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Welcome To The Metaverse: Legal & Ethical Considerations

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Welcome To The Metaverse: Legal & Ethical Considerations

No longer merely a sci-fi concept, the Metaverse has become the latest iteration of the Internet for businesses, employers, and social gatherings. With a variety of tech companies creating Metaverse platforms, companies hosting virtual reality workspaces, factories setting up shop with digital twins, and groups socializing at simulated concerts, lawyers must take the reins in guiding how this new world is regulated. The body of Internet Law is constantly evolving, especially due to the fast-moving nature of technology. The Metaverse is gaining in popularity, and before universal adoption, we must consider the legal concepts necessary for this immersive, virtual world - and the ethical dilemmas it already faces.

Transcript

- Welcome to the CLE entitled Welcome to the Metaverse legal and ethical considerations. I'm Leeza Garber, I'm a privacy and cybersecurity attorney. I also teach internet law, cybersecurity and privacy at the Wharton School and information privacy law at Drexel Universities Thomas R. Kline School of Law. We will be discussing what is the metaverse, how to define it and how technology companies define it. Then we'll get into how you actually enter the metaverse. What kind of tech you need, what kind of platforms are available? And then our clients in the metaverse. Then who regulates the metaverse, what entities are involved, what laws guide and shape our actions in the metaverse and back to law school with issue spotting in the metaverse, ethical dilemmas of the metaverse, of which there are many, and finally the lawyer's obligations within the metaverse. So let's begin at the beginning with what is the metaverse? Neil Stevenson, the famous sci-fi novelist wrote in "Snow Crash in 1992" and in that novel, he coined the term metaverse. He conceptualized the metaverse as a virtual reality or VR based next generation of the internet, a next iteration of what the internet could look like. And in the novel, the metaverse is used as an escape method from a dystopian reality. Then we move on to the conception of the metaverse within Second Life. In 2003, when the platform was created, Second Life offered a "grid" where "avatars" could interact with each other, build personalized environments, socialized, shop, trade property, and services. 10 years later in 2013, Second Life reached a high point with 1 million regular users. Currently, it's actually reemerging in popularity, especially as the idea of the metaverse becomes more popular as well. So put simply the metaverse is an immersive three dimensional virtual world. I have some great quotes I love about the metaverse because it's still tough to explain. First Vogue said, explaining the metaverse is like explaining Google to someone in the 1950s, which really helps start off how we can think about the metaverse, how futuristic it actually is. Then wired brought down to brass tax said, "To help you get a sense of how vague and complex a term the metaverse can be, here's an exercise. Mentally replace the phrase, the metaverse, in a sentence with cyberspace. 90% of the time, the meaning won't substantially change. That's because the term doesn't really refer to any one specific type of technology, but rather a broad and often speculative shift in how we interact with technology. The metaverse is really a new way to conceptualize what the internet could be". Again, it's supposed to be completely immersive. It's supposed to be three dimensional. You're supposed to have a different kind of experience than ever could have been imagined with what we think of as the internet today. So how do we actually get there? There are a variety of platforms that offer the "metaverse". They're all competing for users and obviously the ones that have the most users are going to become more acceptable. All of them are just a little bit different. Decentraland, one of the more popular platforms, runs on Ethereum blockchain. Users can buy and sell real estate, they can explore and interact with each other. The sandbox is also based on Ethereum blockchain, where users can create, share, and monetize virtual assets. Then we have Roblox, which is really one of the mega made metaverse platforms. It attracts major brands and has approximately 54.7 million daily users. And these users spend about 42 billion hours in their virtual world every year. These are huge numbers and Roblox does have major brand partnerships and events going on every day. Roblox users both make, they create games and they play games. And their user base importantly includes 50% of all kids under 16 in the US. It is hugely popular with minors, which obviously as lawyers, we start thinking, okay, huge regulations necessary, right? So how do we get there? How do we get to the metaverse involves different types of tech. Obviously for some of these platforms, you can join without a headset or a controller, but you're not going to have the truly immersive experience. That is the point, the purpose of the metaverse. So the most common method to experience the immersive metaverse is through a headset and controllers like you see here, we have Oculus, we have HTC, we have HP, they're all a little bit different, but they offer the same experience, the same sensation. And these devices may track eye movements. They may use voice commands and they also watch what your fingers and fingertip movements are doing as you navigate virtual reality. Then we have some more cutting edge tech for entering the metaverse. Now you can see Google glass, Google glass has been around for some time, but it's gone through an evolution. There are quite a few iterations of it, but we do have Meta offering haptic gloves and Skinetic offering a haptic vest. All of these products offer different sensations as you participate in the metaverse. Meta's haptic gloves, for instance, is attempting to reproduce different sensations that you could have in real life, like holding onto something or running your hand across a service. And it's using different types of technology to accomplish this. It's not yet released. It's still in prototype form. We also have this haptic vest, which would allow sensations over different parts of your body obviously. There are also developments being made in entire body suits as well. There are certainly legal implications for all of this technology, including how they impact different genders and there's