Avatar Law in Metaverse
(This Article was published on Softtech 2023 Technology Report)
Law Between Revolutions and Evolutions
Since the early 1990s, the so-called Web 1.0 era, we have witnessed many technological developments. While these developments sometimes appear as new products and/or services, sometimes they are more revolutionary than an evolution. During these technological transitions between evolutions and revolutions, the tradition of writing laws and jurisprudence, which first began with the Sumerians in Mesopotamia, has also undergone change and transformation over time to meet these needs. Although the law has often failed to catch the winds of "technological transformation", it has at least managed to keep pace with this transformation with minimal damage thanks to the correct creation of "protective legal rules".
As many jurists would agree, the law is "the set of norms regulating human behaviour". Based on this definition, if we consider that human behaviour will play a major role in the implementation of Web 3.0 technologies, which are nowadays being debated with great momentum, then we can state that it is important to evaluate these technologies from a legal point of view, perhaps sometimes to recreate them.
META-VERSE; LAW AND BEYOND
The concept of the metaverse, first defined by Neal Stephenson in 1992 in his book "Snow Crash", is no longer a science fiction concept but a technology that will be used in the near future. It is stated that this concept, which consists of the combination of the words "universe" and "meta", that is, "beyond the universe", will cause a digital transformation in which virtual reality and other technologies will be used together in all areas of our lives. It is defined as a platform that can be accessed from anywhere in the world with virtual reality (VR) and augmented reality (AR) devices, where physical and virtual worlds will be connected to each other, where users can socialise professionally and engage in commercial activities through the "avatars" they will create.
From a legal point of view, if we are talking about a digital universe where everything is composed of 0s and 1s, i.e. a binary system, it would not be reasonable to expect that the rules of law currently in force in this new "universe" will be in line with this new concept or that they will answer all questions. As a matter of fact, although at the contractual level, traditional contracts are now being replaced by "smart contracts" through "if..." Although we are working on the regulation of the relations between the parties by establishing cause and effect relations with the coding of "then...", when it comes to the law, "grey" areas are also on our agenda due to the existence of "open to interpretation" issues, and new areas of work arise for us lawyers who like to negotiate. Therefore, in this new concept defined as "the universe and beyond", it is necessary to examine what kind of reflections the basic legal needs in the ordinary world may have beyond the universe.
Before addressing possible legal problems, we should not forget that legal discussions have been held under different topics in recent years for many technologies that have actually become a part of our daily lives today. Although there are still grey areas in this new technology world, the issues that are the subject of discussions could not prevent this development and the law actually followed the technology. Therefore, without taking a pessimistic approach, emphasizing the importance of how to provide the right infrastructure legally, which stakeholders should act together, and identifying possible risks in situations that cannot be resolved will shed light on these new world « players ».
What legal issues/questions arise?
In the new concept to be created in the meta-universe, as in our daily lives, issues such as personal data transfers, labour relations due to new employment opportunities, land purchases/sales, leases, ownership of works, hence intellectual property, international law rules since a supranational system will be created;
It is important to make legal evaluations in areas such as intellectual property law, labour law, personal data protection law, inheritance law
within the scope of private law; human rights law, real estate law, tax law, international law and criminal law within the scope of public law. In this article, I would like to state that since the legal problems that may arise due to the avatars to be created in the meta-universe will be discussed, the evaluations made will be limited to this scope.
How will personal data be protected?
While data privacy issues persist in our current system, these issues are likely to become more complex in this new virtual world with augmented reality. As a matter of fact, since the digital footprints of the avatars that users will create will be recorded in a data infrastructure, measures should be taken to protect data such as credit card numbers, medical records, and location information of individuals. The survey studies also show that data privacy and security are the most important problems to be encountered in the metaverse universe, with a rate of 33%
At this point, it is stated that the "privacy by design" application regulated in the GDPR is one of the important solutions for protecting personal data in the metaverse world. Thus, by redesigning all the tools that process data, it will be effective in taking the necessary measures to protect personal data at the very beginning of the process.
