What changed

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

– having regard to the Commission communication of 11 July 2023 entitled ‘An EU initiative on Web 4.0 and virtual worlds: a head start in the next technological transition’,

– having regard to the Commission communication of 11 May 2022 entitled ‘A Digital Decade for children and youth: the new European strategy for a better internet for kids (BIK+)’ (COM (2022)0212),

– having regard to Rule 54 of its Rules of Procedure,

– having regard to the report of the Committee on Legal Affairs (A9-0000/2023),(A9-0442/2023),

A. whereas virtual worlds have not yet been widely taken up, although their deployment in a number of use cases in various sectors has raised general awareness and has attracted the attention of public authorities;

B. whereas, experts say it might still take 10 to 15 years for the metaverse to reach its full potential and its development is expected to significantly impact the digital landscape in future years, bringing both opportunities and risks that need to be addressed;

B. whereas it is essential that we continue to promote and develop new technologies, recognising their transformative potential in fields such as education, culture, healthcare, gaming and many others, while addressing the risks that these new technologies may pose;

C. whereas experts say it might still take 10 to 15 years for virtual worlds to reach their full potential and that their development can significantly impact the digital landscape in future years, bringing both opportunities and risks that need to be addressed;

D. whereas digital sovereignty is a means of promoting the notion of European leadership and strategic autonomy and is key to guaranteeing the EU’s ability to shape and enforce legislation in the digital environment, ensuring ethical, sustainable and human-centric virtual worlds and safeguarding the fundamental rights and values of the EU;

Definitions

1. Notes that the concepts of ‘metaverse’ and ‘virtual world’ currently lack consolidated definitions;

2. Welcomes in this regard the proposal included in the Commission communication for a definition focusing on the main features of virtual worlds, as follows: ‘virtual worlds are persistent, immersive environments, based on technologies including 3D and extended reality (XR), which make it possible to blend physical and digital worlds in real time, for a variety of purposes such as designing, making simulations, collaborating, learning, socialising, carrying out transactions or providing entertainment’; points out that many of the technologies referred to as ‘virtual worlds’ have existed for years; underlines that a future European strategy should be anchored in research, scientific evidence and societal relevance;

3. Stresses the key importance of promoting standardisation and interoperability for the full development of the metaverse, as an ecosystem of interconnected virtual worlds;

An appropriate ethical and legal framework

4. Stresses that virtual worlds accessible in the EU should be guided byrespect ethical values, principles and fundamental rights enshrined in the Charter of Fundamental Rights of the European Union and existing EU legislation;legislation, namely on data privacy, security and safety standards, data sharing, content moderation, the fight against harassment and hate speech, cybersecurity, workers’ rights, consumers’ and child protection, accessibility requirements, respect for intellectual property rights, the protection of know-how and trade secrets, the prevention of online abuse and fraud, and on contestable and fair markets;

5. Recalls that virtual worlds should be developed and deployed in line with the general principle that what is illegal offline should be illegal online, ensuring that people’s rightsrights, with a strong focus on children, as users, consumers, workers, investorsinvestors, rights holders and creators are fully respected;

6. Highlights the importance of monitoring compliance and ensuring effective enforcement of the applicable legal instruments in force; calls on the Commission to develop guidelines and best practices, in cooperation with the various stakeholders, clarifying their legal obligations and responsibilities in the metaverse;

6. Points out that, in particular, the following pieces of legislation already apply to different aspects of virtual worlds: the Digital Services Act; the Digital Markets Act; the Data Governance Act; the Data Act; the proposed AI Act; the General Data Protection Regulation (GDPR); the General Product Safety Regulation; the Unfair Commercial Practices Directive; the Markets in Crypto-Assets Regulation; European Digital Identity; the Directive on Copyright in the Digital Single Market; the Regulation on the EU Trade Mark; the Directive on the Protection of Trade Secrets; the European Accessibility Act; and the Web Accessibility Directive;

7. Underlines that it is paramount that the Commission conducts regular fitness checks of the applicable legal instruments in force and stresses that any future legislation on the metaverse should avoid overlaps or inconsistencies, while filling gaps where needed;

