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Metaverse Disputes – Part 1 – What is the Metaverse and what will it mean for disputes?

In part one of our ‘Metaverse Disputes’ insights piece, Roxanne Selby explores today’s definition of the Metaverse and the disputes that are likely to evolve from its growth.  


What is the Metaverse?

When Neal Stevenson coined the term “Metaverse”[i], he envisaged a virtual reality-based successor to the internet, explored by avatars. When we think of the Metaverse today, we think of the listing of Roblox; Fortnite and Minecraft; and the changing of Facebook’s name to Meta. 

There is no consensus on what the Metaverse is.  Numerous players trumpet nebulous views, depending on their position within the intrastructure-hardware-software nexus.  Views on its shape depend on views on the future of the internet.  Enhanced version of Web2.0, where companies provide services/platforms, allowing users to access and create content, in exchange for data?  Or decentralised Web3.0 network with open-data blockchains, no overarching central authority, generating immersive creator-communities that enable you to do things you can do in the real world in a parallel plane of existence?  A combination of the two?

There seems to be consensus that it comprises a series of large-scale immersive, interconnected virtual spaces – allowing rich interaction via cutting-edge technologies, such as artificial intelligence (“AI”), blockchain, real-time 3D engines, and augmented, extended, and virtual reality, allowing physical-virtual interactions.

For those willing to purpose its power, the Metaverse will be a profitable place, reshaping life as we know it.  Businesses and courts will need to wrestle with its developing forms and implications to harness its huge potential.

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What types of dispute will arise in the Metaverse? 

Where there is money, there will be disputes.  Currency/crypto investment, virtual items, real estate, data, and a phlethora of policies, rules, and governance systems will generate complex conflicts. Expect a proliferation of claims against platform providers and between users.

Disputes may depend on the nature of the technologies used – depending on whether platforms are centralised, controlled by corporations, or decentralised, user-generated platforms, or a combination of the two.  In a more centralised Web2.0 world governed by terms of use, areas such as permitted content, privacy, and data processing disputes may have familiar forms and remedies.  But a Web3.0 Metaverse with decentralised finance and peer-to-peer transactions may lack the governance to define what is inappropriate and raise new challenges. 

Financial claims

Financial loss will constitute a high proportion of future disputes.  With significant money already pumped into existing platforms, and users engaging in an increasingly complex range of transactions, we will see substantial claims about real or often volatile cryptocurrency.  

We will see developing disputes on evolving questions.  What happens if platforms change features on which your business model depends?  What happens if service interruptions lead to financial loss?  What happens when items purchased in the digital world are withdrawn?  How will disputes in relation to smart contracts be dealt with?  What is the position in relation to ownership of digital assets linked to Non-Fungible Tokens (“NFTs”)? What remedy is there if virtual land value plummets when nearby features change?  What guarantees on the treatment of investments will you have?

Intellectual Property Disputes

A range of intellectual property disputes are likely.  Filing patents is a key part of Metaverse-building.  Businesses need to seek patents for novel and inventive hardware and software.  Some may relate to cloning real people as digital avatars, including appearance, mannerisms and biometric data.  Different patent and trade mark regimes may lead to gaps in protection and infringement claims.  What happens in the physical world if avatars create inventions? 

Other areas

There will also be other types of claim. Users may bring claims against other users for defamation, hate speech, or harassment.  Will Metaverse platforms be held responsible for users’ safety?  Product liability claims from mental and physical harm are likely.  Given users can be targeted online, group litigation actions may become feasible.  Any company operating in the metaverse will have to contend with questions of how it protects users, as well as how it protects users’ personal data.

[i] Snow Crash (1992)

Part two of our ‘Disputes in the Metaverse’ will be available from Tuesday 25th April and will explore where disputes arising in the Metaverse will be resolved and how you can avoid or minimise these disputes. Follow us on LinkedIn to keep up to date with all of our latest insight pieces.

Disclaimer: This article is produced for and on behalf of White & Black Limited, which is a limited liability company registered in England and Wales with registered number 06436665. It is authorised and regulated by the Solicitors Regulation Authority. The contents of this article should be viewed as opinion and general guidance, and should not be treated as legal advice.

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