Changes from report parliamentary committee draft to plenary report

9. Notes that some regulatory issues are nonetheless already apparent in the fields of private international, civil and intellectual property law, as specified in the sections below;

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Changed9.10. Highlights that recent research has shown that VR sensor data is as uniquely identifiable as a fingerprint scan and can be used to gain deep insights into users’ personality and infer a variety of attributes such as age, gender, income, ethnicity, and disability status;status, state of mind and emotions; believes that this raises significant ethical concernsand legal concerns, in particular in connection with targeted behavioural advertising, that should not be disregarded;addressed; stresses that part of addressing these ethical concerns around the collection of vast amounts of personal data, including sensitive user data such as biometric and behavioural data, emotional reactions and haptic information, is to guarantee that users are aware of the data being collected and that consent for the collection of such data is not obtained only at the time of entry to the virtual world, but for each use case in line with the purpose limitation principleprinciples laid out by the GDPR;GDPR, such as those of privacy by design and purpose limitation;

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Removed10. Notes, in this regard, that the actions put forward by the Commission in its communication aimed at raising awareness, improving digital skills and increasing users’ access to key technologies are crucial;

Added11. Stresses that, wherever the user’s identification is not required by Union or national law, namely for liability purposes, and it is technically possible and reasonable, virtual worlds should enable the anonymous use of services as a way of providing a protective shield for privacy and effectively prevent unauthorised data disclosure, identity theft and other forms of abuse of personal data collected online;

Added12. Notes, in this regard, that the actions put forward by the Commission in its communication aimed at raising awareness, improving digital skills and literacy and increasing users’ access to key technologies, namely by facilitating access to high-speed internet infrastructure and adequate equipment, are crucial to avoid digital divides and should be implemented as swiftly as possible in order to promote an inclusive and competitive digital society and to ensure that no one is left behind in this rapid technological development;

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Private international law

13. Stresses that certain traditional territorial principles on applicable law and jurisdiction might prove inadequate to virtual worlds, whose non-territoriality is enabled by the use of decentralised technologies such as blockchain, and give rise to problems when it comes to ensuring the applicability of EU law and the protection of the rights of consumers and businesses;

14. Notes more specifically that, since anyone anywhere in the world can access virtual worlds, the ‘mosaic criterion’ established by the Court of Justice of the European Union, by which the injured party may seek compensation in the courts of the countries where at least a part of the harm occurred, might not hold; recalls, however, that the Court established an additional criterion whereby injured parties can claim compensation through the courts of the country in which they have their main interest and affirms that the codification of this criterion into the Brussels I Regulation could be considered;

15. Observes that the definition of ‘consumer’ in the Brussels I Regulation is currently based on a direct contractual relationship, which is missing for instance between the issuer of a non-fungible token (NFT) and the purchaser when the NFT is put on a secondary market; notes that, consequently, in the event of a dispute with the issuer, the final purchaser would be deprived of the jurisdictional treatment that the Brussels I Regulation grants to consumers;

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Changed14.16. Calls on the Commission to take into account these and other potentially problematic situations and to assess the appropriateness of the existing provisions of private international law applicable in the EU, proposing appropriate amendments, where necessary, to guarantee that citizens and businesses do not have to systematically litigate in foreign courts or under foreign laws;laws in order to enforce their rights, thus making sure that their rights under the EU regulatory framework are fully guaranteed, while bearing in mind the risk of forum shopping, in particular on the part of non-EU companies;

Civil law

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Changed15.17. Notes that the number and economic relevance of commercial transactions within thevirtual metaverseworlds is expected to increase over the next decade; stresses the need, in this context, to ensure that providers of virtual goods and services can be identified and held liable for any harm caused by their products;

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Changed16.18. Points out the concerns raised by the advertising techniques used when selling so-called virtual real estate, such as a building or a piece of land in a virtual world represented by an NFT, as users might be led to believe that they are actually acquiring property rights, when, in practice, they only obtain a licence to use the virtual ‘land’; emphasises the importance of ensuring that the applicable terms and conditions are transparenttransparent, clear, fair and fair;easy to understand, particularly as it has been shown that users often fail to read terms and conditions due to their dense and technical nature;

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Changed17.19. Recalls that liability rules should fully apply to virtual worlds and underlines the importance of putting in place effective measures to prevent and address any form of harmful behaviour and enforce the law in line with fundamental rights in virtual worlds, including, where appropriate and without prejudice to the metaverse;right of seeking judicial redress, the establishment of reporting and dispute resolution mechanisms;

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Changed18.20. Is concerned that the use of avatars and decentralised systems, such as those built on blockchain technology, might make it extremely challenging to hold tortfeasors accountable; considers that the implementation of effective identity management systems is key in order to allow for their proper and timely identification and to combat fake identities, also taking into account the specificities linked to the governance of decentralised autonomous organisations (DAOs) and to collective liability; welcomes in this regard the Commission’s intention to study the added value of a possible legal framework for DAOs;

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Changed19.21. Recalls that avatars do not have legal personality so any issues regarding their legal capacity, rights, obligations and liabilities needs to be addressed with reference to the natural or legal persons using them; considers that, as thevirtual metaverseworlds evolvesevolve and becomesbecome more complex, consideration should be given to the appropriateness of granting a specific legal status to avatars; considers that the avatar or the person behind the avatar should be identifiable and a know-your-business-customer principle should be applicable;

