Possibilities and Regulations of the Metaverse
Attempts to build a virtual space on a computer that began around the 1980s have incorporated elements such as SNS, online games, and electronic commerce, and in recent years have come to be called the “Metaverse.” On the Metaverse platform, unique economic spheres are expanding, such as interacting with others by operating avatars and conducting consumption behavior such as purchasing products in the virtual space.
The spread of NFT (Non-Fungible Token) is also a tailwind, and the market is expanding further. Metaverse is expected to be used in various fields such as education and retail as well as media and entertainment.
On the other hand, the laws and regulations related to the Metaverse business are extremely diverse, and it is necessary to pay attention to various laws and regulations such as transaction regulations, financial regulations, intellectual property, and data. Therefore, as a series, we will introduce a wide range of laws and regulations related to the Metaverse.
This time, with the theme of “Overview and Laws of the Metaverse, Laws Concerning the Metaverse and Transactions”, we will explain laws and regulations concerning ownership of items traded on the Metaverse and cross-border transactions.
What is the Metaverse
The metaverse is said to have been coined by American writer Neil Stevenson in his novel by combining “meta” (meaning “higher order”) and “universe” (meaning “world”). I am here.
There are various definitions of the Metaverse, but in terms of the greatest common denominator, it can be summarized as “an online world that creates various values such as economic value through communication”.
Key examples of metaverse businesses include:
- Provides Metaverse space mainly as a communication platform between users
- What provides the metaverse space as an online game
- Aiming for use in business and industry
It is expected to be used in various fields regardless of business domain.
Features of Metaverse x Law
Concerning the Metaverse, a specific legal system has not yet been sufficiently developed. Therefore, when a business operator enters the metaverse business,
- Trading Perspective
- Rights protection perspective
Mainly the following regulatory and legal issues should be considered:
Regulatory and legal issues from a trading perspective
- Digital content becomes the subject of transactions: Sorting out the relationship with civil law ownership rights, etc.
- Where cross-border transactions are conducted, applicable laws and jurisdictional arrangements are made.
- Transactions on non-face-to-face platforms: Dealing with transactions by minors, dealing with impersonation, dealing with consumer protection, etc.
- Digital currencies such as crypto-assets are the mainstream of settlements – Sorting out the relationship with financial regulations –
Regulatory and Legal Issues from the Perspective of Rights Protection
- Possibility of Infringement of Digital Content Created by Various Companies and Individuals in the Metaverse: Organizing the Relationship with Intellectual Property Rights such as Copyright
- Potential infringement of privacy, honor, or moral rights: securing remedies for rights infringements, etc.
In this article, we will explain regulatory/legal issues (1) and (2) from the perspective of transactions using hypothetical cases.
The Metaverse x Trade Law Case (Including Ownership and Cross-Border Transactions)
Digital Contents Are Subject to Transactions: On the Relationship between Item Ownership and Civil Law Regulations in the Metaverse Space
example:
Mr. A purchased item Y that can be used in metaverse space X.
Mr. A purchased Land Z in Metaverse Space X.
Can Mr. A claim ownership of item Y and land Z in the metaverse space?
“Ownership” under the Civil Code means the right to use, profit from, and dispose of property (Article 206 of the Civil Code). The purpose of ownership is tangible property (Articles 85 and 86 of the Civil Code), limited to immovable property and movable property.
In other words, in the case of real estate, the land and its fixtures (a typical example is a building) are subject to ownership (Article 86, Paragraph 1 of the Civil Code), and in the case of movable property, the subject of ownership is tangible things. ” Except for real estate. (Article 86, Paragraph 2 of the Civil Code).
When land or items on the metaverse are subject to ownership, the following rights are granted:
- The right to claim the return of property stolen by another person
- Right to request removal of interference if use is obstructed by others
- An anti-interference claim seeking safeguards against persons who may cause interference
However, since neither Goods Y nor Land Z are digital records, i.e., land and its fixtures or tangible objects, land and goods in the Metaverse cannot be considered to have ownership rights, and Mr. A makes a claim based on ownership rights. i can’t do that.
Then, what kind of method can be considered to protect Mr. A’s rights in the Metaverse? Legally, Mr. A’s right to use item Y and land Z on the metaverse is organized as the right to use based on the terms of use and other contracts related to service usage that apply within the metaverse space X. You may be allowed to use it. To freely use lands and items on the Metaverse within the scope of rights stipulated in the Terms of Use and to protect those rights.
The terms of use, etc. of each business operator will stipulate what specific rights are recognized and what restrictions are imposed (whether it is possible to receive loans based on leasing or setting collateral, etc.). . .
Cross-Border Transactions: Governing Law and Jurisdiction
example:
Metaverse Space X is operated by Japanese corporation A. Mr. E, who lives overseas, purchased item Y that can be used in Metaverse Space X.
Arrangement of applicable laws
In the event of a dispute with a user residing overseas in a transaction in the Metaverse space, the following governing law will become an issue. If the parties do not select the governing law, the contractual risk increases in the event of a dispute, etc., so it is necessary to stipulate the governing law in the terms of use, etc.
- If the parties choose which country’s law to apply ⇒ The chosen country’s law will apply.
- Even in the case of (1), a specific mandatory law in the law of the consumer’s habitual residence (in other words, the country where the consumer lives) ) is applied, if you indicate your intention to apply ⇒ The mandatory law of the country will be applied (Article 11, Paragraph 1 of the Act on General Rules for Application of Laws).
- If there is no agreement in ① ⇒ The law of the land (country) that is most closely related to the contract will be applied (Article 8, Paragraph 1 of the Act on General Rules for Application of Laws).
In addition, there are more branches depending on the type of receivables. For example, in principle, the law of the country where the result of the crime occurred applies to claims for damages due to tort (Article 17 of the Act on General Rules for the Application of Laws).
Of these, acts related to defamation and credit are subject to the victim’s habitual residence law (Article 19 of the Act on General Rules for Application of Law), and there are also exceptions (Article 20 of the Act on General Rules for Application of Law). ) to Article 22).
jurisdiction
Under the Code of Civil Procedure, in principle, a Japanese court can be designated by agreement of the parties (Article 3-7, Paragraphs 1 to 3 of the Code of Civil Procedure). However, in exceptional cases of consumer contracts, unless the consumer invokes a separate contract, the court must go to court in the country in which the consumer was domiciled at the time the contract was concluded. . (Article 3-7, Paragraph 5 of the Code of Civil Procedure).
lastly
This time, focusing on the fact that economic transactions take place within the Metaverse space, I have explained the regulations on ownership and cross-border transactions among the laws related to Metaverse x transactions. From the next time, we will explain other transaction-related laws, Metaverse x financial regulation-related laws, and Metaverse x intellectual property-related laws.
In particular, in the area of intellectual property, we will explain the relationship between content on the Metaverse and intellectual property rights, such as laws and regulations related to NFTs and tokens exchanged on the Metaverse, as well as skins that can be attached to digital twins and avatars. increase. .
ZeLo, a law firm, has been providing legal advice on the metaverse business to many clients, making use of the knowledge gained through research and practice that focused on the potential of blockchain and crypto-assets before the spread of blockchain and crypto-assets. In 2022, we will launch a team specializing in three web areas: blockchain, crypto assets, NFT, and metaverse, and establish a system that can provide more specialized services.
We also accept consultations at spots, so please feel free to contact us.
Related: Law firm ZeLo/Foreign law joint venture official website
