- Increased Adoption of Generative AI and Push to Minimize Algorithmic Biases – Generative AI took center stage in 2023 and popularity of this technology will continue to grow. The importance behind the art of crafting nuanced and effective prompts will heighten, and there will be greater adoption across a wider variety of industries. There should be advancements in algorithms, increasing accessibility through more user-friendly platforms. These can lead to increased focus on minimizing algorithmic biases and the establishment of guardrails governing AI policies. Of course, a keen awareness of the ethical considerations and policy frameworks will help guide generative AI’s responsible use.
- Convergence of AR/VR and AI May Result in “AR/VR on steroids” The fusion of Augmented Reality (AR) and Virtual Reality (VR) technologies with AI unlocks a new era of customization and promises enhanced immersive experiences, blurring the lines between the digital and physical worlds. We expect to see further refining and personalizing of AR/VR to redefine gaming, education, and healthcare, along with various industrial applications.
- EV/Battery Companies Charge into Greener Future. With new technologies and chemistries, advancements in battery efficiency, energy density, and sustainability can move the adoption of electric vehicles (EVs) to new heights. Decreasing prices for battery metals canbatter help make EVs more competitive with traditional vehicles. AI may providenew opportunities in optimizing EV performance and help solve challenges in battery development, reliability, and safety.
- “Rosie the Robot” is Closer than You Think. With advancements in machine learning algorithms, sensor technologies, and integration of AI, the intelligence and adaptability of robotics should continue to grow. Large language models (LLMs) will likely encourage effective human-robot collaboration, and even non-technical users will find it easy to employ robotics to accomplish a task. Robotics is developing into a field where machines can learn, make decisions, and work in unison with people. It is no longer limited to monotonous activities and repetitive tasks.
- Unified Defense in Battle Against Cyber-Attacks. Digital threats are expected to only increase in 2024, including more sophisticated AI-powered attacks. As the international battle against hackers wages on, threat detection, response, and mitigation will play a crucial role in staying ahead of rapidly evolving cyber-attacks. As risks to national security and economic growth, there should be increased collaboration between industries and governments to establish standardized cybersecurity frameworks to protect data and privacy.
Tag: virtual reality
Intellectual Property for the Metaverse
How do you use the patent system to protect inventions related to the metaverse?
What is the Metaverse?
Merriam-Webster defines the metaverse as “a persistent virtual environment that allows access to and interoperability of multiple individual virtual realities.” The term “metaverse” originates from dystopian science fiction novels in which it referred to an immersive, computer-generated virtual world. Today’s “metaverse” is now firmly integrated into the technology sector and can be thought of as a common virtual world shared by all users across a plurality of platforms. Examples of metaverse-related technology includes the software that generates these virtual environments, as well as virtual reality (VR) and augmented reality (AR) headsets and other devices that enable human interaction with the environment and representations of other humans within it.
The adoption of metaverse-related technology is expanding. In 2021 the company then known as Facebook rebranded to “Meta” in an effort to emphasize the company’s commitment to developing a metaverse. In Fall of 2022, Apple announced the development of its own VR/AR headset. 2022 also saw the launch of the first Metaverse Fashion Week.
These events are indicative of the growing emphasis on the metaverse and the expectation amongst technology companies that the metaverse will be the eventual successor to the internet, smartphones, and/or social media. Applications of the metaverse are not limited to socialization and gaming—as the metaverse expands there is increased acknowledgment of the benefits it may provide in other settings, including in education, finance, and medicine.
As patent attorneys and innovators, we ask: How do you use the existing framework of the patent system to best protect inventions related to the metaverse?
Using Patents to Protect Inventive Concepts in the Metaverse
In this blog post, we explore considerations for protecting inventions in and related to the metaverse. Because many of these technologies are new and the industry surrounding the metaverse is in its infancy, inventions made today may prove to be quite valuable in the coming years. Protecting these inventions today is likely to be well worth the investment in the future. Inventive concepts in the metaverse can be protected using both utility patents which focus on the functional benefits of an invention and design patents which focus on the ornamental aspects of an invention.
