Legal Considerations for Brands Engaging with the Metaverse

The metaverse tantalizingly offers a myriad of social, creative, and immersive digital spaces, providing brands with a fresh approach to engage with and expand their consumer base.

Brands are increasingly advertising their physical goods and services within these virtual worlds and developing new products and experiences offered exclusively in the metaverse. The metaverse is projected to be a market opportunity valued at over $1 trillion with participation by brands in virtually every sector.

There are a number of key legal and regulatory risks for brands engaging with the metaverse. These vary significantly depending on the brand strategy, product category, and metaverse functionality involved. Regulators are watching market developments carefully to consider whether current rules are sufficient to provide protections and certainty and promote innovation.

Is the Metaverse the Right Platform for You?

Before entering the metaverse, brands should consider their overall commercial goal. Nobody wants to give off the impression of just "jumping on the bandwagon." Consumers are more likely to respond to brand interactions containing novel experiences that add something to the space. Nike's Nikeland on Roblox, for instance, is free to visit, breaking down a key barrier to accessing gaming content and encouraging greater engagement.

Related:Top 10 Industries Profiting From the Metaverse

Equally, your brand's intended audience should be a sensible fit for the intended participants in the relevant metaverse. For example, you should think twice about marketing alcohol products in a metaverse with a younger target audience.

A Thorough Audit of IP Rights and T&Cs

When choosing a property to market in the metaverse, brands should conduct an intellectual property rights audit to understand what rights they can enforce and identify any gaps in their portfolios. Robust trademark filings in metaverse-related goods/services are key for brand protection.

When choosing a metaverse, carefully review the Terms of Service for legal risks, such as hair-trigger termination or deletion rights. You wouldn't want to find your valuable digital land or asset metadata suddenly deleted because it's "not compliant."

Do You Know Your Virtual Neighbors?

When creating virtual experiences, consider where it is and who is doing it. Beware when purchasing virtual plots of land in a metaverse. For example, Decentraland is currently only 15-20% developed. This leaves plenty of scope for a later purchaser of neighboring virtual land whose presence may adversely impact the value of your brand's experience. Carefully consider the terms of any relationship with an outsourced development studio engaged to create your metaverse experience.

Related:Will the Metaverse Help or Hinder Sustainability?

With Advertising Comes Regulation

When promoting a virtual experience, such as through metaverse events (e.g., Lil Nas in Roblox), metaverse commerce (e.g., Dyson's virtual hairstyle offering), or virtual influencers (e.g., LilMiquela), brands should be conscious of the blurring of commercial and non-commercial content. This means outlining where content in a virtual experience is entertainment, or where it's an advertisement. The UK's Committee of Advertising Practice has released a guide on the metaverse (titled "Things can only get Meta") that touches upon the issues it expects to see for advertising regulation.

Brands are investing heavily to develop their presence in a space no longer limited by the physical world. With theoretically limitless turnout, virtual infrastructure, and personalization, the potential benefits of the metaverse are clear.

Marcus is a leading telecoms and technology specialist with over a decade advising technology, media, and telecoms clients in Europe, Australia, and the Middle East. His wealth of experience includes IP licensing, protection and exploitation, and privacy/data protection matters. Marcus is passionate about the opportunities arising from industry digitalization and evolving network technologies, and applying his experience gained across different jurisdictions to these new challenges.

India Atkin, Associate, Wiggin LLP

India is an associate in the Interactive Entertainment Team, specialising in commercial, regulatory, and intellectual property advice for the video gaming, e-sports, and digital broadcasting industries. Prior to joining Wiggin, India's time at cryptocurrency exchange Wirex spurred her avid interest in everything blockchain, NFTs, and Web 3.