Intellectual property law

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Changed20.22. Underlines that the body of EU law on the protection of intellectual and industrial property rightsrights, including copyrights, trademarks, patents, designs and trade secrets, fully applies to virtual worlds; stresses nevertheless that the development of virtual worlds poses new challenges inwhen termsit ofcomes enforcementto andintellectual property enforcement, identification of infringers;infringers and issues concerning the conflict-of-law rules on applicable law and jurisdiction;

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Changed21.23. Recalls that platforms operators, service providers and users in thevirtual metaverseworlds are under the obligation to respect right holders’ exclusive prerogativesrights and their right to fair remuneration; highlights that the use of content protected by intellectual property rights (IPR)(IPR), including in digital form in an electronic medium, such as an NFT, requires authorisation through licensing or assignment, unless it is covered by any exception or limitation to IPR protection;protection (such as private copy, education, research, quotation, review, parody or pastiche); reiterates the importance in this regard of providers ensuring transparency as to the scope of licenceslicences, including territorial licences, so as to ensure that users are able to determine what uses of IPR-protected content in thevirtual metaverseworlds are covered by the licences they hold;hold and that creators and right holders are able to receive accurate and proper reporting on the actual use of protected works;

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Changed22.24. Welcomes the update brought about by the twelfth edition of the ‘Nice classification’, which allows for the registration of trademarks in classes covering their use in virtual worlds; calls for a close follow-up on the metaverse;concrete application of this classification; is, however, concerned about the use of NFTs referencing trademarks without the authorisation of their owners and calls for effective measures to be implemented to detect and address these and other cases of infringement; welcomes in this regard the Commission proposal to develop a toolbox to fight counterfeiting;

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Changed23.25. Acknowledges the applicability of liability rules as laid down in the Digital Services Act and of the special regime established in Article 17 of the Copyright Directive to cover the uploading of user-generated content; believes, however, that further clarification is needed on how existing rules should apply;apply to online content-sharing services that make content available in virtual worlds and how they should be enforced;

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Changed24.26. Stresses that NFTs do not grant any IPR as such on the digital asset and signals the need for further clarity and transparency in order to avoid fraud and the frequent confusion between the right to the token itself and the right to the underlying protected content;

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Removed25. Recalls the difference between AI-assisted human creations and AI-generated creations; recalls that, while the current intellectual property framework remains applicable to AI-assisted creations, AI-generated creations create new regulatory challenges for intellectual property rights protection;

Added27. Notes that NFTs and other blockchain-based offers facilitate the continuous resale of assets based on copyright-protected works through online transactions and believes that appropriate and proportionate remuneration of authors for each resale of such assets needs to be ensured;

Added28. Recalls that, under the current rules, the outputs autonomously generated by AI systems might not be eligible for copyright protection, as the principle of originality is linked to a natural person and the concept of ‘intellectual creation’ presupposes the author’s personality; recalls, further, the difference between AI-assisted human creations and outputs autonomously generated by AI; recalls that, while the current intellectual property framework remains applicable to AI-assisted creations , outputs autonomously generated by AI create new regulatory challenges for intellectual property rights protection, such as questions of ownership, authorship and inventorship, as well as appropriate remuneration and issues related to potential market concentration; welcomes the commitment set out in the IP Action Plan for the Commission to engage in stakeholder discussions on how to address the challenges raised by AI-assisted inventions and creations; calls on the Commission to consider broadening the scope for this dialogue in order to largely cover AI-related issues, including generative AI;

Accessibility and digital literacy

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Changed26.29. Emphasises that virtual worlds willmay provide opportunities for the provision of public services of general interest, to the wider benefit of citizens; underlines, however, that inclusion of and accessibility for all users in the EU must be ensured both in terms of cost and use of hardware and the understanding of software; notes that accessibility is particularly important when it comes to ensuring that vulnerable population groups such as elderly people, persons with disabilities, children and people living in rural and remote areas acquire the essential digital skills to participate in virtual worlds and should take into consideration aspects such as geographical location, gender, level of educational attainment and socio-economic background;

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Changed27.30. Adds, in this context, that digital literacy is of the utmost importance forto ensuringensure a safe and socially beneficial uptake and informed and responsible use of virtual worldsworlds, to avoid user addiction, bias and discriminatory practices, to tackle disinformation, manipulation and abuse in the virtual environment and to promote democratic control;

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Added31. Highlights the need to put in place effective educational measures to ensure broad literacy in relation to the virtual world among citizens and to upskill professionals in different fields, namely teachers, and to encourage and promote the development of European talent and technologies, while attracting more people, including more women, into science, technology, engineering and mathematics;

32. Recommends that the ‘virtual worlds toolbox’ intended for the general public, as outlined in the Commission communication, be developed further, in line with the recommendations of the Citizens’ Panel in order to help citizens better understand how to manage their virtual identities, their virtual creations, their virtual assets and their data, and to contribute to a comprehensive EU strategy for virtual worlds that is both sustainable and human-centric;

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Added33. Welcomes, as noted by the Commission, the positive contribution of the EU open-source community in developing key features of virtual worlds, such as in relation to the use of distributed ledger technology and other technologies needed for the authenticity, management and security of virtual objects and identities;

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34. Instructs its President to forward this resolution to the Council and the Commission.