax liability associated with doing business across different jurisdiction borders. Ultimately, seeking specialist legal assistance when building a DAO within the metaverse is invaluable for any organization looking to achieve optimal performance within this new digital landscape.

Conclusion

Setting up a DAO in the metaverse can enable organizations to enjoy the benefits of decentralized autonomy by taking advantage of blockchain technology. However, this new frontier also comes with potential legal issues and implications. As there is no central authority to regulate metaverse activity, illegal activities may go unnoticed, leaving victims of fraud or other malicious behavior unable to recover their losses. Additionally, setting up a compliant and secure DAO requires technical expertise, while interoperability issues can make it difficult for DAOs to interact with each other or other metaverse applications.

Gamma Law is a San Francisco-based Web3 firm supporting select clients in complex and cutting-edge business sectors. We provide our clients with the legal counsel and representation they need to succeed in dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

Playing It By Ear: Money and Music Rights in the Metaverse

 1000 648 Amy Sanderson
By:
0

The metaverse promises to open a world of new possibilities, applications, and business models, and along with these new ways of working, socializing, and entertaining ourselves come a host of legal questions. Music is poised to become one of the metaverse’s most fertile grounds for both creativity and litigation. While, like the metaverse itself, issues surrounding music production, performance, licensing, and other areas are still unfolding, it is time to start thinking about how music will “work” in a metaverse environment.

Background

Few have thought about the intersection of music with the metaverse, leaving the area—especially in a legal intellectual property rights context—a mystery to many. Copyright, trademark, contract law, right of publicity, and other civil legal issues have been applied to music production and performance in the physical world for decades. Still, laws concerning music in an alternate realm and optimal strategies for performers, distributors, labels, venues, and other stakeholders will depend on how society answers a few basic questions:

  1. How will people use music in the metaverse?
  2. What are the likely new sources of revenue from music in the metaverse?
  3. Can “real world” laws be applied, or do we need brand new laws for the metaverse?
  4. What are the key issues metaverse companies and emerging technology platforms need to know about music rights over the metaverse?
  5. How will music rights be protected, laws enforced, and bad actors caught and penalized?

Some of these issues are more easily understood, while others are not. For instance, it is likely that music lovers will enjoy their favorite songs in the metaverse in several ways—by attending virtual concerts, subscribing to streaming applications or ad-supported metaverse radio stations, and purchasing and downloading music. But the metaverse also enables more interactive and intimate encounters with music and artists, from exclusive small-venue or “unplugged” shows to Q&A sessions and contests.

This gives rise to several new potential revenue sources. Blockchain technologies in the metaverse may allow for more efficient administration and tracking, reducing transaction costs and cutting out agents, brokers, and other “middle people,” lowering prices and rewarding the creative people behind the music. Another potential revenue source might be converting older musical formats for use in the metaverse. For example, creating metaverse concerts from old footage and remastering music for use in metaverse games and venues could become substantial new businesses. The good news is that existing laws can likely be adapted to the casual enjoyment of music by individuals  in the metaverse. The need to define additional artistic and performance rights for the metaverse is probably unnecessary since it is essentially the same rights, just applied to a new medium and format. In fact, a new bundle of rights specifically for this new technology would create an additional, redundant layer of complexity. Nonetheless, industry and government will need to find a way to regulate music ’s use in the metaverse because, regardless of the locale, intellectual property rights must be protected.

Legal Issues

  • Rights Clearance – As in the physical world, determining who holds the right to use and profit from musical creations, performances, streams, and sales online will be a primary consideration in the metaverse. In most cases, traditional copyright and licensing rules used by today’s online music will apply. However, the proliferation of virtual music venues, derivations, technology, and applications within new, private, or even open online environments muddies an already murky and fragmented licensing process. The rights clearance issues posed by the metaverse are not very different from those posed in the real world, but the additional variables presented eliminate a cut-and-paste or one-size-fits-all approach. We see an environment beset with exceptions, concessions, negotiation, and compromise regarding metaverse music rights.
  • Contracts – Musicians, their representatives, partners, and other individuals who upload music over the metaverse may be beholden to contractual commitments with third parties. For example, an artist might be expected to pay a certain percentage of the royalties earned before being allowed to use or upload a particular song to online platforms. Contracts may stipulate that intermediaries and internet service providers will be held liable for any secondary infringement of intellectual property rights that takes place in their realms. This could become a minefield for digital music, video games, virtual reality, and other companies operating in the metaverse. These companies and metaverse developers themselves need to be careful about any unauthorized use of music on their platforms. It is best to speak to a copyright attorney specializing in emerging technologies about the legal implications related to contracts and music rights in the metaverse.
  • Royalties – So many new formats, venues, and applications may present difficulties for artists to keep track of royalty payments earned in the metaverse. Blockchain, NFTs, and crypto transfers may provide some relief by monitoring and recording how much is owed, by whom, and when payments are remitted. For example, by using blockchain technology, NFT platforms can record who owns a certain piece of music. The platforms can also keep track of the necessary royalty splits at the time when the NFT is minted. Additionally, artists, especially unsigned or independent artists, can take advantage of the blockchain and capture a bigger portion of their music revenue by issuing NFTs of their music themselves. So, blockchain technology and NFTs help artists and creators keep track of everything, including how much money they receive.
  • Licensing – Existing licensing models appear too rigid to accommodate the possibilities promised by the metaverse, likely necessitating new laws or procedures to deal with the complexity. Licensing norms have not been fully developed or standardized for Web3. Experts are applying what they know about Web2 and previous digital iterations to determine how to streamline music licensing in the metaverse. It’s a sticky problem, aggravated by the fact that few musicians, end consumers, and start-ups fully understand how copyright law is implicated in Web3 or the creation of NFTs.

