The virtual world created with the metaverse presents a significant challenge from a legal perspective. In this special feature, Alejandro Touriño, managing partner of ECIJA; Santiago Marín, senior lawyer at Q&Q Legal; Rosa Guirado, lawyer and economist, founder of Legal Sharing, Legal Advice for Digital & Sharing Economy, and contributor to Lawyers for Projects; and Sofía Martínez-Almeida, partner at Gómez-Acebo & Pombo, discuss the topic. and Román Esteban González, notary of Notary 38, talk about the legal implications of the metaverse from the different angles of business law.
Let’s start from the beginning, what is the metaverse?
According to Alejandro Touriño, it is “a natural evolution of the internet, version 3.0, more intensive, integrated, and immersive for the user. Compared to version 1.0, where users primarily consumed content generated by platform owners, or version 2.0, where users consumed and produced content in collaborative environments, the metaverse, or internet 3.0, is a new virtual environment accessed through virtual reality glasses, where users interact with other users and service providers through an avatar. The metaverse offers a vast array of alternatives in entertainment, content, and leisure, but also in work and education.”
Román Esteban stated that the metaverse “is an environment of interaction between people, enriched with technologies such as augmented and virtual reality.”
According to Rosa Guirado, “the word metaverse is a compound acronym derived from Greek: on the one hand, “meta,” meaning beyond, and on the other, “verse,” meaning universe. Thus, the metaverse refers to the universe that lies beyond reality or the current universe.”
It is, therefore, a three-dimensional virtual reality that uses cutting-edge technologies, such as virtual reality and augmented reality. Users create avatars to interact within this reality and to carry out economic transactions or other activities. All of this is done in a decentralized manner through Web 3.0, or the third generation of internet platforms.
Santiago Marín, for his part, defined the metaverse as a “disruptive digital space of interpersonal, commercial and social interactions that emerges on the basis of blockchain technology. We see in it a world of unlimited human possibilities on which novel forms of relationship will land, because in this space, the limit is imagination and creativity and innovation converge transversally as pillars of the ecosystem.”
Sofía Martínez-Almeida believes that the metaverse “is essentially a persistent 3D virtual world or environment in which users, through avatars, interact with each other or with virtual objects and in which they can work, explore, enjoy experiences, buy, play, relate or generate businesses, connected to the real world, but without its physical restrictions.
The video game industry had already largely exploited this concept, but the development and convergence of certain technologies is opening up new opportunities for creating more immersive metaverses and the emergence of a new virtual economy. Although we haven’t yet reached a 100% immersive metaverse—one in which we can experience the same physical sensations as in the real world—nor have we achieved interoperability between the different existing metaverses (currently, there isn’t a single metaverse, but rather several unconnected ones).
From a more personal point of view, for me (as a member of Generation X) it is a reality that in certain aspects can be challenging, for younger lawyers it is a reality that is a natural part of their lives and that they understand very well from the most diverse points of view (relational and economic) and, for everyone, it represents a unique opportunity to develop our skills as legal professionals in a new and exciting technological environment.”
There are metaverses dedicated to video games, but there are also those related to education, the entertainment industry, and information. Products and services are bought and sold, and even the legal sector has begun to venture into this virtual world. Have you considered establishing a presence and perhaps using it as a potential channel for contact and communication?
Alejandro Touriño stated that, for the time being, ECIJA’s role in the metaverse “is limited to in-depth analysis and advising clients on the challenges and opportunities they face. We don’t rule out a more active role in the future, but, as of now, and until the ecosystem is more developed, we see our role as active users and qualified advisors to our clients. Indeed, we are already advising clients from various industries on their approach to the metaverse, in areas such as intellectual property, e-commerce, advertising law, and corporate law. It seems difficult to want to be at the forefront of technologies and not play a significant role here.”
Román Esteban stated that “he is convinced of it, although there is little knowledge of the direction this trend will take, many people and companies are focusing their efforts on participating in the metaverse.”
As a point of contact, Sofía Martínez-Almeida stated, “It’s still too early to assess taking this step. Given the type of advice and clients we serve, establishing a presence within the metaverse would still be very risky, although some of our clients are undertaking projects of varying scales there. However, as lawyers specializing in technology, and because we need to support our clients in their businesses and vision, we must thoroughly understand this new reality, what it implies for them, the legal environment in which they will operate, and the potential consequences of their actions within, for, and in the metaverse.”
That said, as a communication channel, it’s something we’re very much aware of in the short term.”
Santiago Marín said that “as a purely digital presence, no, but at Q&Q Legal we have been positioning ourselves as pioneers in supporting the commercial relationships that arise from there, since the legal challenges in Colombia are enormous due to the age of the legal sources that currently regulate conflicts generated in the metaverse. We have closely followed the presence and immersion of the firm’s clients, mainly artists, who have found the possibility of publishing, selling, and even auctioning their works in NFTs in digital spaces with exclusive immersive experiences.”
Rosa Guirado pointed out that “for the moment, in the short term, not yet. But in the medium term, yes, without a doubt.”
ECIJA recently published a guide on the “metaverse and a first legal approach,” which, among many other conclusions, states that “we are facing a new revolution, not only technological but also social, that is leading us to completely change the paradigm that the Internet once presented. This time, it seems that digital worlds are offering us a completely virtual and immersive daily life.”
Why are we talking about a new revolution?
Alejandro Touriño explains that we speak of a revolution because of “the immersion this technology offers. Those of us who have navigated the metaverse realize two things: it’s still a very immature technology, with a high technological barrier to entry—heavy hardware and software with a lot of room for improvement—but with enormous potential. Navigating the metaverse means creating an avatar and starting to interact in a parallel world. I, for example, have already had the opportunity to buy and sell in the metaverse, to teach and take classes, to generate and share content, and so on. We’re only at the beginning, but the investment that major tech companies have made in this technology suggests a great future for the metaverse.”
Rosa Guirado, in turn, commented that “this is a disruptive and revolutionary innovation, as it represents an essential change in the parameters in which social and legal reality is currently framed.
For years, we have seen different disruptive scenarios emerge, namely:
(1) in the 1990s, the reality of the internet, with one-way interactions of information from Web 1.0 sites to users;
(2) subsequently, around the year 2000, social networks, in which there was a two-way interaction between users, although only based on exchanges of information (likes, comments, etc.);
(3) to then appear, around 2009, two parallel disruptions, both focused on decentralizing traditional models or realities: (3.1) on the one hand, collaborative digital platforms (Airbnb, BlaBlaCar) or quasi-collaborative ones (Deliveroo, Glovo, Cabify and Uber in Spain) that decentralized traditional models of accommodation, transport, car-sharing, ride-sharing, … and on the other hand, Bitcoin, on blockchain , as a mechanism for decentralizing central banks;
(4) to finally note in recent years the parallel emergence of: (4.1) intelligent, artificial and autonomous reality, through Machine Learning and IoT, in which objects interact in relation to subjects (for example, the refrigerator sending a user’s purchase order to the supermarket) and, at the same time, (4.2) the emergence of a virtual reality, this time related to the decentralized blockchain protocol and cryptocurrencies: the metaverse.
For her part, Sofía Martínez-Almeida began by stating that “we are experiencing exponential growth in technologies related to the metaverse (VR devices, IoT, 5G, artificial intelligence, etc.) and decentralized technologies based on blockchain are undergoing strong development. As a consequence of the convergence and mutual reinforcement between both technologies, many analysts anticipate an evolution of the internet as we know it today into a virtual environment where the metaverse will offer an alternative world in which to work and socialize, while blockchain technology will empower users, allowing them to autonomously manage their data, identity, and digital assets.”
In any case, despite the great expectations that have been generated, we cannot forget that the development of these technologies is still in a very early stage of maturity, and it is likely that the full development of this vision of the future will take many more years to arrive.”
Is the legal sector preparing for this new reality, considering that all branches of the legal system may be affected?
Alejandro Touriño, managing partner of ECIJA, stated that he doesn’t know how prepared the legal sector is, but he is “convinced that no legal discipline will remain unaffected by the metaverse. I think it’s easy to imagine. A technology that proposes the creation of a parallel world, where interacting with other users, service providers, or public administration requires an appropriate legal response. In my opinion, many regulations are already prepared to address the metaverse, but many others are not. As legal professionals, we will have to be very attentive to the new situations and scenarios that this technology demands.”
Román Esteban, notary of Notary Office 38, stated that “in general, the legal sector reacts late and slowly to disruptions in what the “metaverse” will be like. Initially, there will be a kind of self-regulation, and certainly some arbitration and mediation initiatives. The latter is a great challenge and opportunity for the legal sector.”
Meanwhile, Santiago Marín, senior lawyer at Q&Q Legal, believes that a “symbiotic relationship” will emerge between privacy laws, data protection, and the metaverse. “Data protection legislation is emerging in a global scenario where the data transfers produced were surely not taken into account. The metaverse, due to its low visibility, is an emerging scenario popularized, among other things, by the name change of Facebook, and additionally, because its understanding and scope is still premature compared to the possibilities that such a complex technology can generate.
However, I believe the biggest challenge for legislation is to be relevant, or to find the space to be relevant, with respect to the future of Web 3.0, which is blockchain technology, whose main pillar is the protection of user data, while also offering sovereignty over its custody. This technology, which is already operational in the market, will surely permeate the entire blockchain ecosystem, of which metaverses are, of course, a part.
Rosa Guirado, a lawyer and economist, and collaborator with Lawyers for Projects, continued by pointing out that “it is undoubtedly something that should be in the medium or long-term strategy of any legal professional, taking into account the specialty and the resources available.”
Sofía Martínez-Almeida, a partner at Gómez-Acebo & Pombo, stated that “the legal sector is beginning to understand that the metaverse is already a very present reality, not only at a social or relational level but also from a business perspective. If lawyers want to guide their clients through this new reality, they must understand it and anticipate the legal issues that will inevitably arise. It is already known that groups like Hermes and Nike have initiated legal action regarding third-party activities carried out in the metaverse. Regulation tends to lag behind technological advancements and new realities. This does not mean that existing regulations are inapplicable in many aspects—though not all—but some will require interpretive work for their application, and others will require new regulations.”
Román Esteban, notary of Notary 38, continued pointing out that the “metaverse will be an environment of interaction, which can facilitate the celebration of agreements between people, including those linked to the real estate sector, and with very interesting initiatives such as digital trusts, the tokenization of assets and of course crowdfunding for real estate projects.”
Will the metaverse adapt to laws on ownership and title of intangible assets, competition law, privacy, data protection, security, etc., or will existing laws in these areas be adapted to the metaverse?
Alejandro Touriño: “I think it will be quite the opposite. It’s not reality that adapts to the rules, but rather the rules that must adapt to new realities. Twenty years ago, internet search engines, social networks, and mobile applications didn’t exist. Laws have had to adapt rapidly to the dizzying pace of technological change, and they will have to do so to adapt to the use cases presented by the metaverse. As of today, it’s difficult to imagine how far the metaverse will go.”
For Rosa Guirado, this approach is reminiscent of “the one that was made globally, and specifically at the European level, with the emergence of the Sharing Economy. Those with less expertise insisted on the need to regulate this new reality. In response, on June 2, 2016, the European Commission published Guidelines entitled “A European Agenda for the Sharing Economy,” outlining how to apply existing legislation to this new economy.”
I believe that reality moves faster than the law, and that the law, in turn, is complete in itself. Thus, in the face of any lack of regulation regarding a specific event or a new reality, the legal system, as a whole, allows for the interpretation of existing rules for their application to the changing reality.
Sofía Martínez-Almeida: “The answer to this is both. As I’ve already mentioned, existing laws will need to be interpreted and adapted to new technological realities (and, specifically, to the metaverse). As an example, the European Data Protection Supervisor has already published several interpretative reports regarding the accessories needed to access new virtual environments (i.e., “smart glasses and data protection”). Furthermore, companies initially venturing into this new virtual environment will also need to familiarize themselves with current regulations (related to intellectual and industrial property, privacy, digital identity, competition, artificial intelligence, etc.) to adapt them to the specific project they are designing or implementing (without being able to wait for the creation of new, ad hoc Industry 4.0 legislation).
It is undeniable that the regulation of the metaverse still has significant gaps, and the greatest legal challenge will arise when there is a single metaverse (or multiple interoperable metaverses). Currently, certain metaverses that have been developing have their own terms and conditions of use (given that they are private platforms) that must be taken into account.
In this scenario, ex-ante advice is especially important.”
Will there be any way to provide legal certainty to companies doing business in the metaverse?
Román Esteban González stated that “reaching agreements for the resolution of disputes or controversies can be achieved with robust mediation and arbitration clauses and procedures based on blockchain. All of this is pending regulation by the State, which is not always appropriate.”