Another concept that should be evaluated in terms of personal data protection is data transfer mechanisms and data localisation. Since technology giants such as IBM, Microsoft, Apple, Meta Inc. are working to realise multiple metaverse platforms with different themes, it should be noted that there will be a transition between these virtual universes. For this reason, it is important to establish data transfer mechanisms in order to ensure secure data transfers when users move between different platforms.
To be evaluated within the scope of the existing rules, in order to establish the said data transfer mechanisms, it will first be necessary to determine whether there is a data controller and a transaction that can be described as data transfer. On the other hand, it is also important to determine how the said transfer will be carried out and what approach will be adopted for data transfers both between countries and between platforms due to the increasingly widespread "data localization" restrictions of countries.
Since there is currently no uniform data privacy law or set of rules applicable to all countries in the world, which legal rules will be applied in terms of the protection of personal data in this new meta-concept, which will host different platforms, is another matter of discussion. Although there are assumptions in the market that a different set of international and universal rules for the metaverse could be established, how this would be implemented, how the interests of all stakeholders could be equally respected, and even whether all countries and/or platforms could reach a consensus on the rules to be applied is a matter of debate.
What if a cyber attack happens in the meta-universe?
Meta-universe platforms may be subject to cyber-attacks in the "traditional" sense, as well as cybersecurity threats due to the ownership and transactions of digital assets, e.g. if end-users' digital wallets are not adequately protected. In such cases, it may cause situations such as identity theft of the end user in the digital world or imitation of the created avatar by someone else.
In order to eliminate the mentioned risks, it is stated that it will be important for metaverse platforms to take the necessary administrative and technical measures within the scope of personal data protection legislation. As a matter of fact, The European Parliamentary Research Service states that identification activities on the blockchain will be beneficial in terms of eliminating these risks and that it will be important to establish cyber security protocols between platforms.
When we evaluate the cyber security risks mentioned in terms of criminal law, the decision made by the 13th Penal Chamber of the Supreme Court in 2020 catches our attention. In the relevant decision, the unauthorised sale of the plaintiff's avatar to a third party occurred due to unauthorised access to the plaintiff's e-mail address and access to account information. As a result of the examination, the Court of Cassation ruled that the defendant obtained unfair advantage on the grounds that the avatars had a material value.
New Employment Opportunities in Metaverse!
New technologies have led to changes not only in companies' operating and investment strategies but also in their employment policies. In this context, "freelance" working models, which emerged through the establishment of consultancy contracts, and remote working and hybrid models, which companies switched to compulsorily during the pandemic period, came to the agenda. Especially due to the increase in hybrid working models, new regulations have been introduced within the scope of labour law, and companies have made changes in their employment policies in this context.
In teleworking models, it is important to determine the applicable law, especially since foreign companies or the element of foreignness are involved in business relations. Since the employment relations to be established in the metaverse world are actually mentioned on a transnational level, questions such as which legal rules will be applied to the business relationship in question, how the employees will be paid or how the nature of work accidents will be determined.
When we evaluate it in terms of the applicable law, in our law, in accordance with the International Private and Procedural Law No. 5718, the parties can determine the law to which the contract will be governed in consultancy contracts containing foreign elements. If not, the law to be applied to the contract will be determined in accordance with article 24/4 of International Private and Procedural Law. The regulation in the relevant article is as follows; “In the event that the parties have not made a choice of law, the law most closely related to the contract shall apply to the contractual relationship. This law shall be the law of the habitual residence of the obligor of the characteristic performance at the time of the conclusion of the contract, the law of the place of business of the obligor of the characteristic performance in contracts concluded pursuant to commercial or professional activities, or if the obligor of the characteristic performance has more than one place of business, the law of the place of business that is most closely related to the contract in question. However, if there is a law more closely related to the contract according to all the circumstances of the case, the contract shall be governed by this law.”