There are many challenges related to obtaining and granting a license to use music in the realm of the metaverse. Different stakeholders hold different views on who should be required to obtain a license, how compensation should be arranged, which rights should be conferred, and a myriad of other details. Performing rights organizations in the US and elsewhere believe the content provider (usually the streaming platform) should be responsible for clearing performance rights licenses.  However, these issues are not so clear in a metaverse context, where the platform may be decentralized or an NFT holder may own the rights to publicly perform a certain song while others do not. IP enforcement may be difficult, which is why new procedures may be necessary for music licensing in the metaverse.

Conclusion

Blockchain technology and NFTs will increasingly play a role in artists’ ability to make money and control their rights, particularly for rising and independent artists. However, questions remain about how these rights will be operationalized, especially as complications arise in the swiftly evolving metaverse and Web3 space.  Qualified legal advice can assure end consumers, metaverse service providers, and artists that their rights are guarded. It is best to seek the advice of a lawyer specializing in blockchain and metaverse issues before foraying into music in the metaverse.

Gamma Law is a San Francisco-based Web3 firm supporting select clients in complex and cutting-edge business sectors. We provide our clients with the legal counsel and representation they need to succeed in dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

Virtual Commerce: Brands in the Metave®se

 1024 664 David Hoppe
By:
0

The value of the global metaverse is expected to reach $800 billion by 2024. This represents more than 16-fold growth over the $48 billion generated in 2020. The metaverse brings with it a host of legal challenges and opportunities including trademark enforcement, branding and marketing deals, content partnerships and collaborations, market development, and customer diversification. Companies – both established players and start-ups – that are intent on operating in the metaverse writ large or building their own metaverse platform should be aware of several brand-use and trademark issues that can arise.

The Metaverse Is Built on Brands and Trademarks

Companies seeking to establish a foothold in the metaverse must familiarize themselves with trademark rights, as many brand owners are leveraging their IP in this new digital environment. Many optimistically view the metaverse as a limitless market for promoting their products and services. Visionary brand owners are taking steps to register their logos and trademarks for goods and services that are accessible exclusively in the metaverse, including downloadable virtual goods for virtual online worlds, retail stores that carry virtual goods, digital collections services, and others. For example, Nike has filed more than a half dozen trademarks with the US Patent and Trademark Office (USPTO), indicating the brand’s intention to sell virtual shoes and apparel in the metaverse. Trademark applications include those for Nike’s swoosh logo, “Just Do It” slogan, and Air Jordan designs. Further, luxury brands such as Balenciaga and Gucci are actively testing how they can use the metaverse to connect with real-world consumers to generate additional revenue.

The diverse commercial implications of the metaverse may prove difficult to regulate, and potential metaverse participants may have difficulty following which rights belong to which stakeholders. The potential issues and ambiguities that arise from the proliferation of digital brands and their intersection with the metaverse emphasizes the need for companies operating in the video game, digital media, AR/VR, crypto, and other emerging tech spaces to develop comprehensive plans for protecting their assets and IP while avoiding infringing upon those of others. This will require them to accumulate or partner with others who possess an understanding of the applicable laws and regulations and how they affect business strategies, partnerships, rights conveyances, audience protections, publicity, products, services, and more.

Legal Considerations

Gaming, digital media, crypto/blockchain, and other tech organizations should pay particular attention to a few pertinent legal areas:

  • Trademark Search and Registration – Technology and digital media companies, whose primary focus until now likely has centered on Web 2.0, now may want to consider taking a page from Mark Zuckerberg’s Facebook and rebranding themselves as metaverse-first organizations. To do this, they will need to file at least one new trademark registration for the metaverse. Rebranding a company to reflect this new focus may stir up a host of issues. For instance, a company seeking to capitalize on the popularity of words such as ‘meta’ and ‘metaverse’ by promoting sports brands in their gaming metaverse, could face stiff competition and/or infringe on already-filed trademarks and copyrights. More than 800 already use “meta” as a word or prefix, and more than 100 more such applications were filed in 2021. Furthermore, the USPTO might consider trademark applications such as ‘BRANDS IN THE METAVERSE’ or ‘SPORTS IN THE METAVERSE’ too generic or descriptive to be valid. It is advisable to consult a trademark attorney for guidance on such matters.

