[Guest post] European Commission strategy on Web 4.0 and virtual worlds

The IPKat is pleased to host the following guest post by Katfriend Alessandro Cerri regarding the European Commission (EC)’s recent strategy communication in respect of Web 4.0 and virtual worlds. Here’s what Alessandro writes:

European Commission strategy on Web 4.0 and virtual worlds

by Alessandro Cerri

The European Commission (the EC) recently communicated its strategy on Web 4.0 and virtual worlds, including in respect of IP rights.

Background

On 11 July 2023, the EC communicated that it had adopted a strategy on Web 4.0 and virtual worlds, with the aim of steering “the next technological transition and ensure an open, secure, trustworthy, fair and inclusive digital environment for EU citizens and businesses and public administrations.”

Metaverse Kat

The EC’s strategy is centred around four pillars:

1. Empowering people and reinforcing skills – the EC is seeking to develop guidance for the general public by Q1 2024;
2. Business: supporting a European Web 4.0 industrial ecosystem – the EC says it will support EU creators and media companies to test new creation tools, bring together developers and industrial users, and work with Member States to develop regulatory sandboxes for Web 4.0 and virtual worlds (by Q2 2024);
3. Government: supporting societal progress and virtual public services - the EC is launching two new public flagships: “CitiVerse”, an immersive urban environment that can be used for city planning and management, and a European Virtual Human Twin, which will “replicate the human body to support clinical decisions and personal treatment”; and
4. Governance: to set up the structures for the EU - to shape the openness of virtual worlds and ensure that they are not dominated by a few big players.

The strategy includes 10 actions – the most relevant of which for IP rightsholders is Action 6, which includes developing a “toolbox to fight counterfeiting” by Q3 2023. The communication clarifies that this toolbox is intended to provide rightsholders with guidance and recommendations on how to enforce their rights in both offline and online environments.

Intellectual Property

The EC’s comments on each of the IP rights in virtual worlds are primarily found in the Staff Working Document. Some of the highlights are, summarily, as follows:

Copyright

The EC’s observations on copyright focus on four main issues:

• Moral rights: the EC notes that moral rights are not harmonised at EU level, and it is “uncertain” how the moral and economic rights of authors and performers across virtual worlds will be enforced at national level;
• NFTs: the EC believes that the trading of protected assets will “often rely on NFTs” in future, and highlights the importance of building awareness regarding the consequences of transactions involving NFTs. The communication further states that “it is not clear whether minting or storing NFTs on the blockchain is an exploitation of a copyrighted work. If doing so constitutes copyright infringement, the full destruction of the infringing NFTs may be difficult. However, blockchain may be useful tool for evidentiary purposes in copyright infringement cases”.
• AI: the EC considers that the interplay between AI and copyright raises two types of challenges, namely those regarding: (a) the use of copyright protected content to train AI applications, in respect of which the EC refers to the general text and data mining exceptions in the DSM Directive [IPKat here]; and (b) the protectability of AI-generated content, noting that “if AI systems generate output without human creative choices, such an output is normally excluded from the copyright protection”.
• Platform T&Cs: the EC notes that it is important to monitor whether Web 4.0 platforms force users to grant non-exclusive free-of-charge licences to their works, and to ensure that users are not deprived of profits as a result.

Designs

The EC notes that there a number of challenges regarding the protection and registration of virtual products as designs, and that the current legislative provisions on designs will be updated by the proposals for a revised Directive and Regulation on the protection of designs [see here for the IPKat’s coverage].

Trade marks

The EC notes that the number of applications for EU trade marks (EUTMs) is increasing for virtual goods and NFTs (see the EUIPO Guidelines in this respect), but that there are questions regarding territoriality of use, and whether the use of a mark in respect of a virtual product can constitute genuine use for the purposes of a trademark registration relating to physical products.

Interestingly, it notes that it will be “necessary to examine whether trademark protection needs to be strengthened by legislative means”.

Finally the EC notes that the enforcement of IP rights in virtual worlds may be uniquely challenging, not least given their cross-border nature – but it is important to ensure that all entities engaging in such worlds are adequately covered by enforcement rules.

Comment

Whereas the EC’s communication is inevitably pitched at a very high level, it does provide an indication of what the key areas of focus/concern are from the EC’s perspective following its consultations with stakeholders, as well as some of the main IP-related initiatives we can expect to see over the next few months – first up being the counterfeiting toolkit, which should be available by the end of this year.

It is also interesting that, although the EC has included in its communication the general statement that the existing EU legal framework already applies to Web 4.0 and virtual worlds, it does leave the door open for assessing whether trademark protection needs to be “strengthened by legislative means”, without however providing further details on what is envisaged in this respect.