In this context, there are different opinions and concerns as to whether the law of the country where the relevant platform is established or the law of the country where the employee resides will apply in the metaverse world, which is referred to as a decentralised working environment. Although it is accepted that the parties may choose the law applicable to their employment contracts, it is stated that the minimum protection rules provided to the employee constitute an exception to the choice of law, by stating that “Employment contracts shall be governed by the law chosen by the parties, without prejudice to the minimum protection that the employee shall have pursuant to the mandatory provisions of the law of his habitual place of work” in Article 27/1 of the International Private and Procedural Law. Therefore, the choice of law to be applied in such labour relations is limited in favour of the employee in accordance with the principle of protection of the employee, who is considered to be the weaker party.
For this reason, the determination of which legal rules provide more protection in favour of the worker will be made in accordance with the « principle of expediency », and the provisions that provide the minimum protection that the worker has in accordance with the mandatory provisions of the law of the place where he or she habitually works will be applied.
Regarding how employees will be paid, the question of “whether employers can pay their employees with cryptocurrency”, which is currently a subject of discussion/curiosity on the agenda, comes up. Under Turkish law, Article 32 of the Labour Law No. 4857 (“Labour Law”) defines wages as “the amount provided by the employer or third parties in return for work and paid in money” and states that wages cannot be paid in any form or by a bill representing money. When evaluated in this context, we can conclude that if Turkish law is to be applied in the labour relations established on the metaverse platform, employees cannot be paid with cryptocurrencies unless cryptocurrencies are accepted as “currency” in our legislation.
Apart from the above-mentioned, questions such as whether an accident experienced by a person hired on the metaverse platform while performing his/her job will be considered an occupational accident, what the scope and implementation of the employer’s supervision and inspection obligation will be, what the limits of the creation of appropriate working conditions by the employer will be, are among the topics that should be evaluated within the scope of labour law.
What about human rights?
It is of legal importance to examine the criminal behaviour of avatars in the Metaverse universe. Crimes such as insult, threat, sexual harassment, qualified fraud, which we encounter in “real” life,are actually occurring between avatars directed by real human hands through avatars created. Indeed, in 2022, the media reported that other avatars were harassing a British user’s avatar.
In such cases, the principle of “individuality of punishments” and whether the absolute rights of individuals from birth will also apply to their avatars should be evaluated from a legal point of view.
In terms of intellectual property;
In the context of the new concept of “life” in the metaverse, intellectual property issues have also come to the fore. As a matter of fact, it is observed that trademark owners in many countries around the world have started to file trademark applications for virtual goods and services in order to eliminate the risk that their existing trademarks do not provide protection in metaverse platforms. In the statement made by the World Intellectual Property Organization (WIPO), it was stated that the applications were filed under different classes and that the standardisation of the approaches of the examining trademark offices would be decisive in terms of future processes.
In the information letter published by the European Union Intellectual Property Office on 23 June 2022, it was stated that a guideline on the subject would be published in 2023.
So, what happens next?
Nowadays,we see that some governments are even making agreements to open embassies in the metaverse universe, additional questions such as how citizenship law will be applied, which legal rules will be applied in case of conflict between the laws of two or more countries, whether a brand new legal plane will be created for the metaverse or whether concrete legal rules will be applied by analogy for the virtual world, what the taxation system will be like, how issues such as inheritance law and property rights will be handled are also on the agenda.
Since data and data-based ecosystems are becoming more and more important today, how the data to be stored in the meta world will be processed, what kind of an economic model it will reveal, and how the stakeholders’ approaches will be, Although questions and problems such as how it will be reflected on the end-user and how “human rights” will be protected are among the topics of curiosity, as I stated at the beginning of my article since the law today follows the technology, I think that new legal rules will come to the agenda with the development and widespread use of technology and a new “legal order” will emerge. In this context, the approaches of the relevant institutions and organisations, countries and metaverse platforms to the above-mentioned legal issues and the conditions under which a common ground can be reached will be important.
 Yargıtay 13. CD, E. 2019/9265, K. 2020/258, T.2020