  • Branding – Use and the misuse of brand names are likely to become even more rampant in the metaverse than in the physical world. This is a primary reason why world-famous brands have registered trademarks for virtual goods in addition to their physical consumer product lines. Technology companies aiming to build their own metaverse should be aware that effective mechanisms exist for brand owners to enforce their rights. As a result, metaverse providers may find it necessary to engage dedicated staff to monitor user-generated content, investigate suspected violations, respond to cease and desist notices filed by legitimate trademark holders, and remove offers for counterfeit goods. Responsible platforms might take a proactive approach and provide a dedicated mechanism for brands to file notices and lodge complaints if they find cases of their trademarks being violated.

    Obtaining the advice of an experienced intellectual property attorney can help these companies understand their responsibilities for policing infringements and ways they can protect themselves from becoming a party to them. A comprehensive, nuanced IP policy is also extremely important for mitigating secondary liability. Specifically, a metaverse service provider that fails to incorporate a sound IP policy might be held liable for trademark infringement or brand misuse which takes place in their corner of the metaverse.

  • Licensing – Many brands and trademark owners are experimenting with ways to profit from the metaverse. Some hope to promote their goods and services while others look to leverage the drawing power of other brands and trademarks. Whatever the business model, commercial metaverse participants and providers must be able to negotiate and document appropriate trademark licensing arrangements. For example, metaverse users can create avatars by using a variety of digital products. This functionality can empower users to assume identities as “real-life” fictional characters in the virtual world. Absent appropriate trademark licenses, metaverse providers may find themselves at risk of being accused of trademark infringement due to user activity. It is critical that providers: (i) understand the scope of rights, duration, territory, exclusivity, sub-licensing, royalty rates, and other provisions of any licensing agreement they enter; and (ii) implement calendars and related procedures to ensure that applicable provisions are complied with and deadlines are met.

The metaverse provides both opportunities and challenges for providers, marketers, and brand owners seeking to engage with new audiences and increase brand loyalty via virtual goods and services. As more brands move forward with metaverse marketing strategies, developing a sound trademark strategy will ensure maximum protection and flexibility for all stakeholders. A strong trademark strategy can also help emerging technology companies monetize their existing IP (brands) in the metaverse. For example, a video game company might capitalize on the goodwill of its existing in-game assets and license them out in the metaverse.

The information provided herein does not, and is not intended to, constitute legal advice. It is for general informational purposes only.

A trademark attorney specializing in emerging technologies can advise you regarding how to profit from your existing trademarks in the metaverse and related legal issues.

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

Heavy Meta: Privacy and Cybersecurity in the Metaverse

 1024 663 David Hoppe
By:
0

The metaverse is poised to become the biggest technological revolution of the 21st century. It is likely to change the way humans engage with each other, revolutionizing social interaction, building whole new economies, and ushering in a host of privacy and cybersecurity issues. Emerging technologies companies should be aware of these issues and take the necessary steps to mitigate risk as these markets enter gray or wholly unexplored legal territories. In this article, we examine some of the issues related to the areas of privacy and cybersecurity in the metaverse.

Privacy

The interconnected universe can be expected to collect, store, and rely on more personal data than ever before by unifying currently disparate personalized digital experiences that range from shopping to virtual travel, to entertainment, and information gathering. Metaverse providers will have access to even more personal data, including biometric responses, physical location, financial records, and even the appearance of users’ homes. FurtherMetaverse companies such as Mark Zuckerberg’s Meta are likely to collect personal information for individual identification, advertisement targeting, tracking through multiple channels, health monitoring (such as heart and respiratory rates), and others to optimize the virtual experience. Metaverse companies will combine and aggregate vast quantities of data that influence every aspect of our lives. 

Protecting user privacy presents a serious hurdle for metaverse, XR, and video gaming platforms, both from a practical and a legal standpoint. And the meta environment magnifies the cost of getting it wrong. 

  • Device and Headset Proliferation – According to Facebook whistleblower Frances Haugen, the metaverse will require people to put “many, many more sensors in our homes and our workplaces in addition to those attached to our bodies to generate fully interactive virtual reality experiences. A metaverse setup is likely to include added gear such as headsets and AR glasses which could present major privacy threats by bringing live cameras and microphones inside homes and offices. This poses challenges from a privacy point of view as it would give these sensors unprecedented real-time insight into the everyday lives of individuals. International Data Corp reports that shipments of AR and VR headsets more than doubled in the second quarter of 2021 to 2.2 million compared with the same period last year. The consultancy expects total headset sales to reach 9.7 million in 2021 and nearly triple again by 2025. Much of the growth is driven both by more sophisticated gaming systems and the use of VR in events, conferences, education, fitness, and the metaverse.
  • Collaboration and Interoperability – The primary purpose of the metaverse is to allow people to interact in a digital world, which means that each metaverse should be accessible from all devices and headsets. This has ramifications from a privacy standpoint since user data will be accessible across devices and platforms. To mitigate the privacy challenges arising as a result of universal interoperability, experts have proposed that technology companies agree to certain standards for a connected metaverse that can integrate among different creators. In the absence of such standards, technology companies will have to license the rights to use another company’s underlying technology to build its own metaverse. 