Utility Applications for Metaverse
Utility patents may be used to protect the functional aspects of hardware or software-based innovative technologies in the metaverse.
Innovators in the metaverse environment might pursue patent protection on technologies associated with headsets, displays, cameras, user control interfaces, networked storage and servers, processors, power components, interoperability, communication latency, and the like. These hardware-based inventions for the metaverse may be a natural expansion of those previously developed for augmented and virtual reality, video-game technology, or the internet. Accordingly, patent applicants may look to those fields for best practices in protecting their hardware-based inventions. As with any patent application, identifying a point of novelty early on in the process is essential to deciding whether and how to pursue patent protection.
Software-based inventions may include technologies associated with performing tasks in the metaverse, such as representation of virtual environments and avatars, speech/voice processing, and blockchain transactions (e.g., for purchasing virtual goods). These software-based inventions may face additional challenges at the U.S. Patent and Trademark Office (USPTO), where the patent eligibility bar under 35 U.S.C. §101 prohibits the patenting of “abstract ideas” which may include methods of organizing human activity, mental processes, and mathematical concepts. It is typical for software-related patent applications to receive a patent eligibility rejection during the examination process.
One challenge in patenting software-based applications for the metaverse includes the fact that software that merely implements a process that is equivalent to a known process outside of the metaverse environment is unlikely to be allowed by the USPTO. However, a software-based invention that accounts for the changes introduced by being in a metaverse environment and addresses what specific problems were unique to the metaverse may be found patentable by the USPTO. Thus, best practices for drafting patent applications related to the metaverse may be to include details surrounding the considerations taken to account for the change in operating in the metaverse environment as opposed to a non-metaverse environment in any patent applications.
Additionally, while patent applicants may draft patent applications with the USPTO in mind, applicants should also consider the intricacies of claiming patent protection for software related technologies on a global basis. For example, patent applicants should consider that patents for software processes are more difficult to acquire in Europe unless clear indications of how a software-based invention provides a technical solution to a technical problem are included in the application.
Design Applications for Metaverse
Innovators in the metaverse may also use design patents to protect ornamental aspects of their invention. For example, fashion companies may seek protection of their branded objects within the metaverse. Technology companies may try to protect the ornamental features of their headsets or user interfaces.
The protection of objects within the metaverse presents an interesting avenue for patent protection. Objects displayed within the metaverse may be protected similarly to how innovations in video-game technology, web applications and graphical user interfaces are currently protected using design patents. For example, representations of physical items within a virtual environment can be considered computer-generated icons that can be protected so long as they are shown in an embodiment tying them to an article of manufacture such as a computer screen, monitor, other display panel, or any portion thereof in compliance with 35 U.S.C. 171. Similarly, movement of items within a multiverse environment can be protected similar to how changeable computer generated icons are protected today.
Again, while patent applicants may focus on the requirements of the USPTO, it is important to note that the metaverse is inherently global in its nature and that industrial design applications across the globe may have different requirements. For example, Europe does not require a display screen for industrial designs. Accordingly, comprehensive strategies for design protection of metaverse related technologies may consider the nuances of seeking industrial design protection in various jurisdictions.
Other Methods for Protecting Inventive Concepts in the Metaverse
As with any product or company, a comprehensive strategy for intellectual property protection includes not only patents but also trademarks and copyrights. As intellectual property attorneys consider the best ways to protect a client’s product, they may often turn to trademarks and copyrights in connection with design and utility patent applications to provide more holistic protection of intellectual property assets. For example, fashion-based companies may utilize a combination of trademark protection and design patent protection for their brands and the innovative designs for which they are known in the metaverse. Software-based companies may turn to a combination of copyright and utility patents to protect innovative functionality for the metaverse.