7. Highlights the importance of regularly monitoring compliance and ensuring effective enforcement of the applicable legal instruments in force; calls on the Commission to develop guidelines and best practices, in cooperation with different stakeholders, including representatives from civil society and consumer protection organisations, as well as academia, clarifying the legal obligations and responsibilities of each stakeholder involved in virtual worlds, such as platform operators, service providers, developers and users, under the applicable EU law;

8. Notes that some regulatory issues are nonetheless already apparent in the fields of private international, civil and intellectual property law, as specified in the sections below;

8. Underlines that it is paramount that the Commission conducts regular fitness checks of the applicable legal instruments in force, namely regarding a possible review of the Unfair Commercial Practices Directive, Consumer Rights Directive and the Unfair Contract Terms Directive, and stresses that any future legislation on virtual worlds should avoid overlaps or inconsistencies, while filling gaps where needed;

9. Highlights that recent research has shown that VR sensor data is as uniquely identifiable as a fingerprint scan and can be used to infer a variety of attributes such as age, gender, income, ethnicity, and disability status; believes that this raises significant ethical concerns that should not be disregarded; stresses that part of addressing these ethical concerns around the collection of vast amounts of personal data, including biometric data, is to guarantee that consent for the collection of such data is not obtained only at the time of entry to the virtual world, but for each use case in line with the purpose limitation principle laid out by the GDPR;

9. Notes that some regulatory issues are nonetheless already apparent in the fields of private international, civil and intellectual property law, as specified in the sections below;

10. Notes, in this regard, that the actions put forward by the Commission in its communication aimed at raising awareness, improving digital skills and increasing users’ access to key technologies are crucial;

10. Highlights that recent research has shown that VR sensor data is as uniquely identifiable as a fingerprint scan and can be used to gain deep insights into users’ personality and infer a variety of attributes such as age, gender, income, ethnicity, disability status, state of mind and emotions; believes that this raises significant ethical and legal concerns, in particular in connection with targeted behavioural advertising, that should be addressed; stresses that part of addressing these ethical concerns around the collection of vast amounts of personal data, including sensitive user data such as biometric and behavioural data, emotional reactions and haptic information, is to guarantee that users are aware of the data being collected and that consent for the collection of such data is not obtained only at the time of entry to the virtual world, but for each use case in line with the principles laid out by the GDPR, such as those of privacy by design and purpose limitation;

11. Stresses that, wherever the user’s identification is not required by Union or national law, namely for liability purposes, and it is technically possible and reasonable, virtual worlds should enable the anonymous use of services as a way of providing a protective shield for privacy and effectively prevent unauthorised data disclosure, identity theft and other forms of abuse of personal data collected online;

12. Notes, in this regard, that the actions put forward by the Commission in its communication aimed at raising awareness, improving digital skills and literacy and increasing users’ access to key technologies, namely by facilitating access to high-speed internet infrastructure and adequate equipment, are crucial to avoid digital divides and should be implemented as swiftly as possible in order to promote an inclusive and competitive digital society and to ensure that no one is left behind in this rapid technological development;

Private international law

11.13. Stresses that certain traditional territorial principles on applicable law and jurisdiction might prove inadequate to virtual worlds, whose non-territoriality is enabled by the use of decentralised technologies such as blockchain, and give rise to problems when it comes to ensuring the applicability of EU law and the protection of the rights of consumers and businesses;

12.14. Notes more specifically that, since anyone anywhere in the world can access virtual worlds, the ‘mosaic criterion’ established by the Court of Justice of the European Union, by which the injured party may seek compensation in the courts of the countries where at least a part of the harm occurred, might not hold; recalls, however, that the Court established an additional criterion whereby injured parties can claim compensation through the courts of the country in which they have their main interest and affirms that the codification of this criterion into the Brussels I Regulation could be considered;

13.15. Observes that the definition of ‘consumer’ in the Brussels I Regulation is currently based on a direct contractual relationship, which is missing for instance between the issuer of a non-fungible token (NFT) and the purchaser when the NFT is put on a secondary market; notes that, consequently, in the event of a dispute with the issuer, the final purchaser would be deprived of the jurisdictional treatment that the Brussels I Regulation grants to consumers;