The metaverse poses significant privacy-related challenges. In the absence of specific laws to protect data privacy over the metaverse, emerging technologies companies should undertake specific legal measures to minimize the risk of privacy-related issues in the metaverse.  

Cybersecurity

The metaverse’s cybersecurity legal challenges are similar to those posed by the internet which, in turn, reflect those of society in general. According to experts, the metaverse is likely to give rise to entirely new cybercrimes due to its unique infrastructure. For example, a metaverse, which is heavily centered on the use of cryptocurrencies and non-fungible tokens (NFTs) can be a hotbed for financial cybercrimes such as fraud, theft, and money laundering, as well as “old-school” digital malfeasance such as phishing, ransomware, and hacking.

  •  Cheating and duping – There is a high likelihood of cheating and duping on the metaverse primarily due to the ease by which attackers can conceal their true identities behind multiple layers, screens, and avatars. Famous art dealer Sotheby’s has recently introduced Sotheby’s Metaverse which is aimed at digital art collectors. It offers a curated selection of NFTs chosen by the auction house’s specialists. The NFTs available on Sotheby’s Metaverse are verified and digitally tracked through a public ledger of the blockchain via Ethereum. However, just like in the real art world, collectors can easily be fooled by counterfeits, replicas, and prints that are minted by cybercriminals poised as legitimate authenticators.
  • Cybersquatting – The ease of obscuring one’s identity also enables would-be cybersquatters. Fraudsters can take advantage of squatting on .eth websites that use a legitimate company’s name. In this case, the cybercriminals leverage the goodwill or reputation of established businesses by creating Ethereum domain names and smart contracts that ostensibly belong to the victim organizations. Hence, transactions on the metaverse may not be safe as it is difficult to ascertain a user’s identity.  

In addition to the above, other questions must be answered before users can truly feel comfortable spending time in the metaverse and platform holders feel reassured that they will not be held liable for enabling security breaches or harboring cybercriminals:

  • How will metaverse cybersecurity be managed?
  • What requirements will apply with respect to keeping data secure?
  • How will regulation or site policies evolve to address deep fakes, avatar impersonation, trolling, and other cyber threats?  
  • What laws will apply and how will the various players collaborate in addressing this issue?

The metaverse poses complex questions that most likely require the amending of existing laws and regulations. Until then, having appropriate legal and technological measures in place can help mitigate risk and provide some degree of protection for metaverse users.      

Recently, Facebook’s metaverse has come under scrutiny for potentially violating users’ privacy. Haugen has argued that  Facebook’s metaverse (and the virtual reality world in general) could be addictive and lead to the stealing of personal information. To prevent similar allegations, Emerging technologies companies working in the metaverse space should be fully aware of the privacy law-related implications of the metaverse. These companies should consider developing their own metaverse (or virtual platform) privacy policies, personal data protection policy, data retention policy, data subject consent form, licensing agreements, and other legal documents in place. A law firm specializing in emerging technologies can help you in drafting these legal documents and provide you with guidance on the privacy and cybersecurity-related regulatory challenges posed by the metaverse. 

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

Can the Long Arm of the Law Reach Into Extended Reality?

 1000 648 David Hoppe
By:
0

Every day, millions of gamers, students, and other users around the world log in to experience the virtual world. Some are intent on playing the latest, most realistic video game. Others seek to recreate real-life social interactions in the virtual space. More employ the metaverse and virtual, augmented, and extended reality (VR/AR/XR) for commercial and educational purposes. Whatever the motive, any environment or platform on which people congregate and transactions occur and can lead to disagreements.

Up to now, legal issues arising in the virtual world have been resolved through the real-life tort system and criminal courts by attempting to apply existing laws developed for the physical world. But is this approach still suitable, scalable, and viable? Is the present legal system prepared to tackle legal issues related to the virtual space? Several legal issues and case studies demonstrate that real-life laws lack the nuance and context to resolve legal disputes developing as a result of engagements in the virtual world. Many of the thorny issues revolve around contracts and privacy, however, online activities that jeopardize personal safety and other criminal concerns also are becoming more prevalent as the metaverse coalesces and AR/VR/XR technologies mature.

Privacy Issues

As we increasingly conduct our daily lives – entertainment, communication, shopping, work, etc. – online, it becomes clear that privacy protections devised for the analog world lack the sophistication required to keep personal data secure. Bad actors will continue to employ brute force attacks, credential theft, phishing, and other more sophisticated methods to obtain access to personal and business financial records, track our movements, and hack into sensitive information. There is a far greater risk of personal information leaking in the virtual world than in real life. Compromised personal data presents a world of harm for the victim. In Carpenter v. United States, the US Supreme Court recognized the privacy challenges associated with new technologies. While the court did not delve specifically into privacy challenges posed by virtual reality, it warned lower courts to ‘tread carefully … to ensure that the legal system does not embarrass the future.’

  • Managing Consent
    Real-life privacy laws require companies to obtain a user’s prior consent before collecting their personal or sensitive data. AR/VR/XR environments involve zettabytes of observable data, collected in the background, complicating the ability to collect, manage, and safeguard consent, the Future of Privacy Forum found.

