Personal Data, Intellectual Property and Consumer Law: Their Challenges in the Metaverse

The concept of the Metaverse is nothing new. This term was first introduced by Neal Stephenson in his science fiction novel “Snow Crash” as a “form of human life and communication in a virtual, three-dimensional space through a digital avatar”. As of today, this new world is no more science fiction but instead part of our world.

Thus, this new virtual world raises some legal issues as to its use, especially when it comes to personal data, intellectual property and consumer law.

The Metaverse is a 3D virtual world. Within this universe, users can live a complete immersive experience since they all can interact, buy, sell products, sell land, etc.

The Metaverse is a world full of opportunities as well as a world still in development. As a matter of fact, more and more individuals and companies have jumped into this new world, where they both experience a unique experience. Because this is a virtual world, it is of legal interest, and certain questions need to be raised.

What will be the applicable privacy laws in the Metaverse?

When Facebook changed its name to Meta and introduced their vision of Metaverse, the trust people could have had towards the Metaverse shifted. Thus, just as in the real world, the issue of personal data has an important place in the Metaverse.

In a more general way, the virtual world is only a reflection of the real world. At the very least, it can be an improved version of reality.  As this world is virtual, the use of data becomes a major issue. The data collected is different than in the real world; it involves numerous various information concerning the user, especially through their avatars, as users are represented by these avatars. Through them, facial expressions, gestures or types of reactions that a person might have during their interactions in the Metaverse can be collected. 

Because facial expressions, gestures or interactions can be collected, the traceability of users will be even more advanced than in the real world.

The European Union has the user’s data protected from being collected without their consent with the applicability of the General Data Protection Regulation (GDPR). Now the question is does the GDPR apply in the Metaverse? Can the GDPR protect European nationals?

Article 4 (1) of the GDPR gives a broad definition of “personal data”. According to article 4(1), personal data is any information related to an identified or identifiable natural person.  

From this definition, the GDPR can indeed be applied in the Metaverse. As the personal data is defined in a broad way, even indirect data can be considered as personal data. Therefore, as soon as a gesture or facial expression can be traced back to a person, it will be considered as personal data.

However, what about the territorial application of the GDPR? In fact, this Regulation only protects users when they are within the European Union.  Yet, the Metaverse, by definition, is a world without any borders.

Is the Metaverse facilitating counterfeiting?

The second issue raised by the Metaverse is dealing with intellectual property law, and more specifically, counterfeiting. There have been recent cases of counterfeiting in the Metaverse, the most famous being the MetaBirkin case.

On January 14, 2022, Hermès sued the artist Mason Rothschild for counterfeiting its Birkin bag. In fact, the latter had created a hundred or so NFTs in the shape of the Birkin bag, which he sold in the Metaverse for cryptocurrency.

The French Intellectual Property Code defines counterfeiting as any violation of an intellectual property right, such as the reproduction, imitation or total or partial use of a trademark, patent, model, copyright or software without the authorisation of its owner (article L.335-2 French Intellectual Property Code). If a work or object belonging to a brand or artist is copied into the Metaverse, there is a risk of infringement.

However, the question arises as to whether the products of small companies or the works of lesser known artists are counterfeit. While well-known brands or artists can effectively defend themselves against misuse of their brand or work in the Metaverse, it is much more complicated for companies or artists who are unknown to the general public. Thus, there could be a disparity between the well-known people/companies and the “others”.

Hence, the best way to avoid such disparity, but also to avoid any infringement, would be for companies or artists, whether they are known or not, to register trademarks covering virtual products or services. Similarly, one solution to avoid infringement of artists’ copyrights would be to use the blockchain. In fact, blockchain grants certificates ensuring a follow-up of the transactions and the originality of each world sold. As a result, a traceability of the work is in place, making it possible to avoid future counterfeiting.

Will consumer law apply to Metaverse?

As a mirror of the real world, users can buy and sell products. Because consumers find themselves buying products in this world, consumer law cannot be overlooked.

Generally speaking, consumer law can be defined as all the legal and regulatory provisions designed to protect the consumer. Thus, as in the real world, the virtual world must be regulated and governed by consumer law. The terms applicable in the real world will be applied in the virtual world and sanctioned in the same way.

The Commission National for Information Technology and Civil Liberties (CNIL) has looked into the issue of consumer law in the Metaverse and has considered that consumers must receive enhanced information and be able to refuse without suffering the consequences. However, this seems complicated in the Metaverse.

The Metaverse offers infinite possibilities to its users, and to our society in general. However, it also raises questions, particularly in terms of personal data protection and trademark law. Moreover, the Metaverse, like the real world, offers its users the possibility of selling products. Consequently, consumer law must be applied there. In other words, the legal rules applicable in the real world must be respected in the virtual world, and some of them must be adapted to ensure the best protection of goods and users. As this technology is booming, it will be important to see how legislations adapt to this new world.