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Legal world lags digital reality

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 22 Aug 2014
The complexities of virtual worlds have led to a plethora of uncertainties in the legal world.
The complexities of virtual worlds have led to a plethora of uncertainties in the legal world.

The virtual world is becoming an increasingly vital part of our lives, but has yet to be effectively regulated. This creates a quandary for courts and legislatures grabbling to apply real-world laws to virtual transactions.

This is according to a write-up by Webber Wentzel, which argues the virtual world is increasingly overlapping with the bricks and mortar one, with people - or their avatars - conducting transactions in virtual reality. Yet, the law firm notes: "South African law is currently struggling to keep up with the ever-changing, multidimensional face of technology, especially within the area of virtual reality."

Webber Wentzel says the complexities of virtual worlds have led to a plethora of uncertainties in the legal world, and legislatures and the courts are doubtful as to what current laws should be applied to disputes that have arisen because of online activities.It says the answer to the dilemma probably lies somewhere in between extending real-world legal mechanisms to virtual-world disputes, and creating a new legal system.

The time is now

The rules that already govern the physical reality can be adapted to suit the realities of the virtual world, says Webber Wentzel. Yet, the law is lagging behind in developments in this area, and if ever there was a time to regulate, it would be now, as online communities in virtual spaces can only thrive and reach full potential if the law affords them protection, it says.

The firm notes the local law is developing, but only as the result of court decisions. "While this appears to be positive as the law is indeed developing, it does, however, mean there is legal uncertainty for users (and their avatars) and developers until such time that a court makes a ruling on a specific issue."

It says lawmakers globally want to extend the reach of national legal frameworks into virtual worlds, to deal with issues such as real-world entities establishing virtual presences. "It is quite surprising there are presently no laws that would be recognised as a comparable body of at least property and contract laws, as it is clear virtual worlds have a fully functioning and growing market economy."

However, says social media lawyer Paul Jacobson, existing laws can be adapted where possible, and new laws will be passed to deal with specific scenarios. In the meantime, much will be done through self-regulation by the virtual industry, as creating a sound online environment with rules is crucial to retaining users.

"In most cases, a court will apply existing legal principles to new situations. Our courts, for example, are empowered to extend the common law to meet new constitutional challenges and have been extending the common law to address new situations in everyday life for ages."

Constant changes

Webber Wentzel notes the concept of virtual reality - from massively multiplayer online role-playing games, to 3D headsets and motion control devices - is constantly evolving, and regulation of this area is the subject of ongoing legal debate.

"With these technological advancements and profitable entertainment forms, it is inevitable that challenges and conflicts will arise in this new and open business territory. From a South African perspective, how will our law address such challenges, especially considering the constantly evolving nature of the area of virtual reality technology?"

Aspects that need to be considered include virtual property - including virtual real estate such as seen in Second Life or relics bought for World of Warcraft. Despite the fact that large amounts of cash are often involved, contracts are not enforceable, the authors argue.

Webber Wentzel also notes there is an issue around tax when people have profited from selling virtual property, and local academics are contemplating whether the law could be amended to include online income. "They have also been exploring the concept of incurring real-world tax implications the moment a user converts his or her virtual assets into real-world currency."

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