INTRODUCTION TO THE LAW OF VIRTUAL AND AUGMENTED REALITY

PART I

INTRODUCTION TO THE LAW OF VIRTUAL AND AUGMENTED REALITY

• 1. The law of virtual reality and increasingly smart virtual avatars

Woodrow Barfield and Alexander Williams

• 1. INTRODUCTION

Advances in virtual and augmented reality technology, and in the software to produce virtual worlds, have allowed virtual avatars to be used with increasing frequency for a range of activities. But with improvements in the technology to create virtual and augmented reality worlds and decreases in equipment costs have come corresponding issues of law and policy applying to the avatars which represent the human presence in virtual environments. This chapter discusses several issues of law which relate to the design and use of virtual avatars, with a specific focus on avatars that are gaining in intelligence and operating with more and more autonomy from humans.1 To introduce this topic we present an overview of legal disputes brought forth by virtual and augmented reality worlds, including those implicated when virtual avatars are used for commercial activities. After the initial discussion focusing on legal disputes within virtual and augmented reality worlds, the remainder of this chapter focuses on issues of law and policy which relate more specifically to the design and use of increasingly smart virtual avatars. For the purposes of this chapter, we note that virtual avatars are increasingly taking a form in which they are not simply computer-generated “puppets” manipulated by real-world users, as is the case in many online virtual reality games, but rather are becoming more autonomous actors, generating their own decisions and solutions to problems which may not always be intelligible or transparent to the real-world users they represent. Further, it is the case that “familiar” virtual avatars controlled almost entirely by real-world users bring up a host of legal issues, such as whether the avatar uses copyrighted or trademarked material and, if it does, who is liable. But while increasingly smart avatars operating with greater autonomy will raise many of the same legal issues as do current avatars, they will also raise further significant legal issues, such as whether the avatars themselves deserve rights. While many current avatars represent alter egos of real-world users in a virtual world, the concept of an avatar is expansive and can refer to any character or perhaps any object in the virtual world—and may even represent no natural person outside the virtual world.

A virtual environment (or virtual world) is an interactive computer simulation which lets its participants see, hear, use, and even modify the simulated objects in the computergenerated environment.2 Within a virtual environment, the user may be stimulated by a range of sensory information, including spacialized sound, stereoscopic imagery, olfactory cues, and force or tactile feedback. Some commentators have even suggested that developments in virtual environments are occurring so rapidly that humans may “inhabit” these environments within the foreseeable future. Although this may seem like a bold prediction, many people are already spending significant amounts of time in virtual environments engaging in activities such as learning skills or performing recreational activities. One reason for the time spent in virtual and augmented reality is that the participants may experience a sense of presence, which is generally regarded as the suspension of disbelief that one is viewing a simulation, that is, the experience of actually “being there” in the virtual or augmented reality world.3 More realistic virtual environments lead to a higher sense of presence, and it has been shown that one way to increase the realism of a virtual environment is by projecting avatars in the virtual world that have the ability to interact with humans and, in some cases, to serve as an alter ego for a human creator.

Participation in a virtual world through the use of a virtual avatar is a compelling experience, especially for those who play massively multiplayer online roleplaying games and for those that experience virtual reality through head-mounted, stereoscopic 3D displays. The virtual avatar(s) representing people enable thousands of participants to interact simultaneously within the same virtual world, and in such settings these participants effectively become the avatars they have created, often looking through their eyes and engaging with other such virtual beings. Virtual avatars can be thought of as computer programs consisting of datasets and algorithms, along with a visual representation. As such, they may receive the legal protection that is awarded software, and the protection awarded images from copyright and trademark law. However, unlike standard software programs, intelligent avatars may deviate from their original programming until they are no longer recognizable to the original programmer(s), raising a host of legal issues beyond the scope of current virtual avatars. These issues are the focus of this chapter.

• 2. THE USE OF AVATARS FOR COMMERCIAL ACTIVITIES

Since increasingly “smart” avatars are being used more and more in commercial activities, in this section we introduce examples and legal issues which relate to the use of virtual avatars for marketing and branding purposes. We then move on to other issues of law relating to virtual worlds and increasingly smart virtual avatars. Certainly, introducing real-world brands, in some form or another, within virtual worlds is a viable means of engaging in commerce, and is an area that has generated several legal disputes. Additionally, an interesting question of commerce for virtual reality is whether avatars will actually buy real-world products that are marketed in virtual worlds, in effect purchasing real-world goods for their creators, just as those creators buy virtual-world paraphernalia for them. Could an avatar who currently spends Linden dollars to buy a virtual dress from another avatar’s designer clothing store in Second Life be enticed, while visiting an in-world Gap retail outlet, to click on a cash register and use his or her creator’s credit card to buy a real-world Gap sweater that would be shipped to the creator’s doorstep?4

In terms of efforts to market real-world products in virtual worlds, companies are beginning to look beyond the overall market itself and to think about the potential individual customer, which may be the person behind the avatar or, with increasing intelligence, the avatar itself rather than its creator.5 The virtual avatar, as a distinct creation of the user’s psyche, can influence its creator’s purchasing behavior and even make its own purchases of real-world products in the virtual world, deliverable to the user’s real-world door. At the least, avatars offer a window into people’s hidden preferences and a means for achieving sustained consumer engagement with a brand.6 According to writer Paul Hemp, the avatar arguably represents a distinctly different “shadow” consumer, one able to influence its creator’s purchase of real-world products and conceivably make its own real-world purchases in the virtual world.7 At the least, it may offer insights into its creator’s hidden tastes. Further, online virtual worlds offer untapped marketing potential for real-world products and services, particularly because of their ability to generate sustained consumer engagement with a brand. This occurs through interactions with “avatars,” the “virtual beings” users create as representations of themselves and through which they live and relate to others in these worlds.

Increasingly smart virtual avatars might also be enlisted to play a direct role in marketing, in that they could use their virtual-world experience in creating virtual property to design products with real-world potential. For example, several Second Life clothing designers have been approached by real-world fashion houses, and at least one business makes real-world versions of furniture based on virtual “furni” designed by Second Life residents.8 Avatar brokers could link real-world companies with virtual landowners willing to rent space for the companies’ marketing initiatives. This implicates the laws of property and of licensing. Avatars ultimately could run virtual-world stores selling real-world products and paid to publicize, overtly or not, those same products. This implicates the law of contract, and the terms of contracts for virtual reality games have already been an issue of dispute within virtual worlds. For example, in Evans v. Linden Research, Inc.9 the plaintiffs were in litigation with Linden Lab over their virtual property rights, arguing that by suspending their accounts Linden had deprived them of their virtual goods. The company asserted that, according to its terms of service agreement, the plaintiffs only had rights to the intellectual property of goods created in-world, not to the goods themselves.10

Further, many commercial brands that are placed in the virtual world will be protected by trademark law. In general, trademark law protects against the unauthorized use of a trademark in a manner that causes a reasonable consumer to believe that the trademark owner either was the source of the goods or endorsed or sponsored such goods. What if the virtual reality experience lets a person drive a virtual Mercedes? Will the virtual-world participant think that Mercedes created the virtual reality experience or sponsored it? If so, the consumer may believe that Mercedes endorsed the use of their brand in the virtual world—and if the brand is shown in an unfavorable light, a trademark cause of action may be warranted. Further, what if the virtual environment participant and not the virtual reality company imported the trademarked item into the virtual world, and what if the user can sell the trademarked item they imported for virtual or actual cash?

Under US law, there are two pieces of legislation that provide significant liability protection for those who host interactive online media such as the virtual game world of Second Life. The Communications Decency Act (CDA) of 1996 (aimed at liability for defamation cases), and specifically Section 230, subsection (c)(1) of the Act, states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”11 Additionally, under the Digital Millennium Copyright Act (DMCA)12 an internet service provider may not be considered to be the publisher of the content itself, and therefore may not be liable for the actions of their users (this is the so-called safe harbor provision of the DMCA, applicable for copyright infringement).13 The concept behind the safe harbor Section 512 in the DMCA is that providers are shielded from the burdens of knowing and policing the contents of their network. The cumulative protections provided by the CDA and DMCA can potentially eliminate liability for copyright infringement (DMCA) and defamation (CDA) for those who host virtual environments populated by users’ avatars.

Under US law the safe harbor provisions of the DMCA do not protect virtual reality companies from trademark claims, but by analogy to general trademark infringement cases, such as Tiffany v. eBay,14 the virtual reality companies should be protected from contributory infringement claims as long as they either are not aware of the conduct or take action to remove the infringing content if they become aware of it. Furthermore, under the US Federal Trademark Anti-Dilution Act,15 nationally known brands can sue if the use of their trademark by others in advertising or branding a product “tarnishes” or “blurs” the trademark. This Act applies whether or not consumers are confused as to the source of the goods, so it is more analogous to a copyright claim than a trademark claim. Thus, virtual reality companies should be diligent not to include any images of nationally known brands in their advertisements, such as online trailers, teasers, or opening web pages.

In addition, augmented reality—which superimposes virtual imagery onto real-world environments, as popularized by the Pokemon Go craze—is also exploring the use of virtual images projected in the physical world for advertising purposes. For years, major brands have offered mobile augmented reality apps that create interactive 3D digital models of their product. But with augmented reality, some interesting issues of law have arisen as users view the virtual images throughout the real-world environment. For example, Pokemon Go allows users to “capture” Pokemon on private property, which has resulted in trespassing lawsuits and injuries to participants despite the game featuring warnings such as “Remember to be alert at all times. Stay aware of your surroundings.” Another issue is that with augmented reality there is a responsibility to ensure that the digital representations of a product faithfully convey the product’s actual features; if this is not the case, several causes of action are available. For example, if the augmented reality demonstration of a product materially misleads or misinforms the consumer about a product’s features, the advertiser could find itself liable for false advertising. In the US the primary legal authority creating the right to sue for such actions is the Lanham Act, which also regulates the use of trademarks. False advertising claims may be filed by a regulatory agency or by a private party whose interests may be negatively affected by the challenged activity. The difficulty involved in precise 3D rendering of virtual images could likewise result in augmented ads that are similarly unrealistic. In the automotive realm, for example, a digital artist may leave out or oversimplify important features when rendering a product, in ways that mislead consumers into believing things about the product that are not accurate. By definition, digitally enhancing physical reality is a fundamental element of what virtual and augmented reality do; yet without careful attention to the design or products displayed in the virtual worlds, a company may find itself subject to a lawsuit.

• 3. DISPUTES IN VIRTUAL AND AUGMENTED REALITY

Continuing the discussion on how the law applies to virtual worlds, we observe that the law of tort may be relevant if a person using virtual reality technology is injured or property is damaged.16 To illustrate this idea, consider the possibility of “real-world” injuries or property damage which may occur when one plays a virtual reality game. To proactively counter claims of negligence and product liability tort actions, virtual reality manufacturers and “publishers” of the content displayed in virtual reality typically use “warning” stickers and disclaimer language in license agreements, to limit liability for manufacturers of virtual reality technology and for software designers of virtual and augmented reality games.

Since the development of virtual reality games by companies such as Nintendo, various personal injury claims—such as for sprained wrists and dislocated shoulders arising from the use of the equipment to interact with the virtual world—have arisen. For example, Nintendo’s Wii Tennis and Wii Boxing were both the subject of civil action,17 regarding use of the controller’s safety strap.18 In Elvig v. Nintendo of America, Inc., a class action lawsuit which involved, among others, breach of implied warranty, product liability, and negligence, the court held that the danger involved in losing possession of the Wii controller while playing a game, namely that it could act as a “damaging missile,” were covered by the company’s repeated warnings in that regard.19 More specifically, on the product liability claim, Nintendo argued that it gave players adequate warning of the need to retain possession of the controller and advised them of the possibility that release of the controller during vigorous motion could result in breakage of the strap and lead to damage to persons or property. In agreement, the court noted that Nintendo advised players via a safety card included with the Wii system that “If you use excessive motion and let go of the Wii Remote, the wrist strap may break and you could lose control of the Wii Remote. This could injure people nearby or cause damage to other objects.”20 This, coupled with repeated instructions on the safety card that advised players “DO NOT LET GO OF THE REMOTE DURING GAME PLAY,” ensured that, if the player followed Nintendo’s instructions and heeded its warnings, the Wii system would not pose an unreasonable danger. On the implied warranty action, the court cited a lack of evidence to indicate just what the intended purpose of the strap was. To withstand summary judgment, the plaintiff needed to show more than an alternate plausible theory on the purpose of the strap; rather, the plaintiff needed evidence of the ordinary purpose of the strap and proof that it failed the ordinary purpose (the plaintiff failed to provide this). Based on the above reasoning the court granted summary judgment for the defendant on all claims.21

Additionally, game platforms for virtual reality games and service providers have sought to limit their liability for user generated content and in particular, user comments which could result in a cause of action for defamation. This they do by refraining from actively moderating games, to avoid serving as a publisher of content.22 Further, to avoid liability, content providers may establish takedown policies and procedures to quickly remove infringing content, and also to require users of virtual worlds to sign robust terms of use policies regulating how users interact with one another in the virtual world. Defamation may also be relevant for avatars communicating in virtual worlds. An interesting question is: How will (or should?) real-world defamation laws be used to protect the rights of avatars, for example, avatars that appear in the popular online game Second Life? In general, defamation laws are designed to protect a person from having their reputation tarnished in their community by another person making false claims about them. Additionally, an action for defamation may occur when a communication is made about a person that harms their reputation in the eyes of at least a substantial minority in the community, or deters others from associating with that person. But what happens if an avatar makes defaming communications about a second avatar that lowers the second avatar’s reputation in a virtual world such as Second Life and as a result other avatars will not associate with them (commercially or socially)? What steps, if any, can the real person behind the defamed avatar take in order to rectify this situation? And with increasing intelligence and autonomy, would the avatar itself have any rights?23

An interesting case involving virtual images, Amaretto Ranch Breedables, LLC v. Ozimals, Inc., was litigated in a United States District Court and involved a DMCA takedown notice between companies that produced virtual animals in Second Life.24"4 The plaintiff brought forth several legal issues such as copyright, defamation, and trade libel claims which were based on one Second Life trading entity competing against another.25 The defamation action arose from comments made in-game with regard to a copyright dispute and potential damages it may have caused. For a takedown claim arising from activities in the virtual world, the DMCA permits content owners to prevent infringement by seeking a court order that requires an internet service provider to block or remove access to content that allegedly infringes copyrighted content. More specifically, the DMCA permits content owners to prevent infringement by seeking a court order that requires an internet service provider to block or remove access to content that allegedly infringes copyrighted content. In this case, Ozimals’ copyright claim alleged that Amaretto Ranch Breedables’ virtual horses infringed on their virtual bunnies and filed a takedown notice for their virtual horses and feed. Amaretto sued for a temporary restraining order and preliminary injunction, which was granted by the court and which barred Linden Research, the operator of Second Life, from removing their products. Had the DMCA order gone through, it would have cut off Amaretto’s source of income before it could challenge Ozimal’s copyright claim. Ultimately, the court granted Amaretto the temporary restraining order against Linden Research, stopping it from removing the horses until a preliminary injunction ruling was made.

A leading jurisdiction for tort law disputes is California. Under California law,26 the elements of a defamation claim are: publication of a statement of fact that is false, that is unprivileged, and that has a natural tendency to injure or cause “special damage,” where the defendant’s fault in publishing the statement amounts to at least negligence. Publication could involve the output (or speech) of virtual avatars, may be written or oral, and involves communication to a third person (or avatar?) who understands the defamatory meaning of the statement and its application to the person to whom reference is made. Publication need not be to the “public” at large; communication to a single individual other than the plaintiff is sufficient. However, republication of a defamatory statement made by another is generally not protected. Further, under California law, a plaintiff need not show special damages—for example, damages to the plaintiff’s

The law of virtual reality and increasingly smart virtual avatars 9 property, business, trade, profession, or occupation, including expenditures that resulted from the defamation—if the statement is defamation per se. A statement is defamation per se if it defames the plaintiff on its face, that is, without the need for extrinsic evidence to explain the statement’s defamatory nature.27 California courts recognize a number of privileges and defenses in the context of defamation actions, including the fair report privilege, the opinion and fair comment privileges, and substantial truth; all of these could be applicable to virtual worlds in a defamation action occurring with virtual avatars.

As indicated above, another major area of law, the law of property, is also being challenged by the buying and selling of virtual images/property. For example, Linden Lab, the company behind Second Life, allows users to lease virtual land to other players, on which they can build and sell virtual items and services within the game. This raises the interesting question of whether the ownership of virtual goods should be treated as analogous to ownership of real property and goods in the real world as opposed to a licensed service provided by the operator of the virtual reality world and governed by the End User License Agreement (EULA). An example case is Bragg v. Linden Research, Inc.,28 in which players of Second Life were allowed to build objects, explore the world, interact with other players, and purchase land with real-world money. In 2003, Linden announced that it would recognize participants’ full intellectual property protection for the digital content they created or otherwise owned in Second Life, such as cars, homes, or slot machines. Players were also able to purchase “virtual land,” make improvements to that land, exclude other players from entering onto the land, rent the land, or sell the land to other players for a profit. The plaintiff, Bragg, had purchased numerous parcels of land in Second Life, including a parcel of virtual land named “Taesot.” However, Linden sent Bragg an email advising him that Taesot had been improperly purchased through an “exploit,” and as a result Linden took Taesot away. It then froze Bragg’s account, effectively confiscating the virtual property and currency that he maintained on his account with Second Life. When Bragg sued Linden, Linden argued that their agreement required mandatory arbitration, a clause which was central to the dispute.

Before a person is permitted to participate in Second Life, they must accept the terms of service by clicking a button indicating acceptance. Bragg resisted enforcement of the terms of service arbitration provision on the basis that it was “both procedurally and substantively unconscionable.” In California law, the procedural component of an unconscionable contract can be satisfied by showing oppression through the existence of unequal bargaining positions, and surprise through hidden terms common in the context of adhesion contracts. The court stated that a contract is procedurally unconscionable if it is a contract of adhesion.29 A contract of adhesion is a “standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” In this case, the Second Life terms of service comprised a standardized contract which only allowed the customer to agree to it or reject it.30 The court held: “When the weaker party is presented the clause and told to ‘take it or leave it’ without the opportunity for meaningful

negotiation, oppression, and therefore procedural unconscionability, are present.”31 An arbitration agreement that is an essential part of a “take it or leave it” employment condition, without more, is procedurally unconscionable. In this case, there was no alternative to Second Life in the market at the time—so if Mr Bragg did not accept these terms he could not play Second Life or any other similar game or service, which created an unconscionable take-it-or-leave-it situation. Linden also had superior bargaining strength over Mr Bragg, and the contract was therefore one of adhesion. The plaintiff’s suit was ultimately settled before a final decision was reached; however, the District Court decided that the Second Life terms of service’s mandatory arbitration provision was unenforceable and, interestingly, that interaction with a person visiting a virtual world could be a factor to satisfy a state’s “minimum contacts” requirement for personal jurisdiction.

If legal systems ultimately decide that virtual reality purchased and acquired content should be afforded similar status as real-world goods and property, this will have profound effects on the virtual reality business model and lead to further questions relating to common law contract law—and, in the US, the Uniform Commercial Code (UCC)— such as: Will users be able to buy and sell their virtual content in the real world? Does software used to create virtual worlds fall under the banner of goods or services? Are virtual images/objects used in virtual worlds goods or services? Will we see a move away from trying to deal with ownership and the rights around virtual content under the End User Terms and Conditions and a move toward discussing “leases” of virtual property, and therefore implicating the law of landlords and tenants? Furthermore, how will the theft of virtual goods and content by another user be dealt with? While courts in South Korea have, through the Game Industry Promotion Act, actively considered the question of the legal status of virtual reality goods,32 many jurisdictions have not addressed the issue of property rights in virtual and augmented reality. Surely this is an area requiring legislation, not to mention a body of case law to aid courts in deciding property disputes occurring in virtual and augmented reality worlds.