  • Protecting Children
    Since VR/AR/XR technologies often appeal to underage gamers, it is particularly important for platforms and websites to implement extra procedures and security measures to protect the personal data of children. Strong real-life privacy laws exist that require businesses, schools, and other organizations catering to minors to take extra precautions to limit and to secure their related data. However, in many cases it remains unclear whether and how these laws are applicable to the virtual world.

  • GDPR Compliance
    Additional legislation and case law are needed to clarify to what extent the European Union’s General Data Protection Regulation (GDPR) is applicable to the virtual world. The concept of “inferred data” complicates matters. Information users share with their virtual platforms may be considered inferred. However, there currently exist few ways to ensure providers have inferred the data correctly, as users cannot access the algorithms or databases. GDPR does cover some aspects of data privacy, but these must be clarified and possibly amended before they can be considered adequate.

VR/AR/XR poses significant privacy risks since, in the virtual world, users do not actively provide personal information. Instead, providers gather personal data by tracking online activities as the users go about their virtual lives. Real-life privacy laws were designed to address situations where users proactively provide their personal information. They may lack the specificity to cover new privacy issues that extend through AR/VR/MR, the metaverse, and other virtual environments. Alternatively, an amendment to the existing privacy laws, notably the Children’s Online Privacy Protection Act (COPPA) and the Health Insurance Portability and Accountability Act (HIPAA) may be required to ensure their suitability for our evolving virtual existence. A well-drafted privacy policy, specific disclaimers, and disclosures may also be required. 

Jurisdictional Issues

As VR/AR/XR evolves and new applications come online, few reliable precedents are in place to guide litigants, defendants, and legal counsel in their handling of civil and criminal cases arising from virtual encounters. Certain laws, such as patent, trademark, and copyright, vary among jurisdictions, and the situation is exacerbated by the borderless nature of the virtual space, blockchain, and other technologies inherent in the metaverse. To deal with these exigencies, businesses operating in the space should develop comprehensive legal strategies that can adapt to new information and new regulation.

  • Crime
    As in real life, crime is commonplace in the virtual world. Multiple forms of virtual crimes have been identified and reported – from disturbing the peace to indecent exposure, assault, and money laundering. Theft is among the most prominent. Avid gamers and entrepreneurs may spend hours in the virtual world crafting virtual goods which can then be sold to other users, speculators, and collectors for real money. What if someone steals these virtual goods and resells them? Where can victims turn for help? Who will investigate, capture, and prosecute the perpetrators? Do existing laws even consider the theft of virtual goods a crime? There are no clear answers as the definition of theft varies by jurisdiction.

  • Applying the Law(s)
    It is difficult to determine the applicable law and the jurisdiction applicable to disputes which take place over the virtual world, as the victim may live half a world away from the criminal. The platform on which the crime occurs likely will be hosted in a third country with servers in several difficult-to-pinpoint locations. If traditional, physical-world rules are applied, crimes would fall under the jurisdiction of the country in which they take place. But does this mean the location of the server, where the platform owner is based, or some other geographical determinant?

Perhaps a universal set of laws or code of conduct governing user behavior in the virtual world would solve the problem. Until then, VR/AR/XR users and companies are advised to develop, post, and adhere to robust terms of service and end-user license agreements that clearly delineate rights, expectations, and dispute resolution methods.

Contractual Issues 

Legal anomalies can be expected when real-world contract law principles are applied to the virtual universe. The fundamental question is whether freedom of contract applies in this new context. What if parties willingly enter into a commercial transaction that obviously and disproportionately disadvantages one of the parties? Could the contract be annulled by citing existing contract law, or would the platform’s term of service apply? Under traditional contract law, freedom of contract is limited. For example, contracts that contravene public order, morality, and law are generally not allowed. But users enter the virtual world in pursuit of novel experiences which may not necessarily be legal or moral if acted out in real life. Will real-life contract principles apply to cases where virtual users enter into agreements that allow or require these virtual transgressions? Will participants be allowed to take recourse to freedom of contract principles as laid down in physical-environment contract law? These are all complex questions, with no clear answers. Once smart contracts become the norm, these legal questions will become more complex.  

Legal issues which present themselves in the virtual world may be quite different from those which arise in real life. Privacy invasion over the metaverse is not the same as in the real world. Similarly, a host of jurisdictional and transnational issues cannot be tackled through traditional laws. Some scholars assert that existing laws could be tailored for the virtual world while others are of the opinion that the virtual world may require a specific legal system, with its own laws. In the absence of laws meant specifically for the virtual world (including the metaverse), the onus of protecting the interests of users lies on the companies (such as video game companies and emerging technologies companies) which create and operate the virtual world. A nuanced legal strategy is required to protect the rights of users and to mitigate any legal liability. Tailored legal documents can help mitigate some of the legal anomalies which arise due to the absence of laws meant for the virtual world. An attorney specializing in emerging technologies including AR/VR/XR and the metaverse can provide legal advice on how to prevent legal liability or to come up with a nuanced legal strategy.