Concluding Thoughts
The growth in use of utility and design patent applications to protect concepts related to the metaverse is immense. One study conducted by IALE Tecnología found that “over the past five years, metaverse-related patent applications have doubled to more than 2,000.” This rapid expansion in patents for innovative concepts surrounding the metaverse is only expected to advance in the coming years.
Cohesive and comprehensive strategies involving utility patents, design patents, trademarks, copyrights and trade secrets are likely to provide the best protection to innovators operating in the metaverse.
©1994-2023 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more Intellectual Property Legal news, click here to visit the National Law Review.
Metaverse Casinos: A Regulatory Wild West
A New World of Gaming
The metaverse is an immersive online universe on the blockchain where users interact with a multitude of digital worlds and with each other. As in the real world, the metaverse offers a wide variety of activities and entertainment options. The metaverse has become a haven for gaming. Users can explore casino “districts,” offering slots, poker, roulette, blackjack and more, go to shows and nightclubs, and even purchase real estate, including an entire casino. Some platforms within the metaverse are more developed than others, with their own parcels of land, decentralized governmental structures and native tokens. As this space continues to expand into various aspects of daily life, participants in the metaverse ecosystem, and in particular, gaming operators, should proceed with caution as the line between fantasy and reality continues to blur.
The metaverse provides an alternative virtual reality for those who visit, seemingly outside of the legal and regulatory structure of the real world. Now, due to the development of digital assets1 including cryptocurrencies and non-fungible tokens (“NFTs”), visitors can add real-world economic value to some in-game activities. Players can buy, sell, or gamble items in the metaverse for digital assets that can convert to fiat currency, further blurring the lines between a virtual game experience and reality. What seems to some like a game will increasingly have real-world economic consequences for users, and the businesses with which they engage in the metaverse, resulting in more regulatory scrutiny and legal disputes.
Metaverse Gaming vs. Traditional Online Gaming
It is helpful to distinguish metaverse gaming from traditional online gaming. Gaming in the metaverse and online gaming both allow users to play casino games with their friends and social network virtually without the burdens and restrictions of physical travel. Unlike traditional online casinos, the metaverse attempts to replicate the full casino experience, allowing users to explore a digital representation of a casino using a unique avatar and virtual reality technology. Through advancements in technology, users can control their avatar’s behavior in a similar manner to controlling their own conduct in the real world. Essentially, avatars are digital representation of users – they physically walk around and engage with other avatars, including making observations of other avatars’ tells and contributing to an authentic casino experience, all from the comfort of home.
Metaverse casinos generally do not accept traditional fiat currency. A metaverse casino requires a participant to convert their fiat into one of the crypto currencies accepted in the metaverse and deposit funds using a crypto wallet. Users exchange the NFTs and cryptocurrency that they win in the metaverse for fiat currency in the real world, however.
The use of crypto in metaverse gaming has some clear benefits. In addition to providing an immersive interaction compared to fiat-based online gambling platforms, metaverse casinos offer higher levels of security, transparency, and privacy for users. For example, the history of the entire transaction history is accessible on a blockchain. Although the transaction is visible on a blockchain, users may remain anonymous without having to disclose certain personal information, thereby protecting privacy. Deposits and withdrawals are processed virtually instantaneously because there is no third party verifying the transaction.
Regulatory Considerations for Metaverse Gaming
Casino and sports gaming is one of the most heavily regulated industries in the United States. The regulation is primarily at the state level. Some mistakenly believe the metaverse is insulated from real life legal restrictions. To the contrary, any gaming and wagering activity, which constitutes a game of chance involving the risk of something of value and a prize,2 that is being offered to U.S. citizens in the metaverse (on an unregulated basis) is likely to draw the attention of regulators.
Despite the popularity of metaverse gaming, the top U.S. operators have largely stayed on the sidelines while offshore and smaller companies dominate the space. This is unsurprising for three reasons:
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The fact that metaverse gaming lacks a dedicated regulatory framework and online gaming is legal in only a handful of states;
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As we wrote previously, the reluctance of regulated gaming companies operating in the U.S. to pursue the legal use of cryptocurrency given its volatility, lack of acceptance, and regulatory and/or legislative hurdles; and
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General legal uncertainty.
