Updated: Feb 13
This article was originally published by The Lawyer’s Daily (www.thelawyersdaily.ca), part of LexisNexis Canada Inc.
Spending time in immersive, virtual worlds has historically been associated with dystopian societies. Ernest Cline’s novel Ready Player One is the first example that comes to mind for many people. However, rising participation in virtual worlds is on a seemingly unbreakable trajectory amongst the younger generations. One leading “metaverse” (virtual world), Roblox, had over 30 million individuals spend roughly three hours per day in their metaverse over the past year.
The growing time spent in metaverses has been accompanied with a rise in spending in these virtual worlds. Spending in Roblox and Fortnite alone surpassed $300 million in 2020. Stories about significant purchases, such as the sale of a digital representation of a Gucci handbag for US$4,000 worth of Roblox’s in-game virtual currency and purchases of digital land for sums exceeding $100,000 in the Decentraland metaverse have become increasingly common. The accumulation of property occurring in metaverses is accelerating, even though purchasers of these digital items lack reasonable property rights.
It is currently industry standard practice for digital objects and in-game content to be “locked-in” to a particular game or metaverse. When people buy digital items in one metaverse or game, they cannot transfer them freely, as they would in the real world, due to a lack of property rights. As metaverses become more important in peoples’ lives, introducing reasonable property rights in these virtual worlds is becoming increasingly necessary.
What is a metaverse?
A “metaverse,” according to the Oxford English Dictionary, is a “virtual-reality space in which users can interact with a computer-generated environment and other users.” Individuals in a metaverse typically interact with one another using avatars that can represent whatever they choose. Due to social distancing rules, metaverses have become an increasingly popular avenue for social interaction, education and entertainment.
Companies operating metaverses typically use digital stores to generate additional revenues within metaverses. This allows individuals to pay for a broad range of digital items to use in the metaverse, including outfits for avatars, textbooks and virtual space. While some metaverses may use game-specific currencies, purchases typically require real-world money to purchase metaverse currencies. Once purchased, digital items remain in the metaverse they are purchased in.
The dominant excuse for the lack of portability of digital items has traditionally been the varying and incompatible technological infrastructures used to build different metaverses. Considering most games and metaverses are now being created and maintained by one of two major gaming engines (Unreal Engine and Unity), this no longer appears to be a valid reason.
Other commonly cited reasons include immature technologies and the difficulty for metaverse operators to maintain and enforce their intellectual property rights for the digital items sold.
Non-fungible tokens as a solution to cross-metaverse portability
One technological innovation that can enable enhanced ownership of digital items across metaverses is non-fungible tokens. Non-fungible tokens (NFTs) are blockchain-based digital assets with distinct traits from other digital assets on a similar blockchain. This quality makes their application to digital items in metaverses compelling. By linking distinct NFTs to unique digital items in a metaverse, NFTs that can be moved across metaverses will make the unique digital items attached to them portable across virtual worlds.
Combining digital items to transferable NFTs can create a new dynamic in which the primary barrier to broad property rights in digital items would rest on the choice of the game or metaverse creator. If used in conjunction with existing anti-piracy technologies, such as widely used digital rights management (DRM) software, the intellectual property rights of the digital items’ creators can be respected and enforced across metaverses.
Are property rights in metaverse needed?
With new technologies providing the ability to disentangle digital items from the virtual worlds they originate from, regulations to reflect this new reality may be needed.
One area of priority for legislators should be the mandatory provision of property rights of participants in metaverses and games. More specifically, allowing metaverse participants to possess similar rights in the digital items as physical property in the real world. Some rights would include the right to resell, transfer, gift and trade these digital items with other individuals.
When purchasing items in a metaverse, the purchaser is given a licence to the digital items, not ownership. While individuals in the real world can exercise property rights over a pair of shoes (such as reselling them), digital items are generally restricted from being transferred among participants in a metaverse.
One situation that demonstrates the necessity for reasonable property rights are instances when a metaverse participant is banned. Under the current legal framework, the affected individual could lose access to everything they’ve purchased in the metaverse or game with little to no recourse.
Property rights in metaverses can be enforced in many ways. Examples include introducing a bill of rights for consumers or amending consumer protection rules mandating specific rights granted to the purchaser of a digital item.
As metaverses become more widespread in peoples’ lives, rules protecting the interests of participants will become increasingly important. With innovative technologies like NFTs providing secure and responsible ownership of digital property, the time has come to consider mandating property rights to purchasers of digital content to reflect property rights similar to those of physical items. If appropriately implemented, individuals’ rights can be protected in the growing world of metaverse economies.
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