14.16. Calls on the Commission to take into account these and other potentially problematic situations and to assess the appropriateness of the existing provisions of private international law applicable in the EU, proposing appropriate amendments, where necessary, to guarantee that citizens and businesses do not have to systematically litigate in foreign courts or under foreign laws;laws in order to enforce their rights, thus making sure that their rights under the EU regulatory framework are fully guaranteed, while bearing in mind the risk of forum shopping, in particular on the part of non-EU companies;

Civil law

15.17. Notes that the number and economic relevance of commercial transactions within thevirtual metaverseworlds is expected to increase over the next decade; stresses the need, in this context, to ensure that providers of virtual goods and services can be identified and held liable for any harm caused by their products;

16.18. Points out the concerns raised by the advertising techniques used when selling so-called virtual real estate, such as a building or a piece of land in a virtual world represented by an NFT, as users might be led to believe that they are actually acquiring property rights, when, in practice, they only obtain a licence to use the virtual ‘land’; emphasises the importance of ensuring that the applicable terms and conditions are transparenttransparent, clear, fair and fair;easy to understand, particularly as it has been shown that users often fail to read terms and conditions due to their dense and technical nature;

17.19. Recalls that liability rules should fully apply to virtual worlds and underlines the importance of putting in place effective measures to prevent and address any form of harmful behaviour and enforce the law in line with fundamental rights in virtual worlds, including, where appropriate and without prejudice to the metaverse;right of seeking judicial redress, the establishment of reporting and dispute resolution mechanisms;

18.20. Is concerned that the use of avatars and decentralised systems, such as those built on blockchain technology, might make it extremely challenging to hold tortfeasors accountable; considers that the implementation of effective identity management systems is key in order to allow for their proper and timely identification and to combat fake identities, also taking into account the specificities linked to the governance of decentralised autonomous organisations (DAOs) and to collective liability; welcomes in this regard the Commission’s intention to study the added value of a possible legal framework for DAOs;

19.21. Recalls that avatars do not have legal personality so any issues regarding their legal capacity, rights, obligations and liabilities needs to be addressed with reference to the natural or legal persons using them; considers that, as thevirtual metaverseworlds evolvesevolve and becomesbecome more complex, consideration should be given to the appropriateness of granting a specific legal status to avatars; considers that the avatar or the person behind the avatar should be identifiable and a know-your-business-customer principle should be applicable;

Intellectual property law

20.22. Underlines that the body of EU law on the protection of intellectual and industrial property rightsrights, including copyrights, trademarks, patents, designs and trade secrets, fully applies to virtual worlds; stresses nevertheless that the development of virtual worlds poses new challenges inwhen termsit ofcomes enforcementto andintellectual property enforcement, identification of infringers;infringers and issues concerning the conflict-of-law rules on applicable law and jurisdiction;

21.23. Recalls that platforms operators, service providers and users in thevirtual metaverseworlds are under the obligation to respect right holders’ exclusive prerogativesrights and their right to fair remuneration; highlights that the use of content protected by intellectual property rights (IPR)(IPR), including in digital form in an electronic medium, such as an NFT, requires authorisation through licensing or assignment, unless it is covered by any exception or limitation to IPR protection;protection (such as private copy, education, research, quotation, review, parody or pastiche); reiterates the importance in this regard of providers ensuring transparency as to the scope of licenceslicences, including territorial licences, so as to ensure that users are able to determine what uses of IPR-protected content in thevirtual metaverseworlds are covered by the licences they hold;hold and that creators and right holders are able to receive accurate and proper reporting on the actual use of protected works;

22.24. Welcomes the update brought about by the twelfth edition of the ‘Nice classification’, which allows for the registration of trademarks in classes covering their use in virtual worlds; calls for a close follow-up on the metaverse;concrete application of this classification; is, however, concerned about the use of NFTs referencing trademarks without the authorisation of their owners and calls for effective measures to be implemented to detect and address these and other cases of infringement; welcomes in this regard the Commission proposal to develop a toolbox to fight counterfeiting;