An operator that wishes to offer a gaming platform to U.S. citizens in the metaverse would need to do so with the express permission and under the oversight of each state’s gaming commission whose residents they serve. This may also require new legislation and regulatory schemes. For example, Wyoming, an early adopter of cryptocurrency, passed legislation in 2021 that allows sportsbooks to accept “digital, crypto and virtual currencies.”3 Generally, however, regulators and legislators are not known for their speed in adopting new and emerging technologies and the industry as a whole is still working toward more immediate and attainable goals, such as expanding legal online gaming. Currently, fewer than 10 states offer online casinos and/or poker.
There is significant regulatory and legal uncertainty surrounding metaverse casinos. For example, which oversight bodies have authority to regulate metaverse casinos? Can users face consequences in the real world for the actions of their avatar in metaverse casinos? How are players protected from unlawful conduct in metaverse casinos? Can operators be held responsible for that misconduct? State gaming regulators would have jurisdiction over gaming activity being offered to their residents in the metaverse alongside other regulators including the SEC, the U.S. Commodity Futures Trading Commission, and the Financial Crimes Enforcement Network, given the use of cryptocurrency and NFTs.4 At this early stage, there are more questions than answers. The history of the real-world gaming industry suggests it is highly probable that metaverse casinos will be subject to direct regulation.
New Legal Parameters Around Metaverse Gaming Are Expected
The competitive nature of the U.S. gaming market, the vast lobbying power of licensed gaming operators, and the substantial fees for licensure indicate that it is not a matter of if, but when regulators will intervene in metaverse gaming. While the concept of metaverse casinos is exciting and creates the opportunity for significant growth in the gaming industry, like many innovations, it brings additional challenges and risks for operators.
In fact, earlier this year securities regulators in Texas and Arizona demanded that a metaverse casino developer cease its funding for the development of its metaverse casino (and expansion of its metaverse casinos to all other relevant metaverses) through NFTs for failing to register the NFTs as securities and on the grounds that it was conducting an illegal fraudulent securities scheme.5
About a month later, securities regulators in Texas, Wisconsin, Kentucky, New Jersey, and Alabama filed an action against another metaverse casino due to its alleged ties to Russia and a fraudulent investment scheme it was running in violation of securities laws.6 The Texas State Securities Board stated its concerns about scammers being able to hide their identities (also referred to as “going dark”), as they alleged occurred here, in metaverse casinos.
In addition, just a few months ago, 28 members of Congress urged the Department of Justice to work with the industry, and other stakeholders to prosecute offshore sports betting companies operating illegally in the U.S.7 Similarly, absent a known regulatory scheme, even “successful” operation of a metaverse casino at present does not foreclose adverse action or shutdowns in the future due to increasing regulatory scrutiny.
While it is unclear how, if, and to what extent, existing regulations apply to metaverse gaming, the actions referenced above demonstrate that some state regulators are taking the position that the same rules that apply to investments in the real world also apply to investments in the metaverse. The risk is not limited to the virtual world, but also exposes investors to the potential loss of real money. The above matters also highlight the broad range of risks government authorities could be motivated to address, from international policy implications to financial fraud scams.
Pioneering the Metaverse
Although there are significant barriers to operating gaming platforms in the metaverse, forward-thinking gaming companies have wisely been preparing to enter this new world when it is safe to do so. If the metaverse becomes as integrated into daily life as it is expected to be, those pioneers will reap the rewards. We recommend gaming operators in the metaverse proceed with caution and retain highly qualified counsel to help them navigate the developing regulatory landscape.