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

video games lawyer

To Thrive, LBEs May Need to Pivot, Repurpose

 1000 648 David Hoppe
By:
0

In early 2020, Sandbox VR was a healthy business, with 10 virtual reality arcades in North America and Asia. By May 1, every one of them had closed. Revenue dropped to zero and 80 of Sandox’s 100 employees had been laid off. Now, as the company works to reopen and operate safely, those layoffs and lack of operating capital create additional challenges.

Sandbox’s predicament is not unfamiliar to virtual reality centers in the US and overseas. Like restaurants, bricks-and-mortar-retailers, and sporting events, VR shops must revamp revenue models to deal with social distancing and reduced capacities. But they face even greater safety challenges, given the nature of the business, such as allaying guests’ reticence to wearing headsets that others have worn recently.

Location-based VR entertainment businesses based on in-person clientele, particularly those in the gaming and arcade industries will struggle. These companies may face continued rent obligations while simultaneously losing most of their in-person business. Many LBEs are located in tourist destinations (The Void, for instance, has shops in Minneapolis’s Mall of America, the World Trade Center complex, and the Las Vegas Strip) where rent is high and visitors scarce.  Restrictions on capacity due to COVID-19 may prevent them from generating enough revenue to cover operating costs, especially if they require greater staffing to handle cleaning.

Randy White, CEO of White Hutchinson Leisure and Learning Group, believes that due to their high levels of proportional debt payments, LBEs must generate over 70 percent of their pre-COVID attendance and revenues just to survive. Barring a vaccine, that may not happen soon.

“All the polls are consistently showing that the percentage of people ready to return to FECs and other type LBEs is too low for the businesses to reach cash break-even in the first month or so after reopening, meaning they wouldn’t be able to pay all their ongoing expenses and debt payments,” White writes. “Also, the 50% restricted capacities for social distancing and reduction in crowd size make it highly improbable to reach break-even. So, the question is, how soon will enough people return to LBEs so they will reach cash breakeven and then profitability?”

April 29-30                                             Nov. 6-9                             Baby Boomers    Millennials

Credit: Morning Consult: https://morningconsult.com/2020/11/10/tracking-consumer-comfort-with-dining-out-and-other-leisure-activities/

While spending on virtual reality games, entertainment and other experiences at dedicated LBE facilities reached $1.5 billion in 2019, Gamedev.net projects “spending this year will be roughly one quarter,” with little hope for rapid recovery. The site estimates that spending in 2023 will still only reach 71 percent of 2019.

So what’s a location-based VR company to do?  To reopen safely and attract enough clientele to prosper, they may need to get creative. 

Pivot to Survive

Successful businesses will be able to adapt in response to the pandemic. That may mean quickly shutting down on-site client engagements or transitioning some functions, such as marketing and finance, to remote work. It may be natural for LBEs to implement extreme cash-saving measures, but prudent investment will ensure a quicker recovery. I advocate allocating resources in three main areas:

  1. Customer Communication – Email, direct mail, and other low-cost marketing tactics can reestablish connections with customers and keep them familiar with your establishment. Two-way communication can provide insights about what it will take for customers to return (visible disinfecting, lower prices, etc.) Segment the audience and focus resources on high-value visitors such as club members, large families, locals, annual pass holders, etc.

     

  2. Upgrades and New Cash Streams – New adventures and content, additional food and beverage options, expanded gameplay, and other changes will get people excited to return. This is especially important to differentiate between the full-VR, interactive, expansive experiences at the LBE from in-home options.

     

  3. Promote Health and Safety – Show potential customers the steps that you are taking to keep them safe. Invest in headset sanitizers, plexiglass shields, and customer flow/queuing facilitators. Implement temperature checks at entrance points. Then tout these investments to allay any fears about returning to your establishment.

Some LBEs may be able to pivot and leverage their technology into new go-to-market strategies. They could target companies interested in virtual shareholder meetings, trade shows, job interviews, etc. Virtual collaboration, meetings, and presentations through VR promise to form a large part of our new work reality. Simulating in-person interaction, which is critical for project hand-off, crowdsourcing, and multi-time-zone enterprises, immersive technology can compensate for travel restrictions and conference cancellations. Businesses unwilling to make large outlays for their own equipment might be willing to rent out VR studios to connect with in-home devices for hosting product training, new employee orientation, and B2B client meetings. LBEs that step into this niche can help claim some of the revenue corporations had previously allocated for plane tickets, hotel rooms, conference center rentals, and other in-person meeting expenses.

LBEs could create mobile units for use at private parties or team-building exercises. Virtual escape rooms would resonate with COVID social distancers afflicted with cabin fever. In the short term, as companies adopt VR for business, team, and client meetings, they may be faced with supply chain bottlenecks that delay delivery of the hardware they need. LBEs could step into the void to provide the headsets and other infrastructure businesses require to conduct virtual meetings.