As another important issue involving virtual and augmented reality worlds, consider the problem of determining jurisdiction for the actions occurring within virtual worlds especially when virtual avatars perform activities across state and international boundaries. In the US, the Federal Rules of Civil Procedure and states’ long-arm statutes apply. If a dispute arises in the virtual world, which real-world law and jurisdiction applies? The answer can be complex and may in part depend upon the nature of the dispute and the jurisdiction laws of a particular physical location. In virtual worlds, the service provider will typically seek to rely upon the laws and jurisdiction set out in its terms of service agreement. However, where a contract is made between a business and a consumer domiciled in the European Union (EU), e-commerce regulations provide that the business-to-consumer contract cannot deprive the consumer of the protection of the laws of the country in which he or she resides. This is fine in a commercial dispute, but what about situations occurring in virtual reality where a criminal offense has taken place—for

The law of virtual reality and increasingly smart virtual avatars 11 example, where the avatar of one player is alleged to have virtually assaulted or stolen from another player? Should this be decided by the criminal courts or is this a commercial dispute, and in either case, which law and jurisdiction applies? Do the related terms of service provide the framework from which to derive jurisdiction for multiuser programs and in determining which governmental regulations should be brought forth to interpret them? As mentioned above, in Bragg, the defendant filed a motion to remove himself from the litigation based on a lack of personal jurisdiction. Although much of the court’s discussion of minimum contacts is fairly boilerplate, the judge’s analysis included a unique twist when he recognized that the defendant’s avatar may have actually interacted with Bragg’s avatar within the virtual world: Once inside Second Life, participants could view virtual property, read additional materials about purchasing virtual property, interact with other avatars who owned virtual property, and, ultimately, purchase virtual property themselves.33 Significantly, participants could even interact with the defendant’s avatar in Second Life during town hall meetings. These are factors occurring in virtual worlds that courts may consider in determining jurisdiction. As another example of an emerging area of law where virtual environments have been implicated, consider the reconstruction of evidence of a crime scene. For example, in a criminal law case, the defendant was convicted and sentenced to 20 years’ confinement. As part of the evidence presented, a virtual reality recreation of the route driven to strike the victim was shown. The Court of Appeals of Texas upheld the allowance of this evidence, concluding that the probative value of the virtual reality crime scene recreation was not substantially outweighed by the danger of misleading the jury.34

Additionally, a topic for a law of virtual reality is whether “real-world” crimes such as those listed in the US Model Penal Code can be committed in virtual worlds. Given that there are few cases or legislation specifically addressing how virtual acts map to real-world criminal law, we must examine related cases and statutes for a sense of how courts might decide such issues. In the United Kingdom, for example, an individual hacked into games publisher Zynga’s social games platform and transferred 400 billion virtual poker chips into his account. Consider another example in which real-world crime bled into virtual worlds to the extent that the term “virtual mugging” was coined. It was argued that when some players of the virtual reality game Lineage II used bots to defeat other players’ characters and take their items, they were essentially mugging virtual avatars. Some countries have even introduced special police investigation units to cover “virtual crimes.” For instance, in the US the FBI’s White Collar Crime Division investigates fraud committed by business and government professionals, and particularly money laundering—a number and variety of methods are used by criminals to launder money, including the use of virtual currency. Similar agencies exist in other law enforcement bodies which focus on cybercrimes, such as Homeland Security’s Cyber Crimes Center, Europol’s European Cybercrime Centre, and England’s National Cyber Crime Unit. Undoubtedly, as virtual systems are increasingly used, examples of virtual crime will capture the attention of national and international enforcement agencies, with all of their established procedure and jurisdiction. Still, we expect that new legislation and international treaties will be

needed to address the increasing incidences of virtual crime occurring across international boundaries.

Further, intellectual property law will have a major role to play in virtual worlds, and particularly in rights for virtual avatars. For instance, virtual reality software (object and source code) such as software for other applications is primarily protected under copyright, and database rights may also be available. Historically, computer programs were not effectively protected by copyrights because computer programs were not viewed as a fixed, tangible object, and in the early days object code was viewed as a utilitarian good produced from source code rather than as a creative work. Due to lack of precedent, this outcome was reached while deciding how to handle computer program copyright. In 1974 the Commission on New Technological Uses of Copyrighted Works (CONTU) was established, which decided that computer programs, to the extent that they embody an author’s original creation, are proper copyright subject matter. In 1980, the United States Congress added the definition of “computer program” to 17 U.S.C. § 101 (the Copyright Act) and amended 17 U.S.C. § 117 to allow the owner of the program to make another copy or adaptation for use on a computer. In the US this legislation, plus court decisions such as Apple Computer, Inc. v. Franklin Computer Corp in 1983, clarified that the Copyright Act gave computer programs the copyright status of literary works.35 In response, many companies began to claim that they “licensed” but did not sell their products, in order to avoid transfer of rights to the enduser via the doctrine of first sale.36 These software license agreements are often labeled as EULAs.

In 1998 the US Congress passed the Digital Millennium Copyright Act (DMCA) (discussed above in Amaretto Ranch Breedables), which criminalized evasion of copy protection (with certain exceptions) and destruction or mismanagement of copyright management information, but included a clause to exempt ISPs from liability of infringement if one of their subscribers infringed. In addition, the DMCA extended protection to those who copied a program for maintenance, repair, or backup as long as these copies were “destroyed in the event that continued possession of the computer program should cease to be rightful.”37 In particular, “owners of copies” may make additional copies for archival purposes, “as an essential step in the utilization of the computer program,” or for maintenance purposes. Furthermore, “owners of copies” have the right to resell their copies under the first sale doctrine and 17 U.S.C. § 109. These rights only apply to “owners of copies.” Most software vendors claim that their products are “licensed, not sold,” thus sidestepping 17 U.S.C. § 117 (which relates to limitations on exclusive rights and computer programs). American courts have taken varying approaches when confronted with these software license agreements. For example, in MAI Systems Corp. v. Peak Computer, Inc.38 and Microsoft v Harmony39 different federal courts held that “licensed, not sold” language in a EULA was effective. However, other courts have held that no brightline rule distinguishes mere licenses from sales. So, given the differences in court decisions, how will virtual avatars be viewed? Will they be licensed, or the property of those who create them? Under some EULAs, the owner of the avatar retains copyright to the avatar. Of course, the question arises: As avatars become smarter and create other avatars, who then is the owner?

• 4. VIRTUAL ENVIRONMENTS, GAMES, AND AVATARS

One type of virtual environment that is accessed by millions of users, and that has generated significant interest from legal scholars, is the massively multiplayer online roleplaying game (MMORPG).40 Once a player enters a MMORPG, they engage in a variety of activities with other players who are accessing the game in the same way from all over the world. MMORPG developers are in charge of supervising the virtual world and guarantee the continuing interest of players by offering an updated set of tasks and activities to perform in the virtual environment.41 Many MMORPGs have been designed for profit: A player must either purchase the client software or pay a monthly fee in order to access the virtual world. An interesting feature of a MMORPG is that it allows its participants to design a virtual representation of their identity which is displayed in the online virtual environment. As noted throughout this chapter, such an identity is termed an avatar.

Generally, the term “virtual avatar” (or avatar) is used to describe the simulation of a graphical form representing a particular person in a virtual environment. The most sophisticated avatars can become a sort of visual and cognitive prosthesis, representing an extension of self in the virtual world, or what the virtual environment visitor would like to be, or appear to be, in the virtual world. Virtual avatars may also represent the actions of a user, different aspects of a user’s persona, or the user’s social status in the virtual environment. A virtual avatar can take on almost any form, such as a realistic representation of the human that owns or created the avatar, another person’s identity (such as a living or deceased actor or historic figure), an animal, or even a mythical creature. Interestingly, the form the avatar takes can implicate several areas of law, such as copyright, trademark, and right of publicity.

How easy is it to create a virtual avatar? Commercial software has been designed to allow people to create their own interactive, emoting 3D avatar using photographs of their individual faces, and their own unique voices, as templates. Further, when a person chats in a 3D online world or plays an online computer game, they are operating a synthetic character or avatar. What makes for an interesting and effective avatar depends on the purpose for which the avatar is used. In the case of a virtual world where communication is important, facial features and expressiveness must be well supported. Additionally, in the case of action games, the physics of the virtual world and interaction within the world must be well supported.

A recent development in virtual avatars is that they are getting smarter.42 Capable of performing a range of tasks, virtual avatars can write poetry, play chess, compose music, and portray a range of emotions and facial expressions. In electronic commerce, avatars are forming contracts;43 in the field of entertainment they are replacing actors;44 and in online games they are interacting with humans and other virtual avatars.45 In addition, in medicine, virtual avatars are helping to train medical students by playing the role of patient. For example, the Virtual Standardized Patient is an avatar that interacts with medical practitioners in much the same way as an actor would if hired to play the role of patient.46 The Virtual Standardized Patient uses natural language, emotion, behavior modeling, and composite facial expression and lipshape modeling to produce a natural patient-practitioner dialogue.47 When avatars interact with humans, facial expressions are key for communicating emotions in face-to-face conversation made simultaneously with speech. In some virtual avatar designs, collaborative virtual environments may force the user to explicitly set avatar emotions after they have entered text or voice input. However, some researchers are investigating a procedure based on an expert system that can be used to parse emotive expressions so that these emotions can be automatically displayed on the corresponding virtual avatar’s appearance.48 In many online games, a user must input avatar body language and facial expressions via key presses, which means it is almost impossible for users to chat and emote at the same time. To appear realistic, an avatar must react as humans do when communicating with each other, and facial expressions are a step toward designing “humanlike” avatars.

Additionally, virtual environments can be designed for single inhabitants—such as a solo flight trainee—or for many, simultaneous participants. When a virtual environment supports multiple users, it can give rise to a virtual community. It has been estimated that some of the millions of people who visit virtual worlds spend more time in the virtual environment than the real world. These people are not just passively viewing the environment. They, or their virtual representatives, are interacting with other people or with virtual avatars of increasing intellectual capabilities. Further, people who spend significant amounts of time in virtual environments are doing more than playing video games; they are creating virtual worlds where they can assume identities, build wealth and social status, and generally participate in creating new worlds.

An important issue in online roleplaying games is whether the licensor or participant owns the intellectual property (such as copyright to a virtual avatar) created while the game is being played.49 In an early version of Second Life, the terms of service agreement gave residents of the virtual world the right to retain full intellectual property protection for the digital content they create in the game, including avatar characters, clothing, scripts, textures, objects, and designs. Such rights have real-world consequences for the objects created in the virtual world. More recently, Second Life has indicated that users have “the non-exclusive, unrestricted . . . [full use of] . . . all or any portion of your User Content.”50

An example of a legal dispute involving virtual worlds is Eros LLC v. Doe,51 in which a copyright and trademark infringement action was pursued against the defendant. Eros created adult entertainment products in the virtual world of Second Life, which it sold to other Second Life users for Linden dollars (which can be converted into US dollars). Another Second Life user, with the avatar name “Volkov Catteneo,” allegedly copied Eros’s products and sold them to other Second Life users without authorization. The products at issue are beds that allow users of Second Life to have virtual sex in them.52 To protect their identity, Eros initiated a “John Doe” lawsuit for copyright and trademark infringement in federal court in Florida. The amended complaint alleged that the company Leatherwood acted in concert with unknown parties to make and sell unauthorized copies of Eros’s products. Eros reached a settlement with the defendant (known only as Second Life avatar Volkov Catteneo).53 The terms include an agreement that Leatherwood will not do any more copying; as noted, Eros had alleged that the defendant sold unauthorized copies of the company’s popular “SexGeb” avatar-animation products.54

In summary, what one can conclude from the above cases is that as people and virtual avatars spend significant amounts of time in virtual reality, more cases will be litigated across a broad range of legal topics, from intellectual property to criminal law, and from contracts to torts. Given the increased use of virtual avatars in virtual environments for tasks such as psychotherapy, teaching, and electronic commerce, future causes of action could be directed at the virtual avatars themselves. If avatars continue to gain in intelligence and autonomy a host of compelling legal issues will be raised. For example, would intelligent avatars be able to bring forth claims involving their own civil liberties?55 And just what civil liberties would be awarded to intelligent virtual avatars? Professor George Wright has discussed the issue of equal protection under the law in the context of “enhanced humans,” concluding that “if there develops a typically unbridgeable gulf separating groups of contemporaries, we must adopt a substantially realistic understanding of equal protection that involves significant resource and opportunity transfers.”56 Wright’s comments were directed at the differences between enhanced and unenhanced humans; however, the possibility of “enhanced” intelligent avatars raises a host of new issues concerning equal protection under the law. In the context of humans, it may be possible to provide those requesting upgrades access to the appropriate technology. However, if intelligent avatars surpassed humans in intelligence, would technology be available to upgrade the humans to the level of the intelligent avatars? And if an intelligent avatar gained a level of intelligence such that they were superior to humans, would humans then be able to bring forth an equal protection claim against intelligent avatars? To best serve humanity’s interests, public policy may benefit by granting intelligent entities legal rights—if for no other reason than that they could then be regulated.

• 5. TOWARD MORE INTELLIGENT VIRTUAL AVATARS

The present format for the protection of virtual avatars’ rights is based on determining who their owner is and then analyzing that person’s rights with respect to the avatar or the avatar’s actions.57 In this model, the rights protected are those of the owner and not those of the virtual avatar (which lacks legal person status). However, as virtual avatars gain in intelligence and create works independent of human input, this analysis may become outdated. In this scenario, avatars themselves may need legal protection based on their own actions and actions directed against them. If avatars do continue to gain in intelligence and people spend more time in virtual worlds interacting with them, significant legal and policy issues will arise.58 For example, since many virtual worlds are created

The law of virtual reality and increasingly smart virtual avatars 17 by private companies for their subscribers and are thus controlled by the game’s creators, should the participants, the creators, or the virtual avatars (or some combination) set and control the permissible actions in the virtual environment?59 In contrast, should the users of the virtual environment set the rules of social interactions, the physical laws that govern the virtual world, or the laws and statutes that people and avatars live by? And as virtual avatars become more autonomous from human input and decisionmaking, and begin to discern their own algorithms, how should such entities be treated by the law?60

The field of artificial intelligence has provided the algorithms and techniques that have led to intelligent actions by virtual avatars. The software and algorithms that control virtual avatars, and artificial entities in general, are getting more sophisticated and “smarter.” As some commentators have argued, the smarter they get, the more the current law will be strained when deciding how to account for their actions.61 In general, advances in algorithms have resulted in levels of creativity exhibited by artificial entities that traditionally were considered only within the domain of humans. This raises several perplexing questions—for example, can a virtual avatar be an author or an inventor, own and sell intellectual property, or be liable for its actions?62

Many software programs which result in creative output use either knowledgebased systems, genetic algorithms, neural networks, or, more recently, machine learning techniques. Neural networks differ from traditional artificial intelligence applications because they do not require explicit symbolic representations to solve problems. Instead, they process and store information as patterns to represent information. Specifically, the knowledge contained within a neural network is represented by the connection strengths between processing elements in the network and the mutual reinforcement or inhibition of elements in the network by other elements. As noted previously, one area where neural networks have been used to create virtual avatars which display intelligent behavior is in the design of facial expressions. For intelligent avatars to be able to act as alter egos of their human owner, they may need to incorporate a high degree of similarity with their owner, including facial expressions and body posture. Neural networks can be trained to recognize and reproduce patterns such as those associated with facial expressions, and to produce such patterns based on external stimuli.

Genetic algorithms are another technique used to create “intelligent acting” avatars in virtual reality. Generally, genetic algorithms are search procedures that use the principles of natural selection and genetics to solve problems. Genetic algorithms use evolutionary techniques based on optimization to develop a solution to a problem. The basic opera-

tion of a genetic algorithm is fairly straightforward. First, a population of possible solutions to a problem is developed, then the better solutions are recombined with each other to form some new solutions. Finally, the new solutions are used to replace the poorer of the original solutions and the process is repeated. In addition to this, many avatars are designed to display appropriate social behavior in reaction to other avatars and people in a virtual environment. Genetic algorithms are useful for designing avatars that can display a range of social behaviors. The diversity of genetic customization is important in creating a unique avatar in a virtual world, and in being a part of a large, diverse community. To use a genetic algorithm to create various facial expressions, the design methodology of the avatar includes identifying variations in the parameters used in the computer code which control facial expressions, setting ranges for these parameters, and placing them into an array, which can be manipulated in a variety of ways. The array is called the genotype. Every unique avatar designed using genetic algorithms will have a different genotype. The gene ranges will provide an overall genetic space within which all possible avatars can exist. These genes will affect, for example, body shapes, colors, motions, facial proportions, and walking styles of an avatar. Another type of computing paradigm which has resulted in intelligent behavior for virtual avatars is an expert, or knowledge-based, system. Knowledge-based systems are those in which the computer algorithms are able to “learn” which solutions are retainable or usable by a series of comparisons with previously stated material. This type of programming is often referred to as an “expert system” because the system is based on imitating the methods of particular human practitioners, or experts, within a particular domain. As with neural networks, an expert system approach has been used to model facial expressions for virtual avatars. As these techniques mature, evolving ever more sophisticated avatars, the potential for legal issues will inevitably increase.

The New Zealand company Soul Machine has perhaps created the most realistic avatar to date, Nadia, using advanced modeling techniques to interact with customers on an emotional level.63 Their design uses an intelligent model of how the human brain works and machine learning techniques to read, predict, and emulate human emotional responses. Further, the University of Southern California and Pinscreen have developed a method of generating photorealistic static avatars using a single input image and a “deep convolutional neural network.”64 Additionally, Loom.ai has developed a method to create realistically animated avatar faces from a single static image.65 Finally, Stanford’s Virtual Human Interaction Lab has been doing work for more than a decade utilizing virtual environments and avatars to study the science of human behavior.

If the avatar’s face mimics that of a celebrity, would this be actionable under a right of publicity statute? Consider California’s common law and statutory right of publicity law. Generally speaking, the right of publicity in California protects against unauthorized uses of a person’s name or likeness for commercial and certain other exploitative

The law of virtual reality and increasingly smart virtual avatars 19 purposes. California has two systems of right of publicity law—a statute and a common law right—with some differences in coverage between the two. In California, the statutory right of publicity protects a person’s right in his or her name, voice, signature, photograph, and likeness.66 The term “voice” applies only to a person’s actual voice, not to imitations.67 However, as noted presently, the common law right of publicity might apply to voice imitators (and possibly an algorithm mimicking a well-known voice). The term “likeness” is the most difficult of the protected categories to precisely define. Courts have used the “readily identifiable” test to conclude that drawings, if sufficiently detailed, can constitute a “likeness.”68 In another case, the court ruled that a robot, if sufficiently detailed, could be a “likeness.”69 Less detailed robots (and virtual avatars?), though, may fall short of the “likeness” mark.70

Under California’s common law right of publicity, courts generally describe a four-step test, in which a plaintiff must allege: the defendant’s use of plaintiff’s “identity”; the appropriation of plaintiff ’s name or likeness to defendant’s advantage, commercially or otherwise; lack of consent; and resulting injury.71 Though the second prong of the standard four-step test mentions “name or likeness,” courts have held that the common law right is actually much broader.72 In California, courts have interpreted “identity” broadly, in such a way that it covers more uses than does the statutory right of publicity. For example, imitating someone’s voice is not a violation of the California statute, but it may violate the common law right.73 A robot can constitute a common law violation, even if not sufficiently detailed to violate the statute.74 Unlike the statute, the common law right is not explicitly limited to commercial uses of a plaintiff ’s identity. However, the “less commercial” a use, the more that First Amendment concerns come into play. Purely commercial speech, such as advertising, does nothing more than “propose a commercial transaction”; if a defendant’s use falls outside the realm of the purely commercial, California’s common law right of publicity is less likely to apply.

There are limits to both the common law and the statutory right of publicity. A right of publicity claim (either statutory or under the common law) fails if it is too similar to a copyright claim; in such a case, the state right of publicity law is preempted by federal copyright law. For example, in Laws v. Sony Music, Sony licensed one of the plaintiff’s songs and sampled it in a new recording.75 The plaintiff tried to bring a right of publicity claim, but the court ruled that Sony’s use of a licensed recording fell under copyright law, thus preempting the state claim. Generally speaking, if the allegedly infringing use of a

person’s identity primarily involves use of copyrighted work, there is a chance that the state law claim will be preempted. The First Amendment also limits the extent to which rights of publicity can limit speech about matters of public interest. As one court put it, “[u]nder the First Amendment, a cause of action for appropriation of another’s name and likeness may not be maintained against expressive works, whether factual or fictional.”76 As mentioned previously, the California statute contains exceptions for uses related to news, public affairs, sports, and politics and thus could relate to a virtual avatar serving as a news anchor or other TV personality. Courts often focus on this statutory safe harbor, rather than the First Amendment directly, when confronting statutory right of publicity claims.77 The First Amendment is more often directly relevant in common law right of publicity cases, since there is no statutory safe harbor. But since cases often involve both common law and statutory claims, the First Amendment analyses often cover both the statute and the common law.

• 6. VIRTUAL AVATARS AND WORKS OF AUTHORSHIP

As indicated earlier, computers using methods of artificial intelligence have been programmed to compose music, write poetry, and write parts of a book. These are all areas deemed to reflect a high level of human creativity, and which result in copyrightable works of authorship. It has been argued that, through a process of copyright reform, the requirement of creativity should be modified to include a contextual and cultural analysis.78 Under this system, it may be easier for artificially intelligent generated works to pass the requirement of creativity. Once virtual avatars create works of authorship, especially if they do so independent from human input, traditional copyright notions of authorship and originality will need to be addressed. This raises the question of whether the copyright law as currently enacted can adequately address issues of authorship in a world of increasingly intelligent artificial entities. Generally, if a work is completely attributable to an intelligent avatar, then that work will be outside the ambit of federal copyright law.79 In contrast, if a human author can be associated with the work of an intelligent avatar, copyright law as it currently exists may adequately account for the output generated by the avatar.

Under the Copyright Act, the author of a work is the initial owner of the copyright in it, and may exploit the work herself or transfer some or all of her rights in that work to others.80 The author is generally the person who conceives of the copyrightable expression and fixes it, or causes it to be fixed, in a tangible form. The Ninth Circuit, in MAI Systems Corp. v. Peak Computer, Inc., held that the loading of software into a computer’s random access memory was sufficiently permanent for it to be deemed fixed.81 Given this decision, an avatar that creates a work may be thought to have fixed it at the moment of creation.82 Therefore, in a copyright dispute involving a virtual avatar the issue for a court will not be whether the work is fixed, but whether the virtual avatar or another party “conceived” of the work and can serve as the author. In some cases an avatar’s owner or programmer may be so far removed from the avatar’s output that they may not have any knowledge that the output exists, or even recognize that it resulted from their original input. In such a case, should this person be considered an author? Given the increased complexity of virtual avatars, it is pertinent to ask: How would this decision serve the policy of encouraging authors to create?

