We recently discussed the myriad legal issues arising out of the development of the metaverse and users' interaction through avatars. Here, we look at some of the key legal risks that game developers, social applications, and metaverse platforms assume when problems occur in the virtual environment. Can these service providers be held liable for crimes, disagreements, or antisocial behavior perpetrated by people controlling avatars? We also propose some legal strategies for game developers and metaverse platforms to reduce their exposure to liability.
The question of liability may hinge on whether the wrongful act can be characterized as a criminal act, a tort, or a breach of contract.
Tort Liability
Torts are wrongful acts for which an aggrieved party may seek damages or a court order for the offending party to cease the harmful activity. Liability can be assigned depending on the roles and responsibilities of the entities found to be at fault: strict liability, absolute liability, third-party liability, joint liability, and others. Depending on the type of tort committed in the guise of an avatar, game developers and metaverse platforms could be deemed vicariously liable for the acts committed by an avatar controlled by an employee. Even if this "master/servant" relationship does not exist, the platform or developer may be subject to joint liability if they act as a "tortfeasor," working in close concert with the offending party.
Criminal Liability
Liability under criminal law is largely determined on the premise of responsibility. This means that a game developer or a metaverse platform could be potentially held liable for any criminal activity committed by users as avatars if the court determines it was in the position to avert or stop the crime. Several women have claimed that their avatars were sexually assaulted n virtual worlds and explained the physical and psychological trauma it causes. While the people who committed these acts should be identified and punished, some suggest there should also be repercussions for the entities that created environments in which these deeds took place. Is it appropriate to affix accountability on metaverse platforms for criminal activities taking place in their worlds? It seems likely that there will be a comprehensive law or regulation in the near future which will deal with all aspects of the metaverse and specifically outline the liability metaverse platforms assume for any illegal activities committed there.
Breach Of Contract Liability and Legal Constructs
Game developers and metaverse platforms may be sued for any breach of contract committed by an avatar user, provided they are a party to the contract. This relationship is outlined in the doctrine of privity of contracts which suggests that only parties to a contract can enforce the obligations or collect the benefits under that contract. Game developers and metaverse platforms can also be held liable under legal constructs such as causation as they are generally aware of the identity or the person behind the avatar. Depending on how the metaverse evolves, it may force platform providers to be aware of the real identity of the users behind the avatars that use their sites. This likely would require the expansion of the concepts of causation and foreseeability to make developers liable under negligence law and potentially responsible for acts committed in their platforms.
Product Liability
Product liability is a source of potential risk for game developers and metaverse platforms. The metaverse is projected to result in a vast market for virtual and physical products available for purchase and use by customers. Software, virtual non-tangible items, and hardware like headsets and glasses are just a few examples. Accordingly, developers, manufacturers, licensors, vendors, and others in the industry may be at risk of metaverse-related product liability claims brought by metaverse participants and users of these products. Several types of product liability claims in connection with the metaverse may arise in the future. For instance, a product liability claim may arise in a situation where an individual sustains injuries while immersed in the metaverse. Further, property damage or economic loss claims could arise where participation in the metaverse or use of related hardware gives rise to an incident that destroys property. Given the potential for a range of product liability claims in connection with the metaverse, game developers and metaverse platforms should seek legal advice on how to limit their liability and seek any other protections such as through contractual drafting, terms of use, and warnings and instructions for use.
Other Liability
Game developers and metaverse platforms can also be held liable for secondary infringement of intellectual property rights and for intermediary liability for content created by avatars. If an avatar engages in copyright piracy on the metaverse and the metaverse platform does not take appropriate action to remove the infringing material or to stop copyright piracy, it may be held liable for secondary infringement. Further, it may be held liable for intermediary liability if the avatar engages in hate speech, disparagement, child pornography, disparagement, cybercrime spamming, phishing, and others.
Legal Protections for Service Providers
Some industry experts believe virtual environments should not face undue liability for the actions of others. One way to limit their liability is to grant avatars legal status distinct from their association with the games and applications they visit. This, metaverse proponents say, would incentivize game developers to continue innovating within the metaverse. The argument is that in order for the metaverse to thrive, there must be a careful balance between protecting the rights of various stakeholders without impeding technological progress. This is likely to be a difficult juggling act for legislators, as no one wishes to absolve the person controlling an avatar of legal consequences. So, while the avatar would be distinct from the game, it could not be separated from the player.
Perhaps a more immediate precaution is for sites to ensure they draft and make public the appropriate legal documents to minimize their liability. Standard legal documents such as terms and conditions, privacy policies, and end-user licenses can go a long way in shielding businesses from legal entanglements. These documents, drafted by an experienced Web3 attorney who can also incorporate a robust limitation of liability clause, should be part of the due diligence exercised by any gaming or metaverse company.
Conclusion
The law regarding the legal liability for acts committed by avatars is still evolving. Some scholars have proposed that there should be statutory remedies for acts committed by avatars while others have proposed that liability for acts committed by avatars could be dealt with within conventional principles of tort law. For developers and platform holders, it is best to speak to counsel or a law firm well-versed in emerging technologies so that you are well-protected against any liabilities arising from illegal acts or wrongdoings committed by users as avatars.
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.
