This is a guest post by Julian Ward. Julian is a partner at Hamlins LLP in London’s West End and has been practicing law since 1998.

With Oculus Rift, HTC Vive and Sony’s PS VR set to battle it out for supremacy and a good line-up of serious VR titles in development, it finally looks like VR is a reality (no pun intended).

So now seems as good a time as any to consider some of the legal issues specific to VR gaming.

VR Ratings and Age Classification

Currently neither ESRB, PEGI, USX, BBFC or any other game rating body, apply different classification standards to content depending upon whether the content is experienced via traditional 2D screen format or VR/360 Film medium. For anyone who’s had bullets whizzing past their head on the Oculus Rift platform or found themselves floating in space in games like ADR1FT, there’s no doubt the all consuming immersive sensory distorting VR is a very different mental and physical experience from the traditional game format.

I predict sooner rather than later rating bodies are going to have to actively take this into account when classifying VR games, particularly those aimed at children. This will surely result in identical content being provided with different age ratings and classification depending on whether the content is experienced through VR technology.

VR Platform Self Rating

Oculus has already announced that it plans to pre-approve all VR Apps made available on the Oculus VR App Store. This will make it similar to Apple’s App Store. As part of this approval process, experiences will be given a “comfort” rating that denotes whether they’re more or less likely to make someone dizzy or scare them.

It will be interesting to see whether regulators feel self regulation is sufficient or whether a more robust independent body should also be rating these VR Apps.

Liability for Health and Safety

It’s a core principle of English law that a party cannot exclude liability for death and personal injury caused by its negligence. Expect the lawyers of VR publishers and platforms to go overtime with ‘Warning’ stickers and disclaimer language to try and limit claims as much as legally possible. Allegedly there were a raft of personal injury claims against Nintendo for sprained risks and dislocated shoulders arising from gamers overdoing it on Wii Tennis and Wii Boxing. It wouldn’t surprise me if we see this tenfold from nausea, headaches, stress and worse with VR.

VR Moderation and User Generated Content

It will be interesting to see whether the increased realism and sensory power experienced with VR, particularly in multiplayer games settings where users are able to communicate and interact with one another, will impact the way VR games are moderated.

Typically, games platforms and service providers have sought to limit their liability for user generated content and in particular user comments including defamatory statements, by

Refraining from actively moderating game and UGC to avoid being caught as a publisher of the content under the Defamation Act.

Establishing and publicising user complaints and take down policies and procedures to quickly remove infringing content.

Requiring users to sign up to robust Terms of Use Policies regulating how users interact with one another in the virtual world and the UGC they can create.

Banning or suspending user accounts that breach UGC policies.

However, given the sensory experience of VR (and potential for mental harm), users and parents in particular may well demand going forward that VR publishers adopt more robust pro-active moderation of content, perhaps via a combination of moderation software and teams of moderators pro-actively reviewing user communications and UGC.

VR Goods – Real Rights?

In May last year, Linden Lab, the company behind Second Life, announced they are working on a new virtual world, codenamed Project Sansar, built for virtual reality headsets such as the Rift and Gear VR. Like Second Life, Sansar will allow users to lease virtual land to other players, on which they can build and sell virtual items and services within game.

This raises the interesting question of whether the ownership of virtual goods should be treated as being akin to ownership of property and goods in the real world as opposed to a licensed service provided by the operator of the VR world and governed by the End User Licence Agreement.

Why does this even matter? One simple answer – money. The way in which free to play VR Game developers, publishers and platforms are able to monetize and commercialize their virtual content are essential to the success or failure of their VR game and business. If legal systems ultimately decide VR purchased and acquired content should be afforded similar status to real world goods and property, this will have profound effects on the free to play VR business model and lead to further questions such as:

Will users will be able to buy and sell their virtual content in the real world?

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 towards discussing ‘leases’ of virtual property and the law of landlords and tenants?

