Lawyers

Reed Smith boldly goes the place no regulation agency has gone earlier than — the metaverse

Lawyers are always looking for new frontiers to expand their practices. How about beyond the universe?

That’s the literal meaning of “metaverse,” and Reed Smith is making a play to be a go-to firm for legal issues that arise where the virtual and real worlds converge.

On Wednesday, the 1,600-lawyer firm released “Reed Smith’s Guide to the Metaverse.”

No, it’s not the less-loved sequel to “The Hitchhiker’s Guide to the Galaxy.”

Instead, the 76-page white paper offers a wide-eyed look at myriad legal issues ranging from IP to privacy to competition that lurk on the horizon of what firm lawyers term “the biggest ever industrial revolution the world has ever seen.”

White papers are my favorite form of law firm marketing. They’re not overt come-ons — law firms’ typical ‘Please-hire-us-for-our-unparalleled-expertise-to-solve-your-most-complex-problems’ approach.

Gregor Pryor, who co-chairs Reed Smith’s global entertainment and media industry group, told me that the goal of the metaverse paper is to start a conversation with clients, other lawyers and the wider world. Indeed, I haven’t come across a comparable publication on the topic by any other firm.

“There’s a value in thought leadership” and sharing ideas, Pryor said.

When done right, such publications are also a lot of work. I counted 36 Reed Smith lawyers spread across 13 offices in five countries who contributed to the report, not to mention the firm’s (uncredited) marketing professionals, who no doubt did their share of the heavy lifting.

The paper gets right to the point in explaining why the metaverse matters: “People exist there and there is money to be had.”

So what do the Reed Smith lawyers actually mean by metaverse?

“One way to describe it is the increasing permeability of the borders between different digital environments and the physical world,” they wrote. “Imagine stepping into a cyberworld: The metaverse is a space where you can interact with virtual objects in real life with real-time information.”

It’s the stuff of sci-fi films like “Iron Man,” “Ready Player One” and “Upload,” but it’s also actually happening.

The smartphone game Pokémon Go is an example (albeit rudimentary) of how digital content can be laid over the real world. Likewise, virtual worlds can replicate real-life environments.

“People interacting in a virtual gaming environment could walk around a virtual London or New York city, seeing digital depictions of real-life streets and buildings,” the report says. “You can visit a virtual Apple store to browse and buy digital depictions of Apple products that can be delivered, in real life, to your actual physical home.”

Nifty, right?

But like all good lawyers, the Reed Smith team sees potential problems lurking around every corner.

Intellectual property is an obvious issue, though Pryor told me he anticipates that existing IP laws will prove flexible enough to handle emerging metaverse issues.

Which is not to say it will be simple. Consider just a few of the questions raised in the white paper.

Will existing copyright licenses cover the use of a work within the metaverse?

How can trademark owners enforce the use of their marks in virtual worlds?

Are metaverse-focused patents vulnerable as software to being invalidated as “abstract” and ineligible for patenting? Are inventors better off trying to protect their IP as a trade secret?

Privacy is another knotty issue.

“Today’s privacy and data protection laws were built for physical filing cabinets and then updated for the Internet,” the report states. “Applying them to tomorrow’s metaverse, an alternate digital real-time existence offering a persistent, live, synchronous, and interoperable experience, could well prove to be a stretch too far.”

Here, the report poses far more questions than answers. To me, one of the most provocative is which privacy rules will apply in the metaverse?

For example, I live in California. How is the California Consumer Privacy Act, which focuses on California residents, supposed to work if I’m an avatar in a virtual environment?

“Most privacy laws around the world have as a central component the principle that individuals should know how their personal data is being used, by whom, and for what purposes,” the Reed Smith lawyers wrote.

“Then imagine that one’s journey through the metaverse isn’t just an engagement with one organization and controller but more akin to a trip to a mall with the possibility to seamlessly move from one store to another with advertising and offers from others along the way. How to operationalize privacy laws obsessed with transparency, tracking, and controls in such a world?”

These are excellent questions, with no obvious answers.

Firm lawyers also considered antitrust and competition issues.

One of the biggest variables: “At what stage should regulators intervene? If they intervene too soon, innovation could be stifled, and if too late, the market could ‘tip,’ causing substantial distortion of competition, risk of monopolization, and emergence of megacorporations.”

That’s an exceptionally difficult call to make (cough Facebook, Google, Amazon). Still, it’s helpful to start thinking about these issues now, when the metaverse, with all its possibilities, is still in its infancy.

O brave new world, indeed.

Opinions expressed here are those of the author. Reuters News, under the Trust Principles, is committed to integrity, independence and freedom from bias.

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Jenna GreeneJenna Greene writes about legal business and culture, taking a broad look at trends in the profession, faces behind the cases, and quirky courtroom dramas. A longtime chronicler of the legal industry and high-profile litigation, she lives in Northern California. Reach Greene at jenna.greene@thomsonreuters.com

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