been studies that they impact women versus men differently, how sensitive they are, meaning how much are you actually feeling, what does that mean for assault, we've seen cases like this come up in the news, and then how hackable the technology is, which brings along a slew of other questions and potential problems. Lawyers need to be proactively aware of what type of technology is already available and what's being created in this space to better guide clients and understand the risks involved. Obviously, there's a huge amount of benefit for this type of tech, but there's certainly risks as well. And clients are in the metaverse. They want to be a part of it, clients of all industries, all sizes are buying land, they're buying real estate in the metaverse across a variety of platforms and they're setting up shop. They're also using the metaverse as a tool for internal development and different processes. This could be for meetings, it could be for seeing how factories operate to become more efficient. And individuals also want to meet with their attorneys in the metaverse. We've seen some law firms shut up, set up shop, and I will get to this later on. We're also seeing law firms guiding on the metaverse because it's a buzzy new tech. It's important to stay on top of these developments. By 2026, 25% of people will spend at least one hour every day in the metaverse for work shopping, education, socialization or entertainment. And also by 2026, 30% of organizations in the entire world will have products and services ready for the metaverse ready for consumption. So let's get a better snapshot of what clients are in the metaverse and how they're using the space. First up, we have food and beverage, which might sound bizarre considering the metaverse's virtual reality. And while there are some early conceptions of companies trying to enable taste in the metaverse and things like that, it's not happened yet, but restaurants, chefs are all trying to set up shop in the metaverse, offering games, experiences, and then coupons for food drink items to enjoy in real life later on. These brands want to stake out their territory and trademark their unique ideas for operating within the metaverse. This could include virtual products, venues, tokens, and events. And Chipotle rolled out a game called Chipotle Burrito builder on Roadblocks earlier in 2022, where users were challenged to roll burritos in the metaverse, they could earn what was called burrito bucks that they could use for national burrito day. And the whole idea was to build excitement around Chipotle's entrance into the metaverse really to get fans excited, give them something else to do. Wendy's also has set up shop in the metaverse in 2022, they had a virtual reality restaurant set up where again, people could join, meet friends, play sports, really just create another space for people to interact with the brand, even though they couldn't actually consume anything real in the metaverse. Then we have fashion, which is a little bit easier to make the connection to the metaverse. There are a variety of fashion brands that have set up shop in the metaverse with different experiences and product offerings and collaborations. Nike has been very active in the metaverse. They set up Nike Land within Roblox that lets users socialize and engage with specific brand experiences. In November of 2021, they launched and they had 7 million visitors visit since then. They've also had famous sports stars, including LeBron James make virtual appearances to create buzz and excitement for their metaverse experience. Gucci has also been very active in the metaverse. For some time, and they've been on multiple platforms within the metaverse. Even historic auctioneer, Christie's, took part in an NFT auction for Gucci. While NFTs deserve their entire own CLE, I will say that NFT stands for non fungible token and it's essentially digital data that's stored in a blockchain. Without getting into further detail, many brands utilize NFTs as part of their metaverse experience. Actually it's applicable also outside the metaverse too. Now Gucci has sold many types of NFTs and after their work with Christie's, they in February, 2022 bought a plot of digital land in the Sandbox, and then in may of 2022, they opened Gucci Town in Roblox, just like Nike open Nike Land. And the space of Gucci town was used for fans to meet, socialize, try on virtual clothing for their avatars, play games, interact with the brand even more. We also see car manufacturers setting up shop in the metaverse. Hyundai, in January of 2022, announced a partnership with Unity which produces virtual reality platforms. They are working together to design and build a meta factory. Hyundai also offers a game within the Roblox platform that allows visitors to "collect epic items, enjoy amazing events and more". Then of course we have entertainment and media companies looking to set up shop in the metaverse. Disney is a fascinating case study here because there's certainly so much potential when you think of the Disney brand to bring those experiences to the metaverse. Back in 2020, a Disney parks executive published a thought piece, suggesting that new technology would allow users to "transcend the physical and digital barrier". In 2021 Disney unveiled a series of NFTs inspired by stories from Disney Pixar star wars and Marvel that fans could purchase. And then in February of 2022 Disney announced the appointment of Mike White as senior vice president of next generation storytelling and customer experience, which in essence, referred to a leading the metaverse strategy position, many called this in headlines, a chief metaverse officer style position. We have many other entertainment and media companies, trademarking concepts for the metaverse and they are trying to capitalize on this new technology for again, further brand interaction for fans. So as we embark on the metaverse with our new clients, the question becomes who regulates this new world. As you can imagine, every platform has its own terms of use rules and other policies that govern users much like big tech and social media platforms have their own terms, but there are also a variety of laws, statutes, acts, and legal precedent that may apply. But because much of this body of law came before the birth of the metaverse, it has to be interpreted, adjusted and translated into this new space. One particular law I want to mention is 47 US code section 20, which has received quite a bit of fame recently in the news because of how it's come up in terms of a discussion of moderation, disinformation, and