Intellectual property right transfer and license agreements in the metaverse

It is necessary to reflect on some of the implications that the Metaverse may have on contracts for the transfer and licensing of intellectual property rights and how the content of these contracts will have to be rethought in the light of the characteristics of the new digital world.  In the years to come, the Metaverse will have an increasing influence on the legal world and, in particular, on intellectual property law.

Therefore, this article aims to reflect on some of the implications that the metaverse may have concerning contracts for the transfer and licensing of intellectual property rights and how the content of these contracts will need to be rethought in light of the characteristics of the new digital world.

According to a recent Bloomberg study, the Metaverse will generate an estimated $800 billion in business by 2024. It’s not surprising then to see more and more companies interested in investing in the virtual world to grab a share of this multi-billion dollar market. It seems clear that the race to the Metaverse no longer involves only technology companies such as Facebook – Meta after the “rebranding” operation announced by Zuckerberg last October – and Microsoft, but companies from all sectors: from Gucci, Nike and Balenciaga that sell digital clothes and accessories on Fortnite and Roblox, to Republic Realm that has recently purchased a plot of virtual land in The Sandbox for a value of 4.2 million dollars.

The metaverse development will go hand in hand with the proliferation of new immersive technologies (AR and VR), explicitly designed to allow users to have increasingly immersive experiences within virtual worlds and the growing popularity of digital goods and services.   Therefore, it seems clear that patents, trademarks, and copyrights will play a key role in the “new world” economy.  The Metaverse will allow companies and users to create and enjoy content in a previously unknown way, paving the way for new forms of intellectual property right monetisation.  Therefore, it is of fundamental importance that companies adopt a precise strategy regarding the use, management and protection of intellectual property rights, a strategy that also includes contractual relationships that take into account the peculiarities of the Metaverse.

Although some dynamics regarding the transfer and licensing of patents, trademarks, and other IP rights will remain substantially unchanged, the advent of the Metaverse will inevitably lead companies to rethink their current contractual models.  Even though the content of each contract differs depending on its subject matter, the rights assigned and/or licensed, the payment model and any other circumstance of the concrete case, some recurring elements must be taken into due consideration when discussing agreements for the assignment or licensing of intellectual property rights in the metaverse, both in the case of the transfer of newly created works and concerning the clearance of rights about existing contracts.

With particular reference to contracts for the assignment and licensing of copyright, some interpretative issues could arise regarding the applicability in the context of the metaverse of clauses on new technologies that extend the right of exploitation to all technologies known at the time and to be developed in the future. The reference legislation provides that the assignment or license “may not include future rights which may be attributed by subsequent laws, which entail a broader protection of copyright in its content or of greater duration” (art. 119, paragraph 3, l.d.a.). However, most case law seems to exclude the analogical applicability of the prohibition of transferring so-called future rights to contracts for the transfer of copyright other than book publishing contracts since the former are atypical and not subject to the provisions laid down for traditional publishing contracts. Companies would be free to exploit the assignment or licensing clauses on new technologies and include the use of works in the metaverse.

Moreover, although it can be said that under our copyright law, the employer owns the rights of economic use of the works created by its employees and then transformed into digital assets for the Metaverse, the same may not necessarily apply to works created by the self-employed.  In this regard, Article 4 of Italian Law No. 81 of May 22, 2017 (in Official Gazette No. 135 of June 13, 2017, which came into force the following June 14, 2017), the so-called Jobs Act, provides that the rights of economic use relating to original contributions and inventions made during the performance of the contract are due to the self-employed worker unless the inventive activity is not foreseen as the object of the employment contract and compensated for this purpose. In any case, it may not always be straightforward to understand whether the copyright creation by the self-employed person falls within the commission’s scope, making it appropriate to include a clause for the assignment of intellectual property rights.

Adding a further level of complexity is undoubtedly the existence of a plurality of metaverses which will further reinforce the need to clearly and unequivocally establish the subject matter of contracts for the assignment and licensing of intellectual property rights. In any case, this need must be balanced with the need to have contracts that can adapt to the changes in an interactive and evolving environment, avoiding continuous renegotiations.

The success of the Metaverse will also depend mainly on user-generated content.  This means that in the economy of the Metaverse, a fundamental role will be played not only by the contracts for the transfer and licensing of intellectual property rights but also by the conditions of use prepared by the providers of the various virtual environments. In fact, despite the common imagination that leads to thinking of the Metaverse as a set of interoperable and decentralised worlds in which users can move freely, the various platforms appear more similar to “walled gardens” controlled by individuals companies. Therefore, the conditions of use will play a key role in shaping the relationships between creators, users, providers of goods and services and owners of the various Metaverse, especially concerning the ownership of content created in these environments.

There are several ways to do this. To date, for example, are widespread in the virtual worlds MMO terms of use that stipulate that everything that resides or is created in these environments is, or becomes, the exclusive property of the provider who licenses it to its users.  Users can purchase digital goods that remain the provider’s property based on this model, substantially limiting their marketability and transferability to other virtual worlds. Second Life follows a radically opposite approach.  Their terms of use stipulate that virtual goods purchased and created within the game are the users’ and creators’ property. Finally, the idea that the Metaverse should be a Web 3.0 virtual environment, open and decentralised, in which content, goods and services do not reside on the servers of individual companies but are spread throughout the network, remaining the property of the legitimate authors.  They have total control of content and infrastructure at the base of the Metaverse.  This model would allow overcoming the “walled garden” setting for which each user must comply with the terms of use of the individual virtual environments they frequent, being separate islands, each subject to its own rules.

On a similar topic, the article “Is the metaverse the new intellectual property rights revolution?” may be of interest.

Photo by julien Tromeur on Unsplash

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