Multilaw members Jennifer Lantz, Stephanie Vazquez, Lydia Mendola, Chiara Marchisotti and Kim Walker explore what luxury brands need to consider in the ever-growing metaverse.
Although widespread discussion would make you think it is a fully formed experience, ready for use by anyone at any time, as of now the metaverse is more an idea than a reality. But the migration of activity from the physical world to online spaces has been going on for decades, and parts of the metaverse have been around for a long time.
Neal Stephenson coined the term 30 years ago in his 1992 novel Snow Crash to describe a virtual world accessible through VR equipment. Second Life - a virtual environment launched in 2003 by San Francisco-based Linden Lab – is still touted by users as the largest and most successful 3D virtual world created. Today, online multiplayer games such as World of Warcraft, Fortnite and Roblox allow users to move through complex imaginary landscapes, create their own characters and engage with other users. Movies such as ‘Ready Player One’ have envisioned what the metaverse might look like, and enhanced reality experiences – which “mix” the real world with digital overlays, such as Pokémon Go – are readily available.
With advances in VR and computer technology, the latest version of a collaborative virtual reality experience is likely to continue evolving, and we may look back at 2022's metaverse in the same way we currently look back to 1994 as the early days of the Internet.
Old rights still exist in a non-existent place
With the metaverse captivating users’ attention by offering new, immense, unimagined scenarios just waiting to be exploited to their full potential by platforms and brands, the legal issues that are likely to arise in the metaverse have probably arisen before, either in similar contexts (like Second Life and video games), or for similar purposes (marketing, promotion, and publicity). That’s why, most issues that brand owners will encounter are likely ones they have faced already, only in different contexts.
Just as with the rise of the Internet, questions abound. Are ad hoc rules really needed? Could or should existing provisions apply despite the changed technological environment where legally relevant conduct applies?
While the metaverse removes many of the barriers to real-world interaction - such as venue capacity, distance, and the difficulty of travel – it remains an attractive platform for brands to work with the personalities that attract consumer engagement. However, any time brands work with real people in advertising, marketing or promotion, certain issues must always be addressed, including likeness permissions and promotional rules.
When it comes to image rights, it could be said the medium is not the message: What is protected is the resulting portrayal or act of using an individual’s personal features - no matter which or how, insofar as it allows identification. This is what could happen if influencers’ avatars were used to sport the latest pieces of fashion collections, top models’ incarnations walked virtual couture catwalks, or celebrity actors starred in movie clips enacted in the metaverse.
The ability to use someone’s likeness – which is more than simply how they look – is often called the right of publicity. This right is what allows anyone, celebrity or not, to control how their persona is used in the commercial sphere. The elements of likeness or persona include someone’s name (including nicknames or professional names), voice, signature, photograph, or physical appearance, but are not limited to those traits alone.
The protection of image rights: A cross-jurisdictional analysis
Legal landscape: Italy
In Italy, use of likeness is protected by specific statutory provisions of the Civil Code and the law on copyright and related rights.These provisions set out personal, inalienable rights that prevent third-party unauthorised use of a person’s image and portrait. The two notions differ to the extent that “portrait” usually refers to the actual visual representation of a person (e.g. through photographs, footage, drawings etc.), while “image” includes any representation that identifies a person (e.g. an actor clearly impersonating a certain individual). In this broad sense, image rights are personality rights that together with one’s name, pseudonym, and honour, identify individuals in their material existence and social status, or evoke their physical features; they are positively protected in the Italian legal system. With their long-standing civil law tradition, personality rights have provided the basis for scholars and case law to outline a right to personal identity under Article 2 of the Constitution.This right is identified in the global expression of personality, including moral personality, and is aimed at preventing any representation of a person that simply may alter their true selves.
Unlike other legal systems, Italy knows a right that stands at the extreme opposite of confidentiality and privacy rights (which aim to protect a negative objective, which is an individual’s interest not to be portrayed or have their private affairs represented to the outside world). In fact, personal identity stands as a positive safeguard against misrepresentations, pursuing individuals’ interest to be portrayed as they really are. In this sense, they go far beyond the idea of mere economic exploitation that is at the core of publicity rights: Personality rights (including image rights and the right to personal identity) allow any individual to seek protection against their representation, irrespective of value, for the simple reason they do not want to be portrayed, or at least not in a certain way.
