Metaverset is widely seen as the next frontier of digital commerce, with companies across industries spending millions of dollars to establish themselves as market leaders. While it provides obvious opportunities for businesses, Metaverse also offers unique legal challenges. This warning highlights a few important legal issues that all companies should consider before taking the plunge.
What is Metaverse?
At its core, Metaverse is the next generation of the Internet. Built primarily on decentralized blockchain technology rather than centralized servers, it consists of immersive three-dimensional experiences with dynamic digital markets, renewable and traceable digital assets, and a strong social component. As consumers flock to Metaverse platforms and technology companies create next-generation consumer electronics that will make Metaverse more accessible, the ways Metaverse can help the retirement industry are already beginning to emerge.
Business Case for the senior housing sector
Metaverset offers unique opportunities for the senior life industry. Consider the virtual tour used in the marketing effort and re-imagine it as an opportunity for businesses to offer potential residents a chance to interact with facilities and staff. At a basic level, the ability to market the meta-verse as a piece of equipment has value in itself. On a larger scale, this could lead to the development of a hybrid offer of home care and senior life, where the metaverse provides this community approach.
While the business opportunities are clear, the metaverse also provides an opportunity to improve resident care. For example, Metaverse allows remote family members to connect with residents in a more engaging setting than a phone call or video chat – an essential alternative in light of the social isolation issues highlighted in the pandemic.
Before embarking on a metaverse platform, companies should consider these six legal issues:
- Take care of digital assets. Due to their digital nature, digital assets such as cryptocurrencies and non-fungible tokens (“NFTs”) are particularly vulnerable to loss and theft. Before acquiring cryptocurrencies or NFTs, companies must create a secure blockchain wallet and adopt appropriate access and security controls.
- Create a dedicated legal entity. Companies may consider setting up a new subsidiary or subsidiary to hold digital assets, protect other parts of their business from reverse liability, and deal with potential tax consequences.
- Choose the platform that suits you. There are several metaverse platforms and they all have compromises. Some, like Roblox, offer access to more consumers, but generally give companies less control over program content. Others, such as Decentraland and Sandbox, offer companies greater control but smaller audiences and higher barriers to entry. Companies should consider their target audience and long-term metaverse strategy before committing to a particular platform.
- Register your IP. Businesses should consider filing trademark applications that cover core metaverse goods or services and secure all available blockchain domains that can be used to facilitate metaverse payments and direct users to blockchain content, such as websites and decentralized applications. Given the accelerated introduction of blockchain domains as well as the limited dispute resolution available, we strongly urge brands to consider securing intellectual property rights now.
- Protect and enforce your IP. The decentralized nature of the metaverse poses a significant challenge to companies and owners of intellectual property. Before engaging in blockchain-based transactions, including the purchase or embossing of NFTs, companies should understand that content stored on a blockchain is there permanently and cannot be deleted. Restrictions on the use and resale of an NFT should be carefully considered and implemented before implementation, because once the content is on the blockchain, there are few options.
- Subject to metaverse rights. Companies that license their intellectual property, especially those that do so on a geographic or territorial basis, should review existing licensing agreements to determine what rights, if any, their licensees have for related uses of the meta-verse. In the future, we encourage trademark owners to expressly reserve your rights for Metaverse-related use and exercise caution before allowing a third party to implement your IP address on Metaverse on your behalf.
Ready to get in?
The metaverset represents a huge opportunity for companies to connect directly with consumers in an interactive way that was considered science fiction just a few years ago. But like any new frontier, technological or otherwise, there are legal and regulatory obstacles to consider and overcome. Some are familiar while others are new. ArentFox Schiff’s attorneys provide an interdisciplinary perspective to help manufacturers, distributors, retailers and their partners in the retirement industry offer practical strategies to maximize the value of the opportunities created by the meta-verse.