With the virtual world increasingly mirroring interactions in the real world, there are bound to be legal issues surrounding data security and privacy, intellectual property rights, tort laws, and digital currency. Without adequate protection for such information, businesses may have a free run over it, much to the detriment of users, as well as law and order.

Here we look at laws and regulations in India that may have an interplay with the metaverse.

Data protection

Data privacy and protection become crucial since all interactions in the metaverse take place in surroundings that are owned and controlled by entities that also control the creation, flow, and storage of all data in metaverse.

The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, governing the Indian data protection regime require enterprises to have compliance mechanisms in place.

The directions issued by the IT ministry’s Indian Computer Emergency Response Team (CERT-In) on April 28, 2022, can be used to protect users’ basic data and privacy rights, while maintaining cyber security in the payments and financial markets sector through the preservation of ‘KYC’ (know your customer) and financial transaction data.

IPR regime

Intellectual property protection is mission-critical in a framework like metaverse, where content is continuously created by users while interacting with the surroundings. Consequently, questions arise over ownership. This could be addressed through robust documentation and the classic concepts of ‘fair usage’ and ‘fair dealing’ in the case of copyright; questions over trademark infringement involving digital replicas have already been addressed and decided in favour of plaintiffs in US courts.

Tort laws

Tort law typically addresses property damage and bodily injury in the real world. It could similarly govern any injury — to property or psychological harm — by one user to another in the metaverse.

Digital currency

Digital currency and non-fungible tokens (NFT) have usually been used to establish ownership, value digital assets, and execute transactions in the metaverse, and these are distributed through blockchain technology and smart contracts, thus ensuring security. While they have been defined as ‘virtual digital assets’ under Finance Act, 2022, clear regulations would build trust and clarity.

Way forward

Although the metaverse and its applications are still at a nascent stage, given its growth trajectory Indian regulators must pay adequate attention.

The proposed ‘Digital India Act’ (DI Act), an umbrella framework to replace the current Information Technology Act, would cover crimes committed on social media, including the metaverse, and link with the Indian Penal Code.

Disruptive technologies have enormous potential, but their interplay with contemporary legal systems should not be ignored.

(The writer is Partner at King Stubbs and Kasiva, a law firm)