So, a third party can legitimately reproduce a person’s image and portrait, as far as a reproduction has either been expressly and previously authorised by the portrayed person, or – irrespective of their consent – is exceptionally permitted by law, as it happens in specific, exhaustively-listed exceptions. The latter include the celebrity status enjoyed by the portrayed person, which however per se do not provide a cause of justification: There needs to be an element of actual public and/or social interest to the information presented by using the image. As this general principle of consent demonstrates, the right to personal image – as a proper personality right enshrined in the Constitution – cannot be waived or assigned but can only be subject to authorisation for use in favour of third-party beneficiaries.
If these provisions were applied to the use of likeness in the metaverse, operators including platforms and brand owners should reconsider the idea of the indiscriminate use of eye-catching avatars. Instead they should carefully evaluate securing written consent covering desired uses from any recognisable individual whose image is exploited in the new virtual reality. Additionally, should they obtain this consent, they would still need to respect the persona behind the avatar, or else under Italian law, they would risk facing identity right claims if they did not provide an accurate portrayal.
In practice, should Italian law apply, any celebrity avatars used in advertising campaigns in the metaverse would need to be released by the relevant right holders. And even if they were released, users and brands would still need to be careful about their representation, considering the personal identity protection. Think of a well-known vegan celebrity and activist for animal rights such as Paul McCartney: He could be more inclined to challenge the use of his image if an avatar portraying him was used to sponsor real fur clothing; or a model of Palestinian descent like Bella Hadid, could be keener to object that her personal identity was being misrepresented if she was shown in the metaverse wearing creations of the late Israeli designer Alber Elbaz (who was Lanvin's creative director).
Of course, issues of applicable law and jurisdiction arise. Based on Italian international private law, the answer appears to lie in the person’s national law and forum. Against this backdrop, image rights in the metaverse may play out just like they do in other scenarios. That is, the metaverse may be less of a free zone than anyone would think.
Legal landscape: United Kingdom
The United Kingdom does not have codified laws protecting an individual’s right to protect the unauthorised use of their name, likeness, and other personal indicators – so-called image rights, personality rights or publicity rights.
Still, luxury brands must take more care before using a celebrity for commercial purposes than they would for example in the United States. In an era obsessed with “celebrity”, these individuals and their lawyers have found imaginative ways to combine and use existing statutory and common law causes of action to protect image rights in the UK. The arrival of the General Data Protection Regulation (GDPR) in 2018 has, as will be seen below, added another weapon to celebrities arsenal of image rights protection.
Personal indicia used to describe and identify a person – such as their likeness, gestures, dance moves and other distinguishing personal features – fall within the wide definition of "personal data“ under the GDPR. The GDPR will apply if the celebrity is in the UK and the luxury brand has a UK establishment or is targeting its goods at customers in the UK. If the celebrity can be identified from their avatar, the avatar will be personal data relating to that celebrity. The avatar may even constitute “special category data” (which has enhanced protection) if it reveals information, such as religious beliefs, ethnic origin, or sexual orientation, over and above what can be discerned from a person’s physical appearance, for example because of the type or colours of clothing or ornaments being worn.
Creating and dressing an avatar in a celebrity’s likeness will involve processing that person’s personal data. Under the GDPR, the brand will be required to have a lawful basis under Article 6 and comply with the data protection principles in Article 5. Unless the brand has the celebrity’s clear consent, it will be difficult to find a lawful basis under the GDPR to use the celebrity’s likeness. The argument that the processing is “necessary for the purposes of the legitimate interest pursued by a controller or by a third party” (Article 6(1)(f)) is likely to fail because of the balancing test that needs to be carried out: Are the legitimate interests of the brand overridden by the “interests or rights and freedoms of the data subject”? Although this is determined on a case-by-case basis, commercial use of the celebrity’s likeness for promotional purposes without their consent or any payment is unlikely to pass the “legitimate interests” balancing test.
It is also arguable that, if a brand uses a celebrity’s image for commercial advertising purposes without their consent or in a way they could not reasonably expect, this could amount to processing of personal data in breach of the “lawfulness, fairness and transparency” principle (Article 5(i) (a)). If the celebrity consequently suffered material financial or non-financial loss, they could apply to the court for compensation under GDPR's Article 82(1).
Other UK legislation and codes will also be relevant. The UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (the CAP Code) urges marketers to obtain written permission before referring in promotions to people with a public profile or implying personal approval of an advertised product (Rule 6.1). And although it is not easy to use UK trademark law to protect image rights (such as photos), avatars may infringe if they are dressed in trademarked items of clothing. For example, Nike has extended the scope of its trademarks for its trainers to cover use in the virtual world. The UK laws of “passing off” may also provide celebrities with a viable means of redress if the use of the celebrity avatar falsely and misleadingly suggests that the celebrity endorses the brand.
