The next technological wave is bringing with it legal implications for its users, service operators, and platforms. New and upcoming virtual reality ("VR") products are increasingly garnering excitement and attention, and they are stirring up legal issues for individuals using VR ("Users") as well as the service providers and platforms providing VR (collectively, "Platforms"). Some of the key legal issues that these stakeholders, along with brands and other advertisers sponsoring and providing VR programs and campaigns ("Brands"), should consider relate to intellectual property rights, such as trademark and copyright ("IP"), and right of publicity. Generally, these legal issues are the same across the virtual and real worlds, but VR creates interesting twists in how the existing laws may apply. We highlight some of them here.
Real World Legal Rights in VR
When VR stakeholders import or incorporate music, photographs,
names or likenesses of people, or brand names or logos into a
virtual experience, the traditional laws of trademark, copyright,
and right of publicity apply. This means that such use may require
permission from the owners of the applicable rights. Whether
permission is required depends on the nature of the use and the
stakeholders involved.
If a User uses a real world logo on a t-shirt that the User
created in VR, although the trademark rights to that logo are owned
by someone else, such use may not constitute a trademark
infringement, because the User is not using the logo "in
commerce," which is an essential element of an infringement
claim under United States trademark laws. If, however, the User
starts selling the t-shirt in VR to other Users, even if the sale
is conducted in virtual currency that can be used only in the
User's VR world with no equivalent value in the real world, it
would be harder to argue that the User is not using the logo
"in commerce."
Similarly, if a User were to create an avatar in the likeness of a
real world celebrity, it is questionable whether there could be
liability against the User if the User wasn't using that avatar
for a commercial purpose from a right of publicity perspective.
Without establishing some economic value in a person's identity
in VR, it would be difficult to argue that the User infringed on
the celebrity's publicity rights. However, using the likeness
of a real person, celebrity or not, could result in potentially
bigger liability for the User, based on, for example, false light
and defamation arising out of the User's impersonation of a
real world person. Of course, if the VR experience is solely for
the User's own enjoyment and is not shared with another person,
there would be no such liability for the User.
Unlike trademark and right of publicity laws, copyright
infringement does not require a commercial tie-in. Any
reproduction, public display, public performance, or distribution
of another's photograph, video, music, etc. in VR is sufficient
for a copyright infringement. However, copyright protection is not
absolute, and use of certain copyrighted material in VR is likely
to generate vigorous discussions on fair use, a legal doctrine that
specifically permits use without permission from the copyright
owner. For example, if a User uses the characters from the
Harry Potter book series and gives them different
identities and creates an alternate world, all within the
User's VR experience, does such use constitute a copyright
infringement? The answer is most likely yes, since one of the
exclusive rights of the copyright owner is a right to create
derivative works. In fact, someone might license the rights from J.
K. Rowling to create a VR experience for legions of Harry Potter
fans. But what if a VR Platform allowed Users to visualize and
experience what is in their heads and a User imagined Dobby and
other house elves from the Harry Potter series meeting the
stately and regal Elves from The Lord of the Rings series?
Would such use of existing characters from the two different book
series constitute a copyright infringement? As in the real world,
determining whether a particular use in VR falls under the fair use
exception will require an extensive analysis of the applicable
facts and circumstances in each instance. Moreover, given the
novelty and enormous potential of the VR technology, it will
probably take several court cases (and maybe even a further
amendment to the existing copyright laws) to establish the scope of
copyright protection in VR.
Neither the current laws nor potential litigants regard Platforms
in the same way as Users. Platforms can be held liable for
infringements committed by Users, even where the Users themselves
are not sued, by virtue of a doctrine called secondary liability.
Platforms can shield themselves to some extent from secondary
liability in the contexts of trademark and copyright, depending on
the type of infringement alleged, by applying appropriate
enforcement policies pursuant to constructs that already exist in
the User Generated Content ("UGC") space – e.g.,
secondary liability and the standard defenses, such as the Digital
Millennium Copyright Act (DMCA), Community Decency Act (CDA), etc.
These constructs generally shield a platform from liability where
the platform (1) did not materially contribute to or induce the
infringement; (2) did not receive direct financial gain from the
infringement; and (3) did not continue to provide its service to a
person or entity that it knows or has reason to know is engaging in
infringement. It is not entirely settled whether an internet
service provider, including a VR Platform, could be held
secondarily liable under a right of publicity claim, but that
appears to be the case in at least some jurisdictions, based on
cases that have been decided to date.
In addition to secondary liability for infringements committed by
Users, Platforms and/or Brands can be held primarily liable for
creating or enabling a VR experience that uses IP from the real
world. One of the many applications of VR that is currently under
development is allowing a User to experience an actual sporting
event as if the User were at the stadium, or watching a film as if
the User were in the film. These applications rely heavily on
existing IP to provide the VR experience and would require the
provider of the VR, such as the Platform or Brand, to obtain the
necessary licenses from the appropriate rights owners.
Similar to the real world, in many ways, Brands may face the
greatest liability when sponsoring or providing VR experiences.
Specifically, because (i) any use by a Brand of existing IP or a
person's name, likeness, or other manifestation of a
person's identity will be deemed to have a commercial purpose;
(ii) Brands usually have deep pockets; and (iii) Brands do not
typically want to engage in any activity that could harm their
reputation, rights owners are more likely to bring a claim against
a Brand than against a User, even if the law ultimately may be on
the side of the Brand based on established exceptions. Moreover,
unlike a VR Platform, which is likely content neutral as long as
Users are drawn to the technology, a Brand using VR for marketing
or promotional purposes will want to create a more controlled VR
environment, even dictating what content the Users should create.