Are there any existing doctrines under copyright law where a copyright can vest in an entity that did not conceive the work or fix it in a tangible medium of expression? The answer is yes; for example, the “work made for hire” doctrine is an important exception to the rule that the party who conceived of the idea is the “legal” author of a work. When a work is made for hire, within the meaning of the Copyright Act, the employer or commissioning party who pays for the creation of the work is deemed the author, rather than the employee who may actually have conceived of the work and fixed the expression.83 One possible way to solve the problem of ownership of the intellectual property created by intelligent avatars is to always deem them as works for hire, in which case the employer or commissioning party would be the author under the Copyright Act. However, can a virtual avatar serve as an employee? Conversely, could a programmer be considered the employer of an intelligent avatar? If yes, then why not assume that as an employee the intelligent avatar would have rights, either contractual or under the Copyright Act, to the intellectual property they created? Further complicating the issue, authorship, if indeed granted to an intelligent avatar, need not indicate copyright ownership.84

Other legal theories may also be useful for thinking about the rights of virtual avatars. For example, could the intellectual property created by avatars be considered a joint work between the avatar, programmer, or avatar owner?85 The US Copyright Act defines a joint work as “a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole.”86 The programmer’s contribution to the joint work would be the algorithms to direct the avatar’s behavior and the programming required to create the avatar’s appearance. The owner’s contribution would be the input directing the avatar’s output. The avatar’s contribution would vary from significant to less meaningful depending on the amount of input supplied by the programmer or owner and the algorithms used to design the avatars. For example, if using techniques such as neural nets, genetic algorithms, or deep learning, the avatar could make significant contributions to a joint work. For a joint work under the Copyright Act, the authors are considered coowners of a single copy of the work. Thus, if a joint work was found, the programmer and avatar would each own an undivided interest in the copyright. But what if the avatar is learning within the virtual environment, and creates an output completely independent of the programmer’s original effort? Should the court then view the avatar’s output as an original work of authorship, or as a derivative of the programmer’s original input? If so, who would the court consider to be the author of the avatar’s output? Would the court deem the work original if created by an avatar, and thus award a copyright to the avatar?

Under the US Copyright Act, copyright subsists “in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced or otherwise communicated, either directly or with the aid of a machine or device.”87 For a work to be original, the author must have engaged in some intellectual endeavor of their own and not just have copied from a preexisting source, and the work must exhibit a minimal amount of creativity.88 In the context of intelligent avatars, an important issue is whether the “works” of an avatar can be considered original. If avatars create original works of authorship eligible for copyright protection, who will the court determine to be the author of such works: the original programmer(s), the employer of the programmer, the avatar’s owner, the avatar—or, as discussed above, will the work be considered a joint work under the copyright law with multiple owners?89 The issue of whether computer-generated output can be eligible for copyright protection has received some attention in the past, with some commentators concluding that a computer can be an author under the Copyright Act,90 and some suggesting extending copyright protection though not necessarily authorship.91 For example, Harvard law professor Arthur Miller argues against copyright protection for artificially intelligent entities since they need no incentive to produce a work of authorship.92

The process of creating a work involving a virtual avatar involves the effort of a programmer to create the avatar, the software and algorithms used to create the avatar’s appearance and behavior, and a computer (or nowadays the cloud) used to store the code used to design the avatar. The software can consist of rules that allow little or no autonomous actions by the avatar, or can consist of neural nets or genetic algorithms (or deep learning techniques) which allow the avatar to learn and act in significantly different ways than the original set of parameters used to design the avatar. In order to determine whether an avatar can be an author and receive copyright protections for its works, the interests of the programmer, employer, and avatar will need to be addressed.

Granting authorship rights to an intelligent avatar will be difficult under the current copyright law.93 One reason for this is enforceability of the rights enumerated under the Copyright Act. Would an avatar be capable of enforcing such rights, or have standing to initiate an action for copyright infringement? Under current law, the answer is no. Further, awarding copyright protection to an avatar would imply that the avatar can have ideas that led to original works of authorship.94 What separates avatars that act with intelligence from avatars which are designed to perform a limited set of actions strictly under human control is the ability of the “intelligent avatar” to apply existing knowledge to a new set of facts or problems. Here the relevant inquiry into whether the avatar’s actions translate into an original work of authorship is whether the avatar is simply reinterpreting another author’s work, and whether the avatar’s output is completely dependent on the programmer’s instructions.

The standard for what constitutes an original work under the Copyright Act has been decided by the US Supreme Court in the seminal case Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc.95 Discussing the requirement for originality, the Supreme Court found that telephone white page listings did not satisfy the originality requirement because they lacked minimal creativity.96 The Court noted that the author’s “selection and arrangement of the facts could not be so mechanical or routine as to require no creativity whatsoever.”97 As the Court discussed, “[o]riginal, as the term is used in copyright, means only that the work was independently created by the author, and that it possesses some minimal degree of creativity.”98 Under this analysis, a court may determine that an avatar using algorithms is simply performing in a mechanical or routine manner. In this case, the avatar could not receive copyright protection for its work, due to lack of creativity. However, consider an avatar with the capability to learn and respond to events in the virtual environment. In this case, the problem solving would be far from mechanical or routine. Even so, before copyright protection is awarded to the output of an avatar, the work must be deemed original. This does not, in itself, seem to be an obstacle for an intelligent avatar. However, the avatar would have to be deemed an author. As discussed throughout this section, this is a more difficult bar to overcome, given the current copyright statute. Interestingly, there is some precedent for the assertion that an “author” need not be a human being (see the case discussed in the following paragraph). As noted previously, under the work for hire doctrine a corporation may be deemed the author of a work, although this conclusion seems to conflict with some case law.

In an interesting and somewhat odd case, the issue of whether a nonhuman can be an author was addressed by the Ninth Circuit in Urantia Found. v. Maaherra.99 This case involved a questionable claim that a superior being authored a particular work, but for our purposes here, the analysis the court used to decide the case offers an interesting insight into how the law might view authorship rights for intelligent avatars. The case involved a copyright dispute between parties who believed the copyrighted work, the “Urantia Book,” was authored by celestial beings and only transcribed, compiled, and collected by “mere mortals.”100 The plaintiff, Urantia Foundation, claimed that the defendant, Maaherra, infringed the Foundation’s copyright when she distributed a computerized version of the Urantia book on disk.101 Maaherra conceded copying, so the issue before the court was whether the Foundation owned a valid copyright in the book. Complicating matters, both parties believed that the words in the book were “authored” by nonhuman spiritual beings described in terms such as the “Divine Counselor,” the “Chief of the Corps of Superuniverse Personalities,” and the “Chief of the Archangels of Nebadon.”102 These spiritual entities were claimed to have delivered the teachings that were eventually assembled in the book, through a patient of a Chicago psychiatrist.103

A threshold issue in this case was whether the work, because it was claimed to embody the words of celestial beings rather than human beings, was copyrightable at all.104 In Feist Publications, Inc. v. Rural Television Service Co., Inc., the court—in discussing a threshold requirement for copyright—said, “To qualify for copyright protection, a work must be original to the author.”105 The core statute from the Copyright Act provides: “[C]opyright protection subsists . . . in original works of authorship fixed in any tangible medium of expression . . . from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.”106 As the court reasoned, “[o]riginal, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.”107 Maaherra claimed that there can be no valid copyright in the book because it lacked the requisite ingredient of human creativity, and that therefore the book was not a “work of authorship” within the meaning of the Copyright Act.108

Interestingly, nowhere in the US copyright laws is there an express requirement for “human” authorship, and considerable controversy has arisen in recent years over the copyrightability of computer-generated works. The Urantia court argued that the copyright law does not protect the “creations of divine beings,” but that the copyright laws protect some element of human creativity.109 The court stated: “At the very least, for a worldly entity to be guilty of infringing a copyright, that entity must have copied something created by another worldly entity.”110 For copyright purposes, the Urantia court reasoned, a work is copyrightable if copyright is claimed by the first human beings who compiled, selected, coordinated, and arranged the Urantia teachings, “in such a way that the resulting work as a whole constitutes an original work of authorship.”111 The court said that the party who was responsible for the creation of a tangible literary form that could be read by others could claim copyright for themselves as “authors.”112 They were responsible for the religious revelations appearing “in such a way as to render the work as a whole original.”113 Thus, notwithstanding the Urantia Book’s claimed nonhuman origin, the papers in the form in which they were originally organized and compiled by the members of the Contact Commission were at least partially the product of human creativity.114 The court reasoned that the papers did not belong to that “narrow category of works in which the creative spark is utterly lacking or so trivial as to be virtually nonexistent.”115 From the Ninth Circuit’s analysis in Urantia, one can summarize the decision as calling for a human author to find a copyrightable work even if the author did not conceive of the original work. However, the issue may not be settled as under § 201(b) of the copyright statute: If the work is a work for hire, a nonhuman entity such as a corporation can be deemed the author of a work.

17 U.S. Code § 201(b) (1976):

In the case of a work made for hire, the employer of other person for whom the work was prepared is considered the author for purposes of this title, and unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.

This apparent conflict in the law will be even further revealed as artificial entities gain more intelligence, self-program, and make decisions independent from any human. Could an avatar be registered as a corporation, and thus be deemed the author of a work for hire, such as the work of another avatar? Some commentators suggest a “grantable” framework for personhood by which nonhuman entities could assume legal personhood status by the grant of someone already held as such.116 Under such a framework, personhood status could easily be given to an avatar or artificially intelligent system insofar as it is working for a (human) person.

One obstacle to gaining copyright protection is determining whether the avatar is self-aware that it created the work. If the avatar is not self-aware, it can be argued that its output is merely a digital reinterpretation of what it has been programmed to do. Thus, it is not exhibiting any level of creativity required for copyright protection. In this case, if copying were found, the avatar’s owner—and not the avatar—would be liable for copyright infringement.117 Under copyright law, in order for a human author to be liable for copyright infringement, a significant amount of copying would have to be found.118 In the future it may be argued that a virtual avatar that is self-aware (if possible) and producing creative works of authorship is no different than a human author—liable for copyright infringement if a significant amount of copying is found, or on the other hand producing a copyrightable work if the requisite level of creativity exists in the work, and no copying occurred.119

One issue that has impacted the debate over whether the output of virtual avatars should be eligible for copyright protection is the lack of humanlike performance by avatars.120 That is, in many cases, virtual avatars and software agents have performed tasks within a narrow range as defined by a human owner, without showing any creativity beyond the original parameters of the software used to create the avatar. However, recent advances in neural networks have led to works that are different in nature from conventional computer-generated works. The human owner of a neural network can be quite removed from the authorship process and output of the neural network.121 Procedures used by neural nets mimic human brain processes to some extent, and are relevant for the issue of whether the avatar is aware of its own creations. One commentator has argued that the issue of copyrighting neural network weights confronts the issue of intelligent entity authorship head-on.122 On this point, the Copyright Office has already registered a set of neural network weights. Note that avatars may be designed using neural networks and that the structure of the neural network may change as the avatar learns. Thus, one can wonder whether the output of an intelligent avatar operating using a neural network and other artificially intelligent techniques would be eligible for copyright protection, since the weights assigned to the neural networks can be registered. That is, neural network architectures embodied in conventional software are copyrightable, just as are other forms of software. Interconnection weights derived by training a neural network represent a new and valuable form of intellectual property, and courts are typically inclined to protect economic rights. Therefore, copyright law seems to offer one possible means to protect neural network weights and therefore the output of virtual avatars.123

In the area of creative writing, according to one commentator, “computer technology is advancing to the point where a computer may soon be able to generate works in the

The law of virtual reality and increasingly smart virtual avatars 21 style of any author that it is programmed to duplicate.”124 In one example, a program was written to write in the style of bestselling author Jacqueline Susann. The result was a published book, Just This Once. To create this work, the programmer used two of Ms Susann’s novels, Valley of the Dolls and Once Is Not Enough, to extract rules which represented the author’s style.125 In order to duplicate Ms Susann’s style, the programmer wrote thousands of computer-coded rules relating to how characters interacted, all based on Ms Susann’s works. The rules, numbering in the thousands, were input into a computer to produce the tone and plot of the book.126 It has been argued that current copyright law is not equipped to deal with the potential legal ramifications of such computer-generated works.127 Copyright law protects the expression of an idea, but not the idea itself.128 And protection extends to works fixed in a tangible medium of expression129—it does not extend to procedures, processes, systems, methods of operation, concepts, principles, or discoveries.130 Once an avatar gains sufficient intelligence to make a claim for copyright protection, it must use more creativity in producing an output than a standard procedure or method. If the writing style of an author is characterized as a system or method of operation, then it may not be protectable.131 To determine if a writer’s style can be protected, it must first be defined. In copyright terms, this is referred to as “dissection.”132 In the above example, the programmer admitted using Susann’s style, reducing her style to thousands of rules equaling thousands of lines of computer code. Most human authors create works by improving on another’s style, and generally such improvements are copyrightable. However, as noted by one commentator, “when a computer is programmed to specifically imitate an author’s style, the human interpretive element is removed.”133 If we assume an avatar with artificial intelligence has developed to the point where it can interpret an author’s style and then create a new work based on that style, and if we also assume that no human was involved in the work being written, still something worthy of copyright protection has been created, but who should receive a copyright for this work? If an artificially intelligent entity cannot be the author of a work, the choice for authorship is either the programmer or user of the software. If the user simply turns on

the computer and runs the program, no requisite level of creativity for copyright is shown. As for the programmer’s rights, the right to copyright a program is clear, but what about the programmer’s rights to the output of the program? If the program is not run by the programmer but by another person, or by the avatar itself, the programmer would not be the person who “fixed” the work or embodied it in a tangible medium of expression, both requirements for copyright. Therefore, when an intelligent avatar creates a work on its own, determining who the author should be is problematic.

Further, in discussing who should be the author of a work generated by an intelligent avatar, the issue of whether the avatar is creating a derivative work in copying the style of a human author should be considered. The Copyright Act defines a derivative work as “a work based upon one or more preexisting works.”134 If Just This Once, a computergenerated work, is viewed as a derivative work,135 then it could be covered under an expansive interpretation of copyright law. However, if an author recognized that his writing style had been copied by a virtual avatar but the words had changed such that no case for copying could be made, then the author would have no cause of action for copyright infringement because under a traditional infringement analysis there would be no substantial similarity. Copyright expert Melville Nimmer defines authorship as “a sine qua non for any claim of copyright . . . the person claiming copyright must either himself be the author, or he must have succeeded to the rights of the author.”136 137 The Ninth Circuit expressed a narrow interpretation of a derivative work in Litchfield v. Spielberg.™ In Spielberg, the plaintiffs argued that substantial similarity was not a requirement to find that an infringing work was derivative. The Spielberg court soundly rejected this argument, stating that substantial similarity was necessary. It seems reasonable that the “substantial similarity” standard could also be used to analyze the work of virtual avatars.

• 7. DESIGN AND USE OF VIRTUAL AVATARS

This section presents several intellectual property schemes that can be used to protect the rights of the virtual avatar’s owner and, in the future, with legal rights for virtual avatars, the rights of the intelligent avatar itself. As a basic principle, one needs to consider that a virtual avatar is more than the graphical image that appears in a virtual environment; an avatar also includes the software and algorithms used to design the avatar. We first note that under the Copyright Act, the visual image of the avatar appearing in the virtual environment can receive protection as a pictorial character.138 However, characters may also be created with words, in which case they receive protection under the Copyright Act as a literary work.139 Under the copyright statute, the protection of literary characters normally is distinguished from the protection of pictorial characters.140 Due to the unique nature of virtual avatars, existing in the form of software and in the form of an image appearing in a virtual environment, we surmise an avatar may be eligible for dual protection as a pictorial character and as a literary character.

The mode of thinking about copyright protection for virtual avatars as literary characters is a less common one. Support for the argument that an avatar could be protected as a literary work is provided by Universal City Studios v. Reimerdes, where the court held that code is eligible to receive First Amendment protection as speech.141 The court held that code is a means of expressing ideas, and thus “the First Amendment must be considered before its dissemination may be prohibited or regulated.”142 If software is used to describe the visual appearance of a virtual avatar, how it reacts in a virtual environment, even its possible range of speech, then the question becomes whether software may be protectable as speech under the First Amendment. Based on the decision in Universal City Studios,143 one could argue that an avatar could receive protection under the Copyright Act as a literary character given that the code used to design the avatar could be protectable as speech. Also supporting this argument are cases involving cartoon, movie, or television characters; the Ninth Circuit has been willing to find copyright protection when the character at issue has a visual representation, as well as a personality described by a word or character line.144 Therefore, the more the virtual avatar displays a unique character, the more likely the court is to find the avatar to be more than an idea, but rather expression deserving of copyright protection.145

That code may be protected under the First Amendment as speech has significance for the rights of virtual avatars should they continue to get smarter. In Universal City Studios, the court concluded that communications do not lose constitutional status as speech simply because they are expressed in the language of computer code.146 This conclusion raises the question of whether the software used to design the avatar itself is protected under the First Amendment. Although the Universal City Studios case did not deal with the issue of whether the First Amendment right applied to virtual avatars, the case does provide insight as to what rights may someday be awarded intelligent virtual avatars, even suggesting that they may even receive constitutional rights.147

The increased complexity of visual images has led one commentator to conclude that the situation existing in many courts has resulted in the convergence of distinct bodies of law, such as copyright, trademark, and unfair competition, into a new body of law formulated solely to protect characters.148 According to this commentator, the interplay of many factors has resulted in this convergence of the law.149 These factors include: (1) the profits that can be made from the commercialization of characters, such as virtual avatars who are able to take on a life of their own in settings that differ from those in which the avatar was originally designed to inhabit;150 (2) the ability of avatars to function as entertainment products that are recognized under federal, state, and common law because they “suggest, if not clearly indicate, origin” of the products or services with which the avatar is associated; and (3) the quality that a virtual avatar through extended use, can lead the public to relate to the character as being human.151

In the context of virtual avatars, the copyrightable expression of a character is much more than just the character’s physical appearance. It includes the specific name and character traits of that character as well. In Warner Bros. Inc. v. American Broadcasting Companies, Inc., the court noted that, in determining whether a character in a second work infringed a cartoon character, “courts have generally considered not only the visual resemblance but also the totality of the characters’ attributes and traits.”152 A similar result was shown in Detective Comics, Inc. v. Bruns Publications.153 Here, the court found that the character “Superman” was infringed in a competing comic book publication featuring the character “Wonderman.” The court held that the infringing work “appropriated the pictorial and literary details embodied in” the copyrights protecting Superman.154 To summarize the above courts’ decisions in the context of virtual avatars, a copyright infringement action will involve more than just a showing of the physical similarity between two virtual avatars; the court will also consider the range of behaviors exhibited by the avatars, and even the avatar’s digital speech.155

One of the more difficult problems of applying copyright law analysis and protection to virtual avatars will be to ascertain how such protection will be extended to protect a particular virtual avatar after that avatar has taken on a life of its own, so to speak, and no longer exists in the original context in which it first appeared. Will copyright protection be lost if the virtual avatar’s appearance has changed? For virtual avatars designed using genetic algorithms, once they have mutated their appearance and behavior, will they still be eligible for copyright protection? In order to ascertain whether a virtual avatar might be entitled to copyright protection, the courts likely will follow the

The law of virtual reality and increasingly smart virtual avatars 31 “character delineation” test used to analyze the copyrightability of graphical images.156 Under this test, the critical issue is whether the avatar is sufficiently and distinctively delineated so that it warrants protection.157 Because copyright law does not protect ideas from infringement but instead only protects the expression of those ideas, courts considering copyright do not protect character types.158 Therefore, while a court would likely not extend copyright protection to a virtual avatar possessing superpowers, the courts will likely extend copyright protection to a specifically delineated “superpowered” virtual avatar, without bestowing a monopoly on the mere character of a “super avatar.” Based on this conclusion, a good way to protect a virtual avatar under copyright law will be to ensure that the avatar’s appearance and personality are specific and unique. Past characters that have received copyright protection have displayed consistent, widely identifiable, traits.159

• 8. PROTECTION OF VIRTUAL AVATARS UNDER TRADEMARK AND UNFAIR COMPETITION LAW

Other avenues for the protection of the rights of the owner of the virtual avatar, and someday the rights of the virtual avatar itself, may include trademark and unfair competition law. Federal, state, and common law protection will protect the avatar from being used by another party without authorization when the avatar functions as a form of identification and is recognized by the public as paired to a product.160 This protection could prevent the duplication of the trademark owner’s avatar, or the imitation of that avatar where the likely result would be to cause public confusion, mistake, or deception with regard to the source of the products or services that carry the likeness of the avatar.161 Trademark law will not permit a graphic character to be trademarked solely for its own protection. However, it does permit the character’s name and likeness to be trademarked when the function of that trademark is to indicate the source of the products and services bearing that mark.162

As may be expected, there will be advantages and disadvantages to protecting a virtual avatar as a trademark. On the positive side, to obtain a trademark, the avatar will not

have to include the originality attributes that are required under copyright law.163 In addition, in order to prove trademark infringement, the trademark owner will not need to prove that the infringer had access to the avatar, as is required under copyright law,164 but only that the mark was used by a party other than the owner of the mark without permission. Finally, the longer term of protection—potentially perpetual just as long as the registration requirements are fulfilled and the mark is not abandoned or does not lose its status as a trademark—can be valuable and profitable.165 This is especially true for successful and highly marketable graphic characters, such as many of the Disney and Warner Brothers characters. On the negative side, federal trademark protection for an avatar can be costly.166 This will be especially true if the avatar is extensively used or licensed for use in multiple media formats, or in merchandising programs for many different categories of products and/or services. In addition, because trademark protection is territorial, the avatar serving as a mark may need to be registered in countries other than the United States to provide the maximum degree of protection.167 Because neural nets and genetic algorithms allow an avatar to learn and change their appearance, and any changes in the appearance of the avatar could destroy the original trademark protection, additional trademark registrations (incurring costs) may be necessary to ensure that the current appearance of the avatar remains protected.

