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In 2016, virtual reality (VR) technology will generate its first billion dollars for the industry, according to consultancy and accounting firm, Deloitte. The latest findings reveal $US700 million will come from the sale of headsets and hardware and $US300 million from content such as games. It further estimates 2.5 million VR headsets and 10 million games will be sold this year. The report recommends startups begin to invest in the technology as it begins to emerge as the next big consumer trend. But with every new technological wave, it brings with it legal implications for its users and service platforms. The technology also creates new challenges on how to apply existing laws in a virtual world, particularly for intellectual property (IP) rights.

Fair Dealing in a Virtual World

VR hardware immerses its users in a virtual world via a wide-angle headset that uses sensors to track the user’s movements and adjusts the user’s view accordingly. The creation of virtual worlds is limited only by the imagination of its game creators. This means VR creators can build worlds that imitate and replicate real cities and incorporate music, brand names and logos into a virtual experience.

IP laws require permission from the original owner for its use. However, use of a trade mark or logo in a VR experience does not constitute infringement if it is used in good faith (Section 122 of the Trade Marks Act 1995 (Cth)). For example, displaying a Coca-Cola logo on a billboard in a virtual world would be permitted under the fair dealing exception. The rules change where a user buys a can of Coca-Cola in the virtual world, as this would be considered a use of the trade mark for a commercial purpose even if purchased with virtual currency with no real value. What remains to be seen is how the virtual application of real-world intellectual property will withstand scrutiny under fair dealing.

Meet Your Maker

The lines are blurrier where users create their intellectual property in a virtual world. Here, the issue is who owns the Intellectual Property. Does the game creator own the IP the user creates or does the user own the IP? In the U.S., lawsuits against popular virtual world game, Second Life, have highlighted the difficulties of attributing IP rights in virtual settings. In the virtual reality game, users spend their virtual currency to buy islands, clothing and homes for their avatar.

When the suspension of user accounts took place for whatever reason, users fought for their virtual intellectual property rights, arguing the game’s creators deprived them of their intellectual property. In these disputes, game creators argue that users agree to their Terms of Service when they sign up, which set out the game creator’s right to the IP of goods created in the virtual world. Hence, the game creators in Second Life were within their rights to cancel accounts.


It is inevitable that more challenging issues of law will arise from the popularity of VR. For example, can a user be prosecuted for a crime committed in a virtual world? How can laws be enforced across jurisdictions? With the goal of many companies invested in making VR a commercial and virtual reality, users on the cusp of this trend should be excited by what lies ahead. It’s a world that we cannot ignore, particularly in the legal profession.What do you think? Tag us on Twitter @legalvision_au and let us know.

What do you think? Tag us on Twitter @legalvision_au and let us know.

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