hate speech on social media platforms. Section 230 is referring to the protection for private blocking and screening of offensive material and is known as the good Samaritan law related to the internet. Inherently, it means that no interactive computer service will be treated as the publisher or speaker of information provided by another information content provider. And it certainly applies within the metaverse meaning that platforms that provide metaverse services will not be held liable for moderating, taking down content, leaving content up. With that being said, we have to first define who regulates the metaverse by understanding where the metaverse is. Now that we understand what the metaverse is, how to get there, the tech that's involved and what clients are joining the metaverse, we need to better understand who regulates the metaverse, which is an extremely complex question and is still shaping. Every platform has its own terms of use its own rules and other policies that govern users, much like many social media platforms have their own terms of use and service. There are a variety of laws, statutes, acts, and legal precedent that may apply to the metaverse. But because all of it has come before the existence of the metaverse, it has to be interpreted, adjusted and translated into this new space. This is something that has plagued the technology cybersecurity and privacy field for some time because the tech simply evolved so much faster than the law does. And so we have to interpret, adjust, apply what exists to this new field. I do wanna contextualize this discussion with a mention of section 230 of title 47 of the US Code, which is part of the us communications decency act. And I have appeared the full text of this section. It's referred to as good Samaritan blocking and screening of offensive material. It's come up pretty recently over the past five or six years as social media platforms struggle with moderation, with hate speech with disinformation and misinformation. Section 230 would apply to the metaverse as well. And generally it offers immunity for internet-based platforms with respect to third party content that people are posting. It's important to understand that in the context of the metaverse as we move forward. But the big question here when we discuss regulation is where is the metaverse because of course that would help us understand what laws could apply. And regarding jurisdiction, there is no universally accepted approach. This can go back to a law school discussion. Internet law in a fuller understanding of jurisdiction is very fact specific and it evolves quickly. There are questions that cases attempt to answer regarding extraterritorial application of geographically local laws, questions of contacts, of comedy, and of selective enforcement. And the case law related to internet jurisdiction, and therefore metaverse jurisdiction can help illuminate what issues to consider in legislating the metaverse. And I have a few cases without getting too much into the weeds. I have to mention Yahoo VLICRA, which states back to 2001. And in essence, we have French courts. We have United States state appellate courts involved. And the question was whether a French ordinance would be effective in the United States. And while this case doesn't offer any sort of true decision, the lengthy analysis is extremely helpful. It's a fact specific opinion on how to interpret jurisdictional principles, looking at country focused websites and how early in the years of the web itself, mainstream use of the web, you could use IP addresses to determine a website visitor's country of origin. But still it came down to what laws would apply in a cross country cross global scenario. And then of course we have Google the Equistech, which goes back to 2017, was quite a debacle. And this was a question of indexing global Google search results. We had differing views of the Supreme court of Canada and a California district court. So we have countries that disagree on how to apply laws. And when we're speaking to internet jurisdiction or metaverse jurisdiction, it becomes especially hazy because it's hard to define the "where" of the metaverse. While unfortunately there is no specific defined, easy answer, and as a lawyer, we always have to say, it depends on the facts and the circumstances, it's important to understand that many of these principles of black and white jurisdiction have to be interpreted. And looking back to older, legal precedent helps us understand how courts have attempted to apply existing law to this very gray space where we don't necessarily know where the metaverse is operating. We don't necessarily know where the internet is operating. It truly depends on how different countries are going to respect their laws and how we as citizens are going to operate within the "boundaries" of the internet or the metaverse. As one can imagine, this becomes a rather frustrating endeavor, and it's no surprise that many of the laws that guide the metaverse or will guide the metaverse are seemingly pretty old. Even the communications decency act section that we discussed earlier, section 230 dates back to 1996, it's over 35 years at this point. So we are attempting to translate and apply existing laws to this evolved space. There are no metaverse specific laws yet. So we have to look to historic internet legislation and precedent and attempt to stretch it even further to fit the metaverse. There are certain legal standards that will always apply those related to children, ie, the children's online privacy and protection act, those related to data collection, which of course, we think immediately of the big ones, financial data with the Gramm-Leach-Bliley Act, healthcare data with the health insurance portability and accountability act, HIPAA and high tech. Title seven and employment law. We can see how these fields would easily apply, but others become more complex and it will certainly require court interpretation, which we will get to in issue spotting. However, despite the lack of very specific laws and legal precedent, while we can look to older legislation and older precedent, there are also standards and guidelines regarding best practices that are helpful. And in fact, in 2022, the metaverse standards forum was created and it is quoted as saying, "This forum will simply coordinate requirements and support for existing standards, organizations, developing standards relevant to the metaverse under their existing governance models and intellectual property frameworks". Meaning there are quite a few