23.25. Acknowledges the applicability of liability rules as laid down in the Digital Services Act and of the special regime established in Article 17 of the Copyright Directive to cover the uploading of user-generated content; believes, however, that further clarification is needed on how existing rules should apply;apply to online content-sharing services that make content available in virtual worlds and how they should be enforced;

24.26. Stresses that NFTs do not grant any IPR as such on the digital asset and signals the need for further clarity and transparency in order to avoid fraud and the frequent confusion between the right to the token itself and the right to the underlying protected content;

25. Recalls the difference between AI-assisted human creations and AI-generated creations; recalls that, while the current intellectual property framework remains applicable to AI-assisted creations, AI-generated creations create new regulatory challenges for intellectual property rights protection;

27. Notes that NFTs and other blockchain-based offers facilitate the continuous resale of assets based on copyright-protected works through online transactions and believes that appropriate and proportionate remuneration of authors for each resale of such assets needs to be ensured;

28. Recalls that, under the current rules, the outputs autonomously generated by AI systems might not be eligible for copyright protection, as the principle of originality is linked to a natural person and the concept of ‘intellectual creation’ presupposes the author’s personality; recalls, further, the difference between AI-assisted human creations and outputs autonomously generated by AI; recalls that, while the current intellectual property framework remains applicable to AI-assisted creations , outputs autonomously generated by AI create new regulatory challenges for intellectual property rights protection, such as questions of ownership, authorship and inventorship, as well as appropriate remuneration and issues related to potential market concentration; welcomes the commitment set out in the IP Action Plan for the Commission to engage in stakeholder discussions on how to address the challenges raised by AI-assisted inventions and creations; calls on the Commission to consider broadening the scope for this dialogue in order to largely cover AI-related issues, including generative AI;

Accessibility and digital literacy

26.29. Emphasises that virtual worlds willmay provide opportunities for the provision of public services of general interest, to the wider benefit of citizens; underlines, however, that inclusion of and accessibility for all users in the EU must be ensured both in terms of cost and use of hardware and the understanding of software; notes that accessibility is particularly important when it comes to ensuring that vulnerable population groups such as elderly people, persons with disabilities, children and people living in rural and remote areas acquire the essential digital skills to participate in virtual worlds and should take into consideration aspects such as geographical location, gender, level of educational attainment and socio-economic background;

27.30. Adds, in this context, that digital literacy is of the utmost importance forto ensuringensure a safe and socially beneficial uptake and informed and responsible use of virtual worldsworlds, to avoid user addiction, bias and discriminatory practices, to tackle disinformation, manipulation and abuse in the virtual environment and to promote democratic control;

28. Recommends that the ‘virtual worlds toolbox’ intended for the general public, as outlined in the Commission communication, be developed further, in line with the recommendations of the Citizens’ Panel in order to help citizens better understand how to manage their virtual identities, their virtual creations, their virtual assets and their data, and to contribute to a comprehensive EU strategy for virtual worlds that is both sustainable and human-centric;

31. Highlights the need to put in place effective educational measures to ensure broad literacy in relation to the virtual world among citizens and to upskill professionals in different fields, namely teachers, and to encourage and promote the development of European talent and technologies, while attracting more people, including more women, into science, technology, engineering and mathematics;

32. Recommends that the ‘virtual worlds toolbox’ intended for the general public, as outlined in the Commission communication, be developed further, in line with the recommendations of the Citizens’ Panel in order to help citizens better understand how to manage their virtual identities, their virtual creations, their virtual assets and their data, and to contribute to a comprehensive EU strategy for virtual worlds that is both sustainable and human-centric;

33. Welcomes, as noted by the Commission, the positive contribution of the EU open-source community in developing key features of virtual worlds, such as in relation to the use of distributed ledger technology and other technologies needed for the authenticity, management and security of virtual objects and identities;

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29.34. Instructs its President to forward this resolution to the Council and the Commission.

EXPLANATORY STATEMENT

With this draft report, the twoThis Rapporteursreport acknowledgeacknowledges the growing economic, social and even political importance of virtual worlds.