In practical terms however, the GDPR (and the Data Protection Act 2018) provide the most significant deterrent to the unauthorised creation of recognisable avatars. Enhanced data subject rights, stringent requirements for processing personal data lawfully, and the threat of significantly increased fines and expanded enforcement powers will offer celebrities the opportunity to use their GDPR rights (usually in conjunction with a breach of confidence claim) to prevent the unauthorised use of their avatars in the metaverse.
Legal landscape: United States
In the United States, rights of publicity are largely based on common-law theories or on state laws. Claims based on false association through the Lanham Act or unfair competition claims may also be brought in disputes about the use of someone’s likeness. These disputes typically occur when a third party uses an element of someone’s likeness in a commercially focused way, most often when promoting products or services. Accused parties sometimes defend these claims by arguing that the uses are expression protected by the First Amendment to the US Constitution, which protects expressive and artistic works. While video games have been held to be expressive works under the First Amendment, US courts recognise that there is a tension between the rights of individuals to control the commercial exploitation of their likenesses and the right of free expression. However, as a collaborative activity with a heavy commercial aspect rather than a controlled product or narrative, it’s not clear that the metaverse will be considered expressive in the same way as a film or video game, even if expressive activity occurs there.
What luxury brands should bear in mind
Whenever a brand partners with a person – be they celebrity, influencer, or anyone else – it is a best practice to have a written agreement that clearly spells out each party’s obligations and sets forth with as much specificity as possible how any portion of the person’s likeness or persona will be used in brand-related activities. The first question is always “are we using someone’s likeness?” Likeness is not limited to someone’s physical appearance, although that is also covered. Celebrities have successfully sued brands when advertising has mimicked their famous voice without permission, when ads have shown them inside the race car with which they are associated – even when their face was not fully visible – and when they have been supplanted by a robot that still called them to mind. But if your brand is using someone’s likeness, then permission is critical. Here are some examples:
- Use of likeness under an old agreement: Your brand has an existing agreement with someone to use their likeness in advertising and you want to transport that advertising to the metaverse. Does your old agreement cover the new technology platform, or is it limited to a particular technology such as print or video? It may not be, and therefore the brand may not be able to move the prior advertising to the metaverse. It’s also important to understand if the old agreement has time or geography limits. If so, those agreements may not work in the metaverse. If your old agreement covered still images, is it okay to take those images and create an animated avatar for the metaverse? Probably not.
- Use of likeness under a new agreement: The metaverse isn’t a set place or group of technologies currently, so it’s important to make sure new agreements include language that allows for technological developments, sets out reasonable places where disputes may be brought, and have practical details about how the person whose image will be used will approve the uses. Brands should also consider if they want to put any constraints or requirements on the individual about how they will conduct themselves in the metaverse – analogous to current morality or reputation clauses.
- Use of likeness without an agreement: Often creators use someone as an inspiration, but do not want to engage that person directly. Prior US disputes over similarities of voice, appearance or overall identity that have reminded viewers of a real person without showing that person had mixed results. Vanna White, of Wheel of Fortune fame, sued and won when a Samsung ad’s use of a robot reminded people of her. But others whose likeness is claimed to have inspired video game characters have lost when bringing similar claims. Courts focus on how transformed the new character is, whether that character engages in the same activities as the inspiration, and whether there is a strictly commercial purpose or some expressive activity that would qualify for First Amendment protection. If the metaverse is more like the real world than a video game, then the First Amendment may not be a useful defence.
A few thoughts about influencers and promotion
Many brands work with individuals to promote their wares in indirect ways, such as product mentions by influencers on social media. Those types of promotions also occur in the metaverse. Similarly, regulations about disclosure of material compensation and requirements for monitoring and vigilance are also likely to carry over to the metaverse. If your brand plans to work with influencers in the metaverse, the same types of guardrails and disclosures will likely be necessary, even if they are harder to do without text-based disclosures like #ad and #sponsored. Brands will also have to develop new ways to ensure that influencers are making the required disclosures, and monitor the influencer’s comments and interactions in the metaverse which may not be as easily accessible as social media posts are now.
The authors are members of the Multilaw global law firm network. Jennifer Lantz is a partner and Stephanie Vazquez is an associate at Duane Morris. They can be reached at firstname.lastname@example.org and email@example.com. Lydia Mendola is a partner and Chiara Marchisotti is an associate with the Italian law firm Portolano Cavallo. They can be reached at firstname.lastname@example.org and email@example.com. Kim Walker is a partner at UK law firm Shakespeare Martineau. He can be reached at firstname.lastname@example.org. The authors thank Multilaw’s Hayley Grammer for her editing assistance.