For more internet and cybersecurity legal news, click here to visit the National Law Review
Copyright ©2022 Nelson Mullins Riley & Scarborough LLP
FOOTNOTES
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Regulators in the United States including the Securities and Exchange Commission (“SEC”) use the term “digital asset” to refer to “an asset that is issued and transferred using distributed ledger or blockchain technology.” Statement on Digital Asset Securities Issuance and Trading, Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets, SEC (Nov. 16, 2018), available here. As the SEC has noted, digital assets include, but are not limited to, virtual currencies, coins, and tokens. Id. A digital asset may in certain instances be deemed a security under the federal securities laws. While not defined in the securities laws, the SEC often refers to digital assets that are securities as a “digital asset securities.” Id.
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The issue of what is a “thing of value” within the meaning of state anti-gambling law has been the subject of recent litigation. See, e.g., Kater v. Churchill Downs, Inc., 886 F.3d 784 (9th Cir. 2018) (virtual chips in online game held to be a “thing of value” for purposes of Washington’s illegal gambling law); Coffee v. Google, LLC, No. 20-CV-03901-BLF, 2022 WL 94986, at *13 (N.D. Cal. Jan. 10, 2022) (“loot box” prizes limited to use in in-app game not “things of value” under California illegal gambling law).
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Pat Evans, Cryptocurrency In Legal Sports Betting: What’s Next?, (June 9, 2022), available here.
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We will discuss the potential role of these Federal regulators in future articles.
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Dorothy N. Giobbe, et. al, Texas and Alabama Securities Regulators File Enforcement Actions Against Online Casino Developer Selling NFTs to Operate Casinos in a Metaverse, (April 29, 2022), available here.
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Five States File Enforcement Actions to Stop Russian Scammers Perpetrating Metaverse Investment Fraud, (May 11, 2022), available here.
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Chris Altruda, Congressional Group Calls on DOJ to Help Fight Illegal Offshore Sportsbooks, (Jun. 30, 2022), available here.
Pokémon Go: At (Or Coming To) A Workplace Near You
If you haven’t already heard, Pokémon Go, a virtual reality app created by Nintendo and Niantic, is taking the world by storm. According to Forbes, the app is about to surpass Twitter on the Android platform in daily active users, even though it was first released just a couple weeks ago in the United States and Australia and has not yet been made available worldwide. More and more people are getting in on the action, exploring real world landscapes with their smart phones in hopes of capturing virtual Pokémon appearing on their screen based on their phone’s clock and GPS location. It seems that no location is off limits, as Pokémon appear on or near both public and private property – even in bathrooms. As the Pokémon franchise motto commands, users “Gotta Catch ’Em All” at designated “Pokéstops” in their quest to become a renown Pokémon “trainer” who can out battle other users at local, virtual “Gyms.”
Pokémon Go users have been wreaking havoc, day and night, along the way. They have been loitering near, and trespassing on, private property, so much so in Massachusetts that the Boston police are calling for users to be “vigilant” in avoiding private property and the “obvious inherent dangers” presented by playing Pokémon Go. They have disrupted operations at hallowed sites, such as the 9/11 Memorial and the Holocaust Museum. One even interrupted a live weather report. Users have used the app to lure and then rob other, unsuspecting users. One gamer ran his car into a tree while playing the app. Another was hit by a car trying to cross a public highway while playing the app. They have even fallen off a 75 foot-high cliff while playing the app.
Employers are not immune from the Pokémon Go fun. They have been – or soon will be – affected not only as property owners but also as managers of their employees.
Employer as Property Owner
As legal bloggers have noted, Pokémon Go challenges the traditional paradigm for legal property rights. It blurs the lines between reality and augmented reality, raising a number of interesting legal questions in the process. Does placing a Pokémon on private property without permission affect a property owner’s common law right to exclusive ownership of his property? Are Nintendo/Niantic potentially liable for placing characters on private property? Does the presence of virtual Pokémon on a property create an attractive nuisance that could create liability for the owner in the event a child-user injures himself on the property? If so, how would the property owner abate the nuisance? Can the state preclude users from playing Pokémon Go on public property consistent with the First Amendment? The answers to these questions are unclear.