things we have to consider in order to operate properly and legally within the metaverses. And so we are going to figure it out as we go, but let's consider best practices and high standards for governing how we operate. Now we can look to existing organizations that while they don't necessarily specifically mention the metaverse, they are discussing cybersecurity best practices, privacy best practices. And up here, I have the national Institute of standards and technology, which is abbreviated as NIST. This organization has set guidelines for best practices in cybersecurity and related tech issues for a very long time. It's highly respected. And while it's not mandatory in the private sector, it is a type of standard that has really looked to across industries for setting high requirements and best practices that different organizations may choose to follow. While we are missing specific laws, very specific legal precedent, although we are working on that, I will get to it, there are a variety of international and United States based standards and guidelines for best practices that may be helpful to consider. Excitingly, in 2022, the metaverse standards forum was created. Now this group I'll quote from their site, it will simply coordinate requirements and support for existing standards, organizations developing standards relevant to the metaverse under their existing governance models and intellectual property framework. So basically this forum, which has about 35 founding members and includes Meta, Microsoft, Sony, Adobe, Epic Games, Huawei, Ikea amongst others, will look to a variety of organizations to coordinate and put together a working body of regulations and standards. Meanwhile, we can look to existing heavy hitters in this space while they don't necessarily speak directly to the metaverse. They do speak to best practices for cybersecurity in emerging technologies and technologies that have been around for some time. And first obviously is NIST, the National Institute of Standards and Technology, which has a variety of resources related to best practices for cyber security and is a great reference point for even private companies that aren't required to follow these standards. They're a great place to start to figure out what's necessary. Then we have ISO, which is independent. It's not a governmental institution it's and it shares knowledge related to a variety of sectors to develop voluntary standards that are supposed to support innovation and provide solutions to global challenges. This is directly directly from their site. Now ISO has famous cybersecurity standards, famous information technology standards, and many can be interpreted and stretched to apply to the metaverse. Great places to look, especially for clients looking to operate in this space. Finally, we have state to consumer privacy laws. As many of us know, there is no federal unified privacy standard yet, but the states have stepped in and offer a variety of requirements for businesses related to consumer privacy and data breaches and data breach notification. State laws vary quite a bit. There are a few states that are a bit offer higher requirements like California and New York and Illinois and Texas. Many things to think about lots of moving parts and I'm sure privacy requires hours of CLA on its own. But it's important to understand how these consumer privacy laws will also apply to the metaverse. And there's no question that these state laws will apply. Of course, we will see cases play out, but obligations will remain the same, whether you're in the internet as it looks now or in the metaverse. In fact, obligations may even be heightened because the metaverse presents challenges in collecting so many more data points. But back to the question at hand, let's get to the exciting part, which is issue spotting in the metaverse. Unfortunately, cyber bullying has reared its ugly head in the internet, as we know it, for decades. We've seen problems on a variety of platforms in social media, cetera, and cyber bullying is also a problem within the metaverse. There are cases that we can look to and I'll mention some precedent, but first there is no federal standard related to cyber bullying. There are state laws that specifically are codified related to cyber bullying although sometimes these laws struggle in the face of first amendment challenges, which we've seen in a variety of contexts already. There are also state laws related to harassment and stalking that mention the idea of cyber bullying too. The case of State V Bishop, which states back to North Carolina in 2016 revolved around the issue of a high school student who was bullied on Facebook, the social media platform, and it implicated the North Carolina general statutes chapter 14 of criminal law related to cyber bullying. And without reading the entirety of the language here, what's important to note is while cyber bullying can be heinous, when it occurs in the internet, as we know it, it could technically be even worse on the metaverse simply because of what the metaverse is supposed to be. It's supposed to be completely immersive. You can imagine that there may be cases that look to up some of the penalties, maybe how a minor may be treated in bullying, maybe what potential jail time could look like, what civil penalties could look like as well. There's so much that can be done within the metaverse simply because of how it's supposed to operate. You can imagine that the negative things could be magnified even further, which brings me to the next problem in issue spotting, which is harassment and assault. Unfortunately, as the metaverse has been gaining steam, there has been quite a bit of discussion of researchers and people that have gotten to do testing within various metaverse platforms that have struggled with harassment and assault. I have an example of Nina Jane Patel who's a psychotherapist and a metaverse researcher, and she recently was experiencing Horizon Worlds, the metaverse platform offered by Meta. She's quoted in an interview with Vogue as saying "A group of male avatars surrounded me and started to grow my avatar while taking selfies. I tried to move away, but they followed me laughing and shouting. Part of me wanted to shrug it off as weirdos on the internet as I have after other incidents of online harassment, but this was different". Just as I was saying with how cyber bullying might look different within the metaverse, harassment and assault also looks different. There have also been questions of how rape might apply here too, as a criminal issue because of the way