Another legal theory which may be used to protect an avatar is unfair competition law.168 Unfair competition laws involve a variety of different causes of action that primarily fall into three categories: (1) misrepresentation; (2) sponsorship; and (3) misappropriation.169 Misrepresentation occurs when a party represents that a particular character is associated with their product or service, when in reality it is not.170 Sponsorship occurs when a party indicates that a particular character has endorsed its product or service when it has not.171 Misappropriation, which may be most relevant for the protection of virtual avatars, may occur when a party steals another’s avatar in order to associate it with their product or service.172 Therefore, when one brings an unfair competition action, the injured party is

claiming that their character has been wrongly associated with another party’s product, service, person, company, or idea.173 If such misuse of a graphic character occurs, and it is determined under the reasonable person standard that the graphic character had been misrepresented,174 used falsely as a sponsor, or misappropriated, then the party engaged in such misuse could be found liable for trademark infringement.175 Most courts have recognized trademark protection for graphic characters and have found trademark infringement liability under both trademark and unfair competition law.176 Therefore, if avatars are used for commercial purposes, in addition to copyright protection, other claims to protect avatars can be brought, including right of publicity and trademark or unfair competition. An example of case law in this area is Walt Disney Productions v. Air Pirates,177 where the court appeared to commingle copyright and trademark infringement criteria by stating that the Disney characters used by the defendants had “achieved a high degree of ‘recognition’ and ‘identification’” and that these elements helped make the characters protectable under copyright law.178

• 9. THE DOCTRINE OF MORAL RIGHTS FOR VIRTUAL AVATARS

The doctrine of moral rights refers to rights regarding the personality of the artist and to the preservation of the integrity of an artist’s intellectual creations.179 The Visual Artists Rights Act of 1990 (VARA)180 provides moral rights protection for artists and protects the personal interests in their work, even after the copyright is transferred to a third party purchaser.181 VARA was the result of efforts on the part of moral rights advocates to overcome Congress’ failure to adopt the moral rights provision of the Berne Convention. The legislation protects works of visual art and gives the artist two kinds of moral rights—the right of attribution and the right of integrity.182 The right of attribution allows the artist to claim authorship of a work and prevent the use of her name as the author of any work which she did not create.183 Presently, no intelligent avatar is awarded attribution rights for its output, but in the future this might be a necessary outcome given the avatar’s ability to create unique and creative works beyond the original programming. The right of attribution allows the artist the right to prevent the use of her name in connection with a mutilated, distorted, or otherwise modified work, if that alteration would be “prejudicial to . . . her honor or reputation.”184 Likewise, the right of integrity gives an artist the right to prevent intentional mutilations, distortions, and other modifications of a work which would be prejudicial to her honor or reputation.185 The rights granted under VARA may not be transferred, but may be waived by the artist.186

VARA’s passage was a big step toward recognizing moral rights in the United States. However, the enacted version does not protect motion pictures, even though the original version did provide such protection.187 Without the protection that VARA provides other artists, film directors can have altered works attributed to them. One difference, however, between works protected by VARA and motion pictures is that when films are colorized or otherwise altered, the original generally still exists.188 When a “painting or sculpture is altered, the original work is changed forever.”189 Virtual avatars seem to fit better into the film category, since the concept of an “original” is difficult to apply to virtual avatars given that they exist as bits. If courts follow this reasoning, a virtual avatar would not be protected under VARA.

The moral rights doctrine is included in the copyright laws of many European countries, as well as the laws of countries subscribing to the Berne Convention.190 Given that virtual avatars reside in a virtual environment which is most likely accessible on the internet, the moral rights doctrine as applied in Europe could be relevant for the protection of avatars created in the United States. Article 6bis of the Berne Convention requires that countries that are members recognize, independently of the author’s economic rights, that “the author shall have the right to claim authorship of the work”—the right of paternity—and “to object to any distortion, mutilation or other modification of, or other derogatory action in relation to the said work, which would be prejudicial to his honor or reputation”—the right of integrity.191 The scope of moral rights protection varies among countries that recognize these rights. However, the doctrine encompasses three major elements: (1) the right of disclosure; (2) the right of paternity; and (3) the right of integrity.192 Under the right of disclosure, the creator has the privilege of determining when to release his work. The basis of this right is the theory that the creator is the sole judge of when a work is first ready for public dissemination.193

The second element of the doctrine of moral rights under the Berne Convention is the right of paternity, which entitles the author to have his name and authorship recognized.194 This right allows the creator to present himself to the public as the creator of a work.195 Furthermore, the right of paternity permits the author to require others to acknowledge his authorship and prevent others from attributing works to him which he did not originate.196 The third element, the right of integrity, is the right most pertinent to virtual avatars. The right of integrity enables the creator to prevent any distortion of or modification to his work if the alteration would constitute a misrepresentation of his artistic expression.197 This right, like the other moral rights, is held by the creator and is independent of any economic rights that he may or may not have in the work.

The United States enacted the Berne Convention Act in 1988. However, the implementing legislation indicated that the law in the United States as it existed on the date of enactment satisfied the United States’ obligations under Article 6bis of the Berne Convention and that no further rights were to be recognized for that purpose.198 Thus, the Implementation Act did not change the pre-Berne Convention precedents or balance of rights between authors and proprietors. As Section 3(b) of the Berne Convention Implementation Act stated, no change in American law regarding the right of paternity or the right of integrity occurred as the result of implementation of this new legislation. Accordingly, the legal theories previously used to protect an author’s moral rights, based upon provisions of the Lanham Act and common law principles, remain the law in the United States.

Another legal theory used by the courts to protect the integrity of a work prior to the United States’ ratification of the Berne Convention is embodied in the law of defamation. As stated earlier, an action for defamation protects an individual from harm to his reputation or his standing in the community.199 Given the ability of virtual avatars to take on the look of another person, this tort may still serve people who have been harmed by a “lookalike” avatar, especially if it portrays them in a false light. In Clevenger v. Baker Voorhis & Co., a publisher revised an edition of a well-known attorney’s law book.200 By including the author’s name on the title page, the revision implicitly misrepresented that the author himself, rather than the publisher, had written the revision, which contained many errors.201 Because publishing in the name of a well-known author of a literary work tended to injure his position in the legal community, the court held that the plaintiff had a cause of action against the publisher based upon defamation.202 Similarly, in Ben-Oliel v. Press Publishing Co., the Court of Appeals of New York held that attribution of an inaccurate newspaper article on the social customs of Palestine and Mosaic symbolism to a well-known authority, who did not in fact write it, constituted libel.203 As the foregoing discussion demonstrates, both Section 43(a) of the Lanham Act and the law of defamation are used to preserve the integrity of an author’s work. Both theories may aid a party who alleges that they have been harmed by an avatar. Could such theories also be used by intelligent virtual avatars to protect the integrity of their image and output?

Section 43(a) of the Lanham Act provides two general theories of liability:204

• (1) false representations regarding the origin, endorsement or association of goods or services through the wrongful use of another’s distinctive mark, name, trade dress, or other device (“false endorsement” or “false association”), and

• (2) false representations in advertising concerning the quality of services or goods (“false advertising”).205

To prevail under Section 43(a) of the Lanham Act, a plaintiff must show that it has “a valid, protectible trademark and that the defendant’s use of a colorable imitation of the trademark is likely to cause confusion among consumers.”206

• 10. CONCLUSIONS: TOWARD AVATAR PERSONHOOD

There are three notable trends in virtual avatars: (1) they are getting smarter; (2) their physical appearance is becoming more photorealistic and humanlike; and (3) their behavior is becoming more sophisticated. With regard to the three points above, imagine one day that a virtual avatar claims that it is a person,207 and that it is therefore entitled to certain constitutional rights. Should the law grant constitutional rights to intelligent avatars that have intellectual capabilities like those of humans? The answer may turn out to vary with the nature of the constitutional right considered and our understanding of the underlying justification for the right. For example, Professors Samuelson and Miller, as well as other legal scholars, have noted that a rationale for copyright is to provide an incentive for authors to create copyrightable works.208 As they argue, since “software and machines” currently need no such incentive to create works, there can be no copyright awarded to such entities. The lack of incentive shown by a virtual avatar (at least current versions) when producing an output under the direction of a human could conceivably be overcome when avatars evolve that self-program and pursue objectives of their own. The economic justification for producing an output when a human author is involved may also provide an incentive for virtual avatars. An intelligent avatar that evolved to the point at which it could claim to be conscious and deserving of legal rights may need to purchase computing resources and memory, or even require the assistance of humans or other artificially intelligent entities for the performance of tasks. In addition, other incentives to motivate virtual avatars to produce outputs useful to society may become clear as virtual avatars evolve and interact further with humans and other avatars.

Imagine also that an intelligent avatar claims that it cannot be owned and has been forced into involuntary servitude. A lawyer takes its case and files a civil rights action on its behalf against its owner. How should the legal system deal with such a claim? Would the intelligent avatar have standing to pursue such an action?209 And with regard to intellectual property rights, what if an intelligent avatar creates a work completely independent from a human’s input that meets the requirements for copyright? Would the court then award the avatar a copyright for the work? The current answer is surely no, but why not? The work could clearly pass the copyright hurdles of an original work fixed in a tangible medium of expression. To some, the argument of antagonists of awarding a copyright to an artificial entity comes down to a requirement that a human being be the author of a copyrightable work. For this reason, the issue of personhood for nonhuman entities becomes an important topic when discussing legal rights for intelligent avatars. Before exploring the issue of personhood for artificially intelligent entities in greater detail, it should be noted that granting legal recognition to nonhuman entities may not pose an insurmountable problem doctrinally. It is already done for corporations.210 In terms of policy considerations, Professor Samuelson of Berkeley has previously argued that the ownership allocation between humans and software should not only make sense, but also reflect the realities of the world.211 Those realities, in regard to intelligent systems, have changed dramatically since antagonists argued against the idea of copyright protection for artificially intelligent entities in the 1980s and early 1990s. Given the advances in autonomous machines, smart computer vision systems, and self-programming neural nets, Samuelson’s past statement is even more relevant for these times than it was when first made.212

Judge Curtis Karnow introduced the term “electronic person,” or “epers,” when discussing the issue of legal rights for “agents” or “avatars” existing within cyberspace. 213 Taking a liberal view on legal rights for software agents, Karnow argued that epers should be allowed to own physical property, maintain bank accounts, enter into contracts, and be recognized as authors of expression, subject to constitutional protection.214 Karnow,215 as well as Solum,216 have previously addressed the issue of personhood for artificially intelligent entities. According to Solum, “the question whether an entity should be considered a legal person is reducible to other questions about whether or not the entity can and should be made the subject of a set of legal rights and duties.”217 For example, “the particular bundle of rights and duties that accompanies legal personhood varies with the nature of the entity.”218 In this context, both corporations and natural persons are considered legal persons, but they have different sets of legal rights and duties.219

Intuitively, when one uses the term “person” she means to refer to a human being as opposed to a virtual avatar controlled by software.220 However, based on legal principles, the definition of a person is not as straightforward as one might expect. Black’s Law Dictionary defines a person as “[a]n entity (such as a corporation) that is recognized by law as having the rights and duties of a human being.”221 Furthermore, an artificial

The law of virtual reality and increasingly smart virtual avatars 39 person is defined as “[a]n entity, such as a corporation, created by law and given certain legal rights and duties of a human being; real or imaginary, who for purposes of legal reasoning is treated more or less as a human being (also termed a legal person).”222 Based on the latter definition, an intelligent avatar could be regarded as an artificial person and awarded some legal rights. While every human being, regardless of intellectual capabilities, is considered to be a “legal person,” not all persons are considered human beings.223 Indeed, under common law, corporations are regarded as “persons” with full rights to sue, be sued, hold property, and so on. However, as noted by Solum,224 corporations have [human] boards of directors which exert control over the corporation; in contrast, avatars in some domains already perform complex tasks without human supervision.

Since corporations have the status of a person for some legal purposes, we can ask whether this legal principle should be considered as precedent for the issue of legal personhood for avatars. There are several reasons why legal personhood is denied to current implementations of avatars. One is the lack of a full repertoire of intellectual abilities similar to those of humans: To be granted legal personhood, it will not be enough for avatars to be idiot savants, experts in a narrow field of knowledge or conduct (such as making theater reservations or playing chess). Instead, avatars will have to exhibit a broad range of intellectual abilities before they begin to approach humanlike cognitive and perceptual capabilities, and thus warrant consideration of their status vis-a-vis legal personhood. Another reason why legal personhood is denied to current versions of avatars is the lack of self-awareness in such systems. Without self-awareness, an avatar is not only denied legal personhood, but also denied the characteristic of being alive. In fact, when the crucial aspects of personhood are irretrievably lost, it is generally assumed that an individual has died, that is, is no longer a person.225 Finally, another reason why avatars are denied legal personhood is based on legal precedent: No such entity has ever approached human levels of intelligence or self-awareness. Thus, the issue of legal personhood for such systems has not been considered.226

The debate on legal personhood for virtual avatars can benefit from a consideration of the legal status of humans and great apes, two species which clearly differ in levels of intelligence, although great apes are certainly intelligent creatures, have complex social structures, and are genetically similar to humans.227 We deny legal personhood to great apes not only because they are not human beings, but also because they have a significantly lower level of intelligence than the “normal” human and it is unclear as to whether they exhibit self-awareness. Although some apes may have the capability to learn language, as evidenced through signing at the level of a three- to four-year-old child, they

are not provided legal personhood. In contrast, people with severe cognitive deficits are provided the legal protection of personhood, regardless of their intellectual capabilities, although the state may assume some responsibility toward their upkeep. So, if humans with cognitive deficits are awarded the status of legal person, why then not consider such rights appropriate for intelligent avatars that may at the least be equally smart?

We can also consider the legal status of children in current society as legal precedent for the treatment of intelligent avatars.228 Under the law, children share several attributes of personhood with adults, but their immaturity disables them from receiving all the legal rights of an adult. Until fully possessed of mature reason and adult perspective, children are not legally allowed to assume either the prerogatives or burdens of full legal personhood. However, upon the age of majority, the law fully invests its citizens with constitutional rights, giving them both legal prerogatives and burdens. Before the age of majority, the law seems to manifest a gradual investment in children of legal personhood, roughly corresponding to their gradual attainment of adulthood. Until the age of majority, however, the law views children as lacking in at least some essential attributes of adulthood necessary to their exercise of legal rights and assumption of legal burdens. Arguably, we exclude children from legal standing and personhood for their own protection, providing other remedies for their claims. Indeed, the law assigns children’s claims to parents and the state, assuming one or the other party will best represent children’s interests. Children cannot, the reasoning follows, know or do what is best for them. In the context of intelligent avatars, would it be prudent to treat such entities from a similar legal perspective as minors, affording them some legal rights, but not those of a mature adult? What the above examples seem to suggest is that granting significant rights to virtual avatars based solely on intellectual capability, is ripe with contradictions.229 With the exception of corporations, the essential aspect of an entity that seems to lead to legal rights is self-awareness and humanlike intelligence.

For the time being, virtual avatars will be regarded as computer programs consisting of datasets and algorithms, along with a visual representation. As such, they may receive the legal protection that is awarded software, and the protection awarded images from copyright and trademark law.230 However, unlike standard software programs, intelligent avatars may deviate from their original programming until they are no longer recognizable to the original programmer(s). Avatars may run on a single computer or local cluster, or in a distributed fashion across a public network. They may be designed using “classical,” or deterministic, programming algorithms, in which case they should be able to summarize or “explain” their thought process, which could then be evaluated using step by step logic. More likely, however, intelligent avatars will have a substantial “neural network” or deep learning component so their internal state may consist of a large number of unlabeled weight values or sophisticated algorithms. In this case, they may output an answer without being able to “explain” it. Intelligent avatars may have a reflective capability that can at least partly describe and summarize the weights used to reach a given conclusion. According to one commentator, one might expect avatars to become strong believers in intellectual property law (copyrights, patents, trade secrets, etc.), to prevent their code and data from being stolen and copied, thus dramatically lowering their potential wages due to competition with clones of themselves.231

Since all machines have owners who pay their rent, power, and network connection charges, under the current law we can always look to the owner, whether a human or a corporation, and hold them responsible for the acts of the avatar, while assuming that the avatar merely acts as their agent. Under this view, the avatars, no matter how smart or decentralized, is just an item of personal property. If the avatar enters into a contract, that agreement binds the owner (subject to the usual rules of contract formation) and not the avatar, and if the avatar commits a tort, its owner is liable to pay compensation for any damages.232

In conclusion, a major event in US corporate law was the landmark Supreme Court decision to treat corporations as “persons” entitled to the equal protection of the laws under the 14th Amendment. Will there also be a similar landmark case for virtual avatars, or, as necessity dictates, will rights for avatars appear slowly, without any particular landmark decision paving the way for their emancipation? Many questions remain unanswered, as there is literally no case law on the rights of artificially intelligent entities in general, and intelligent avatars specifically. However, given the increasing intelligence of avatars, significant legal disputes involving their actions very likely will arise in the future. This chapter has provided a framework in which to consider how future litigation may develop, and potential causes of action which may be raised, especially in the context of virtual avatars.

SOURCES

Cases

Abdul-Jabbar v. General Motors, 85 F.3d 407, 413-14 (9th Cir. 1996).

Amaretto Ranch Breedables, LLC v. Ozimals, Inc., 29 (N.D.Cal. Dec. 21, 2010).

Am. Law Book Co. v. Chamberlayne, 165 F. 313 (2nd Cir. 1908).

Anderson v. Stallone, No 87-0592 WDK, 1989 U.S. Dist. LEXIS 11109 (C.D.Cal. Apr. 25, 1989).

Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. 1983).

Ben-Oliel v. Press Publ’g Co., 167 N.E. 432 (Ct. App. N.Y 1929).

Bernstein v. U.S. Dept. of State, 922 F Supp 1426, 1436 (N.D.Cal. 1996).

Bragg v. Linden Research, Inc., 487 F Supp. 2d 593 (E.D. Penn. 2007).

Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1475 (9th Cir. 1992).

Clevenger v. Baker Voorhis & Co., 168 N.E.2d. 643 (N.Y. 1960).

Computer Assocs. Int’l v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992).

Daly v. Viacom, 238 F Supp. 2d. 1118, 1123 (N.D.Cal. 2002).

Detective Comics, Inc. v. Bruns Publ’ns, 111 F.2d. 432 (2d Cir. 1940).

Eros LLC v. Doe, United States District Court, Middle District of Florida (2007).

Evans v. Linden Research, Inc., 763 F Supp. 2d 735 (E.D. Pa. 2011).

Elvig v. Nintendo of America, Inc., 696 F.Supp. 2d 1207 (2010).

Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340 (1991).

Fisher v. Star Co., 132 N.E. 133 (1921), cert. denied, 257 U.S. 654 (1921).

Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995).

Gardner v. Nike, Inc., 279 F.3d 774 (9th Cir. 2002).

Gionfriddo v. Major League Baseball, 94 Cal. App. 4th 400, 415-17 (Cal. Ct. App. 2001).

Harris v. State, 152 S.W.3d 786 (Tex. App. 2004).

Junger v. Daley, 209 F.3d 481, 485 (6th Cir. 2000).

Karn v. U.S. Dept. of State, 925 F.Supp. 1, 10 (D.D.C. 1996).

Kellogg Co. v. Exxon Corp., 209 F.3d 562 (6th Cir. 2000).

Laws v. Sony Music, 294 F.Supp.2d 1160 (C.D.Cal. 2003).

Litchfield v. Spielberg, 736 F.2d 1352 (9th Cir. 1984).

L.S. Heath & Son, Inc. v. AT&T Infor. Sys., Inc., 9 F.3d 561, 575 (7th Cir. 1993).

MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993).

Metro-Goldwyn-Mayer, Inc. v. American Honda Motor Co., Inc., 900 F.Supp. 1287 (C.D.Cal. 1995).

Microsoft v. Harmony Computers & Electronics, 846 F Supp. 208 (E.D.N.Y 1994).

Midler v. Ford Motor Co., 849 F.2d 460 (9th Cir. 1988).

