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DRAFT REPORT (2023/2062(INI))

On policy implications of the development of virtual worlds – civil, company, commercial and intellectual property law issues

JURI-PR-753772

Committee on Legal Affairs · Rapporteur: Axel Voss, Ibán García Del Blanco

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This draft report by the Committee on Legal Affairs examines the civil, company, commercial and intellectual property law issues raised by virtual worlds and the metaverse. It welcomes the Commission's proposed definition of virtual worlds and calls for standardisation and interoperability. It asks the Commission to develop guidelines, run fitness checks of existing law and assess whether private international law rules on jurisdiction and applicable law need amending, since territorial principles may not fit virtual worlds. It finds that liability rules, intellectual property law and the Digital Services Act apply to virtual worlds, but that enforcement and identification of infringers are difficult, and that NFTs grant no intellectual property rights as such. It stresses that accessibility, digital literacy and public services must be ensured for all users, and recommends developing the Commission's 'virtual worlds toolbox' for the general public.

Committee position. The rapporteurs acknowledge the growing importance of virtual worlds, welcome the Commission's definition, and outline the main legal issues in private international law, civil law and intellectual property law. They aim to flag issues not addressed in the Commission's communication and to serve as a basis for Parliament's future work.

Key points

  1. Notes that 'metaverse' and 'virtual world' lack consolidated definitions, and welcomes the Commission's proposed definition of virtual worlds as persistent, immersive environments blending physical and digital worlds in real time.
  2. Stresses the key importance of promoting standardisation and interoperability for the full development of the metaverse as an ecosystem of interconnected virtual worlds.
  3. Says virtual worlds accessible in the EU should be guided by the Charter of Fundamental Rights and existing EU law, and that what is illegal offline should be illegal online.
  4. Calls on the Commission to develop guidelines and best practices clarifying legal obligations in the metaverse, and to conduct regular fitness checks of existing legal instruments, avoiding overlaps and filling gaps.
  5. Highlights that VR sensor data is as uniquely identifiable as a fingerprint scan and can infer attributes such as age, gender, income, ethnicity and disability status, and says consent should be obtained for each use case under the GDPR's purpose limitation principle.
  6. Stresses that territorial principles on applicable law and jurisdiction may prove inadequate for virtual worlds, and asks the Commission to assess existing private international law provisions and propose amendments where necessary.
  7. Notes that the definition of 'consumer' in the Brussels I Regulation is based on a direct contractual relationship, missing between an NFT issuer and a secondary-market purchaser, and that codifying the Court's 'main interest' criterion could be considered.
  8. Stresses that providers of virtual goods and services must be identifiable and liable for harm, that terms for so-called virtual real estate must be transparent and fair, and that liability rules fully apply to virtual worlds.
  9. Is concerned that avatars and decentralised systems make it hard to hold tortfeasors accountable, considers effective identity management systems key, and recalls that avatars have no legal personality.
  10. Underlines that EU intellectual and industrial property law fully applies to virtual worlds, that use of protected content requires authorisation through licensing or assignment unless covered by an exception, and that licence scope must be transparent.
  11. Welcomes the twelfth edition of the Nice classification allowing trademark registration for metaverse use, is concerned about NFTs referencing trademarks without authorisation, and welcomes the Commission's proposed toolbox to fight counterfeiting.
  12. Stresses that NFTs grant no intellectual property rights as such, calls for transparency to avoid fraud and confusion between the token and the underlying content, and recalls the difference between AI-assisted and AI-generated creations.

Who is affected

  • Users, consumers, workers, investors and creators in the metaverse, whose rights must be fully respected.
  • Providers of virtual goods and services, who must be identifiable and liable for harm caused by their products.
  • Purchasers of NFTs on secondary markets, who may lose consumer jurisdictional protection under the Brussels I Regulation.
  • Right holders, whose exclusive prerogatives and right to fair remuneration must be respected by metaverse users.
  • Vulnerable population groups, for whom accessibility of virtual worlds is particularly important.

Figures and deadlines

  • 10 to 15 years: the time experts say it might take for the metaverse to reach its full potential.

Legal basis: Articles 4, 16, 26, 81, 114 and 118 of the Treaty on the Functioning of the European Union.