If the designers of the Metaverse’s Second Life want this virtual world to gain popularity, they must prioritize finding solutions to its legal challenges.
An Overview of the Challenges of Second Life Over Time
Virtual reality is rapidly becoming one of the main pillars of modern culture for citizens who engage with computers daily across the globe. This concept emerges from the real world of time and space, following a structure composed entirely of a dynamic and ongoing set of binary programming languages, transforming into a person’s virtual world. With these interactive virtual playgrounds’ increasing complexities and realism, users have gained numerous entrepreneurial opportunities that challenge the boundaries of laws worldwide. This is where we simultaneously enter the realm of legal rules and regulations as we delve into the captivating virtual world—a domain filled with unanswered questions that intertwine our thoughts and logic.
The existing laws in a domain that lacks physical and tangible existence lead us to a society where regulations also exist virtually, and these laws are continuously evolving. With the dizzying speed that technology drives forward, they are expanding. However, the question arises: how can we delineate this legal trajectory concerning virtual worlds? With this introduction, we enter the famous world of Second Life, where the boundaries of law are challenged in the virtual space
Residents of Second Life and Life in a Virtual Community
Understanding a concept or subject becomes engaging when we hear its history and story, allowing us to immerse ourselves in it. Therefore, it is beneficial to understand the story behind Second Life first. Second Life is a three-dimensional virtual world designed much like a sandbox. This world is entirely created by its residents and continuously evolving, with more and more people “settling” in it daily, contributing to their virtual community. Launched to the public in 2003, Second Life has accommodated over 10 million residents and more than one million users since its inception. This virtual world is described as a “vast and extensive digital continent, filled with people, entertainment, experiences, and opportunities,” where its residents can purchase virtual plots of land to build their homes or launch and grow their businesses.
Given this environment’s open and extraordinarily vast nature, innovative entrepreneurs quickly recognized the enormous potential of this previously unknown and seemingly unlimited resource. In fact, in just the first two or three months of 2007, over six million dollars were spent in user-to-user transactions involving buying and selling virtual land, goods, and services, which is astonishing.
The spokesperson for Second Life, Linden Lab, promised participants that they could acquire, buy, or sell “virtual goods like virtual land” through a currency transaction known as “Linden Dollars.” As a result, Second Life’s economy has managed to accommodate over 300,000 users spending money in the game since its inception, with at least 138 users earning over $5,000 (265 Linden Dollars / $1) in positive income since September.
For example, a German woman announced in December 2006 that, with an initial investment of $9.95 in 2004, she had earned over one million dollars from her investments in Second Life real estate. She now employs 20 people in China and Germany who design and develop these properties.
In light of this, large and small American companies have also recognized this commercial potential in Second Life and are actively investing in and capitalizing on this opportunity. For instance, MTV Networks opened a club in the virtual world; American Apparel opened a t-shirt store for avatar clothing; Toyota began selling digital vehicles; and IBM purchased dozens of virtual islands for private business.
The possibilities seem endless as users teach virtual classes, open virtual restaurants, role-play, form relationships (including friendships and marriages), promote politics, create music, and traverse virtual cities, all potentially as expansive as Second Life.
Now, considering the history of Second Life, let’s examine the legal challenges that Second Life has faced over time. Since this platform is the grandparent of all existing metaverses and was established before blockchain development, we will explore its legal issues over the past two decades and identify potential legal challenges in newer metaverses.
Exploration in the Realm of Law
Before diving into legal categories and subjects, it is best to explore the realm of law and familiarize ourselves with fundamental concepts we encounter daily yet may need to understand fully. In this writing, we have used many legal terms; at least, it is worthwhile to understand these words’ meanings and concepts.
According to legal sources and scholars worldwide, “law” is commonly recognized as a system of rules created and enforced through social or governmental institutions to regulate behavior. However, a precise definition of law is a lengthy discussion. Law is typically described as a body of knowledge and an art of justice.
The word “law” is derived from the Persian term “kānun,” which translates to “state” in English. Law can consist of physical laws that affect humans or moral laws or decrees established by a country’s government or authority in a specific manner and at a particular level.
Another term we use daily is “rights.” “Rights” is the plural form of “right,” referring to rules created and enforced through social or governmental institutions to regulate behavior. The study of law involves analyzing and understanding the evolution of legal rules. Additionally, rights are a collection of laws and regulations that govern and oversee the relationships between individuals and entities. Rights are interpreted as individual rights in the context of a person’s privileges within a particular society.
From Property and Assets to Privacy in Virtual Worlds
The most important legal and judicial issues regarding virtual worlds, such as Second Life and newer metaverses, can be summarized and examined under the following topics. It is essential to recognize that the scope of laws and regulations in various countries is so vast and diverse that we may need to spend many years drafting and formulating new laws to abridge the natural world’s rights with those of the virtual world.
This article addresses legal topics such as property and assets, privacy, and jurisdictional competence to review the legal challenges related to the metaverse and explore potential solutions. We analyzed Second Life and newer metaverses and found that laws in each area of the metaverse are complex.
The metaverse concept is becoming a reality with the emergence of virtual reality and other technologies. However, as the metaverse evolves, it also brings various legal challenges, including intellectual property, jurisdiction, and privacy issues.
We must accept that the question of who owns and controls the creations within the metaverse is a complex and unresolved issue. In the well-known virtual world called the metaverse, ownership is a prominent aspect, particularly concerning user-created products and their sale in the virtual space. The ownership of virtual assets, such as virtual real estate, digital items, or NFT avatars, must be clearly defined in-laws. Regulations may state that creators of existing virtual assets may have rights concerning their works, such as copyright laws that protect the original author.
Legal challenges for users and companies operating in the metaverse and virtual worlds include respecting intellectual property rights, privacy, and jurisdiction. Intellectual property laws, such as copyright and trademark, may be difficult to enforce, and individuals’ privacy may be easily violated. Moreover, the jurisdiction that exists in the real world may not have meaning or relevance in the virtual world, as there are no precise times, locations, or geographies.
Due to its virtual and decentralized nature, the metaverse may lead to challenges regarding who owns and who has the right to use virtual assets.
In this context, we should briefly reference other legal categories and topics raised in this domain.
A) Identity of Individuals in Second Life and New Metaverses
In Second Life and the Metaverse, each person is identified by an avatar they create and introduces themselves to others through this avatar. This is similar to other social platforms where each individual makes a profile and engages in activities and a form of life within Second Life and the metaverse through that profile. Individuals establish social connections via their self-created avatars, buy and sell, utilize available services, and perform other necessary actions. However, it is possible that these profiles could be more genuine, which represents one of the most significant legal challenges in the virtual world. In the real world, when individuals commit crimes, judicial authorities seek to find, punish, and penalize the offender. Enforcing punishment becomes very challenging if a criminal does not possess a real and physical identity.
Additionally, a person may create a fake profile using someone else’s information and engage in activities under that false identity. It’s also possible that the fraudulent identity of a person never gets revealed, leading others to incur losses when transacting with this individual. Why? Because when a person’s identity is not clear and precise, it is impossible to compel them to fulfill contractual obligations or ensure compliance. Consequently, entering into contracts with such individuals in a world that lacks a semblance of reality is difficult and complex, necessitating specific laws and regulations.
B) The Impossibility of Enforcing Various Punitive Measures in Second Life and New Metaverses
As we know, penalties come in various forms and differ across countries. One of the most significant and primary punishments imposed worldwide is imprisonment and prohibition from community participation for the offender. Countries implement these penalties to remove the offender from society and ensure they do not commit crimes again. However, in the metaverse and similar environments, enforcing imprisonment and expulsion from the community is not feasible. Why? Because individuals exist in this world virtually, represented by their profiles, and engage through virtual reality headsets. Ultimately, the harshest penalty that can be imposed on these individuals may be blocking their profiles, which has limited effectiveness. A person whose profile has been blocked can easily create another profile in the metaverse or Second Life.
For this reason, this issue could be one of the primary legal challenges facing the metaverse.
C) Data Protection and Privacy of Individuals
One of the most significant legal challenges in Second Life and the metaverse is the issue of protecting individuals’ information in this virtual world. All activities and interactions individuals engage in within the metaverse are conducted through their personal information, which will be exposed to many others. Consequently, the potential for misuse of this information is very high. Creators of digital worlds like Second Life and the metaverse must seek precise and practical solutions to protect the internet data of individuals present in these virtual realms. Otherwise, chaos and numerous crimes may occur, rendering intellectual property rights and all personal privacy meaningless in the metaverse.
D) Legal and Absolute Ownership of Assets in the Metaverse
As mentioned, buying and selling in worlds like the metaverse occurs through cryptocurrencies, allowing individuals to own the purchased assets. However, this form of ownership is entirely different from what exists in the real world. One of the key differences is that when individuals acquire property in the real world, they can take possession of and exercise control over that property. In contrast, this is impossible in the metaverse, representing a legal and regulatory gap regarding ownership in these environments. Furthermore, according to legal sources in our country, a transaction (sale and purchase) can only occur when the buyer (the price or money) has paid for the transaction and received the asset—payment for something not classified as property is not permissible and has no standing.
H) Challenges Related to Intellectual Property and Trademarks
A trademark is a sign that various entities design and use to distinguish their activities from others. For instance, every mobile phone brand has its unique trademark, which is not limited to large corporations; all businesses, big and small, have their marks. Different businesses and individuals mustn’t use another company’s trademark without obtaining permission from the trademark owner, as this behavior is considered a crime worldwide and is punishable by law. For example, a mobile phone manufacturing plant cannot display the names and logos of other brands on its products unless it intends to become an authorized dealer by paying the trademark fee.
This issue faces many complexities and complications in the metaverse. We must accept that the metaverse is a digital representation of the real world, and we cannot expect to see a world entirely different from reality. In the metaverse, there are also cities with streets and restaurants where vehicles operate. The question arises: who owns and creates these vehicles, restaurants, and so on?
The answer to this question needs to be clarified. However, based on available evidence, metaverse designers aim to recreate various aspects of people’s lives in the metaverse. In the metaverse, people will likely encounter vehicles from brands like BMW and branches of McDonald’s restaurants. This is precisely the challenge we discussed, as individuals in the metaverse must recognize the rights of entities such as BMW and McDonald’s over their trademarks. However, obtaining permission to use various brands could be more feasible for metaverse creators. Hence, this issue remains one of the most prominent legal challenges in the metaverse.
Conclusion
Overall, in addition to the issues mentioned above, there are numerous legal complexities surrounding the metaverse, including proving users’ claims against one another and the metaverse, proving rights over advertisements, respecting copyright, identity denial by users themselves, the impossibility of enforcing legal guarantees in the metaverse, payment for various transactions, and the challenges of enforcing many criminal penalties, among others. These are all part of the legal challenges that individuals and metaverse creators face.
Regarding the future of metaverse law, it must be stated that if creators and designers want this virtual world to gain popularity, attract people, and become a global phenomenon, they must prioritize solutions to address the metaverse’s legal challenges. They should refrain from expanding only when the regulations for widespread participation in this digital world are established. The volume of legal disputes and crises may be such that it could lead to the project’s failure.