Moseley v. V Secret Catalogue, Inc. 537 U.S. 418 (2003).

Murray Hill Publ’ns, Inc. v. Twentieth Century, 361 F.3d 312 (6th Cir. 2004).

Newcombe v. Adolf Coors Co., 157 F.3d 686, 692°3 (9th Cir. 1998).

Nichols v. Universal Pictures Corp., 45 F.2d 119 (2d Cir. 1930).

Nike, Inc. v. Kasky, 539 U.S. 654 (2003).

Oliver v. Saint Germain Found., 41 F.Supp. 296 (S.D.Cal. 1941).

Santa Clara Cty. v. S. Pac. Ry., 118 U.S. 394 (1886).

Seals-McClellan v. Dreamworks, Inc., 120 Fed.Appx. 3 (9th Cir. 2004).

Step-Saver Data Systems, Inc. v. Wyse Technology, 939 F.2d 91 (1991 U.S. App. 16526).

Toho Co., Ltd. v. William Morrow and Co., Inc., 33 F.Supp.2d 1206, 1215 (C.D.Cal. 1998).

Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992).

Universal City Studios v. Reimerdes, 111 F.Supp.2d 294, 327 (S.D.N.Y 2000).

Urantia Found. v. Maaherra, 114 F.3d 955 (9th Cir. 1997).

Waits v. Frito-Lay, 978 F.2d 1093, 1098-100 (9th Cir. 1992).

Walt Disney Prod. v. Air Pirates, 581 F.2d 751 (9th Cir. 1978).

Warner Bros. Inc. v. Am. Broadcasting Cos, Inc., 720 F.2d 231, 241 (2d Cir. 1983).

Washington Speakers Bureau, Inc. v. Leading Authorities, Inc., 33 F.Supp.2d 488, 493 (E.D. Va. 1999).

Wendt v. Host Intern., Inc., 125 F.3d 806, 810 (9th Cir. 1997).

White v. Samsung, 971 F.2d 1395, 1397-99 (9th Cir. 1992).

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Yow v. National Enquirer, Inc. 550 F.Supp.2d 1179, 1183 (E.D.Cal. 2008).

Statutes

Berne Convention Implementation Act of 1988, Pub. L. No. 100-568, 102 Stat. 2853 (1988).

Berne Convention for the Protection of Literary and Artistic Works, art. 6bis (Sept. 9, 1886).

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Defamation Act of 1996, Great Britain.

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Lanham Act § 43(a).

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Sen. Treaty Doc. 99-127.

Trademark Act of 1946, codified at 15 U.S.C. § 1125 et seq.

US Const. art. I, § 8, cl. 8.

U.S.T. Lexis 160.

1 B.D.I.E.L. 715.

113 S. Ct. 198 (1992).

282 U.S. 902 (1931).

470 U.S. 1052 (1988).

17 U.S.C. § 101 (1976).

17 U.S.C. § 102(a) (2005).

17 U.S.C. § 106A, 113, 301, 501(a) (1990).

17 U.S.C. § 117 (1996).

47 U.S.C. § 230(c) (2000).

• 2. Starting up in virtual reality: examining virtual reality as a space for innovation

Crystal Nwaneri*

• 1. INTRODUCTION: VIRTUAL REALITY AS AN INNOVATION SPACE

The Oxford Dictionary defines virtual reality as a “computer-generated simulation of a three-dimensional image or environment that can be interacted with in a seemingly real or physical way by a person using special electronic equipment, such as a helmet with a screen inside or gloves fitted with sensors.”233 234 In some respects, commercial virtual reality (“VR”) has been around since at least the late 1950s but has recently seen a precipitous rise as a result of modern desktop and mobile devices. For a time relegated to laboratories at academic institutions, VR is once again a growing, budding commercial industry with applications in education, health care, military training, and theme parks. This new beginning for the industry is based primarily on advances in “the helmet with a screen inside,” that is, in head-mounted displays (“HMD”). Such displays contain sensors that detect and track the orientation and tilt of a user’s head, which allows images on the helmet’s screen to move corresponding to those head movements. The helmets consist of a mask with a screen large enough to encompass more than 90 degrees of a user’s field of view.

The “virtual reality” industry had a lift in 2014 when Facebook spent $2 billion dollars to purchase Palmer Luckey’s Oculus Rift VR system. The Rift’s key distinctions were its lower price point compared to other products on the market, high resolution, wide 100-degree field of view, and lower latency rate. Latency refers to the rate at which a visual display changes or updates its screen in order to “trick” the human eye into having the impression that it is viewing a continuous simulation. If the update rate is fast enough to increase a user’s sense of presence in the immersive virtual environment, it may also reduce the incidence of motion sickness that may occur if the visual display is unable to align with the speed at which the brain processes images. The Oculus system is able to capture and track movements 1,000 times per second using its “Adjacent Reality Tracker,” composed of a magnetometer, gyroscope, and accelerometer. The Oculus Rift system is now part of a growing hardware field consisting of mobile and desktop devices that allow more people than ever to use and own their own VR devices. Along with improved hardware and corresponding increases in the use of VR technology have come interesting legal issues in areas ranging from commercial law to intellectual property.

Just as funders have invested in the engineering of modern HMDs and position tracking systems, they have also invested in the creation of content within this growing industry. Generally, VR devices allow users to choose content through application (“app”) stores that work similarly to the Google Play Store and Apple App Store. Oculus has a proprietary app store; its competitor HTC’s desktop VR hardware works with content distributed through an existing game distribution platform called Steam. Content developers range from indie gaming studios,235 on the one hand, to dedicated media studios making VR experiences, on the other.236 One of the most prominent entities to invest heavily in VR content development is the New York Times, which offers 360-degree news experiences.237

The continued development of VR hardware and content creates multiple points of liability. This chapter will review the legal implications of VR as a field for innovation. After going over the history of VR, the chapter will examine the common legal pitfalls that VR companies may face in retaining confidential information and obtaining funding as hardware or software startups. It will then consider new privacy risks that come from the collection of biometric data necessary to make VR function. It will next explore the potential cognitive and physical implications of allowing users to immerse themselves in alternative universes while still physically inhabiting this one. It will end by discussing how to protect the intellectual property of these new companies and the legal rights of others who may have their intellectual property reproduced without authorization in VR. In innovating in virtual reality, developers and the attorneys advising them must think critically regarding both the new and old legal risks posed by this nascent industry.

• 2. MODERN VIRTUAL REALITY

  • 2.1 History of VR

VR has a long history, which is worth examining in more detail before going on to discuss the legal implications of the technology’s current iterations. In 1957, Morton Heilig developed what some argue is the first instance of VR—a 3D head-mounted display and a Sensorama machine that allowed users to immerse themselves in an experience with artificial vision, sound, smell, and vibration. A decade later (extending his work from the early 1960s), Ivan Sutherland created a stereoscopic HMD, commonly called the “Sword of Damocles,” that was suspended from the ceiling above a user’s head during operation.238 Experimentation with VR had been around for at least 40 years before Jaron Lanier coined the phrase “virtual reality” in the 1990s.

Lanier himself was a VR innovator. His company, VPL Research, created new VR peripherals, including HMDs and data gloves used to track hand motions to enable interaction with the immersive environment. One of the goals of VR technology is to increase one’s sense of presence in a computer-generated simulation. Early investigators of this concept were Tom Sheridan at MIT and Woodrow Barfield, then at the University of Washington. Presence is the sense of actually being or existing in a virtual world.239 Also of importance to the VR experience were the development of the peripherals just mentioned, such as HMDs and data gloves, which track a user’s position in order to effect change in the digital display of the 3D environment that replicates the change in the physical world. These changes in display and position within a 3D environment increase presence and are what make VR immersive in the first place.

The key tool in immersive VR is the HMD, which surrounds the user with a computergenerated virtual environment. An HMD “tricks” the human eye and thus the brain into making a user believe she is present in the virtual world by enclosing the user in a blackout blindfold to reduce external distractions while presenting each eye with a slightly separate or offset view of the virtual scene in order to mimic human binocular vision. The human eye will instinctually fuse the distinct images in order to create 3D depth perception. Stereo or surround speakers may be added to increase the sense of immersion. The HMD tracks head position (or in some cases user movement) by using an accelerometer—such devices, whether in one’s cellphone or in a VR display, allow for navigation in reference to the device in which it is contained. When an accelerometer is placed in an HMD, navigation is based on the position of the user’s head. In this latest era of VR technology, two general platforms have emerged: mobile and desktop VR, distinguished by the computers used to effectuate the VR experience.

• 2.2 Desktop VR

Consumer desktop VR is experienced through the use of an HMD attached to a high-powered computer or video game console. Some early iterations of this type of VR technology are the HTC Vive, Oculus Rift, and Sony PlayStation VR. These VR technologies require either sensors or cameras set up around the room to input and track the user’s position. The latter of these systems hooks up to the Sony PS4 video game console while the former systems connect to computers. This is the traditional version of commercial VR technology.

The presumed advantage of these types of systems is their greater functionality, larger displays, higher refresh rates, and overall greater computing power. This allows content developers to create high-fidelity games.240 Yet, this requires a powerful VR-ready computer and space in order to set up a system that properly tracks one’s head, hand, and body positions. This creates a significant barrier of entry for interested consumers—not only are these VR kits expensive in their own right, but in order to use them one must already own a VR-ready PC or console, or would need to invest in one separately.241

• 2.3 Mobile VR

A user experiences mobile VR through the connection of smartphones to mobile HMDs. Some popular early mobile HMDs are the Samsung GearVR and Google’s Daydream. The former HMD runs with versions of the manufacturer’s smartphone released concurrently and the latter with a select group of smartphones running Alphabet’s Android operating system. The phrase “mobile VR” is in some ways a misnomer. Although the smartphones and HMDs themselves are wireless and can be carried easily to different locations—unlike a desktop VR system—the user must nevertheless remain stationary while using such a device for reasons of safety. The devices are mobile, but while they are in operation, the user is not.

Although the computing power, and thus the display power, of a smartphone and that of a fully rigged gaming PC are nowhere near each other in terms of capabilities, many industry insiders feel that mobile VR is the future of the industry. Despite the few inputs that mobile VR devices support compared to more elaborate setups, developers still say that it is easier and cheaper to develop content for mobile VR platforms.242 By the end of 2016 more than 100 million VR systems had sold, but 88 million of those sales were of Google’s low-end HMD, Cardboard. Mobile VR has a larger audience and has made VR as a whole a more acceptable cultural product.243 The fact that mobile VR is cheaper has resulted in it becoming far more commonplace than higher-end VR systems, and allows users to be in VR anywhere they have their HMD and smartphone. This poses significantly greater personal risks for those who choose not to exercise care.

• 3. VR STARTUP CONCERNS

  • 3.1 New Legal Issues in Funding a VR Startup

Not only is the technology for modern VR different compared to past iterations, but it is also distinct from VR’s past era in its financial origins. Because modern VR is commercial, smaller companies attempting to obtain funding to develop their experiences or products are looking to private funding rather than research grants to innovate in the field. While the information below is widely applicable to the high-tech startup space rather than VR specifically, it is worth analysis given that it describes the context in which a modern VR startup will arise.

Back in 2012, Oculus proved that VR was a viable investment through a highly successful crowdfunding campaign and its later acquisition by Facebook. Founder Palmer Luckey developed an early version of the Rift in 2012 and that year it was named one of the best products at the Electronic Entertainment Expo, an annual conference showcasing upcoming developments in the gaming world. Based on the interest generated at the Expo, Oculus started a Kickstarter campaign, which garnered over two million dollars—among the largest amounts raised in crowdfunding history at the time, and far above the amount the company was seeking. Oculus proved to venture capitalists and large electronics manufacturers alike that VR had a commercially viable future.

Oculus and other successful high-tech hardware crowdfunding campaigns also revealed that crowdfunding’s “backers” were viable sources of capital for innovative early stage startups. Backers in a crowdfunding campaign are a distinct source of financial capital. Backers provide a relatively small amount of capital to a project listed on a crowdfunding platform’s website in exchange for whatever promise a founder makes based on the price tier of the donation. This promise can range anywhere from heartfelt thanks to early access to a new product or, if the donation is large enough, early access to a prototype of the hardware at issue. Yet even these so-called gifts may come with obligations.

First, public pressure may cause a VR or other hardware company to owe a nonlegal obligation to backers. The clearest example is Oculus. After the company’s successful Kickstarter campaign, which allowed it to begin to develop a state of the art HMD, Facebook bought Oculus for $2 billion dollars. Although the sale took place two years after the Kickstarter campaign, it caused a backlash among some of the company’s early supporters. Oculus had already fulfilled its Kickstarter promises to backers, yet in 2016 it sent the first commercial release of its Rift HMD as part of a freebie bundle to backers who had provided the original campaign with significant funds. While Oculus had no legal obligation to provide an additional freebie, it likely made the decision to stay in its supporters’ good graces despite the fact that, in financial terms, the company had become wildly successful. It is unclear what rights, if any, a crowdfunding backer could assert against a company in which she has no stake if that company moves in a direction the supporter does not like. If a company violates a promise made to backers on Kickstarter, while there is no formal legal relationship between the company and the backer, such an event may still constitute fraud and lead to an enforcement action taken by the Federal Trade Commission (“FTC”).

Section 5 of the FTC Act allows the FTC to take enforcement action against companies that engage in “unfair and deceptive acts and practices in or affecting commerce.”244 In FTC v. Erik Chevalier, after accepting over $122,000 in Kickstarter campaign funds in order to make a board game, the defendant canceled the project after 14 months and used the funds to pay for personal expenses.245 The FTC charged the defendant with engaging in deceptive acts in violation of the statute.246 In the end, the court ordered that the defendant was restrained and enjoined from misrepresenting the purposes for which funds raised from a crowdfunding campaign may be used, from failing to honor a crowdfunding service’s refund policy, and awarded the FTC a little over a suspended $111,000 due to the defendant’s financial state.247 This was the first case to be brought based on fraud occurring in a crowdfunding campaign—it shows that consumers who have participated in such campaigns have protection even if they may not have any legal claim against a company.

Based on the Jumpstart Our Business Startups Act (JOBS Act) of 2012,248 some of these supporters may have an actual stake in a company and have actual rights to assert. Formal investors in a company provide capital to a company in order to receive equity. The JOBS Act permits individuals who are only able to make a small investment, subject to certain conditions in the statute, to obtain a financial stake in a company they support offering securities. Specifically, the statute makes securities-based crowdfunding legal. This allows a startup to obtain crowdfunding in exchange for actual securities. In order to obtain funding, the company must use an intermediate funding portal rather than soliciting funding directly from investors and investors are limited in the amount of funds they may invest based on their income.249 While this Act has allowed companies to diversify their funding, taking too much capital from smaller investors may actually have a negative impact on the future growth of the company, deterring angel investors and venture capitalists from future rounds of financing.

Some view this alternative form of financing as a positive for the innovative hardware industry, allowing developers to generally retain control of their company while still getting outside investments. However, as shown above, crowdfunding in both forms poses its own set of problems to hardware startups. Lawyers advising such companies should be aware of all promises made to backers and, in the case of JOBS Act investors, must meet all of the Act’s requirements for crowdfunding investments. There are many new ways in which nascent companies can obtain funding—the next big innovation in VR may not use a traditional funding method and there are a number of legal considerations for both the entities and their lawyers to consider if they take an alternative path.

• 3.2 Protecting Trade Secrets During Development

The first challenge of developing innovative hardware in the tech space is retaining talented developers and protecting company secrets. New VR companies launching soon will have to protect trade secrets in the development process of their hardware and software. While this is a general rule of thumb for startups, some highly publicized legal battles in the retail VR field reinforce this need.

In one legal battle, Total Recall Technologies (“Total Recall”) sued Facebook and its subsidiary Oculus Rift, LLC (“Oculus”) for a breach of confidentiality with regard to the technology behind Total Recall’s HMD hardware.250 Palmer Luckey, the founder of Oculus Rift, had signed a nondisclosure, exclusivity, and payments agreement with Thomas Seidl stating he would have exclusive use of Luckey’s HMD designs for $10,000 per year. Thomas Seidl formed Total Recall in partnership with Ron Igra in order to develop a 3D head-mounted display. The agreement granted Seidl rights to Luckey’s designs and also held that all commercially valuable information was protected and confidential. After Luckey had sent a prototype to Seidl for Total Recall, he announced the commercial sale of Rift, outside the agreement. Total Recall itself was not a party to the agreement but the court permitted it to sue based on its standing as a third party beneficiary and as an undisclosed principal to the agreement between Luckey and Seidl.

Luckey asserted that he could not have been in breach since the contract had not taken effect, and that the contract violated California law prohibiting noncompete agreements. The defendant’s position was undermined further when it was discovered that Luckey had allegedly agreed in conversation with Seidl to share the prototype at issue through open source methods. Total Recall claimed that the defendant committed fraud when he decided to commercialize the HMD. It is unclear whether Luckey and Oculus would have been able to succeed based on their assertions—the case was dismissed when the court discovered that the lawsuit was unauthorized given that both partners had not agreed to it and the plaintiff partner failed to cure this issue by obtaining authorization or ratification.251 But this all shows the importance of the complex agreements that can be formed when one is working in a nascent field, and the necessity of writing clear contract agreements. None of the parties realized how popular the Oculus system would ultimately be, but things said in casual conversation were later brought up in litigation regarding who truly owned the information used to reinvigorate a multibillion-dollar industry. Developers must seek out advice when working with promising technology and lawyers must advise clients on the promises they should and should not make, and help them determine the proper scope of even preliminary working agreements.

The issue of ambiguity in contracts concerning development and production has arisen in two other cases in the VR field. In the first, ZeniMax Media Inc. and id Software LLC (collectively “ZeniMax”) sued defendants including Luckey, Oculus, and Facebook for, inter alia, copyright infringement, tortious interference with a prior contract, misappropriation of trade secrets, unfair competition, and breach of contract.252 The defendants argued that the plaintiff ’s claims rested on an unenforceable nondisclosure agreement that did not define the scope of the confidential information it was meant to protect. The case centered on an ambiguous agreement. This argument over what information was protected by the agreement between the parties cost the defendants a significant amount of money. At the end of a trial a jury found in favor of ZeniMax over Oculus and its executives and awarded the plaintiffs $500 million dollars for breach of contract, copyright infringement, and false designation.

In a second case, Fawzy Amer Deghedy v. Viztek, Inc., the Southern District of Iowa granted a permanent injunction against the plaintiffs in a contractual dispute regarding the “contractual rights and obligations arising from the development, distribution and sales of a three-dimensional anatomical visualization system of the human body,” or a VR-like program used to teach anatomy to medical students.253 Although the jury found the defendants guilty of unjust enrichment and breach of implied contract, the jury also found the plaintiff guilty of “defamation, intentional interference with prospective business, misappropriation of trade secrets, copyright infringement and unfair competition.”254 Based on this ruling, the court enjoined the plaintiff from further infringement of the defendants’ copyrights in their Cyber-Anatomy Med VR, misappropriation of the defendant’s trade secrets and confidential information, and from generally using the defendants’ trade secrets in any commercial manner.255

The first defense against the disclosure and misuse of a new company’s confidential, proprietary information is the confidential agreements that such companies have employees and external partners sign. These agreements must be clear and must properly define what information is protected and who is entitled to use it and in what capacity. Considering the financial stakes, it must be clear if technology will be open source or if it will be considered a trade secret. Even then, the provision of labels stating information’s confidentiality may not establish that such information constitutes a trade secret—what constitutes a trade secret is determined by looking at the information’s value, whether or not the information can be obtained some other way, and the extent to which a party imposes measures to protect trade secrets.256 The virtual reality industry is growing and the information within the industry is valuable—lawyers must be cognizant of the value of this information even in working with early stage startups and take necessary measures to truly protect their client’s work from disclosure.

• 4. RISKS OF VR

4.1 Privacy

Lawyers and developers should consider the legal risks of VR content and hardware companies not only as startups but also as platforms that bring new risks to data privacy. It is a VR company’s responsibility to inform consumers about the range of data such technology will collect, as well as to provide them with information about how such data will be used. This applies to top-level hardware manufacturers and content developers alike. Just as applications on smartphones each have their own set of permissions regarding the information they can access on phones and collect about users, each VR experience may collect different sets of information from users, and users have a right to be informed of what that may be.

Virtual reality functions through the collection of data regarding a user’s physical movements. Peripherals, whether an HMD or a data glove, are likely to collect information about a user’s position in space and therefore information about a user’s physical movements. As peripherals become more advanced, they will likely be able to collect more particularized biometric information such as a person’s heart rate, hand movements, or even gaze. Yet, of the major existing hardware manufacturers, only Oculus directly addresses in its privacy policy the fact that it may collect information on a user’s physical movement. Like other manufacturers, such as Sony, Samsung, Google, and HTC, Oculus’s privacy policy says it will collect information provided by users on how they access the company’s services, about the applications installed on users’ devices, and about how such information may be shared with third parties. Oculus is unique in that it is the only major dedicated VR hardware company with its own dedicated privacy policy. Other companies generally direct users of their VR devices to the company’s general privacy policy for all its services, and this may be inadequate given the discrete information that an HMD and other VR peripherals may collect. Oculus’s privacy policy in particular states it will collect “[information about [a user’s] physical movements and dimensions when [she uses] a virtual reality headset.”257 Users may access the data associated with their Oculus accounts by emailing the company.258 Facebook, Oculus’s parent company, has previously taken advantage of its legal rights in using user data. Due to the social network’s broad data use policy, its company data scientists were able to run an experiment on users seeing how removing all negative or positive posts affected a user’s mood. This led to the publication of a scientific paper on the subject in 2014.259 Users should note that Oculus similarly retains the right to use the information it collects to conduct research on the way consumers use its services.

