By Darren Parkin
by Christopher Eklund, Senior Associate, Reed Smith
You are well aware of the metaverse. You sense its growing presence in the news, alongside web3, NFTs and blockchain. Looking around your immediate surroundings, you feel optimistic about the decentralised spaces you will be able to live, work and socialise in.
However – privately of course – you remain slightly confused about how this open utopia will actually work. You wonder whether you can take your skins from Fortnite into your next VR business meeting.
Your friend says you will need cryptocurrency for the metaverse, but you are only comfortable with traditional banking. Will metaverse services, worlds and platforms be interoperable? Will navigating this brave new world become something that is normal and easy?
There are number of obstacles that still need to be overcome before the potential of this alternative reality is truly realised.
Interoperability (the ability for different systems to ‘talk’ and ‘understand’ shared information) is especially important for the success of the metaverse. This is because no single software, platform or company can build it alone, although this does not stop some from trying.
Today, interoperability, and the challenges it presents to intellectual property rights, is a genuine focus for the architects of the metaverse. Several big tech names (Meta, Adobe, Microsoft, Epic Games, Ikea, Sony, Nvidia, etc) have created the Metaverse Standards Forum (MSF) to “foster the development of open standards for the metaverse”.
The MSF is working to improve the lack of interoperability which is holding back the metaverse, creating joint standards, and accelerating their use. Khronos, one of the groups promoting interoperability standards, hopes to make the binary code underpinning the metaverse as easily accessible as the JPEG is today.
One obstacle to general interoperability is the desire to protect and exploit copyright. Companies and investors want a return for their sizeable investments. Beyond software, copyright protection exists broadly in the metaverse, extending to “original works of authorship fixed in any tangible medium of expression”.
As is evidenced by the colourful and content-full metaverses developed by Decentraland, The Sandbox or Second Life, there is seemingly no rock in the metaverse under which no copyright exists. The capacity of copyright to adapt and survive technological revolutions has been demonstrated time and time again, yet for all its transformations it has generally been used to enforce a rightsholder’s monopoly and limit access to and use of such copyright material by third parties.
While the metaverse clearly presents huge opportunities, it also raises significant commercial and legal challenges. Private architects of the metaverse, and a range of industry groups and policy makers around the world are actively focused on overcoming these hurdles.
The Virtual and Augmented Reality Industrial Coalition provides dialogue between the European VR and AR ecosystems as well as policymakers. The EU has also announced “thrive in the metaverse”, an initiative which intends to make Europe fit for the digital age, and sets out policy priorities for 2023, seeking to shape the future of virtual worlds with rules and taxes. Frameworks such as the Digital Services Act and the Digital Markets Act will further embed European legal values in the metaverse.
For the metaverse to be a persuasive alternative to the real world, it’s going to have to be easy to navigate. This will require reduced friction for consumers and interoperability between different metaverse properties. If the end user does not find it easy to use, they will not engage with it.
Intellectual property and licensing issues will increasingly dominate the conversation, from here on in, as publishers, console manufactures and creators grapple with the look and feel of what is to come, new legal landscapes, and who is able to establish themselves as the leader of the pack.
The metaverse will likely continue to challenge the relevance of some of our core IP mechanisms; put others – like interoperability – under the spotlight; and could redefine the proprietary nature of technology, virtual worlds assets and other “things” in the metaverse.
We expect the metaverse to continue to develop iteratively, although the coalescence of emerging leaders in the space, increasingly compelling use cases for consumers, new legislation, and increased cross-industry focus, means that we expect momentum to accelerate rapidly. The dots are starting to be joined.
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