Given the early stage of their development, in light of the outcome of the work of the Citizens’ Panel on Virtual Worlds, and taking account of the Commission’s Communication of 11 July 2023 entitled ‘An EU initiative on Web 4.0 and virtual worlds: a head start in the next technological transition’, the Rapporteurs aim with this report to outlineoutlines the main legal issues posed by virtual worlds.

This effort is meant both to indicate to the Commission the need to examine possible legal issues that are not addressed in its Communication and to serve as a basis for future work for the Parliament in the next legislature.

After welcoming the definition of ‘virtual worlds’ delineated by the Commission in its above mentioned Communication, the RapporteursReport assert the need for an ethical and legal framework for this new technology and analyse the most problematic aspects that fall within the competence of the Committee on Legal Affairs, namely in the areas of private international law, civil law and intellectual property law.

These issues, although scattered across different legal domains, present common features: the technologies underpinning virtual worlds, and in particular the decentralised nature of blockchain and of non-fungible tokens (NFTs), are either incongruous with some of the concepts and principles traditionally at the heart of the Union legal acquis, like the territoriality of the provisions on applicable law and jurisdiction, or severely hinder the enforcement of Union law, as is the case with the protection of intellectual property rights and the identification of infringers or tortfeasors.

The Rapporteurs,Report, moreover, expressexpresses concerns about the lack of transparency that characterises the marketing of NFTs and note that, for instance, the expression ‘virtual real estate’, sometimes used in this context, is susceptible to make consumers mistake the licence agreement they are concluding for the acquisition of an actual property right.

In order to ensure a safe and socially beneficial, inclusive and affordable uptake and informed use of virtual worlds and to promote democratic control, legislation alone is not sufficient. The RapporteursReport therefore conclude their reflectionsconcludes by recalling the importance that accessibility, public services and digital literacy play for a human-centric digital transition, in which every citizen can benefit from access to this new technology, no one is left behind and the values, principles and fundamental rights of this Union are upheld.

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEURS HAVE RECEIVED INPUT

Pursuant to Article 8 of Annex I to the Rules of Procedure, co-rapporteur Axel Voss declares that he has received input from the following entities or persons in the preparation of the report, until the adoption thereof in committee:

Entity and/or person

Federation of European Sporting Goods Industry

Telekom

International Trademark Association

European Writers Council

Institute for Competitiveness

International Federation of the Phonographic Industry

Motion Picture Association

Epic Games

Gesac

European Crypto Initiative

Video Games Europa

Metaverse EU

Global Counsel

The list above is drawn up under the exclusive responsibility of the rapporteur.

Pursuant to Article 8 of Annex I to the Rules of Procedure, co-rapporteur Ibán García Del Blanco declares that he has received input from the following entities or persons in the preparation of the report, until the adoption thereof in committee:

Entity and/or person

XR Assotiation

Snapchat

Nokia

Improbable

FleishmanHillard

FTI consulting

NVIDIA

Telefonica

Meta

Amazon

IBM

Microsoft

ISFE

Bolt

ITI

Amcham

XR4EU

Euromersive

TheLisbonCouncil

Acumen Public Affairs

Metaverse EU

CredoAI

Berkeley University

OpenAI

Oracle

Roblox

Google

Stanford University

German Accelerator

INTA

GESAC

SONY Digital

Federation of the European Sporting Goods Industry (FESI)

EU Crypto Initiative

Metaverse Society

M2

The list above is drawn up under the exclusive responsibility of the rapporteur.

INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE

Date adopted

11.12.2023

Result of final vote

+:

–:

0:

15

1

2

Members present for the final vote

Ilana Cicurel, Ibán García Del Blanco, Pierre Karleskind, Sergey Lagodinsky, Maria-Manuel Leitão-Marques, Karen Melchior, Sabrina Pignedoli, Jiří Pospíšil, Franco Roberti, Raffaele Stancanelli, Axel Voss, Marion Walsmann, Tiemo Wölken, Javier Zarzalejos

Substitutes present for the final vote

Alessandra Basso, Pascal Durand, Antonius Manders

Substitutes under Rule 209(7) present for the final vote

Caroline Roose

FINAL VOTE BY ROLL CALL IN COMMITTEE RESPONSIBLE

Key to symbols: