Virtually identical: Legal considerations digital twins in the metaverse

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Among the many exciting prospects for the metaverse is the possibility of customers having a ‘digital twin’, an avatar that is exactly the same size and shape as the customer, but able to stroll through the virtual world of the metaverse. While the avatar might be a three headed purple dragon in other contexts, for some metaverse services – and particularly anything related to purchasing wearable items for delivery in real life – the digital twin will prove very useful. It is the twin, along with perfect digital replicas of the items offered by online retailers in the metaverse, that will allow customers to buy with greater confidence that they’re going to get an item that fits.

This aspect of the metaverse has the potential to benefit customers and retailers alike. It creates a much more immediate experience for the customer, and for the retailer the experience draws customers in, delivers greater brand engagement, improves carbon footprint, and saves on costly returns processes.

But if you want to set up shop on a plot of virtual realty, what should you be considering?

Top-down or decentralised?  

The metaverse is not a single thing and will never be one any more than the web is a single web site or browser.

There are two metaverse concepts: ‘top-down’ - think of Meta’s ‘Horizon’, with the platform operator acting as the arbiter and town planner; or decentralised and ‘web3’ enabled - think of Decentraland, built on the Ethereum blockchain, where users own and build their environment.

A top-down approach might be easier to secure and create safe spaces, has features that more easily facilitate legal compliance, and perhaps connects to other top-down metaverses giving access to a large pool of customers, all in exchange for giving up a large slice of control and data.

Assuming you opt to site your store in a top-down metaverse to begin with, the platform provider’s terms of service will be crucial to understand before properly assessing the considerations below.

Data protection 

Your store will be receiving a vast array of rich datasets from prospective customers, and potentially other sources, that dwarf those collected via your existing (very popular) ecommerce site. Depending on the capabilities of the VR headsets customers use to peruse your wares, you could be collecting data such as vital signs and eye tracking data from which certain traits and behaviours can be inferred.

Whilst undeniably an exciting opportunity for any retailer, any use of this personal data needs to be assessed under the law. The data protection and privacy laws that are engaged will depend upon the location of the platform operator’s servers, the store operator’s place of business in the real world, and the places from which virtual customers visit. If EU laws apply, as a data controller, you bear a host of data protection duties. For instance, you should carry out a data impact assessment to assess your lawful basis for processing the data, the impact on your customers, how you might mitigate this impact, and how you will inform them of all of this at the appropriate time. Some of this is troublesome enough on the good-old fashioned internet – cookie banners anyone?

Intellectual property

You will likely want to engage a range of third parties to help you get your store off the virtual ground, particularly designers who will help build your metaverse store and to design any digital assets that are going to be available for purchase by customers’ avatars. Your contracts with these third parties will be crucial for ensuring that copyrighted works created are owned by the business and that the commercial model is accurately captured. If your store is to have accurate digital copies of many different sizes of physical goods created, ensure any contracts commissioning those items allows for the creation of the matching digital copies for your metaverse shop window.

You will also need to police use of your brand’s intellectual property. Make sure trade marks are registered (good advice in any context), that the platform provider polices infringement robustly, offers a clear reporting and disputes process, and has the tools to combat infringement.

Consumer protection

Your customers will be protected by their local consumer protection regime when interacting with your metaverse store, with sales in the metaverse constituting distance sales.

Your ecommerce terms of sale will certainly need amending to reflect your new sales channel, or perhaps a new, separate set of metaverse-centric terms of sale.

The customer (or avatar) journey will also be completely different. You will need to carefully consider how you can ensure that key compliance obligations are met, such as providing pre-contractual information to consumers and ensuring it is abundantly clear when a purchase is binding, all whilst ensuring the customer experience is slick.

Crystal-ball gazing?

What we think of the metaverse and how it will operate years into the future involves some educated guesswork. Our laws will also be adapted to take account of metaverse and web3 as they become an ever more critical part of our commercial landscape. However, it would be reasonable to bet on most, if not all, of the above being key legal considerations for innovative businesses in the years to come.

And as the metaverse takes off, the industry will also need to think even harder about how to keep bricks and mortar stores relevant and create moments of delight that don’t require a VR headset to enjoy.

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This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.

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