that technology works and is evolving, if you think about haptic vests, but entire haptic body suits, there's certainly the potential that people can feel what's happening to them with other avatars. And the platforms are attempting to adapt based on the problems that their researchers and testers are seeing within their environments. And after some of these incidents, it was publicized that Horizon Worlds offered an option to create a safety bubble around your avatar. There are other ways that other metaverse platforms are attempting to deal with these problems, but it's also the way that much of this tech social media has attempted to deal with many of the problems we see on the internet. It's a game of cat and mouse. And as attorneys, we need to understand how we can interpret existing laws to this new environment. Some people laughed off allegations of assault or rape within the metaverse, but because again of how the metaverse is supposed to operate as immersive, we can't shrug off these problems because people will really feel some of the consequences of using this technology in a physical immersive way. That brings me to the issue of deep fakes. Deep fakes can take the form of face reenactment where software manipulates facial features, face generation, where a new face is created, which doesn't relate to a specific individual, face swapping, where one person's face is swapped with another, and speech synthesis, where voices are recreated. I've taken these examples from Bloomberg law. There are quite a few famous examples of deep fakes. We have some deep fakes that circulated of Barack Obama, of Tom cruise. The technology has only gotten better and it's really easy to obtain and learn how to create a deep fake. Deep fakes are funny. They've produced memes. They can be used for really neat endeavors, but they also pose privacy problems. Specifically, I'm thinking of privacy torts, including defamation false light and appropriation of likeness, many of which are already codified in state law. But the problem again, when you're taking these really basic legal concepts and converting them into the space of the immersive metaverse, these issues can be so much more damaging. While privacy towards have been argued in internet based cases before on large scales, the metaverse again, poses a new set of challenges for us as attorneys because of its three dimensional, immersive nature, meaning people might suffer more damages because of this kind of behavior in the metaverse. And I mentioned this briefly before, but we also have to discuss data collection practices. Because of the nature of metaverse and the technology that's used to access it, there are increasingly expansive points of collection of information, including the gear itself, the headset, the controllers, a haptic vest suit and glasses. All of these pieces of tech can gather biometric information and health data. And if you operate in the health law field and know about biometric laws as well, there's only a handful of states that protect biometric information differently than personally identifiable information or PII. Biometric and health data is really heavily guarded as crown jewels because you can't change it right amongst a variety of other issues. So much of this gear is collecting biometrics like your fingerprint, your iris, maybe your body temperature, maybe the way that you walk, your gate. There are other things that could come of the evolution of this equipment. Biometric data requires specific protections pursuant to a few states laws, including Illinois, Texas, and California. We've seen lawsuits, especially coming out of Illinois because they offer a provision for actually impacted victims to bring suit. We've seen major class actions out of Illinois and large penalties collected. But more states are considering adding biometric data protection acts and many of these are pending approval right now it's become a very hot topic and we have to stay abreast of what obligations will be in terms of collecting this type of data, especially within the metaverses. And finally, when we're talking about data collection practices, it's obviously important to update our privacy policies and update our data breach policies. Depending on what state you're operating in, where your consumers are, where your employees are, a complete review of obligations will be necessary. Then of course we have metaverse related trademark and copyright litigation. We've already seen a handful of cases appearing in courts around the country related to trademark and copyright. While we haven't seen the harassment cases, the assault cases, the cyber bullying yet, we are seeing trademark and copyright. And these ongoing cases do not disappoint handling a variety of issues within the metaverse. So I have Miramax versus Tarantino out of California, of course, in 2021, the issues included a breach of contract, copyright infringement, trademark infringement, and unfair competition related to Quentin Tarantino wanting to create and sell NFTs from his original handwritten pulp fiction script. Now, while many of the issues under discussion here are pretty typical contract case issues, we have to contextualize it in the metaverse because we're dealing with a completely different concept. Then we have Amez versus Roth's Child out of New York in 2022, which is issues of trademark infringement, trademark dilution, and common law trademark infringement, among other things related to a digital artist who decided to create a variety of Birkin bags NFTs, he called the metaverseburkins and sold them for thousands of dollars. Then we have Nike versus Stock X out of New York, 2022. Again, issues of trademark infringement, trademark dilution, counterfeiting, and common law trademark infringement among other things. And this was related to Stock X's use of Nike branding for its own collection of NFTs. The question here is really how NFTs are going to be treated within the courts, how the metaverse will handle trademark and copyright because it looks a little different. We've already seen that brands are racing to get their trademarks in for the metaverse. They want to make sure that they have all of their marks protected. So we are going to see this space evolve pretty quickly. We'll have to see how these cases play out. Then it's important to note that right now, Lena Khan, the chair of the FTC is extremely concerned about how children are going to be treated in the metaverses. This was an open letter that a few senators wrote to Lena Kahn explaining their concerns about children and how they're treated