What is clear, however, is a property owner’s right to exclude others from his property under West Virginia law. A property owner generally has the right to exclude other persons from his property, but there are exceptions to this rule. For example, if the property is a place of public accommodation, the property owner may not exclude persons based on their protected status, e.g., race, sex, religion, disability, or national origin. Generally speaking, however, property owners could legally exclude Pokémon Go users from their premises. To wit, in the case of a trespasser, a property owner could seek monetary damages for any damages caused by a trespass, even if such damages are only nominal.
A property owner’s obligation to keep his property safe is also clear. In the case of an invited person, the property owner must exercise reasonable care to protect the invited person from anticipated/foreseeable hazards. In the case of a trespasser, such as a wandering Pokémon Go user, the property owner need only refrain from willfully or wantonly injuring the trespasser to escape liability.
Pokémon Go isn’t all bad from a property owner’s perspective, however. For the right property/business owner, Pokémon Go could be a very useful marketing tool. Just Google “6 Ways To Use Pokémon Go in Your Local Marketing Campaign” to learn how. One New York Pizzeria spent just ten dollars to have a dozen Pokémon lured to its store and saw a 75% increase in their business. How’s that for return on investment?
Employer as Manager
Pokémon Go also raises several concerns for employers as managers. Several of these concerns are obvious. The foremost of these concerns may be workplace safety. In a little more than a week, Pokémon Go users have shown just how dangerous the app can be. Think about what could happen if you added a distracted user to the existing hazards in your workplace. Disaster. In addition, there is the age-old concern of vicarious liability, especially for employers who have employees out on the road. Your mobile device policy should preclude employees from using a mobile device while driving, if it doesn’t already. West Virginia law makes it unlawful to use your phone while operating a motor vehicle on a public road.
Further, Pokémon Go is yet another appealing fad, much like March Madness, that threatens to bring your workforce to a halt while on the clock, particularly if you employ groups of Millennials or Gen Zers. You must set appropriate boundaries and outline clear expectations with your employees, especially where you are relying on broad language in your company handbook. If you need a “catchy” sign to get your employees’ attention, one human resource manager has got you covered:
Otherwise, revisit your personnel policies and update them as needed to mitigate the potential employment carnage that could result from Pokémon Go. At bare minimum, no Pokémon hunts in the bathroom!
There are at least a couple of hidden concerns with Pokémon Go too. For one, users participate on the Pokémon Go program with their phone’s camera and will soon, if they do not already, have the option of recording or even live streaming their Pokémon Go gameplay. That is cause for concern where employees are permitted to play Pokémon Go on breaks in the workplace. In their quest to capture Pokémon “living” around the office, they may record or stream unsuspecting coworkers, or worse, confidential company information. This creates one more avenue for workplace conflict among employees and raises security concerns for private company information.
For another, Pokémon Go may be a cyber-security concern for company’s using Google products, such as Chrome, Gmail, and Google drive. When the app first debuted, it requested “full access” to the user’s Google account, which meant that Nintendo and/or its partner, Niantic, could not only review your email, your Google docs, Google photos, your location history, your search history, but also, modify all that content, and even send emails as the user of your Gmail account! For users who signed up with a company-related Google account, Niantic was functionally a business partner. It appears that recent outcry has led the Pokémon Go creators to modify the permissions required to download the app. It will be interesting to see whether this change is enough to quell the public outcry. Either way, the initial cyber-security scare is a reminder that employers should remain vigilant in maintaining the wall between work and play with employees that have been granted a company-sanctioned mobile device.
What You Should Do
Pokémon Go is all the rage and promises to be for your employees soon, if it isn’t already. Regardless of whether the app catches on at your workplace, go through the exercise of reviewing your mobile device and social media policies. Are they inclusive of augmented reality apps? If necessary, update them to ensure that they are clear on the use, non-use, or limited use of augmented reality apps like Pokémon Go at your workplace. But don’t stop there. Review your policies with your employees, even if you don’t make any changes. Make sure that employees are aware of the boundaries for augmented reality apps at the office.