While Santiago Marín said that “of course there is and will be. However, it is necessary to understand how the technology works and the core of economic relationships to understand what kind of businesses can arise from the corporate presence in this digital scenario and, to that extent, to determine whether the security protocols of blockchain and smart contracts are not sufficient security to legally intervene and solidify these relationships.
It’s worth mentioning that companies are increasingly interested in these spaces. Million-dollar transactions have been generated, which certainly represent a market opportunity for the legal sector, provided that innovation is fostered in the services offered and, most importantly, that the technological and economic workings of these ecosystems are thoroughly understood.
From a business perspective, it is clear that great opportunities will open up, and for this, a legal framework that provides security and certainty will be needed. How do you see the legal sector in the future? Are interesting times approaching?
Alejandro Touriño asserted that “exciting times are approaching for the legal sector. Whether for business, entertainment, health, or any other social or human dimension, the emergence of a technology with the scope envisioned here foreshadows significant normative, legal, and regulatory challenges.”
Rosa Guirado did not hesitate to affirm that “without a doubt, it is a time to contribute to the development of interpretations of legal entities and the correct application of current regulations.”
Sofía Martínez-Almeida, “without a doubt. In the metaverse, multiple situations will occur (and, in fact, are already occurring) that will involve legal issues of various kinds and that will require our advice, the design of an appropriate legal strategy (preventive and reactive) and subsequent operations that allow companies to provide their services and advertise safely in the metaverse.
However, we are not talking about such a distant future, but about a reality that is already (semi)tangible, since the first lawsuits in this field have already been filed (e.g., Miramax against Quentin Tarantino for the unauthorized sale of Pulp Fiction NFTs, Hermes against NFT creator Mason Rothchild for infringing his trademark rights by selling a digital reproduction in NFT format of his famous Birkin bag model, or Nike against StockX for selling NFTs of its sneakers), which will probably serve as a guide, among other things, in terms of protecting brands and designs in digital universes.
On the other hand, multiple companies such as Nike, Dolce & Gabbana, Coca-Cola, Louis Vuitton, Sotheby’s, Inditex, Gucci, or BMW have already launched their products or experiences in the numerous metaverses that are already in production, and many others (mainly Big-Tech) have already announced the creation of specialized 4.0 teams and the development of ad hoc tools for these new virtual environments.”
The legal community, like many other sectors, has had to evolve in the way it provides its services. Is it possible that with the metaverse, legal services will begin to be rethought from the ground up, from scratch?
Alejandro Touriño stated that “the legal sector is absolutely transversal to all social strata. Legal professionals play a crucial role in any social or technological change. The metaverse will require us to guide our clients through a previously unknown environment and perhaps even rethink how we provide legal services to them. We have already seen how some Anglo-Saxon firms have begun offering services in different metaverses. In Spain, I think it is still too early, but I don’t rule out the possibility that we will begin to see it soon. We must pay close attention.”
Román Esteban González clarified that “it is possible, although this has been happening since before the ‘metaverse.’ The trend toward providing clearer legal services, with a greater understanding of clients’ operations and sectors, and with more transparent costs is already a reality. The ‘metaverse’ will be an environment of interaction; whether it is suitable for providing legal services remains to be seen.”
Santiago Marín believes that “it is possible as long as legal practice follows two paths that I consider essential: (i) The first, through the search for an alternative to break with legal formalism, the traditional nineteenth-century legal culture, and perhaps even with positivism, as a consequence of understanding an ecosystem that arises on the basis of decentralization. (ii) Secondly, offering an alternative solution with added value that allows for quickly assessing the relevance of acquiring services based on the solution to a specific problem that cannot be solved by technology, a protocol, or a line of code of any type of software.”
Rosa Guirado stated that “everything (affected by the reality of the metaverse) will have to be rethought from scratch.”
Finally, Sofía Martínez-Almeida added that “it is difficult to envision such a revolutionary scenario today, although the way certain legal services are provided or how we interact with clients may be transformed. The potential advantages of holding trials, mediations, or arbitrations in the metaverse are already being discussed in certain forums.”
But a parallel legal world with no connection to the physical world is still difficult to imagine. As Ángel Carrasco recently pointed out in the GA_P Analysis Paper, “What is a Metaverse?”, which I recommend reading, “The possibility of autonomous virtual universes that do not communicate with the real world, where avatars—tokens—agents of advanced artificial intelligence negotiate and dispute according to the rules of the metaverse, still belongs to the future.”