Although Oculus may be the only company that explicitly states it will collect such information, if collection of movement and biometric data is in the nature of VR hardware and software, companies trying to enter the space may all be collecting unique information that has never been collected in such a widespread manner before. If this is coupled with passive or personally identifiable data given to these companies, such entities may have the ability to determine a user’s physical characteristics or health data by connecting formerly unconnected data points. While users should be conscious of the amount of information collected about them from these companies, it is unlikely that the companies will intentionally misuse that data. But users would have a right to be wary of the possibility that such information might fall into the wrong hands after a cyberattack or be misused by a third party to facilitate discrimination or engage in some type of surveillance.

Although major hardware players in the VR industry currently do not create distinct privacy policies for their new devices, because this is an entirely new category of information being granted to commercial entities, it is likely that it will prove worthwhile to craft a new privacy policy that clearly tells a user how such data will be collected and retained. Such a policy is not only important for users but would also be useful internally so that employees within a company can design with notice of the company’s goals regarding user privacy. If a company does not adhere to its privacy policy—by collecting more data than disclosed or by violating its privacy policy—it may cause a backlash among users or run afoul of state privacy and wiretapping laws, or of the FTC itself.

Section 5 of the FTC Act allows the FTC to take enforcement action against companies that engage in “unfair and deceptive acts and practices in or affecting commerce” or for violating other federal laws relating to consumer privacy and security.260 This includes taking action against a company for failing to live up to its privacy promise or failing to maintain security for sensitive consumer information. The FTC has also held companies secondarily liable for the advertising and telemarketing practices of business partners and this may be extended to a contracting third party’s failure to uphold their privacy policies. This means that VR content developers should make sure they fulfill their privacy promises and that contracting hardware or platform providers ensure applications have a privacy policy in place.

• 4.2 Cognitive and Physical Risks

In its product safety and regulatory guide for the Vive, HTC warns:

Content viewed using the product can be intense, immersive, and appear very life-like and may cause your brain and body to react accordingly. Certain types of content (e.g. violent, scary, emotional, or adrenaline-based content) could trigger increased heart rate, spikes in blood pressure, panic attacks, anxiety, PTSD, fainting, and other adverse effects. If you have a history of negative physical or psychological reactions to certain real life circumstances, avoid using the product to view similar content. Similarly, it is important to remember that simulated objects, such as furniture, that may be encountered while using the product do not exist in the real world, and injuries may result when interacting with those simulated objects as if they were real, for example, by attempting to sit down on a virtual chair.261

Similar language is used in Google’s Daydream View Health and Safety Information guide.262 Although users may approach VR as if it were just another game, VR companies are cognizant of the short and long-term physical and cognitive harm that immersive sensory experiences may cause users.

The first harm mentioned in HTC’s safety guide is psychological harm. VR companies should be aware that the lifelike nature of their products may cause real life psychological trauma and illness. Depending on the VR experience, users could either suffer the effects of post-traumatic stress disorder after experiencing something triggering, or experience something stressful and new that could cause the condition. For example, the armed forces do not use the Oculus Rift system for military training because, despite its advancement, it still has a high enough latency rate that it could trigger nausea or cause a user to act unpredictably, compared to the higher-end models currently in use by the armed services. It has been proposed that long-term exposure to VR could even undermine an individual’s ability to process and respond appropriately to threats if she repeatedly subjects herself to catastrophic experiences but walks away unharmed. Decades of research has shown that VR can affect the way people act and think—lawyers and developers must consider this facet of VR as they roll out more and more widely available commercial products.263

In response to such harm, a user could attempt to file a tort suit against a VR platform provider or app developer. An absolute defense to intentional torts is consent, and a claim in that category is not likely to succeed if the user participated in the experience willingly. A user could attempt to file a negligence or strict products liability claim but precedent shows that such a claim is unlikely to succeed against today’s VR companies if the harm is premised on content rather than some hardware defect. In Sanders v. Acclaim Entertainment, Inc., family members of the victims of the 1999 Columbine high school shooting sued movie and video game producers for negligence and strict products liability, claiming that their violent products influenced the shooters.264 The federal court dismissed both claims, reasoning that the manufacturers had no duty to the victims’ families for the negligence claim and that the intangible ideas and thoughts contained in the media at issue were not subject to the strict liability doctrine. If a user were to bring a similar claim against a VR company, that company could argue that while their product is immersive, it too is only a collection of intangible ideas and thoughts. Although VR promises to be an immersive, tangible experience, it is unclear if, despite the industry’s progress, it has advanced far enough for its content to legally be considered tangible enough to be subject to strict liability doctrine. Some users still suffer from motion sickness caused by latency issues and may not feel fully immersed even with today’s high-tech peripherals. VR has yet to reach a point where it can be said to be an experience entirely divorced from the video game industry. As long as VR is still closely connected in content and experience to video games, the industry can likely rely on such precedents to defend itself against similar legal claims. History shows that technology advances faster than researchers predict and courts may need to set new precedents sooner than one thinks to keep up with the psychological issues that may stem from immersion in a 3D VR environment.

The second harm mentioned in HTC’s safety guide is physical harm. The language mentions that users could suffer harm from trying to interact with virtual objects that do not exist in the real world. Serious physical harm can also stem from general carelessness. In order to be immersed, users have their entire field of vision blocked either by a screen or by a blackout blindfold. The technology intentionally tricks a user’s brain into believing that what they are seeing is the world in which the user exists. It is thus no surprise that a user may accidentally inflict harm on herself or another, or cause other property damage. There are a number of ways in which a VR company could protect itself from liability.

The first defense seen is the use of adequate warnings enclosed in safety guides. In Elvig v. Nintendo of America, Inc., the District Court for the District of Colorado granted Nintendo’s motion for summary judgment after the mother of a user sued the company when her son’s Wii remote strap broke and damaged her television set.265 More than 900 other reports to Nintendo had been made regarding property and personal injuries stemming from the defective strap. The mother had claimed that Nintendo violated Colorado’s Consumer Protection Act (CCPA) by engaging in deceptive trade practices by distributing inadequate safety straps, breached an implied warranty that the safety straps were fit for a particular purpose under the Uniform Commercial Code (UCC), and violated the Colorado Product Liability Act (CPLA) in distributing straps that were unreasonably dangerous and defective. The court granted summary judgment to Nintendo for the plaintiff’s CCPA claim because she failed to carry her burden to provide proof that Nintendo falsely advertised its system and the remote’s athletic use without disclosing that the straps had a propensity to break. Similarly, the court granted Nintendo summary judgment for the UCC claim since the plaintiff failed to establish that she had obtained her system for a particular purpose other than that for which it would customarily be used as required for such a claim or that the strap was not fit for ordinary purpose. Likewise, the court granted Nintendo summary judgment for the CPLA claim because a safety card included in the system gave precise warnings that the same misuse of the controller engaged in by the plaintiff ’s son would result in the harm caused by that misuse. This shows that precise warnings within a safety guide or a safety card may act as a sufficient defense if there is an external hardware failure that causes some type of harm.

Another defense is for companies to allow users to assume these risks through the terms and conditions for use. While many of the major manufacturers have safety guides and some include information about the need to use HMDs in safe environments, generally the actual applications are only accessible if one has internet access. Since online services generally have terms of service, users can agree to assume the risk to these physical harms when they agree to use a platform’s web-based services. This requires a platform and app provider to add new sections to a terms of service agreement rather than relying on boilerplate language that does not account for the fact that physical harm may actually stem from a web-based service.

Another option would be for competitors to form a coalition early on and lobby Congress for new laws that will limit a fledgling company’s liability for its users’ carelessness. The extent of damage that VR may cause, if any at all, is unclear, and it would be unsurprising if companies that are investing billions into the industry want to protect their investments preemptively, before an extreme case such as an accidental death causes another nuclear winter in terms of further development in the industry.266

A fourth option would be to create both software and hardware safety solutions. Lawyers can advise VR clients to put technical safety measures in place within the products themselves. At the platform and app store level, companies such as Oculus already provide a safety warning every time their platform is loaded up. This acts as a defense to failure to warn products liability claims, as outlined above in the Elvig case. However, content developers themselves can provide further, more specific warnings when an application is opened. Content developers can develop quick, creative ways for users to interact with and become cognizant of the dangers of use before they are able to participate in the experience itself. Content developers could even follow Niantic’s lead from the augmented reality Pokemon Go mobile game and limit the circumstances in which their content can be used. In that game, users attempt to capture randomly generated fictional creatures called Pokemon that appear to exist in different locations in the physical world through the screen of the user’s mobile device. As a safety measure, new Pokemon will not randomly populate or appear in the game’s map for capture if a user is moving at driving speed.

At the hardware level, other external companies are creating peripherals that make the use of VR safer. While users tend to rely on swivel chairs so they can be stationary while still taking advantage of the content’s 360-degree immersion, various startups, such as Roto VR, have developed VR-enabled chairs to enhance users’ experience. Roto VR’s particular good is a motorized chair that was specifically built to allow for a more immersive experience while still allowing a user to be safely seated.267 This is just one example of hardware built for modern VR technology that has safety in mind. While content developers may not want to enter the hardware space, other hardware developers should consider making their own complementary safety peripherals and consider how the peripherals they already manufacture put their users in harm’s way. VR poses new risks and safety should be considered at every level of production.

• 5. INTELLECTUAL PROPERTY

The growth of virtual reality will allow users to connect with and use real-world products in a fashion that may never have been previously conceived of. VR companies will need not only to protect their own intellectual property (“IP”) in their software and hardware but also to take care not to infringe on the IP rights of other manufacturers, authors, or brand owners. Although replicating real-world goods may make an immersive 3D environment feel more lifelike, VR developers must be warned of the potential liability inherent in using another’s IP rights.

5.1 Patent Rights

Patents are a negative right that allow an owner to prevent others from making, using, selling, offering for sale, and importing their claimed invention for a statutory, limited period of time. Under U.S. patent law, in order to claim this right the owner’s invention must be useful, novel, and non-obvious to a person having ordinary skill in the art. Another person will have infringed the owner’s patent if she uses, makes, or sells the claimed invention without authorization. The patent owner may then sue for infringement.

Only a few prominent patent infringement cases have arisen in the VR context. One such case is Lamson v. United States.268 There, the patent holder for a method for “Virtual Reality Immersion Therapy for Treating Psychological, Psychiatric, Medical, Educational and Self-Help Problems” sued the United States in federal claims court for unauthorized use of methods covered by the patent. Although the court construed the phrase “immersive virtual reality environment” in favor of the plaintiff, defining it as a computer-generated three-dimensional immersive environment that allows movement and navigation,269 it ultimately granted summary judgment to the government, stating that the Patent Act’s medical use immunity protected the government from liability for its actions in this specific case.270

In order to protect a developer’s own innovations in VR, she must file a patent to protect any new processes used to create the hardware or any innovations in the manufacture of the VR peripheral itself. In the VR industry, many different manufacturers are producing different but similar peripherals in order to produce the best VR experience. Thus, a claim in a VR patent must refer back to existing VR patents, but also must clearly outline what is different about the hardware that the developer seeks to protect. A developer may want to file a utility patent or a patent for a new or an improvement on an existing machine or manufacture.271 A developer may also want to file a design patent, which may be “issued for a new, original, and ornamental design embodied in or applied to an article of manufacture.”272

In addition to protecting her client’s novel invention, a lawyer must also consider the new ways in which a patent may be infringed within a VR environment.

The first new issue is whether or not reproducing a real-world good in a VR environment would infringe on the patent owner’s rights to the real-world good. In this case, a virtual good will likely only explicitly violate a patent if the attorney filing the patent extended the patent to cover computer embodiments of her client’s claimed invention. One way to do this is to write additional patents or claims in a patent in order to include a digital reproduction of the product or process. While the explicit violation of patent seems unlikely in a 3D environment, how patent applications are being drafted could change to accommodate new technology. If that is the case, developers must know that they can be held liable for direct infringement.

A patent owner may also assert a claim against a VR content producer through the doctrine of equivalents. This doctrine allows a patent owner to sue an alleged infringer for the use, production, or sale of a good that carries out a substantially similar function in a substantially similar way with a substantially similar result to her claimed invention. This may extend to a virtual representation of a good if it operates in the same way within the applicable laws of physics. The difference between the representation and the invention may be deemed trivial by the court and the producer may be found liable.

VR platform owners such as HTC or Oculus may also be found to be secondarily liable for inducement infringement. An entity may be secondarily liable for infringement if it actively induces infringement of a patent.273 To prove inducement infringement, a plaintiff must show that (1) a third party actually infringed, that (2) the inducer knew of the patent, and (3) that there was knowing inducement of the infringing acts with a specific intent to encourage infringement by the third party.274 If platform owners include clauses in their terms of service stating that content producers may not reproduce patent protected goods in VR without obtaining proper permission, this will undermine any assertion that the platform owner knowingly induced the infringing acts. Besides protecting her own patents, a developer must also make sure not to infringe another’s patent either in the development of her own hardware and software or in the reproduction of goods within the 3D environment.

• 5.2 Trademark Rights

Besides patents, a VR developer must also ensure that she protects her own brand and does not infringe upon the brand of others. A trademark is a word, symbol, device, or name used to distinguish between the goods or services of one seller and another.275 A party infringes another’s trademark when she uses the trademark owner’s mark in commerce and that use causes or is likely to cause confusion as to the source of the good or service.

Once a company has made an improvement on VR technology or produced unique VR content, it is imperative that the developer protect the brand with a federal and international trademark registration. Although this process has a number of steps and is not mandatory, in order to aid in the growth of a company, registration is important to provide “notice to the public of the registrant’s claim of ownership of the mark, [obtain] legal presumption of ownership nationwide, and [obtain] exclusive right to use the mark on or in connection with the goods/services listed in the registration.”276 This should be one of the first steps taken by a new VR company.

It is also important to be cognizant of the new ways in which a producer may infringe on another’s trademark within VR content. One way to create a more realistic immersive world is to reproduce the goods found in the physical world and the brands that produce them. Replication of a mark in a virtual world may facially seem like a straightforward case of infringement. However, VR developers have three plausible arguments that such replication is not infringement.

The first defense is based on the First Amendment and the right to make permissible parodies of marks.277 Use of another’s mark is not infringement if the alleged infringer can show that use of the mark does not cause consumer confusion in light of trademark law’s multi-factor test for confusion. Such a use is fair use if a reasonable viewer would not think the mark owner was a source of the parodying good. A representation of a mark is a parody if it simultaneously presents itself as the original and communicates that it is not the original through some articulable element of satire or ridicule.278 The right to make parodies is protected by the First Amendment. For example, in E.S.S. Entertainment v. Rock Star Videos, Inc., the Ninth Circuit held that use of a mark in an artistic work would not violate the Lanham Act unless the mark has no artistic relevance to the underlying work. If it does have artistic relevance, it will only violate the Act if it explicitly misleads consumers as to the source of the work. In that case, the court found that the parodic reproduction of an East Los Angeles nude dance club in a video game had artistic relevance but did not explicitly mislead consumers as to the source of either the game or the club—thus the video game publisher did not infringe on the trade dress of the club under Section 43(a) of the Lanham Act and its acts were protected by the First Amendment. Trade dress refers to the overall image of a good or service which may receive the same protection as a trademark if it serves to identify and distinguish the source or a good or service.279 While this case sets a useful precedent against claims of trademark infringement in future immersive worlds, its relevance may be limited. The court’s determination was made based on the facts of the case and future cases will likely also be subject to the same specific analysis. In future cases, those making more realistic 3D worlds may have to take greater caution, as a hyperrealistic rather than parodic world may make a consumer more likely to believe that the trademark owner was somehow involved in production.

As a second defense, a trademark owner’s claim of infringement may also fail if the defendant can prove that the owner failed to establish that consumers were confused as to the owner’s affiliation with or sponsorship of the good or service in the virtual world. A defendant will likely not be held to have falsely presented an affiliation or sponsorship if the defendant has either criticized the mark, identified the mark’s owner, or even disavowed affiliation with the mark. Similarly, a defendant may also claim that their use constitutes nominative fair use. Under this doctrine, use of a mark is not infringing if the mark is only used to describe the goods or services of the trademark owner or its geographic origin in good faith. A use is not infringing if the VR developer is attempting to describe or comment on a good in good faith. There can also be no claim of improper affiliation if there is a true affiliation. Just as brands do with video games, VR content producers can intentionally enter into product placement deals. Furthermore, there are a number of cases where trademark infringement claims against video game manufacturers were dismissed because the court found that it was unlikely for consumers to believe that they were purchasing a copy of the trademark owner’s goods when they purchased the relevant game.280 These cases will likely inform the first era of litigation in regard to misuse of trademarks in VR.

The third defense that an alleged infringer may assert is that the use of the mark was not in commerce, as required by the Lanham Act. Use in commerce is defined as a bona fide use in the ordinary course of trade.281 If the mark is used on virtual goods that a user can sell or exchange solely for virtual currency, it is unclear whether such a transaction constitutes use in commerce. It is also unclear if the exchange of fictional, virtual currency—even if it is made across state lines through an internet connection—is something that a federal statute may govern. A trademark owner will have an even weaker case if the good or service with which the mark is associated is not part of any transaction at all. A trademark owner could plausibly argue that being part of any sort of VR content that a consumer obtains is use in commerce, but this application of the Lanham Act would be overly broad. Such an application would allow any party to attempt to apply the Lanham Act to all virtual commercial transactions, whether those transactions concern real goods or are simply a component of a fictional immersive world. Likely, whether or not the use of a mark in VR constitutes “use in commerce” will have to be litigated before any final resolution can be found.

Attorneys working with VR platform providers can set a precedent by requiring that content producers have a license to use a trademark before reproducing it in VR. Nevertheless, if a license is not obtained, the First Amendment and trademark fair use have been shown to provide some protection for the reproduction of real life brands.

• 5.3 Copyrights

With the production of new and old goods in 3D virtual environments primarily through software code, VR developers must also take the time to protect their copyrights and respect the copyrights of others. Article I, Section 8, Clause 8 of the US Constitution grants Congress the power to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The Copyright Act, derived from this clause, specifically grants a specific set of exclusive rights to authors whose works are fixed in a tangible medium of expression.282 The Act grants authors the exclusive right to reproduce, create derivatives, distribute, publicly perform, and display their original works.283 Under Section 102 of the Copyright Act, the subject matters of the works include literature, music, plays, choreography, pictorial or sculptural works, audiovisual material, sound recordings, and architectural works.284

VR content likely garners protection in multiple ways. First, if the experience is put together through the development of software code, the authors will have a copyright in the code itself. However, considering that VR is an immersive experience, content developers will likely also be able to assert copyrights in the other audiovisual elements of the experience itself—the sounds, images, and any video content. A copyright is created in the instant when the original work is fixed in a tangible medium of expression and is able to be perceived. In order to obtain certain damages in the event of a lawsuit for infringement, an author must register her work with the Copyright Office. Because of the complex intersection of different types of copyright-protected material, it is likely worthwhile for a VR content developer or even a platform provider who creates an immersive portal to other VR content to take an expansive approach and register copyrights for all relevant material. To protect against the improper violation of copyright by users rather than competitors, VR content producers could also use technological protection measures. VR content has limited utility outside existing platforms and hardware devices. Yet, creators could still use encryption or the digital rights management software to stop the replication and use of their content in unauthorized hardware systems.

As for the reproduction of real-world copyright-protected content within VR experiences themselves, copyright owners may have claims against VR developers if their works are reproduced in the 3D immersive environment without authorization. Yet, if VR follows precedent set in the gaming industry, it is unlikely that copyright owners will be able to protect their work to the same extent as they would be able to in the physical world, since it may not be financially worthwhile to pursue infringers and limiting reproduction of digital content is much more difficult than limiting reproduction of physical works. In order to prove that an owner’s copyright has been infringed, the owner must show (1) that she has a valid copyright and (2) that actual copying of original elements of the plaintiff’s work occurred.285 This is a fact-intensive inquiry and can cost parties a significant amount if they choose to take a case to trial. Furthermore, damages are limited—a plaintiff may generally only collect statutory damages if the copyright was registered before the infringement took place, or actual damages and a defendant’s additional profits. If the alleged infringer makes either low or no profits from the use of the virtual goods or the distribution of an infringing VR application, the lawsuit as a whole may not be worthwhile. Such a suit would then only be pursued to make an example of the infringer. For some larger corporations this may be something that the company can invest in, but it likely will not be a practical remedy for copyright owners with more limited means. In regards to infringement within the VR industry itself, this state of affairs provides a recourse to the industry’s larger players while limiting the options of smaller companies that produce pioneering content.