COVID and shelter-in-place helped generate unprecedented demand for in-home VR. If a vaccine can be deployed relatively soon, consumer interest could bode well for LBEs. Newly-converted VR enthusiasts will be eager to explore the technology in bigger and more immersive arenas than is possible with their home systems. VR Studios, a platform and system-management vendor says “consumers will play for fun, practice, and compete with others casually online from home, and then take those skills and their performance stats to LBE venues for physical, multiplayer, social experiences complete with food and beverage and formal competitions that only an LBE venue can deliver. LBE businesses will have new options for building awareness, maintaining connections to their players at home, promoting in-store events, and driving revenue.”

At least one company is making the home-to-LBE transition easier by allowing players to take their profiles to an LBE venue and continue their stats, and vice -versa. The Player Portal enables players to create a profile and track their scores and global leaderboard rankings whether they play at home or in an arcade using ATOM or FLEX systems.

Working with a law firm well-versed in the challenges faced by VR business and the technologies and relationships inherent in content, hardware, and other areas can help LBEs weather the current storm. Gamma Law specializes in assisting all stakeholders in AR/VR, video games, and other high-tech industries. We can help LBEs negotiate with creditors, content developers, and landlords to make payment arrangements and other agreements that benefit all parties. We work with developers and investors, and may be able to find financing partners and vendors willing to engage in creative solutions to help your company survive and thrive during the coming economic recovery.

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, to push the boundaries of innovation, and to achieve their business objectives, both in the US and internationally. Contact us today to discuss your business needs. 

VR lawyer

VR Offers an Up-Close Look at COVID-19 Lung Damage

 1000 648 David Hoppe
By:
0

Dr. Keith Mortman, Chief of Thoracic Surgery at George Washington University Hospital, has created a virtual reality simulation of coronavirus-damaged lungs using a CAT scan from a patient in his late 50s. The patient had to be intubated and put on a ventilator after a quick progression of the illness.

Collaborating with the medical technology company Surgical Theater, Dr. Mortman created a colorized replica of the patient’s lungs that vividly depicts parts of the patient’s lungs where they have been damaged by the virus.

“It’s quite alarming to see, in all honesty,” said Dr. Mortman, “because unlike your garden variety pneumonia that might affect only one small part of the lung, or unlike the common flu, what you’re seeing in this video is really the widespread damage to the lung, and you can see in vivid color how it affects not only both lungs, but many different parts of both lungs.”

Dr. Mortman’s motivation for generating the simulation was two-fold. First, he wants to help medical professionals better understand the impacts of the disease. Second, he hopes to educate the public on the severity of COVID-19. He believes that this visual glimpse into the reality of how the virus impacts human health will motivate people to take mitigation practices such as physical distancing more seriously.

Wearing a VR headset, users can see in intense detail, and from a variety of angles, the damage done to the lungs. In addition, those not wearing a VR headset can see the impact via a video depiction.

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

VR lawyer

Compose Music in VR with SolsticeVR

 1000 648 David Hoppe
By:
0

Music and virtual reality intersect with increasing frequency in today’s technological landscape. Numerous artists have recorded 360-degree music videos for viewing with a VR headset. While others, like AmplifyVR, utilize VR technology to create immersive listening experiences in which artists perform in otherworldly locations with influence from their audience. The new technology also enables listeners to play along with their favorite songs. Now, a new innovation called SolsticeVR intuitively merges music and VR for music composition.

What is SolsticeVR?

SolsticeVR is described as an “electronic music composition sandbox” by its creator, Dr. Roy Magnuson, a professor at Illinois State University’s School of Music. This virtual reality experience places users in a digital composition space where they can interact with audio, alter sounds to achieve a vast array of effects, and make recordings. While many electronic music software offerings exist, they often have steep learning curves and high price tags. SolsticeVR is more accessible to the layperson and offers a different type of user experience.

In SolsticeVR, even novice musicians can quickly grasp exploratory, playful means of composition. Users can reach out and grab sounds and then move them around in order to alter pitch, echoes, and 3D positional audio. In addition, they can choose from an array of menus that includes options, such as mic effects, to apply different qualities to the audio.

Built on the Unity Platform

Dr. Magnuson took online courses and certifications in Unity in order to learn how to do the code work on Solstice VR. The software itself was inspired by his love of music and gaming and his commitment to utilizing technology to benefit artists, including his students. Dr. Magnuson told Illinois University News:

“VR is a tool, not a gimmick. We are witnessing the inception. We’re entering a new computing age, and just how profoundly mixed reality will be – with a convergence of virtual and augmented reality – we can’t comprehend. I want to figure out how to own that for art and for creatives to do good.”

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

VR lawyer

Demand for AR/VR Engineers Grows 1,400%

 1000 648 David Hoppe
By:
0

From Pokemon Go to the Ikea app, Snapchat filters to connecting with replicas of loved ones after death, virtual reality (VR) and augmented reality (AR) are gaining traction in the mainstream. As the technology gains steam, demand for employees with the skills to create these types of additive, immersive experiences is surging.

https://gammalaw.com/vr-ar-news-the-latest-use-case-reuniting-loved-ones-with-the-dead/

Demand For AR/VR Engineers Skyrockets

Popular job site Hired released its report, 2020 State of Software Engineers, and the results are clear – this is the year of AR/VR. Demand-growth for AR/VR engineers tops the chart of engineering specializations at a whopping 1,400%, nearly ten times that of the second most popular category – gaming engineers – at 146%.

