Translator：Jiang Wenyu

On April 13, 2022, Shanghai Landing Law Offices held the "Metaverse Entry Conference", announcing its official entry into the Metaverse. From April 14th to April 18th, Landing Law Offices, in cooperation with Sina's VR platform, organized a five-day online lecture series on the law of the Metaverse, explaining the legal issues that may be involved in the world of the Metaverse.

What exactly is a metaverse? What can the metaverse do? Let's follow the perspective of Landing lawyers and explore the answers about metaverse together.

 01

The World of Metaverse from the Perspective of Criminal Law

In the first lesson of Metaverse lecture series " Exploring the Metaverse from the Perspective of Criminal Law", Mr. Zhou Wenjia, deputy director of criminal department and senior partner of Shanghai Landing Law Offices, made the following explanation, "Metaverse is still a virtual world, which is still under the category of Internet. At present, it is still more of a financial and Internet concept because the supporting technology is still relatively immature."

What are the behaviors that involve the risk of criminal offenses in the virtual space that is the Metaverse?

Mr. Zhou suggested that when exploring the Metaverse, it was important to pay attention to the differences and connections between the Metaverse and virtual currencies. It was crucial to consider whether "cross-border" activities in the Metaverse carried criminal liability. He believed that the virtual world had its own uniqueness, ranging from the protection of personal and property rights, data confidentiality, to sales processes. For example, in the application of blockchain evidence technology in the sale of NFT blind boxes, we should all take criminal law as the basis and not cross the line.

“In addition, most people nowadays lack a deep understanding of the concept of Metaverse, which allowed many criminals to exploit the concept of the Metaverse to engage in fraudulent and other illegal activities. We should remain vigilant regarding this matter.”

During the livestream, Mr. Zhou expressed his concern about possible criminal offenses in the future Metaverse. He analyzed six possible types of crimes and provided preventive suggestions. At the end of the livestream, he expressed his expectation for the Metaverse with one sentence: "The direction and trend of human development will continue to generate emerging things. We need to explore boldly, verify carefully, and have true freedom in both reality and the virtual world."

 02

An Exploration of the NFT Compliance Model

In the second lesson of the Metaverse Lecture Series, "Discussion on NFT Compliance Models", Wang Ren, a senior lawyer from Shanghai Landing Law Offices, gave a presentation on "What is NFT", "What are the application models of NFT" and "Compliance issues of NFT under Chinese law" and other issues were explained in detail.

NFT is called Non-Fungible Token (NFT), which is usually developed by developers on the Ethereum platform in accordance with specific smart contract standards (currently the common standards are ERC721 and ERC1155, and ERC998 is also gradually being promoted). The term "non-fungible" refers to the indivisibility of each NFT, meaning that each NFT cannot be divided and represents the entirety of its underlying asset. This is in direct contrast to fungible tokens (FT).

Subsequently, Mr. Wang Ren introduced the compliance risks of NFT trading in China, which are mainly centered on three aspects: administrative liability, civil liability and criminal liability. Among them, administrative liability is mainly related to relevant licenses and filings; civil liability is mainly related to copyright infringement; criminal liability is mainly related to illegal fund-raising, money laundering, illegal business operation and intellectual property rights crimes, and put forward the corresponding compliance suggestions.

Finally, Mr. Wang Ren interpreted the "Initiative on Preventing NFT-related Financial Risks" jointly issued by China Internet Finance Association, China Banking Association and China Securities Association on April 13, 2022.

The initiative clearly states that NFTs are an innovative application of blockchain technology and should be recognized as a technology. It emphasizes that NFTs are distinct from virtual currencies, which are strictly regulated by the government. The initiative acknowledges the potential value of NFTs in enriching the digital economy and promoting the development of cultural and creative industries. However, it also highlights the risks and concerns associated with speculation, money laundering, and illegal financial activities in the application of NFT technology. Vigilance should be exercised in these areas.

 03

Metaverse, is intellectual property ready?

In the third lesson of the Metaverse Lecture Series, "Metaverse, Is Intellectual Property Ready? in which Ms. Zhang Li, Partner of Intellectual Property Department of Shanghai Landing Law Offices, sorted out the copyright characteristics and value of NFT digital artworks. She proposed that "NFT solves the problem of copyright traceability of digital artworks rather than the copyright of digital artworks", and introduced the types of patent layout and the layout of existing Metaverse technology.

Zhang Li pointed out that enterprises can take their own advantageous core technology, or competitors' technology improvement direction, main application expansion field and key supporting technology as the starting point to establish patent barriers in advance.

During the livestream, Zhang Li also shared her views on the relationship between the future Metaverse and the existing intellectual property rights, and analyzed the cases that have been or may be generated in the future. She pointed out that although the law may lag behind technological advancements, it does not hinder its practical application. We have legal rules and principles that can be applied to relevant events. However, for the emerging online world, there is an expectation for more concrete legal regulations to provide clarity.