Enforcement of copyright will likely take the creation of open communications channels between VR platform providers and app distributors, such as HTC and Steam, and content producers. Copyright owners would likely have a higher chance of having infringing content removed if they make a claim to the platform provider that the infringer has violated the clause asserting that she has not used anyone else’s intellectual property without permission, which is commonly found in most terms of service or end-user license agreements for today’s online services. This will likely take place through the filing of a claim under the Digital Millennium Copyright Act (DMCA),286 enacted in 1998. Title II of the bill, called the “Online Copyright Infringement Liability Limitation Act,” added Section 512 to the Copyright Act, which limited service providers’ liability for potentially infringing material posted online by third parties through their services.

In order to protect themselves from liability for the infringing acts of users, online service providers must have a notice and takedown procedure meeting Section 512’s statutory requirements.287 This allows copyright owners to request to have infringing content removed. In order for this procedure to be applicable, VR platform providers who control the distribution of VR content in both mobile and desktop systems must be considered online service providers. Online service providers are “provider[s] of online services or network access, or the operator of facilities therefore.”288 This has been interpreted broadly to include services existing purely on the web, such as social networks, and will most likely extend to the app store-like platforms controlled by VR’s most prominent hardware developers. However, the possibilities of VR complicate matters. Who is the service provider if a user creates infringing content within an application? Whom does a copyright owner reach out to first? Must there be a notice and takedown procedure at each level, even for a small VR social network that has not gained any prominence yet? Established gaming companies, famous studios, and new startups are all competing for attention and usage within the space—this poses unique and serious challenges to copyright owners attempting to assert their rights. It is unclear if the DMCA and copyright litigation will provide adequate remedies.

• 6. CONCLUSION

A host of new legal issues and challenges to existing law arise when considering VR as a new growth industry. Lawyers advising on VR may look to the case law concerning video games in the near future, since it is likely the subject with the most closely related fact situations. Yet, video game companies have not traditionally had to consider the biometric data being collected from users. Nor have they had to consider the harm and liability that stems from having users participate in fictional but increasingly tangible, lifelike digital immersive experiences. Both forms of new media likely require a more targeted reinterpretation of intellectual property law, since they involve complex multimedia that grows more realistic in both its visuals and its immersive nature as time passes. VR has never been used just for entertainment and as it starts to affect our healthcare, education, and business dealings, its own body of law will develop as it gains wider distribution. Until then, lawyers working with growing virtual reality companies must understand both the familiar and unique challenges faced by a company in this sector.

SOURCES

Cases

Civil Action No 08-cv-02616-MSK-MEH, 2010 U.S. Dist. LEXIS 100643 (D. Colo. Sep. 23, 2010).

Fawzy Amer Deghedy v. Viztek, Inc., No. 3:12-cv-00048-HCA, 2016 U.S. Dist. LEXIS 181097 *2 (S.D. Iowa June 10, 2016).

FTC v. Erik Chevalier also d/b/a The Forking Path, Co., Case 3:15-cv-01029-AC (D. Or. 2015).

Lamson v. United States, 110 Fed. Cl. 691, 704 (2013).

Lamson v. United States, 117 Fed. Cl. 755, 763 (2014).

Louis Vuitton Malletier, S.A. v. My Other Bag, Inc., 156 F. Supp. 3d 425, 434-35 (S.D.N.Y. 2016).

Minn. Mining & Mfg. Co. v. Chemque, Inc., 303 F.3d 1294, 1304-5 (Fed. Cir. 2002).

Sanders v. Acclaim Entm’t, Inc., 188 F. Supp. 2d 1264 (D. Colo. 2002).

Total Recall Techs v. Luckey, No C 15-02281 WHA (N.D. Cal. 2016).

Total Recall Techs v. Luckey, No C 15-02281 WHA, at *11 (N.D. Cal. Mar. 9, 2017).

Zenimax Media, Inc. v. Oculus VR, LLC, 166 F. Supp. 3d 697 (N.D. Tex. 2015).

Statutes

Digital Millennium Copyright Act, 1998 Enacted H.R. 2281, 112 Stat. 2860, 105 P.L. 304.

H.R. 3606—112th Congress: Jumpstart Our Business Startups Act; 112 P.L. 106.

15 U.S.C. § 45(a).

15 U.S.C. § 1127.

17 U.S.C. § 102.

17 U.S.C. § 106.

17 U.S.C. § 512(c).

17 U.S.C. § 512(k).

35 U.S.C. § 287(c)

35 U.S. Code § 271(b).

1

 See generally, W Barfield, Intellectual Property Rights in Virtual Environments: Considering the Rights of Owners, Programmers and Virtual Avatars, 39 Akron L. Rev. 649 (2006); W Barfield (ed.), 2nd edition, Fundamentals of Wearable Computers and Augmented Reality (CRC Press 2015).

2

 W Barfield and T. Furness (eds), Virtual Environments and Advanced Interface Design (Oxford University Press 1995).

3

W Barfield and S. Weghorst, The Sense of Presence within Virtual Environments: A Conceptual Framework, in Human-Computer Interaction: Applications and Case Studies (G. Salvendy and M. Smith eds) 699-704 (Elsevier 1993); W Barfield, Musings on Presence, 25 Years After “Being There,” 2 Presence: Teleoperators and Virtual Environments (2016).

4

 PaulHemp,GettingRealaboutVirtualWorlds,Avatar-Based Marketing.

5

  Id.

6

  Id.

7

  Id.

8

  Id.

9

 Evans v. Linden Research, Inc., 763 F. Supp. 2d 735 (E.D. Pa. 2011).

10

  Id.

11

 47 U.S.C. § 230(c) (2000), Communications Decency Act.

12

 See Pub.L. No. 105-304, 112 Stat. 2860 (1998) (codified in scattered sections of 17 U.S.C.), among others, the DMCA makes it illegal to circumvent measures that copyright owners use to control others’ access to their works.

13

 Jonathan Band and Matthew Schruers, Safe Harbors Against the Liability Hurricane: The Communications Decency Act and the Digital Millennium Copyright Act, 20 Cardozo Arts & Ent. L. J. 295 (2002); see also David Sheridan, Zeran v. AOL and the Effect of Section 230 of the Communications Decency Act upon Liability for Defamation on the Internet, 61 Alb. L. Rev. 147 (1997-8).

14

 Tiffany Inc. v. eBay Inc., 600 F.3d 93 (2d. Cir. 2010).

15

 Federal Trademark Dilution Act of 1995, Pub. L. No. 104-98, 109 Stat. 985 (Jan. 16, 1996), amending the Trademark Act of 1946, codified at 15 U.S.C. § 1125 et seq.

16

For example, in a study published in the British Medical Journal, BMJ 2014;349:g7267, researchers from the Netherlands outlined the findings of previously published reports involving injuries and other problems related to the original Nintendo system, Nintendo 64, and Wii gaming consoles. Nearly 1,200 articles involving mild to life-threatening injuries were identified. Reports of Nintendo controller injuries ranged from tendonitis, fractures, and neurological and psychological problems to surgical concerns. See www.aboutlawsuits.com/nintendo-injury-study-75923/#sthash. jDWNKPHO.dpuf. According to a case report published in the New England Journal of Medicine, many of the more severe injuries were related to use of the Wii Fit balance board, which rests two inches off the ground and requires users to quickly adjust their balance while standing on the board to play certain video games. Most commonly, users suffered what doctors called “Wii-knee,” which is caused by frequent bending at the knee while using the balance board. In some cases, such injuries have involved the kneecap becoming dislocated. See www.webmd.com/ fitness-exercise/news/20100203/when-wii-goes-wrong-video-game-injuries.

17

 British Journal of Medicine, ibid.

18

 Elvig v. Nintendo of America, Inc., 696 F.Supp.2d 1207 (2010).

19

  Id.

20

  Id.

21

  Id.

22

 See e.g., Defamation Act of 1996, Great Britain.

23

 Barfield, supra note 1.

24

 Amaretto Ranch Breedables, LLC v. Ozimals, Inc., 29 (N.D. Cal. December 21,2010).

25

 Scheck, Justin, You Can Lead a Virtual Horse to Water, But You Might Get Sued Along the Way, Wall Street Journal (2011).

26

 Cal. Civ. Code §§ 44, 45a, and 46.

27

 See Cal. Civ. Code § 45a; Yow v. National Enquirer, Inc. 550 F.Supp.2d 1179, 1183 (E.D. Cal. 2008).

28

 Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593 (E.D. Penn. 2007).

29

 Id.

30

 Id.

31

  Id.

32

 Grubb, J., South Korea Blocks All Facebook Games as Part of a Government Crackdown, 2014, https://venturebeat.com/2014/09/02/south-korea-blocks-all-facebook-games-as-part-of-a-gove rnment-crackdown/.

33

 Bragg, supra note 28.

34

 Harris v. State, 152 S.W3d 786 (Tex. App. 2004).

35

 Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. 1983).

36

 See Step-Saver Data Systems, Inc. v. Wyse Technology, 939 F.2d 91 (1991 U.S. App. 16526). The first-sale doctrine is a legal concept playing an important role in US copyright and trademark law by limiting certain rights of a copyright or trademark owner. The doctrine enables the distribution chain of copyrighted products, library lending, giving, video rentals, and secondary markets for copyrighted works (for example, enabling individuals to sell their legally purchased books or CDs to others). In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder put the products on the market. The doctrine is also referred to as the “right of first sale,” “first sale rule,” or “exhaustion rule.”

37

 17 U.S.C. § 117 (1998).

38

 MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993).

39

 Microsoft v. Harmony Computers & Electronics, 846 F. Supp. 208 (E.D.N.Y 1994).

40

 Caroline Bradely and A. Michael Froomkin, Virtual Worlds, Real Rules, 49 N.Y.L. SCH. L. REV. 103, 121 (2004-5).

41

 Cory Ondrejka, Escaping the Gilded Cage: User Created Content and Building the Metaverse, 49 N.YL. SCH. L. REV 81 (2004-5). See also Nicholas Yee, The Psychology of MMORPGs: Emotional Investment, Motivations, Relationship Formation, and Problematic Usage, in Avatars at Work and Play: Collaboration and Interaction in Shared Virtual Environments (R. Schroeder & A. Axelsson eds, London: Springer-Verlag 2005), available at the DAEDALUS PROJECT: MMORPG Research, Cyberculture, MMORPG Psychology archives/02_04/Yee_Book_Chapter.pdf.

42

 Norman I. Badler, Rama Bindiganavale, Juliet Bourne, Jan Allbeck, Jianping Shi & Martha Palmer, Real Time Virtual Humans, Center for Human Modeling and Simulation, Department of Computer and Information Science, University of Pennsylvania, available at www.cis.upenn. eduZ~badlerZbcsZPaper.htm.

43

 See Jeff C. Dodd and James A. Hernandez, Contracting in Cyberspace, 1998 SMU Computer L. J. 1, 12 (1998).

44

 Joseph J. Beard, Clones, Bones, and Twilight Zones: Protecting the Digital Persona of the Quick, the Dead and the Imaginary, 16 Berkeley Tech. L. J. 1165 (2001).

45

 See generally Avatars in Networked Virtual Environments (Tolga K. Capin et al, eds 1999); see also generally Peter Plantec, Virtual Humans: A Build-It-Yourself Kit, Complete With Software and Step-by-Step Instructions (American Management Association; Bk&CD-Rom edition 2004).

46

 Robert C. Hubal, Paul N. Kizakevich, Curry I. Giunn, Kevin D. Merino & Suzanne L. West, The Virtual Standardized Patient: Simulated Patient-Practitioner Dialogue for Patient Interview Training, 70 Stud Health Technol Inform. 133-8 (2000).

47

 Id.

48

 Jimena Olveres, Mark Billinghurst, Jesus Savage & Alistair Holden, Intelligent, Expressive Avatars, in Proceedings of the First Workshop on Embodied Conversational Characters (WECC 1998), Lake Tahoe, California, (October 12-15, 1998).

49

 Some foreign courts have begun to accept the notion of virtual property; for example, a Beijing court ordered the restitution of one player’s stolen virtual weapons.

50

 See www.daz3d.com/forums/discussion/29511/ot-linden-lab-second-life-will-now-own-your-uploaded-content.

51

 Eros LLC v. Doe, United States District Court, Middle District of Florida (2007).

52

  Id.

53

 Id.

54

  Id.

55

 George Wright, Personhood: 2.0: Enhanced and Unenhanced Persons and the Equal Protection of the Laws, 23 Quinnipiac L. Rev. 1047 (2005). A legal person, as opposed to a natural person, enjoys many of the rights and obligations of individual citizens, such as the ability to own property, sign binding contracts, and pay taxes; but they do not retain all the rights of a natural person, for example, they do not have the right to vote or hold public office. See generally Curtis M. Vazquez, Direct v. Indirect Obligations of Corporations Under International Law, 43 Colum. J. Transnat. L. Rev. 927, 944 (2005). A legal person (or artificial person), as opposed to a natural person, enjoys many of the rights and obligations of 657.

56

 Wright, id at 1095.

57

 See generally Woodrow Barfield, Issues of Law for Software Agents within Virtual Environments, 14 Presence: TeieopeRATORS and Virtual Envs, 741-48 (2005).

58

games such as reports that users may suffer from side effects including vertigo and dizziness after exposure to virtual environments).

59

 Richard A. Bartle, Virtual Worldliness: What Imaginary Asks of the Real, 49 N.YL. Son. L. Rev. 19 (2004-5) (the elements of an end-user license agreement could effectively limit the range of permissible actions allowed in a virtual environment). See generally Lawrence Lessig, The Limits in Open Code: Regulatory Standards and the Future of the Net, 14 Berkeley Tecn. L. J. 759, 763 (1999).

60

 See generally Curtis E.A. Karnow, Liability for Distributed Artificial Intelligences, 11 Berkeley Tecn. L. J. 147 (1996).

61

  Id.

62

 See Pamela Samuelson, Allocating Ownership Rights in Computer-Generated Works, 47 Pitt. L. Rev. 1185 (1985-6) (providing a comprehensive overview of issues associated with whether a computer can be an author); see generally Karnow, supra note 60.

63

 EllyStrang,SoulMachinesUnveilsItsFirstEmotionallyIntelligent,LifelikeAvatar,idealog,http:// idealog.co.nz/tech/2017/02/soul-machines-unveils-its-first-emotionally-intelligent-lifelike-avatar.

64

 S. Saito, L. Wei, L. Hu, et al, Photorealistic Facial Texture Inference using Deep Neural Networks, https://arxiv.org/pdf/1612.00523v1.pdf.

65

 Ben Popper, This Tech Generates Realistic Avatars from a Single Selfie, The Verge, www. theverge.com/2016/12/13/13919766/loomai-vr-avatar-digital-character-3d-visual-effect.

66

 Wright, supra note 55. Professor George Wright has discussed the issue of equal protection under the law in the context of “enhanced humans,” concluding that “if there develops a typically unbridgeable gulf separating groups of contemporaries, we must adopt a substantially realistic understanding of equal protection that involves significant resource and opportunity transfers.”

67

 See Midler v. Ford, 849 F.2d 460, 463 (9th Cir. 1988).

68

 Newcombe v. Adolf Coors Co., 157 F.3d 686, 692-93 (9th Cir. 1998).

69

 Wendt v. Host Intern., Inc., 125 F.3d 806, 810 (9th Cir. 1997).

70

 White v. Samsung, 971 F.2d 1395, 1397 (9th Cir. 1992).

71

 Id at 1397.

72

 See Abdul-Jabbar v. General Motors, 85 F.3d 407, 413-14 (9th Cir. 1996).

73

 See Waits v. Frito-Lay, 978 F.2d 1093, 1098-100 (9th Cir. 1992).

74

 White, supra note 70.

75

 Laws v. Sony Music, 294 F.Supp.2d 1160 (C.D. Cal. 2003).

76

 Daly v. Viacom, 238 F.Supp. 2d. 1118, 1123 (N.D. Cal. 2002).

77

 See, e.g., Gionfriddo v. Major League Baseball, 94 Cal. App. 4th 400, 415-17 (Cal. Ct. App. 2001).

78

 Julie Cohen, Creativity and Culture in Copyright Theory, 40 U.C. Davis L. Rev. 1151-205 (2007), .

79

 See generally Timothy L. Butler, Can a Computer Be an Author? Copyright Aspects of Artificial Intelligence, 4 Hastings Comm. & Ent. L. J. 707 (1982).

80

 17 U.S.C. § 102(a) (2005).

81

 MAI, supra note 38.

82

 Id. at 519.

83

 See generally Darin Glasser, Copyrights on Computer-Generated Works: Whom, If Anyone, Do We Reward? 2001 Duke L. & Tech. Rev. 24 (2001).

84

 Jane Ginsburg, The Concept of Authorship in Comparative Copyright Law, 53 Depaul L. Rev. 1063 (2003).

85

 See generally Tarcisio Queiroz Cerqueira, Some Common and Civil Thoughts on Computer Generated Works, Some Common and Civil Thoughts on Computer Generated Works (1). - Núm. 27, Octubre 2000 - REDI Revista Electrónica de Derecho Informático - Libros y Revistas - VLEX 107749; see 17 U.S.C. § 101 (1976) (defining a “joint work”).

86

 17 U.S.C. § 101 (1976) (defining a “joint work”).

87

 17 U.S.C. § 102(a) (subject matter of copyright).

88

 Id.

89

 See generally Tal Vigderson, Hamlet II: The Sequel? The Rights of Authors vs. ComputerGenerated “Read-Alike” Works, 28 Loy. L. A. L. Rev. 401 (1994) (discussing whether a romance novel written by an AI that was programmed to mimic author Jacqueline Susann might inappropriately copy Susann’s style).

90

 See generally Karl F. Milde, Jr., Can a Computer Be an Author” or an “Inventor?” 51 J. Pat. Off. Soc’y 378 (1969).

91

 See generally Arthur R. Miller, Copyright Protection for Computer Programs, Databases, and Computer-Generated Works: Is Anything New Since CONTU? 106 Harv. L. Rev. 977 (1993) (concluding that AIs should not be authors because computers need no incentive to produce their output).

92

  Id.

93

 Milde, supra note 90.

94

 See Butler, supra note 79, at 726-33.

95

 Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340 (1991).

96

 Id at 362.

97

  Id.

98

 Id at 345.

99

 Urantia Found. v. Maaherra, 114 F.3d 955 (9th Cir. 1997).

100

 Id at 956.

101

 Id at 958.

102

 Id at 956.

103

 Id

104

 See Oliver v. Saint Germain Found., 41 F.Supp. 296 (S.D.Cal. 1941). In Oliver, the plaintiff’s religious text proclaimed that the facts contained in the text had come straight from a spirit, and that the spirit was the author of the history in the text. The plaintiff (unsuccessfully) claimed copyright protection in the divine revelations themselves, and in the methods of spiritual communication, rather than in the plaintiff’s specific selection or arrangement of these divine revelations. The defendant in Oliver had not copied that arrangement and selection, but simply had written another text using the same divine “facts.” The court in Oliver made it clear that, had the claim been that the selection and arrangement of the divine revelations had been infringed, the plaintiff’s copyright infringement claim might have had merit.

105

 Feist, supra note 95.

106

 17 U.S.C. § 102(a) (1976).

107

 Feist, 499 U.S. at Clevenger v. Baker Voorhis & Co., 168 N.E.2d. 643 (N.Y 1960).

108

 Urantia, supra note 99 at 958.

109

 Id at 958.

110

 Id at 958. It would be interesting to consider whether an intelligent avatar would constitute a “worldly entity” under the court’s reasoning.

111

 Id at 958; see also 17 U.S.C. § 101 (1976) (defining a “compilation”); see 17 U.S.C. § 103 (1976) (providing that compilations are copyrightable). Under this logic, the user of the avatar would be deemed the author.

112

 Urantia, supra note 99 at 960.

113

 Id at 958.

114

 Feist, supra note 95; see also Urantia, supra note 99 at 958.

115

 Urantia, id at 958.

116

 Shawn Bayern, The Implications of Modern Business-Entity Law for the Regulations of Autonomous Systems, 19 Stan. Tech. L. Rev. 93 (2015) available online at: https://journals.law.stan ford.edu/sites/default/files/stanford-technology-law-review/print/2015/10/19-1-4-bayern-final_0.pdf.

117

 See generally Karnow, supra note 60, at 181-3.

118

 See, e.g, Midler v. Ford Motor Co., 849 F.2d 460, 462 (9th Cir. 1988).

119

 See generally Cerqueira, supra note 85.

120

 See generally Barfield, supra note 57.

121

 See generally Glasser, supra note 83.

122

 Donald L. Wenskay, Neural Networks: A Prescription for Effective Protection, 8 Computer Lawyer 12 (1991).

123

  Id.

124

 Vigderson, supra note 89, at 402.

125

 John Boudreau, A Romance Novel with Byte; Author Teams Up with Computer to Write Book in Steamy Style of Jacqueline Susann, L.A. Times at E6 (Aug. 11, 1993).

126

 Vigderson, supra note 89 (French identified 200 idiosyncrasies in Susann’s writing. These idiosyncrasies related to language, character, and action. The rules French programmed were designed to teach the 200 idiosyncrasies to the computer).

127

 See generally Glasser, supra note 83.

128

 17 U.S.C. § 102(a), (b) (1976).

129

 17 U.S.C. § 102(a) (1976).

130

 17 U.S.C. § 102(b) (1976).

131

 Vigderson, supra note 89.