in the metaverse. And I mentioned earlier that obviously the children's online privacy protection act will apply, there other federal statutes that will apply to children and minors operating within virtual reality. What's fascinating about this letter from Edward Marky, Kathy Castor, and Lori Trehan to Lena Kahn, who has a reputation as being tough on big tech, they wanted to elucidate the potential threats to children who use VR products and platforms. We know that children are in a uniquely vulnerable position. And the questions here that the FTC is also struggling with is how to authenticate age in the metaverse. How you authenticate experience, how you make sure that the rules apply, meaning that these platforms may have rules against bullying against hate speech against the dissemination of content that's graphically violent or graphically sexual in nature. How do you make sure those things are held to as policies? And so this discussion is ongoing with the FTC who is certainly getting involved and senators and members of Congress are also equally concerned. Now the question of authentication regarding age is difficult despite technical advancements. And we've seen this on social media. We've seen this on the web in general. The FTC offers guidance on how to comply with Copa via parental consent, but minors, as we've seen, if you're a parent, especially are still able to circumvent certain methods of authentication. And I have here a variety of methods that the FTC offers related to gaining consent from a parent and making sure you have someone who's at the right age to use the technology. Now we could go back quite a few sides and remember that some of these metaverse platforms and I'm specifically referencing roadblocks have huge amounts of users under the age of 16. This vulnerable population needs to be protected and authentication can be problematic. We have some technical solutions that are being offered that are still an entrepreneurial startup phases, but this is something that many companies operating in the metaverse are going to have to be cognizant of, what their obligations are. And the other concern here is that some of the platforms are starting to offer "worlds" within the metaverse that are created and are catering to an older crowd. Let's say with more mature content, this is something that Meta's horizon worlds has just said they are doing, there are others doing it as well? How do you make sure if you brand is in one of these worlds, or if you are client is offering more mature content that you don't get in trouble with what the FTC requires and what the terms of use are for the variety of platforms. Just something to keep in mind. An interesting case, which ended in a class action settlement is Zanka V Epic Games, which was out of North Carolina dating back to 2021. And Fortnight is an online video game. It's hugely popular. It's really one of the most used online games. And the question here was about using in-game virtual currency to purchase items that were basically gambling. You'd buy these random loot boxes. You wouldn't know what was inside. The chances were very slim that you'd get anything that people really wanted and or things that were really highly coveted. And so the question was people spending real money to pay for virtual currency and then buy these random loot boxes. These random loop boxes are no longer used. They've been discontinued by Epic Games, but they decided to settle because, as I said, really was akin to gambling, especially for people that were minors that didn't know what they were going to get. So they agreed to settle for about $27 million. And then they also offered other benefits to players, which included more in-game virtual currency. So the question is, how do we value in-game assets, virtual assets, things like that. This was a really fascinating settlement that came out very recently. Then we have the question of what happens when a platform handles virtual assets in a way that users don't like. We have Doe v. Roblox out of California in 2021, which really came down to a question of interpreting contract law. But the defendant Roblox owns and operates an online metaverse in which users control avatars of themselves. Users can purchase an in-game currency and spend it on virtual items for their avatars. Some of which are generated by other users who actually create them. We have a minor who alleged that Roblox incentivizes its users who are mostly minors. We know that we have a huge population of folks under 16 using this platform. To purchase such items, Roblox takes a cut of the profits, and then it appears that Roblox deleted some items without warning to induce users to buy more. The plaintiff alleged that this deletion scheme is an unlawful business practice and is fraudulent and brings related claims on behalf of herself and a punitive class. And according to the complaint, more than half of Roblox as users are under the age of 13. The court found that Roblox knew these people are operating they're under 13 using the platform, not requiring to get an adult's permission or supervision. And so we have questions about fraud. We have questions of unlawful business practices and how their terms of use actually function. In the case, we see a great discussion and analysis of how minor users are interacting with a metaverse platform, how they actually purchase in-game currency and virtual items and what kind of liability the platform has here. So while it's pretty standard contract law, it's being applied to this new world once again, where we're bringing in a host of variables, including minor users, virtual assets, and questions of proposed moderation by the platform actually impacting what users have purchased. Because part of the question here was whether virtual assets were being deleted because they violated policies, terms of use if other users created, let's say an avatar's clothing that someone bought that was violating some sort of rule on the platform. Then the platform could say, well, we'll delete it. Well, they got enriched by doing that because the user would simply buy more. So many different issues here, all based around contract law, some pretty typical issues at stake just extended into this new platform. Then of course, what actually is a good or a service. And it was found that the plaintiff didn't dispute that there were no goods at issue in this case, because there was nothing tangible, right? Because these are virtual assets. However, the plaintiff argued that they were services. The court stated that Roblox is alleged to carry out an