Hired also shares salary figures for this in-demand field. AR/VR engineers in major U.S. cities, such as San Francisco, New York, Seattle, LA, and Boston, can expect a salary in the $140k–$160k range. 

However, demand is quickly outpacing supply, and we may see bigger companies offering sizable incentives to highly-skilled candidates. But first, they’ll need to pass through an array of coding exams, behavioral interviews, and whiteboarding sessions to compete for the most desirable positions. 

The growth in demand for AR/VR engineers has quickly outpaced the high demand for blockchain engineers in the previous year as many smaller blockchain startups struggle to gain mainstream traction. 

On the other hand, 74% of engineers in the survey expected to see the full impact of AR and VR within the next five years, and nearly half named the tech to be among the top three skills they desire to learn in 2020. 

What’s Driving The Demand For AR/VR Engineers?

According to IDC, global spend on extended reality (XR) technology, which includes AR and VR, is expected to increase by 78.5% in 2020. Major technology players, such as Apple, Facebook, and Google, are working to further develop the technology as well as integrate it into our everyday lives.

Forbes recently released the following information regarding the top five trends in AR and VR for 2020, all of which may contribute to increased demand for engineers in the field:

  • Industrial usage of AR and VR exceeds that of consumer applications. It’s used in training, to simulate dangerous working conditions or working with expensive tools, as well as to convey necessary information to staff who would otherwise need to stop working while they consult manuals.
  • Use of AR and VR in healthcare has become more mainstream for purposes such as therapy, diagnostics, and training. 
  • Smaller, more mobile headsets with greater power offer more untethered experiences that users crave at reasonable price points. 
  • 5G opens unprecedented possibilities for VR streaming.
  • Education uses VR to offer remote classrooms, instructional overlays, and flexible training environments. 

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs. 

VR lawyer

Augmented Reality Will Be the Tech Revolution of the ’20s

 1000 648 David Hoppe
By:
0

In the 1990s, computing technology reached a level of affordability that brought desktop PCs into homes around the world. In the 2000s, those desktop computers connected users to the world wide web, and thus to nearly unlimited information as well as to other users in forums and chat rooms, and eventually, via social media. In the 2010s, mobile phones and 3G and 4G technology enabled users to have these connections on-the-go, almost everywhere they went. In the ‘20s, augmented reality, backed by 5G technology, promises to bring users closer together than ever before in ways that will transform nearly aspect of our lives, from the way we socialize to how we work and interact with service providers.

What Fortune 100 Leaders Predict For AR

The tech giants, including Google, Apple, and Facebook, all have augmented reality projects underway, a testament to their conviction that this technology will become ubiquitous in the ‘20s. 

On Facebook, Mark Zuckerberg wrote:

“While I expect phones to still be our primary devices through most of this decade, at some point in the 2020s, we will get breakthrough augmented reality glasses that will redefine our relationship with technology.

Augmented and virtual reality are about delivering a sense of presence – the feeling that you’re right there with another person or in another place. Instead of having devices that take us away from the people around us, the next platform will help us be more present with each other and will help the technology get out of the way. Even though some of the early devices seem clunky, I think these will be the most human and social technology platforms anyone has built yet”

Facebook is currently working on a solution to generate lifelike avatars for use in virtual and augmented reality. While Apple is purportedly working towards the launch of its AR headset in 2022 and AR glasses in 2023. Meanwhile, Google, an early player in the AR space with its product Google Glass, is offering a growing array of services that will leverage AR. 

Role of 5G in AR

Augmented reality has thus far been limited by slow mobile data speeds. However, as mobile networks convert to 5G, higher data speeds and increased reliability will allow AR and VR experiences to become more commonplace, as well as more complex. 

5G is already available in some developed countries, especially in metropolitan areas, and the speed difference is substantial – Verizon customers can expect 450Mbps up to 1Gbps on their 5G network.

AR’s Impact on the Way We Work

Augmented reality is already having an impact on the job market – the demand for AR/VR engineers rose 1400% in 2019 over 2018. 

Beyond that, the upcoming ubiquity of augmented reality may remove geographic barriers to a variety of careers. Employees will have more opportunities to work remotely and job candidates may not have to factor in relocation as a qualification for some jobs. This will give employers access to a wider pool of talent on a global scale. 

The result could mean higher competition for certain jobs. In addition, housing markets could be impacted as fewer people need to live in cities or high-cost areas for access to lucrative positions. The impact could be a dampening of home prices in major metropolitan areas, as well as an increase in prices in smaller, more remote towns. 

Augmented reality will also affect the ways businesses reach and interact with customers. Today, Apple users can view products in augmented reality as well as have a listening experience via spatial audio. This gives potential buyers a more enhanced experience with the product before making the decision to buy. The opportunities are limitless, and will call for new realms of expertise and skill sets on the part of product developers, UX professionals, designers, marketers, advertisers, and more. 

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

AR VR Blog