132

 See Computer Assocs. Int’l v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992) (Altai enunciated the abstraction test from Nichols v. Universal Pictures Corp., 45 F.2d 119 (2d Cir. 1930), cert. denied 282 U.S. 902 (1931) (upon any work a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out). See also Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1475 (9th Cir. 1992) (endorsing “analytic dissection” of computer programs in order to isolate protectable expression), cert. denied, 113 S. Ct. 198 (1992).

133

 Vigderson, supra note 89, at 406. Perhaps the human interpretative elements can be found in the software?

134

 17 U.S.C. § 101 (1976).

135

 A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which as a whole, represent an original work of authorship, is a “derivative work.” 17 U.S.C. § 101 (1976).

136

 Melville B. Nimmer and David Nimmer, Nimmer on Copyright § 5.01 [A], at 5-3 (1993).

137

 Litchfield v. Spielberg, 736 F.2d 1352 (9th Cir. 1984), cert. denied 470 U.S. 1052 (1988).

138

 17 U.S.C. § 102 (a)(5) (1976).

139

 17 U.S.C. § 102 (a)(1) (1976).

140

 See generally Walt Disney Prod. v. Air Pirates, 581 F.2d 751 (9th Cir. 1978).

141

 Universal City Studios v. Reimerdes, 111 F.Supp.2d 294, 327 (S.D.N.Y 2000).

142

 Id. See generally Junger v. Daley, 209 F.3d 481, 485 (6th Cir. 2000); Bernstein v. U.S. Dept. of State, 922 F.Supp 1426, 1436 (N.D.Cal. 1996) (First Amendment extends to source code); see Karn v. U.S. Dept. of State, 925 F.Supp. 1, 10 (D.D.C. 1996) (assuming First Amendment protection extends to source code).

143

 University City Studios, 111 F.Supp.2d 294.

144

 See Gardner v. Nike, Inc., 279 F.3d 774 (9th Cir. 2002.); Wrench LLC v. Taco Bell Corp., 256 F.3d 446 (6th Cir. 2001).

145

 See Seals-McClellan v. Dreamworks, Inc., 120 Fed.Appx. 3 (9th Cir. 2004); Murray Hill Publ’ns, Inc. v. Twentieth Century, 361 F.3d 312 (6th Cir. 2004).

146

 University City Studios, 111 F.Supp.2d 327.

147

  Id.

148

 Michael Todd Helfand, When Mickey Mouse Is as Strong as Superman: The Convergence of Intellectual Property Laws to Protect Fictional Literary and Pictorial Characters, 44 Stan L. Rev. 623, 641 (1992).

149

 Id at 628.

150

  Id.

151

 See generally Helfand, supra note 148 at 628.

152

 Warner Bros. Inc. v. Am. Broadcasting Cos, Inc., 720 F.2d 231,241 (2d Cir. 1983).

153

 Detective Comics, Inc. v. Bruns Publ’ns, 111 F.2d. 432 (2d Cir. 1940).

154

 Id. at 433.

155

 See generally Midler v. Ford Motor Co., 849 F.2d 460 (9th Cir. 1988).

156

 Metro-Goldwyn-Mayer, Inc. v. American Honda Motor Co., Inc., 900 F.Supp. 1287 (C.D.Cal. 1995); Anderson v. Stallone, No. 87-0592 WDK, 1989 U.S. Dist. LEXIS 11109 (C.D.Cal. Apr. 25, 1989).

157

 See generally Metro-Goldwyn, 900 F.Supp. at 1296.

158

 See 17 U.S.C. § 102(b) (1976).

159

 See, e.g., Toho Co., Ltd. v. William Morrow and Co., Inc., 33 F.Supp.2d 1206, 1215 (C.D.Cal. 1998) (Godzilla); Metro-Goldwyn-Mayer, 900 F.Supp. at 1297 (James Bond); Anderson, 1989 U.S. Dist. LEXIS 11109 (Rocky Balboa).

160

 See generally Restatement (Third) of Unfair Competition, §§ 13. 16. 17.

161

 See generally Kellogg Co. v. Exxon Corp., 209 F.3d 562 (6th Cir. 200) overruled on other grounds by Moseley v. Secret Catalogue, Inc. 537 U.S. 418 (2003)

162

 Mark Fowler, Copyright in Fictional Characters: Can I Have Don Draper Make a Cameo Appearance in My Novel? 2011, www.rightsofwriters.com/2011/04/copyright-in-fictional-characters-can-i.html (last visited August 29, 2017); see Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992).

163

 The originality requirement for copyright is expressed in Feist, 499 U.S. at 346; 17 U.S.C. § 101; and U.S. Const. art. I, § 8, cl. 8.

164

 See generally U.S. Copyright Office, Copyright basics (Circular 1) available at www.copy right.gov/circs/circ01.pdf.

165

 See generally Graeme B. Dinwoodie and Mark D. Janis, Trademarks and Unfair Competition: Law and Policy, 2nd edition (Aspen Casebook Series 2014).

166

  Id.

167

 If an avatar gains in intelligence, could it then serve as a trademark? The subject matter of trademark covers “any word, name, symbol, or device.” 15 U.S.C. § 1127 (200). Could an avatar that produced its own output serve as either a symbol or device? It seems that an avatar that gained legal rights would not be an appropriate subject for trademark law.

168

 See Nike, Inc. v. Kasky, 539 U.S. 654 (2003)

169

 See Dinwoodie and Janis, supra note 165.

170

 See Mary LaFrance, When You Wish upon Dastar: Creative Provenance and the Lanham Act, 23 Cardozo Arts & Ent. L. J. 197 (2005).

171

 See Joseph R. Dreitler, The Tiger Woods Case—Has the Sixth Circuit Abandoned Trademark Law, ETW Corp. v. Jireh Publishing, Inc, 38 Akron L. Rev. 337 (2005).

172

 See Peter S. Menell, Regulating “Spyware”: The Limitation of State “Laboratories” and the Case for Federal Preemption of State Unfair Competition Laws, 20 Berkeley Tech. L. J. 1363 (2005). For an example of a real word case dealing with images, see Kellogg, 209 F.3d 562.

173

 See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985).

174

 See generally Joseph Gibbons Llewellyn, Semiotics for the Scandalous and the Immoral and the Disparaging: Section 2(A) Trademark Law after Lawrence v. Texas, 9 MARq. Intell. Prop. L. Rev. 187 (2005).

175

 See generally Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir, 1995).

176

 Fisher v. Star Co., 132 N.E. 133 (1921), cert. denied, 257 U.S. 654 (1921).

177

 Walt Disney Prod. v. Air Pirates, 581 F.2d 751 (1978).

178

 Helfand, supra note 148, at 643-5.

179

 See Ronald B. Standler, Moral Rights of Authors in the USA (1988), www.rbs2.com/moral.pdf.

180

 17 U.S.C. §§ 101, 106A, 113, 301, 501(a) (1990).

181

 William A. Tanenbaum and Jeffrey M. Butler, The Impact of the Visual Artists Rights Act, 9 N.Y. L. J., 1 (1993) (the moral rights provided in VARA are independent of the usual copyright and are retained by the artist, even if the economic copyrights are sold or assigned).

182

 “The right of attribution [is] known as the right of paternity in European practice.” Tanenbaum and Butler, id at 11, col. 1.

183

 17 U.S.C. § 106A(a)(1) (1990).

184

 17 U.S.C. § 106A(a)(2) (1990).

185

 17 U.S.C. § 106A(a)(3) (1990).

186

 17 U.S.C. § 106A(e)(1) (1990).

187

 Timothy M. Casey, The Visual Artists Rights Act, 14 Hastings Comm. & Ent. L. J. 85, 98 (1991).

188

 17 U.S.C. § 101 fully defines “work of visual art” as “(1) a painting, drawing, print, or sculpture, existing in a single copy, in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author, or, in the case of a sculpture, in multiple cast, carved, or fabricated sculptures of 200 or fewer that are consecutively numbered by the author and bear the signature or other identifying mark of the author; or (2) a still photographic image produced for exhibition purposes only, existing in a single copy that is signed by the author, or in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author.” 17 U.S.C. § 101 (1990).

189

 Casey, supra note 187, at 99.

190

 See Berne Convention Implementation Act of 1988, Pub. L. No. 100-568, 102 Stat. 2853 (1988).

191

 Berne Convention for the Protection of Literary and Artistic Works, ar 6bis (Sept 9, 1886; revised July 24 1974 and amended 1979; entered into force for the U.S. Mar. 1, 1989 (Sen. Treaty Doc. 99-127)) U.S.T. Lexis 160 or 1 B.D.I.E.L. 715.

192

 David J. Kohs, Paint Your Wagon—Please! Colorization, Copyright, and the Search for Moral Rights, 40 Fed. Comm. L. J. 1,4 (1988).

193

 Id at 12.

194

 Berne Convention, supra note 191.

195

  Id.

196

  Id.

197

 Kohs, supra note 192, at 12.

198

 Berne Convention Implementation Act, supra note 191 (amending title 17 of the United States Code to make the changes in the United States copyright law that are necessary for the United States to adhere to the Berne Convention).

199

 See Furine Blaise, Game Over: Issues Arising When Copyrighted Work is Licensed to Video Game Manufacturers, 15 Alb. L. J. Sci. & Tech. 517 (2005).

200

 Clevenger v. Baker Voorhis & Co., 168 N.E.2d 643 (N.Y 1960).

201

 Id at 644.

202

 Id at 645-6.

203

 Ben-Oliel v. Press Publ’g Co., 167 N.E. 432 (Ct. App. N.Y 1929); see also Am. Law Book Co. v. Chamberlayne, 165 F. 313 (2d Cir. 1908) (acknowledging possibility of recovering damages for libel resulting from publication of mutilated or altered form of author’s work).

204

 The text of Section 43(a) of the Lanham Act provides that:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. (2) As used in this subsection, the term “any person” includes any State, instrumentality of a State or employee of a State or instrumentality of a State acting in his or her official capacity. Any State, and any such instrumentality, officer, or employee, shall be subject to the provisions of this Act in the same manner and to the same extent as any nongovernmental entity. (3) In a civil action for trade dress infringement under this Act for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.

205

 See L.S. Heath & Son, Inc. v. AT&T Infor. Sys., Inc., 9 F.3d 561, 575 (7th Cir. 1993).

206

 Washington Speakers Bureau, Inc. v. Leading Authorities, Inc., 33 F.Supp.2d 488, 493 (E.D. Va. 1999).

207

 Hans Moravec, Mind Children: The Future of Robot and Human Intelligence 5968 (Harvard Univ. Press 1988) (estimating that it would take roughly ten trillion calculations per second to equal the speed of the human brain and that computers will reach this speed around 2020).

208

 Samuelson, supra note 62.

209

 See generally Tom Regan, The Case for Animal Rights (University of California Press 1983); Christopher D. Stone, Should Trees Have Standing? Toward Legal Rights for Natural Objects, 45 S. Calif. L. Rev. 450, 458ff (1972); See generally Joseph Mendelson III, Should Animals Have Standing? A Review of Standing Under The Animal Welfare Act, 24 B. C. Envtl. Aff. L. Rev. 795 (1997).

210

 See Santa Clara Cty. V S. Pac. Ry., 118 U.S. 394 (1886).

211

 Samuelson, supra note 62, at 1192.

212

 One could argue that an intelligent avatar and the programmer could share rights to any intellectual property created by the avatar, since the programmer wrote the initial software to create the avatar. However, if the avatar were to become truly autonomous and create works independent from the initial programming, would granting the programmer rights to the avatar’s property then be similar to the idea of granting property rights to one’s parents once the child reached adulthood?

213

 Karnow, supra note 60, at 128.

214

 Id at 128.

215

 See generally Curtis E. A. Karnow, The Encrypted Self: Fleshing Out the Rights of Electronic Personalities, in Future Codes: Essays in Advanced Computer Technology and the Law 117-36 (Curtis E.A. Karnow ed., Artech House Publisher 1997).

216

 See Lawrence B. Solum, Legal Personhood for Artificial Intelligences, 70 N. C. L. Rev. 1231 (1992).

217

 Id at 1239.

218

 Id.

219

 Id. See generally Jonathan Chaplin, Political Perspective: Toward A Social Pluralist Theory of Institutional Rights, 3 Ave Maria L. Rev. 147 (2005). See supra note 34.

220

 See generally Barfield, supra note 57.

221

 Black’s Law Dictionary 1162 (7th ed. 1999).

222

 Id at 1162.

223

 Barfield, supra note 57.

224

 Solum, supra note 216, at 1239.

225

 Steven Goldberg, The Changing Face of Death: Computers, Consciousness and Nancy Cruzan, 43 Stan L. Rev. 659 (1991).

226

 See generally Barfield, supra note 57; see generally Martine Rothblatt, Bioethics: Should We Stop a Company From Unplugging an Intelligent Machine? http://www.Kurzweilai.net/meme/frame. html?m=4.

227

 See The Great Ape Legal Project, www.aldf.org/article.asp?cid=20; see Jens David Ohlin, Is the Concept of the Person Necessary for Human Rights? 105 Colum L. Rev. 209 (2005).

228

 See generally Ralph C. Brashier, Children and Inheritance in the Nontraditional Family, 93 Utah L. Rev. 983 (1996); Children’s Rights: An Overview, available at LII / Legal Information Institute topics/childrens_rights.htlml; Children’s Rights, available at http://hrworg/children/child-legal.htm (last visited Nov. 6, 2005).

229

 Barfield, supra note 57.

230

 See Data Cash Sys. Inc. v. JS&A Group, Inc. 480 F.Supp. 1063 (N.D.Ill. 1979) (dealing with the copyrightability of computer programs); see generally Pamela Samuelson, CONTU Revisited: The Case Against Copyright Protection for Computer Programs in Machine Readable Form, 1984 Duke L. J. 663 (1984).

231

 See Karnow, supra note 215 at 128 (including a discussion of the rights of electronic persons or “epers”).

232

 See generally Karnow, supra note 60 (discussing the difficulty of finding a responsible party given a distributed computing system).

233

* This chapter is based in part on past work by the author, such as Crystal Nwaneri, Ready Lawyer One: Legal Issues in the Innovation of Virtual Reality, 30(2) Harvard J. L. & Tech. 601 (2017).

234

Oxford Living Dictionaries, definition of virtual reality, Definitions, Meanings, & Spanish Translations | Lexico.com definition/virtual_reality.

235

 See Feltham, 11 VR Games Developers to Watch, VentureBeat (Oct. 1, 2016), https:// venturebeat.com/2016/10/01/11-vr-game-developers-to-watch/.

236

 See, e.g., StartVR, Start Beyond — Immersive Learning Solutions in VR & AR.

237

 NYTVR, www.nytimes.com/marketing/nytvr/ (last visited Aug. 11, 2017).

238

 Ivan Sutherland, A.M. Turing Award, http://amturing.acm.org/award_winners/sutherla nd_3467412.cfm

239

 See, e.g., W Barfield and S. Weghorst, The Sense of Presence within Virtual Environments: A Conceptual Framework, in Human-Computer Interaction: Applications and Case Studies (ed. G. Salvendy and M. Smith), Elsevier, 699-704, 1993.

240

 Matthew Handrahan, The Vanishing Difference between Mobile and Desktop VR, Gameindustry, biz (Jul. 25, 2016), www.gamesindustry.biz/articles/2016-07-25-the-vanishing-differences-between-mobile-and-desktop-vr.

241

  Id.

242

  Id.

243

 Id; Paul Armstrong, Just How Big Is the Virtual Reality Market And Where Is It Going Next? Forbes (Apr. 6, 2017), www.forbes.com/sites/paularmstrongtech/2017/04/06/just-how-big-is-the-virtual-reality-market-and-where-is-it-going-next/#1334d404834e.

244

 15 U.S.C. § 45(a).

245

 FTC v. Erik Chevalier also d/b/a The Forking Path, Co., Case 3:15-cv-01029-AC (D. Or. 2015).

246

  Id.

247

  Id.

248

 H.R. 3606—112th Congress: Jumpstart Our Business Startups Act; 112 P.L. 106.

249

 Updated: Crowdfunding and the JOBS Act: What Investors Should Know, FINRA, www.

finra.org/investors/alerts/crowdfunding-and-jobs-act-what-investors-should-know.

250

 See Total Recall Techs. v. Luckey, No. C 15-02281 WHA (N.D. Cal. 2016).

251

 Total Recall Techs. v. Luckey, No. C 15-02281 WHA, at *11 (N.D. Cal. Mar. 9, 2017)

252

 Zenimax Media, Inc. v. Oculus VR, LLC, 166 F Supp. 3d 697 (N.D. Tex. 2015).

253

 Fawzy Amer Deghedy v. Viztek, Inc., No. 3:12-cv-00048-HCA, 2016 U.S. Dist. LEXIS 181097 *2 (S.D. Iowa June 10, 2016); see Cyber-Anatomy Med VR, Cyber-Anatomy, http://cyber-anatomy.com/product_CAHA_medVR.php (last visited Aug. 12, 2017); Global Medical VR, Global Medical VR, 安全检测 - 认证线路 (last visited Aug. 12, 2017).

254

 Fawzy Amer Deghedy v. Viztek, Inc.

255

 Id.

256

 Jonathan Rubens, Early-Stage IP Protection: A Primer and Overview for Working with the Startup, Bus. L. ToDAy, July 2016, at 1, 1, www.americanbar.org/content/dam/aba/publications/ blt/2016/07/ip-protection-201607.authcheckdam.pdf.

257

 Oculus, Legal Documents, Oculus Privacy Policy, www.oculus.com/legal/privacy-policy/.

258

 Id.

259

 Adam D.I. Kramer, Jamie E. Guillory, and Jeffrey T. Hancock, Experimental Evidence of Massive-Scale Emotional Contagion through Social Networks, 111.24 Proceedings of the National AcADEMy of Sciences 8788 (2014).

260

 Enforcing Privacy Promises, Federal Trade Commission, www.ftc.gov/news-events/media-resources/protecting-consumer-privacy/enforcing-privacy-promises (last visited Aug. 11, 2017).

261

 Safety and Regulatory Guide, HTC, http://dl4.htc.com/vive/safty_guide/91H02887-08M%20Re v.A.PDF.

262

 Daydream View Health and Safety Information, Google, https://support.google.com/day dream/answer/7185037?hl=en&ref_topic=7184600.

263

 See Brian Crecente, “We’re running with scissors”: Why Some Experts Worry about VR Dangers, Polygon (Apr. 7, 2017), www.polygon.com/features/2017/4/7/15205366/vr-danger-close.

264

 Sanders v. Acclaim Entm’t, Inc., 188 F. Supp. 2d 1264 (D. Colo. 2002).

265

 Civil Action No. 08-cv-02616-MSK-MEH, 2010 U.S. Dist. LEXIS 100643 (D. Colo. Sep. 23, 2010).

266

 Id.

267

 Roto Chair, www.rotovr.com/.

268

 Lamson v. United States, 117 Fed. Cl. 755, 763 (2014).

269

 Lamson v. United States, 110 Fed. Cl. 691, 704 (2013).

270

 Under 35 U.S.C. § 287(c), if a medical practitioner engages in a medical activity that would be considered direct or inducement patent infringement, a patent holder may not bring a civil action or seek damages from them or any related health care entity for the conduct. 35 U.S.C. § 287(c). This is worth keeping in mind considering virtual reality’s long history of use for medical treatment.

271

 Types of Patents, www.uspto.gov/web/offices/ac/ido/oeip/taf/patdesc.htm (last visited Aug. 11, 2017).

272

  Id.

273

 3 5 U.S. Code § 271(b).

274

 Minn. Mining & Mfg. Co. v. Chemque, Inc., 303 F.3d 1294, 1304-5 (Fed. Cir. 2002).

275

 See 15 U.S.C. § 1127.

276

 Trademark Basics, USPTO, www.uspto.gov/trademarks-getting-started/trademark-basics (last visited Aug. 11, 2017).

277

 Louis Vuitton Malletier, S.A. v. My Other Bag, Inc., 156 F. Supp. 3d 425 (S.D.N.Y 2016).

278

 Louis Vuitton Malletier, S.A. v. My Other Bag, Inc., 156 F. Supp. 3d 425, 434-35 (S.D.N.Y. 2016).

279

 1-2A Gilson on Trademarks § 2A.01.

280

 Brittany Frandsen, Is Using Call of Duty in This Comment Infringement? BYU L. Rev. 295, 301 (2016), http://digitalcommons.law. byu.edu/cgi/viewcontent.cgi?article=3031&context=lawreview.

281

 15 U.S.C. § 1127; Alexandra MacKay, Defining Use in Interstate Commerce in Trademark Applications, INTABulletin (Oct. 1,2016), www.inta.org/INTABulletin/Pages/Defining_Use_in_ Interstate_Commerce_7117.aspx.

282

 17 U.S.C. § 102.

283

 17 U.S.C. § 106.

284

 17 U.S.C. § 102.

285

 4 Nimmer on Copyright § 13.01.

286

 Digital Millennium CopyRiGHT Act, 1998 Enacted H.R. 2281, 112 Stat. 2860, 105 P.L. 304.

287

 17 U.S.C. § 512(c).

288

 17 U.S.C. § 512(k).