The metaverse is widely seen as the next frontier of digital commerce, with companies across industries spending millions of dollars to establish themselves as market leaders. While it offers obvious opportunities for businesses, the Metaverse also presents unique legal challenges. This alert highlights a few key legal issues that all businesses should consider before taking the plunge.
What is the Metaverse?
At its core, the Metaverse is the next generation of the Internet. Built largely on decentralized blockchain technology instead of centralized servers, it consists of immersive three-dimensional experiences with dynamic digital markets, persistent and traceable digital assets, and a strong social component. As consumers flock to Metaverse platforms and technology companies create next-gen consumer electronics that will make the Metaverse more accessible, the ways the Metaverse can help the retirement home industry are already beginning to emerge.
The Business Case for the Seniors Housing Industry
The metaverse offers unique opportunities for the senior living industry. Consider the virtual tour used in marketing efforts and reimagine it as a chance for properties to offer potential residents a chance to interact with property amenities and staff. At a basic level, the ability to market the metaverse as a piece of equipment has value on its own. On a larger scale, this could lead to the development of a hybrid offering of home care and senior living, with the metaverse providing this community setting.
While the business opportunities are clear, the metaverse additionally offers the possibility of improving resident care. For example, the Metaverse gives distant family members the ability to connect with residents in a more engaging setting than a phone call or video chat – an essential alternative in light of the social isolation issues highlighted. in the pandemic.
Before embarking on a metaverse platform, companies should consider these six legal questions:
- Take custody of digital assets. Due to their digital nature, digital assets such as cryptocurrency and non-fungible tokens (“NFTs”) are particularly vulnerable to loss and theft. Before acquiring cryptocurrencies or NFTs, businesses will need to set up a secure blockchain wallet and adopt appropriate access and security controls.
- Set up a dedicated legal entity. Businesses may consider creating a new subsidiary or affiliate to hold digital assets, protect other parts of their business from metaverse liability, and deal with potential tax consequences.
- Select the platform that’s right for you. There are several metaverse platforms, and they all have tradeoffs. Some, like Roblox, offer access to more consumers but generally give businesses less control over program content. Others, such as Decentraland and the Sandbox, offer companies greater control but smaller audiences and higher barriers to entry. Businesses should consider who their target audience is and their long-term metaverse strategy before committing to a particular platform.
- Register your IP. Businesses should consider filing trademark applications covering core metaverse goods or services and securing all available blockchain domains, which can be used to facilitate metaverse payments and direct users to blockchain content. such as websites and decentralized applications. Given the accelerated adoption of blockchain domains as well as the limited dispute resolution remedies available, we strongly encourage brands to consider securing intellectual property rights now.
- Protect and enforce your IP. The decentralized nature of the metaverse poses a significant challenge to businesses and intellectual property owners. Before engaging in any blockchain-based transactions, including buying or minting NFTs, businesses should understand that content stored on a blockchain is there permanently and cannot be deleted. Restrictions on the use and resale of an NFT should be carefully considered and implemented before minting, because once the content is on the blockchain, there is little recourse.
- Reserve metaverse rights. Companies that license their intellectual property, particularly those that do so on a geographic or territorial basis, should review existing license agreements to determine what rights, if any, their licensees have for related uses. to the metaverse. Going forward, we encourage trademark owners to expressly reserve your rights for Metaverse-related uses and to exercise caution before allowing a third party to deploy your IP address on the Metaverse on your behalf.
Ready to enter?
The metaverse represents a tremendous opportunity for businesses to connect directly with consumers in an interactive way that was considered science fiction just a few years ago. But like every new frontier, technological or otherwise, there are legal and regulatory hurdles to consider and overcome. Some are familiar, while others are new. ArentFox Schiff’s attorneys provide an interdisciplinary perspective to help producers, distributors, retailers, and their partners in the retirement home industry offer practical strategies to maximize the value of the opportunities created by the metaverse.