unlawful business practice in a transaction that results in the sale of services. Roblox provides users access to its metaverse, which is classified as an online entertainment service. So when a user purchases, Robux the virtual currency within Roblox, with real money, they're engaging in a transaction with the platform to make use of a part of that entertainment service. Roblox has continued to face increased scrutiny, especially because we're talking about minors here. We have issues with ad for games that are directed towards children. When I use the phrase ad for games, as you can imagine, it's games that have advertising intrinsically intertwined, and the problems here are undisclosed brand promotion through influencer avatars, through games, and through other kinds of endorsements. You can see the image here of Stranger Things, a game that's set forward by Netflix. And I have a statement on this by truth in advertising.org. Advertising is being surreptitiously pushed in front of millions of users on Roblox by a multitude of companies and avatar influencers. It's digital deception, and it's possible because Roblox has failed to establish any meaningful guardrails to ensure compliance with truth in advertising laws. And as a result, the brands Roblox has invited into the metaverse, including DC entertainment, Hyundai, Meta and others along with undisclosed avatar brand influencers, which is something that we've seen problems with on social media over the past couple years, and bots are running rough shot on the platform, manipulating and exploiting consumers, including its most vulnerable players, more than 25 million children. We can imagine expanding this problem across different kinds of brands, including not just entertainment but food, music. We're seeing more events like concerts take place in the metaverse. We're seeing cars, fashion, all of these brands and industries could face in scrutiny related to advertising. So we're seeing this happen on Roblox it's going to happen more and more. Then we have obviously employment law. Employers must consider the implications of operating within the metaverse. And that means proactively addressing a variety of issues. So, first and foremost, how do handbook policies become updated? We've had to update policies related to social media, internet use for personal purposes. Well, now if you're asking your employees to gather in the metaverse or take part in exercises for creating and using digital factories that are created within the metaverse, whatever that is, there are implications to having your employees use the tech. And it doesn't just mean how the headset might make them feel nauseous, but it's also, how do they feel in using the metaverse for work purposes and then potentially using it for personal purposes? How do you create the dividing lines, many questions. And of course, how will avatar creation be addressed? We've seen research that people tend to want their avatars to look more attractive. Is this going to be a slippery slope? Is this going to lead to people creating avatars that maybe don't look like themselves, maybe look like people they're trying to make fun of, are they trying to impersonate someone, et cetera? Then we see surveillance and access concerns in workplace provided metaverse environment, people using it outside work hours, using their company provided equipment to enter the metaverse outside of work hours, using it during break time, are they going to be recorded? How are you going to let employees know what types of meetings you're going to record? What kind of data you're going to keep, which brings me to the point of how is employee data actually collected and protected. We've mentioned this before in issue spotting, but within the metaverse, you're just inherently collecting more and more points of data and information. And then appreciating what platform policies apply. There are many different programs for virtual meetings in the metaverse, for other types of team exercises. And then for companies that are building digital twins or replicas of their factory floors or other pieces of their day to day functions, that they wanna get a better handle on within the metaverse that has to interact with a platform policy. Now we've seen brands like Hyundai are building their own metaverse platform, but for many companies, this is going to mean using a predeveloped, already developed platform. So finally we have the ethical dilemmas of the metaverse. There are so many. While I don't mean to sound like I have a tin foil hat on, metaverse can be a wonderful thing, an excellent resource, but we have some of the same problems and ethical issues that we've faced with the Dawn of the net. So obviously there are discrimination concerns. Reactions to the technology, findings show that women experience more motion sickness when using VR, unfortunately. Certain protected groups may and will feel negatively targeted in social environments based on problematic avatar activity and avatar interaction we've already seen and discussed harassment, intensification of in real life situations. People always feel a bit more bold online, and if they're acting anonymously they might act in a more intense way than they would in the real world. Platform self-governance is far from perfect. You can see in the case examples I already gave, and as we've seen in today's social media, moderation isn't perfect. We see problems with defamation, with hate speech, with disinformation, problems with cyber bullying, with harassment, really malicious content. And then finally, avatar creation suffers from sexist expectations. I mentioned this with the employment law issue spotting, but it's been found that many people want to create avatars that look more attractive than they do in real life or better in different ways, however, you wanna subjectively define that, but if you're in a workplace situation or in a school situation, this could lead to ripple effects related to ethical concerns. Then we have questions of moderation. I've mentioned this a few times now related to social media platforms. These private companies are inherently self-regulating and that's because of a lack of laws and then also laws that proactively allow safe self-regulation like section 230 of the communications decency act, which I reviewed earlier. They are self-regulating in moderating behavior and moderating content. And unfortunately we've seen concerns with hate speech with misinformation, bullying, stalking, predatory behavior, discrimination, promotion of criminal activity, depictions of violence, whether