How will the theft of virtual goods and content by another user be dealt with?

If a user owns the VR content, what will happen on occasions when the user is unable to access the VR platform service, or when the service is turned off? Will there be an ability for a user to download and store that content?

So where does that leave us? Whilst courts in South Korea have actively considered the question of the legal status of VR goods, in the UK the precise status of VR goods and content are still unresolved as we await our first UK court case for guidance.

Jurisdiction – which laws apply in VR?

If a dispute arises in the VR world, which real world law and jurisdiction applies? The answer can be complex and may in part depend upon the nature of the dispute.

The Service Provider will typically seek to rely upon the laws and jurisdiction set out in its Terms of Service. However, where a contract is made between a business and a consumer domiciled in the EU, the E-Commerce Regulations provide the B2C 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 where a criminal offence has taken place. For 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 which law and jurisdiction applies.

Virtual Crimes – real law consequences?

Can crimes ever be committed in the virtual world? Given we don’t have any legislation which spells out the answer we are left with looking at the court’s interpretation and there are a few examples covered by fraud dealing with the theft of virtual currency.

In the UK, an individual who hacked into games publisher Zynga’s social games platform and transferred 400 billion virtual poker chips into his account (street value of around £184,000 according to court submissions) is now in prison.

The term “virtual mugging” was coined when some players of Lineage II used bots to defeat other player’s characters and take their items. The huge time and effort which can be invested by players into multiplayer games can lead virtual “crime” to spill over into real world crime, and even blur the distinctions between the two. Some countries have introduced special police investigation units to cover such “virtual crimes”.

Intellectual Property Rights in Virtual Reality

Being able to apply for and demonstrate the likely existence of one or more IP rights in VR hardware and software is not only a highly important step in discouraging would be infringers and ‘me too copycats’, but also vital if venture capital and other investment funding is going to be sought by start-ups and developers.

How VR hardware can be protected

Firstly, the VR kit itself. This typically consists of the headset, hand held controllers and the positional tracking system which tracks the movement of the head or body.

The tech design and development of these hardware items in whole or in parts can potentially be protected as a patent, if new and inventive and if not falling within any of the exclusions set out under Section 1(d) of the Copyright Designs and Patents Act i.e. a computer program will be excluded per se.

The design of the VR kit may also be protected as unregistered and registered design and copyright can protect some of the 3D aspects if aesthetic.

How to protect VR software

VR software (object and source code) like other software is primarily protected under copyright. But database rights may also be available.

It is more than likely that the middleware and game software engine will need to be licensed.

Can the VR user interface and gameplay be protected?

By user interface we are talking about screen displays, icons, graphics, on-screen text and databases. Again the answer is yes. If the icon design is ‘new’ and of ‘sufficient individual character’ to differ from other icons, then it may be protected as a Registered Design. In addition, it may be capable of being registered as trade mark or protected under passing off. User interfaces may also be protectable as literary and artistic copyright.

Big Brands and in the Digital Space

We are already seeing a lot of interest from big brand owners in VR and the opportunities it presents. Traditionally luxury brands have not been a leader in the digital format – 40% of luxury brands don’t sell online at all – but VR is changing this as brand owners see the cost and reach benefits of offering customers a virtual opportunity to try out their favourite brands, from test driving the latest BMW or try on in a virtual shop this seasons latest collection from Zara.

This in turn will undoubtedly lead to greater focus on brand owners seeking to protect and control their brands through robust licensing, registered trade mark and passing off actions.

The Future?

How will Brexit impact the regulation of VR in the UK? Will the UK, for example, seek to mirror into English law those new directives and regulations coming out of the EU as part of the Digital Single Market strategy? How will the new Copyright Directive impact VR? How will VR publishers and developers meet the raft of increased onerous obligations introduced by the EU General Data Protection Regulations and implemented early 2018?

It’s going to be an interesting couple of years as again the law plays catch up with technology.