Alexander Schmalenberger, LL.B.

Knowledge Lawyer

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Alexander Schmalenberger, LL.B.

Knowledge Lawyer

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29 January 2024

Metaverse January 2024 – 1 of 3 Insights

Evolving legal paradigms in AI and the Metaverse: An exposition on recent developments

  • Briefing

In the year 2024, the convergence of law, artificial intelligence (AI), and the metaverse is witnessing a series of transformative changes. These alterations are sculpted by key developments in both global and European legal frameworks, reshaping the future of these rapidly evolving digital domains.

We shall embark on an analytical journey through these changes, focusing on the G7's intellectual property (IP) decisions of 15 December 2023, the European Commission's initiatives, the EU Parliament's regulatory calls, the revision of the Community Design Regulation agreed upon provisionally on 5 December 2023, and the recent leak of the AI Act drafts on 22 January 2024.

Essential insights: A quick read

  • G7's intellectual property emphasis in the Metaverse (15 December 2023): The G7's IP offices underscored the applicability of existing IP laws in digital environments, specifically the metaverse, emphasizing the importance of IP rights in the digital economy. 
  • European Commission's inquiry on Virtual Worlds and AI: Launched on 9 January 2024, this initiative seeks to adapt competition law to the nuances of virtual worlds and generative AI, reflecting the EU's commitment to a fair digital market. 
  • EU Parliament's Regulatory Approach to Virtual Worlds: On 17 January 2024, EU lawmakers advocated for a regulatory framework in virtual worlds that aligns with EU values and fundamental rights, acknowledging the unique challenges of digital environments. 
  • Revision of Community Design Regulation (Provisional Agreement on 5 December 2023): This revision, crucial for the metaverse, extends design protection to non-physical products, ensuring the legal framework remains relevant for digital innovations. 
  • Implications of the AI Act's Leaked Drafts (Leak on 22 January 2024): The leaked drafts of the AI Act introduce stringent regulations against manipulative AI practices in the metaverse, signalling a shift towards ethical AI usage.

G7's Intellectual Property Emphasis in the Metaverse

On 15 December 2023, the G7's IP offices, led by the Japan Patent Office, convened in a metaverse format to reinforce the applicability of IP laws in digital environments like the metaverse. This dialogue, continuing from discussions initiated by the UKIPO in 2021 and advanced by the German Federal Ministry of Justice and DPMA in 2022, focused on fostering an international IP ecosystem to drive global innovation and creativity.

The joint statement stressed the importance of diversity and inclusion in the IP domain, advocating for accessible IP systems for all societal segments, including MSMEs, start-ups, and underrepresented groups. Emphasizing the role of international cooperation and the contributions of WIPO, the G7 IP offices committed to enhancing public understanding of IP and its role in innovation.

Addressing IP rights in new digital contexts, particularly the metaverse, the offices pledged collaborative efforts to tackle enforcement and infringement challenges. This includes raising consumer awareness about the risks of counterfeiting and piracy in digital spaces, ensuring consumer protection from infringing products and content.

For further elucidation, the detailed discourse on this meeting can be found here.

European Commission's Inquiry on Virtual Worlds and AI

On 9 January 2024, the European Commission launched an initiative to scrutinise competition in virtual worlds and generative AI. This move aims to adapt competition law to the nuances of these emerging technologies. The Commission's investigation into major partnerships in the AI sector, particularly Microsoft's investment in OpenAI, reflects the EU's commitment to preserving a competitive and equitable digital market. This initiative is an embodiment of the EU's strategy to ensure that advancements in AI and virtual worlds do not undermine market fairness or consumer rights. Additional information on this initiative can be accessed here.

EU Parliament's Regulatory Approach to Virtual Worlds

The European Parliament's statement of 17 January 2024 represents a significant call for EU leadership in the regulation of virtual worlds. Lawmakers advocate for a regulatory framework that upholds EU values and fundamental rights, acknowledging the unique challenges posed by digital environments such as the metaverse. The call for consistent application of existing laws and the development of new legislation is a proactive measure to ensure that virtual worlds are secure, equitable, and respectful of individual liberties. The full statement is available here. We covered the initiative in depth also here and here

Revision of Community Design Regulation

The proposed revision of the Community Design Regulation, marked by a provisional agreement on 5 December 2023, signifies a pivotal shift in design protection, particularly relevant for the metaverse. This revision extends design protection to non-physical products, crucial for digital designs, animations, and other virtual world technologies. By accommodating the dynamic nature of digital creations, this revision ensures that the legal framework remains relevant and capable of safeguarding intellectual efforts in digital innovations. The comprehensive documentation of this revision is available here.

Implications of the AI Act's Leaked Drafts

The leaked drafts of the AI Act, unveiled on 22 January 2024, introduce strict regulations against specific AI practices prevalent in the metaverse. The Act's provisions, which prohibit AI systems employing manipulative or exploitative techniques, signify a paradigm shift towards ethical AI usage. These provisions will have profound implications for AI applications in the metaverse, especially in the creation and interaction with AI-driven characters and environments. The Act aims to protect users from subliminal manipulation and exploitation, emphasizing ethical standards and user autonomy in AI interactions. The detailed contents of these draft can be explored here.

Forward Outlook

As the Council is expected to vote on the AI Act on 2 February 2024, followed by the committees in the European Parliament on 13 February 2024 and the plenum in March or April 2024, the anticipation for its formal adoption and publication in May or June 2024 is palpable. This evolving legal landscape for AI and the metaverse, characterized by proactive steps taken by global and European entities, reflects a concerted effort to navigate the complexities of these innovative technologies.

As we stand at the cusp of these significant legal developments, it is evident that the future of AI and metaverse technologies will be significantly shaped by the interpretation, implementation, and evolution of these frameworks. The forthcoming months promise a riveting chapter in the annals of digital law, one that will indubitably influence the course of AI and virtual reality technologies in the years to come.

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