 04

Data Compliance in the Metaverse

On April 17, Mr. Ding Xueming, Senior Partner and Head of Data Compliance Team of Landing Law Offices, shared his views on the topic of "Data Compliance in the Metaverse". Mr. Ding discussed the uniqueness of data compliance in the context of the metaverse, the operators of metaverse platforms such as DAOs and foundations, new challenges in data processing with the emergence of new smart terminals, and the potential privacy rule changes that may arise from platform autonomy. Drawing from his practical experience, Mr. Ding provided a comprehensive analysis of how to achieve data compliance in the metaverse, both in theory and in practice.

In this sharing, Mr. Ding especially introduced the new changes of data compliance under the new intelligent terminals (e.g., VR, AR, MR, XR), including the variety of data types, the changing scenarios of authorization and consent, as well as the complexity of data processing relationships. In addition, Mr. Ding focused on the changes in privacy rules triggered by platform autonomy and provided targeted advice on how to prove that user consent has been obtained under the blockchain feature. The participants in the lecture actively participated, and Mr. Ding answered.

The Metaverse has put forward new requirements for data compliance, and Data Compliance Team of Landing Law Offices will continue to study them with a view to keep communicating with colleagues from all walks of life and jointly explore new challenges of data compliance in the context of the Metaverse.

 05

 Legal Issues of "Virtual Person" in Metaverse

In the fifth lesson of Metaverse Lecture Series, Ms. Chen Mengyuan, a lawyer and patent attorney of Shanghai Landing Law Offices, shared the topic of Legal Issues of "Virtual Person" in Metaverse" with the audience.

First of all, what is a “virtual person”? "Virtual people" is a comprehensive product with multiple human characteristics realized by technical means. "Virtual people" is not a recent concept, China's earliest virtual idol was born in 2001 in the all-digital movie short film "Qingna", Subsequently, characters like Hatsune Miku, Luo Tianyi gained global popularity. Virtual characters such as "Xiao Xiao Sa", "Teresa Teng" have appeared on the Chinese New Year Gala, virtual content creators have become popular on platforms like Bilibili, and virtual streamers have gained popularity by streaming 24/7. "Virtual persons" have completely entered the public's field of vision.

Then the “virtual person” will face what legal problems?

Firstly, does a virtual person have virtual personality rights? This question can be answered as follows: if the virtual person has a one-to-one correspondence with a human being in the real world, although the virtual person does not have independent personality rights, if their virtual personality is violated, it may cause harm to the real person's personality. Based on this, the virtual personality is protected by law. However, if the virtual personality cannot be directly linked to a real person, it may be difficult for the virtual personality to be independently protected by personality rights. In some cases, the corresponding rights may be protected through Article 11 of the Anti-Unfair Competition Law, which deals with commercial defamation.

Secondly, does the work created by the AI virtual person have copyright? Referring to the copyright dispute between Shenzhen Tencent Computer System Co., Ltd. and Shanghai Yingxun Technology Co., Ltd., the court recognized that the works created by the virtual AI have copyright and are considered legal person works.

Thirdly, what algorithm compliance obligations should be implemented by the AI virtual person. the operator of the AI virtual person should implement the compliance obligations involved in the recommendation algorithm and the depth synthesis algorithm.

Finally, Ms. Chen summarized seven compliance recommendations for reference by virtual human operators.

 06

Web3.0's Change to Traditional Investment and Financing Methods

Web3.0 is a hot topic among investors nowadays, and enterprises involved in Web3.0 have been the focus of major venture capital organizations and technology enterprises. So as the next generation of the Internet, what is Web3.0 like? Is it evolution? Integration? Or is it a deeper level of governance?

Wang Ao from Shanghai Landing Law Offices (Shenzhen) explained the current hot topic of the Internet - Web3.0 - through the course "Web3.0's Transformation of traditional investment and financing methods".

Lawyer Wang Ao in the live classroom with everyone around the "Web3.0 is really decentralized" this topic to start the discussion, at the same time, also shared with everyone enterprises and investors are incredibly concerned about the " Web3.0's Change to Traditional Investment and Financing Methods ".

Since 2019, Wang Ao has been helping corporate clients with the layout of web3, including the construction of overseas company structure, equity design, equity incentives, enterprise investment and financing, qualification license application, data compliance, etc., and providing support to corporate clients with various business ideas and business models.

In the past, the purpose of Internet projects is to obtain users and followers through rounds of financing and capital investment. However, what web3 brings is a brand-new investment and financing model, a brand-new market revolution, and web3 is redefining the trade principles in the digital era.

Wang Ao's lecture showed us a brand-new world. Users take ownership of their data, can control it autonomously, and can securely realize data interaction. With the emergence of co-construction community, enterprises have a new way of operation; the emergence of Dao organization can help enterprises to get 1 million users in 1 day; the emergence of NFT helps enterprises to make up for the management loopholes, protect the user's property rights, and then retain the users.

Web3.0 still has a vast space for development and exploration. The internet is a vast world with many things waiting for us to explore.

This series of legal lectures on Metaverse has come to a successful end, and we have prepared a replay of the lectures for everyone. Follow the Official accounts of "Landing Lawyer", and reply "Metaverse" in the backstage to obtain the replay link.

As Wang Ao mentioned, the Metaverse is a virtual space that is constantly evolving and improving with future technological advancements, and there are still countless unknown fields waiting for us to discover and explore, which is precisely an opportunity and attempt brought to lawyers.