The Metaverse: A Legal Introduction to the Retirement Home Industry | Arent Fox Schiff

The metaverse is widely seen as the next frontier of digital commerce, with companies across industries spending millions of dollars to establish themselves as industry leaders. While it presents clear opportunities for businesses, the Metaverse also presents unique legal challenges. This warning highlights a few key legal issues that all companies should consider before taking the plunge.

What is the Metaverse?

At its core, the Metaverse is the next generation of the Internet. It is largely based on decentralized blockchain technology rather than centralized servers and consists of immersive three-dimensional experiences with dynamic digital markets, persistent and traceable digital assets and a strong social component. As consumers flock to Metaverse platforms and technology companies create next-gen consumer electronics that will make the Metaverse more accessible, the ways the Metaverse can help the retirement home industry are already beginning to evolve.

The business case for the senior housing sector

The metaverse offers unique opportunities for the senior industry. Consider the virtual tour used in marketing efforts and again see it as an opportunity for branches to give potential residents a chance to interact with facilities and branch staff. At a basic level, the ability to market the metaverse as a device has value in itself. On a larger scale, this could lead to the development of a hybrid offering of home care and senior living, with the metaverse providing this community setting.

In addition, while the business opportunities are clear, the metaverse offers the opportunity to improve care for the residents. For example, the Metaverse gives distant relatives the opportunity to connect with residents in a more engaging environment than a phone call or video chat — an essential alternative in light of the social isolation issues that have emerged during the pandemic.

Before embarking on a metaverse platform, companies should consider these six legal questions:

  1. Take the custody of digital assets. Due to their digital nature, digital assets such as cryptocurrency and non-replaceable tokens (“NFTs”) are particularly vulnerable to loss and theft. Before acquiring cryptocurrencies or NFTs, companies must set up a secure blockchain wallet and apply appropriate access and security controls.
  2. Set up a dedicated legal entity. Companies may consider establishing a new subsidiary or affiliate to hold digital assets, protect other parts of their business from metaverse liability, and deal with potential tax implications.
  3. Choose the platform that suits you. There are several metaverse platforms and they all have trade-offs. Some, like Roblox, provide access to more consumers, but generally give companies less control over program content. Others, such as Decentraland and the Sandbox, offer companies more control, but smaller audiences and higher barriers to entry. Companies should consider their target audience and long-term strategy before committing to a particular platform.
  4. Register your IP. Companies should consider filing trademarks for metaverse core goods or services and securing all available blockchain domains, which can be used to facilitate metaverse payments and direct users to blockchain content, such as websites and decentralized applications. Given the accelerated adoption of blockchain domains and the limited dispute resolution remedies available, we strongly recommend that brands consider securing intellectual property rights now.
  5. Protect and maintain your IP. The decentralized nature of the metaverse poses a major challenge for businesses and intellectual property owners. Before engaging in blockchain-based transactions, including buying or minting NFTs, businesses should understand that content stored on a blockchain is permanent and cannot be deleted. Restrictions on the use and resale of an NFT must be carefully considered and implemented before coining, because once the content is on the blockchain, there is little recourse possible.
  6. Reserve metaverse rights. Companies that license their intellectual property, especially those that do so on a geographic or territorial basis, should review existing license agreements to determine what rights, if any, their licensees have for related uses on the metaverse. Going forward, we encourage trademark owners to expressly reserve your rights for Metaverse-related uses and to exercise caution before a third party posts your IP address on Metaverse on your behalf.

Ready to enter?

The metaverse represents a great opportunity for businesses to connect directly with consumers in an interactive way that was considered science fiction only a few years ago. But as with any new frontier, technological or otherwise, there are legal and regulatory hurdles to consider and overcome. Some are known, others are new. ArentFox Schiff’s attorneys provide an interdisciplinary perspective to help manufacturers, distributors, retailers and their partners in the retirement home industry provide practical strategies to maximize the value of the opportunities created by the metaverse.

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