Thus, if an airline invites Users to plan and experience a
"dream vacation" and the User listens to illegally
streamed music and carries a virtual designer handbag on the
"trip," the Brands involved could face legal claims,
given their degree of involvement in, profit from, and direction
over the creation of content. Furthermore, use of third-party IP
within a sponsored VR experience, even when driven by the User,
could create a false association between the Brand and the third
party, which might be actionable under trademark law.
Virtual Rights in the Real World
When it comes to the creation of content in the real world,
whoever creates content owns it, unless certain narrow exceptions
apply or ownership is changed by contract. However, the default
ownership is not so clear in VR, where Users direct creation but
the underlying code enabling the creation of images, virtual
property, or other content was created or otherwise is controlled
by the Platform. Thus, as between the User and the Platform,
ownership may be disputed. However, if today's social media
sites and content-sharing platforms ("UGC Platforms")
provide any guidance, ownership will largely be addressed in the
Platform's terms of use or participation agreement. UGC
Platforms generally provide that users own the content that they
create or upload to their sites. Interestingly, if VR Platforms
follow this approach, it could create a sticky legal situation
surrounding ownership and entitlement to the property.
Specifically, if a VR Platform, like Second Life, one of the main
pioneers in VR, represents to potential Users that they can own
property within a world that exists only in VR and encourages Users
to invest in such property (monetarily or otherwise), would the
User have any rights against the Platform or any other recourse in
the event the Platform terminated the User's right to use the
Platform (including, for example, due to an IP infringement or
fraud) or if the VR world imploded altogether? Even if the terms of
use or participation agreement clearly stated the Platform's
right to terminate the User's account or the VR world itself,
it is feasible that such termination would probably carry at least
some risk of false advertising, fraud, and unfair competition-type
claims, based on existing laws that have general application. Given
existing legal frameworks, it is possible that User rights will
evolve in VR such that Users get to own and control virtual
property analogous to IP protected by copyright and trademark
regimes; however, ownership and control will be meaningless unless
there is an established value of VR property in the real world or
VR that transcends just a single platform. As VR becomes more
commonplace and more people participate in VR economies with
significant investments at stake, the law will need to catch up
with the technology, and there may eventually be legislation to
regulate property rights and investments in VR.
Assuming Users own IP they create in VR, and want to assert rights
to that IP in the real world, it is likely that copyright and
trademark laws will apply in a manner similar to how they apply to
IP created in the real world, with a few twists. One twist under
trademark law is whether a User creating virtual products, such as
virtual apparel, could satisfy the "use in commerce"
requirement for trademark registration and obtain trademark
protection for such virtual apparel. It remains unclear whether a
trademark used on such apparel could qualify for real world
classification as a good. If the apparel is not used as apparel in
the real world, the User may be limited to seeking classification
as a service, which could limit the User's ability to compete
and protect against real world apparel that is similar to the
virtual goods the User controls. Another twist relates to
copyright. Copyright law protects original works of authorship, and
it's questionable what is original and capable of copyright
protection in VR if some of the work is based on real world
IP.
Publicity rights also present an interesting challenge for Users
because laws protecting the right of publicity protect natural
persons only. Users that create avatars that become famous or
otherwise valuable in a particular VR context would therefore be
unable to take advantage of real world publicity rights, unless
such avatars become specifically associated with a real person.
Even without publicity rights, however, the name, likeness, and
other indicia of identity of a VR avatar would likely merit
protection under the same IP laws that protect well-developed
fictional and graphic characters.
Brands and, to a lesser extent, VR Platforms may also have an
interest in real world use of property created in VR. Brands are
always seeking ways to engage in more meaningful ways with their
customers, and VR opens up unprecedented possibilities for
communicating with customers about the Brands' products and
services and building brand loyalty. Also, Brands could use VR for
focus group testing and getting customer feedback, and content
companies like movie studios, production companies, producers, and
networks (as well as Brands and Platforms) can use VR to source
content, similar to how the Internet is currently used to source
UGC. These companies will all want to own, control, or at least
have a license to use all or part of the IP created by Users. As in
the real world, this can be accomplished through terms of use or
participation agreements that expressly allocate such IP rights to
the Brands, and allow flexibility in the Brands' use of IP
created by Users (e.g., in the Brand's advertising, in product
development, or for internal purposes). As with any online service,
it is important to have enforceable terms of use and participation
agreements governing use. In recent years, there has been some
suggestion that certain portions of online terms of use,
particularly portions affecting legal rights or remedies, are not
enforceable unless a user has affirmatively assented in some way.
So, it is essential that Brands that seek to use User IP ensure
that Users complete click-through or click-to-accept agreements
that clearly state the ways in which a User's IP might be used
by the brand.
Conclusion
Legal practice and advice pertaining to VR will evolve as we see where each stakeholder's imagination takes this trend, but in the meantime, at least with respect to trademark, copyright, and publicity issues, we can anticipate some of the legal risks inherent in VR by looking at VR Products currently in use and applying the law as it stands today. In this article, however, we've only just scratched the surface of the legal developments that will come with the advancement of VR, and we look forward to reporting back in the weeks and months ahead as we get a better sense of where VR is going, and the challenges our client industries are facing as a result.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.