The Metaverse: Litigation Challenges | Blake, Cassels & Graydon LLP

The metaverse has been described as the future of the Internet. Although its development is still early, established and emerging companies are spending millions developing metaverse technology. Although the virtual-reality parallel universe is probably still a few years away, as we have seen with the regular Internet, new areas of law have been developed to deal with the Internet world. Cyberattack or class actions for data breaches have become common. No matter what form the metaverse ultimately takes, the law will evolve in response.

This report is the first in a two-part series examining the unique legal issues the metaverse may present. Here, we focus on the litigation challenges presented by the metaverse, with a focus on potential privacy and product liability litigation. In our next papers, we will look at the key privacy regulatory issues for organizations considering launching in the metaverse.

WHAT IS THE METAVERSE?

The word “metaverse” is used in different ways. Here, we use it to mean the online version of 3D – an immersive digital world that exists alongside a physical world, which you can interact with using a virtual reality headset. Imagine having a virtual digital life, where your image exists in the digital world and can interact with other people’s avatars in one digital space. You can own real estate in the area. You can visit a store and buy virtual goods – or a virtual office where you attend a virtual meeting with avatars of your real colleagues.

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In the most realistic visions of the future, the metaverse will be fully interoperable. You and your physical assets can move seamlessly from a digital environment maintained by one platform to one maintained by another. Perhaps a possible future is where the metaverse exists as a series of “walled gardens”, where the physical environment of each realm is a closed system that does not interact with the others.

SECRET COVENANTS IN THE TAVERSE

If the metaverse develops as expected, it will involve the collection of an unprecedented amount of data about users. Platforms (as they do now) can collect data about what users buy in the metaverse, what they view, and their conversations with other users. However, because the user’s access to the metaverse will be through an earphone, a lot of data can be collected – for example, related to the user’s movements, physiological responses and brain waves – which will give platforms a deeper understanding of the thinking patterns of their users. and behavior.

Many of the most common Internet-related privacy cases in common law states focus on intrusion by a single person, which deals with stealth — where the defendant knowingly intrudes on the plaintiff’s private affairs in a way that would be highly offensive to a reasonable person. In addition to the case of a data breach, it is possible to imagine other metaverse cases of private intervention. If it were possible to buy physical real estate in the metaverse, for example, the defendant could be responsible for stalking the plaintiff’s virtual home. Or consider a situation where the defendant compromises the complainant’s headset and can track their movements, conversations and perhaps thoughts. Given the sensitivity of the data the metaverse can collect, the stakes will be high.

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Although existing causes of action for privacy can be used in the metaverse, courts or legislatures may want to create new causes of action. Can a metaverse operator be held liable for negligently failing to prevent a cyberattack that resulted in damage to user data? If a metaverse user violates another user’s privacy, can the platform be held liable for failing to prevent the violation? Time will tell how the law develops in response to these challenges.

PRODUCT LIABILITY

The metaverse is expected to result in a large market of virtual and physical products available for purchase and use by customers. Software, physical intangibles, and hardware such as headsets and glasses are just a few examples. Accordingly, developers, manufacturers, licensors, vendors and others in the industry may be at risk of product liability claims related to metaverse brought by metaverse participants and users of these products.

Several types of potential product liability claims related to the metaverse may arise in the future. As an example, product liability claims may arise from situations where people have been injured while immersed in the virtual or augmented reality world of the metaverse. In addition, property damage or economic loss claims may arise when participation in the metaverse or use of related hardware causes a property-damaging event. Metaverse users may also be sued by other users for their behavior on the metaverse as it relates to another person or image.

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Complex and novel arguments are likely to arise in this emerging area in the context of product liability claims. This may include questions regarding who may be liable for claims related to the metaverse, choice of law and forum, and when a claim should be brought when a loss or injury occurs. Given the potential for a variety of product liability claims in relation to the metaverse, industry participants will want to seek legal advice and consider how to limit their liability and seek any other protections through contract drafting, terms of use, and warnings and instructions for use. .

CONCLUSION

The metaverse, however it develops, will undoubtedly create new legal questions and issues. Above, we summarized the litigation challenges presented by the metaverse, with a focus on privacy and product liability litigation. In our next article on this topic, we will look at important privacy regulatory considerations for organizations considering launching into the metaverse.

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