that's graphic bloody violence, sexual violence, it's all out there on the internet as it stands and in the metaverse, unfortunately. There is body of case law that exists on many of these issues. And this is when the conduct coincides with an existing criminal statute. But as we know, there are no laws related specifically to the metaverse just yet. And certainly we're going to see this play out in the coming years. One of the most famous cases related to this ethical and criminal issue is Allonus versus US from 2015. And the critical points of analysis were a standard for interpreting threats and threatening language. What mental state is necessary for the speaker and the speaker's intent. You can see here that after his wife left him, petitioner Anthony Douglas Allonus, under the pseudonym, Tone Dougie, used the social networking website, Facebook, to post self-styled rap lyrics that contained graphically violent language and imagery concerning his wife, coworkers at kindergarten class and state and federal law enforcement. These posts were offered often interspersed with disclaimers that the lyrics were fictitious and not intended to depict real persons. And with statements that Allonus was exercising his first amendment rights. But many people who knew him saw the posts threatening, including his boss, his wife, et cetera. He was convicted but it was overturned by the Supreme Court. And in this ruling, they argued that the jury was erroneously instructed and should have weighed Allonus intent in making the post and not just their content. Then the conviction was reinstated in 2016 by a US appeals court. The court in Philly said, no jury could doubt Allonus knew his lyrics, which including talk of killing his estranged wife, shooting up a school, cutting an FBI agent's throat would intimidate his targets despite appearing under an entertainment only disclaimer. He served 44 months in federal custody. This case is critical to understanding how speech operates online and how we should consider speech within the metaverse. And obviously it's been a theme throughout the CLE. The metaverse is supposed to be immersive. So speech that is threatening that appears threatening and malicious may feel quite differently to a plaintiff or a victim within the metaverse than it would even in social media, as it looks today. It's an important case to understand it's an important case to read because it's fascinating how the court goes through its analysis related to intent mental states and what language means online. There's also important issues related to language online when it comes to the employment context and people liking or behaving in a certain way towards content within social media, same issues are going to arise within the metaverse. Important to note, there are federal and state agencies that do address internet related crime, but as we know, lawsuits are expensive for plaintiffs, and sometimes it's very hard to find an anonymous defendant operating online. I have different resources on here. These suits are going to continue to emerge in the metaverse and we're going to see how courts handle different factual scenarios. But it's important to be aware of what agencies are out there to help plaintiffs. Obviously the platforms themselves have their own current conduct policies for the metaverse. I have an example with Meta's Horizon Worlds conduct, obviously that's harassment or bullying is not allowed, stalkings not allowed, cornering is not allowed, encouraging intimidation or bullying others is not allowed. The policies go on and on the same standards that apply for the social media in general also apply within the metaverse. But then there are other heightened standards simply because of the capabilities of these platforms. And we come to our obligations in the metaverse. We see law firms of various sizes, shapes setting up shop in the metaverse, they're buying land for their offices, they're advising clients on metaverse topics. Ethical guidance and opinions have been directed to attorneys practicing virtually and working remotely. Maintaining confidentiality is key. So are using best cybersecurity practices, staying up to date regarding tech. And obviously we can look to the ABA ethics, opinions and comments about working remotely, technological competence and virtual practices. The state bar associations have also offered guidance on best practices related to tech advancements and new work environments. Fascinatingly at the beginning of the pandemic, the Pennsylvania state bar issued a formal opinion on ethical obligations for lawyers working remotely and specifically called out smart devices, internet of things devices that may be listening into conversations and recording them, which would break confidentiality. We have to understand as attorneys, the different eyes and ears that may be listening within a metaverse meeting. Finally, guiding clients on this new tech means understanding how it functions and proactively determining potential implications. Again, keeping kind confidentiality within the metaverse should be a chief concern. Attorneys are aware that the metaverse could change the way that we practice with virtual client interactions, opening a virtual office, virtual networking and increased types of work in these practice areas. Importantly, we need to be aware of potential obligations, how courts could interpret laws to translate them into this new world and how we can best guide our clients and our fellow attorneys in practicing within this space, keeping up to date with best practices, using the technology in a safe and helpful, effective way. What's so exciting about the metaverse space within law and technology and internet law in general, is that because it's so cutting edge, we get to put on our issue spotting hats and be creative and adventurous in trying to seek out where the problems could be and how they might be solved. And that's something that's key within looking at the metaverse as a new legal practice area, because there are so many questions, there are so many gray areas and to best guide how we practice in this space, we need to look to historic precedent and determine how it could be applied, how the laws might change. There are many proposed pieces of legislation related to internet law, the metaverse privacy, cybersecurity, all of which we should be somewhat aware of in order to put our best feet forward in guiding best practices for the metaverse.

Presenter(s)

LG
Leeza Garber
Attorney and Consultant
Leeza Garber, Esq.

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