On June 8, 2023, Paul Jurcys, one of the co-founders of Prifina, attended a panel discussion entitled "Real Laws for Unreal Lands" hosted at the HQ of Treasury. Two other panelists were Max Sills (General Counsel, Midjourney) and Barath Chari (attorney, Wilson Sonsini), the event was moderated by John Manoochehri (CEO, Treasury).
The panel discussion revolved around three main topics: the ownership of legal assets, legal liability for personal virtual agents, and future directions in setting forth the legal framework for new digital interactions.
You can watch the entire discussion on YouTube... Or you can continue reading for some highlights of the discussion.
Do real laws apply to unreal worlds?
Barath emphasized the importance of recognizing that virtual worlds, despite being distinct from the physical realm, still have a significant impact on real-world individuals. He noted that there must be a way to establish responsibility and accountability within these digital environments.
He further highlighted the need to navigate the gaps between current laws and emerging technologies, such as AI-generated content. For instance, the question arises of whether platforms creating virtual worlds can maintain their neutral platform status.
“There's always somebody ultimately responsible for what happened. The practical challenge is determining how that responsibility gets allocated under the law. ” - Barath Chari
Paul Jurcys from Prifina started by challenging the notion that real laws do not apply to unreal worlds. He emphasized that existing legal frameworks are indeed applicable to digital spaces. Although these laws may not be perfect or fully aligned with the unique aspects of virtual environments, they serve as a foundation for understanding the legal implications:
Max Sills shared some insights from the law and economics perspective. First, the concept of transaction costs suggests that laws should be designed to minimize these costs for private parties within the digital realm. Second, the concept of the "cheapest cost avoider" doctrine suggests that the responsibility for preventing harm in the real world and also in virtual worlds should lie with the party that can most efficiently address the issue. Finally, Max Sills explained that intellectual property (IP) laws are primarily designed to facilitate creativity rather than benefiting only those who possess preexisting property.
The complex issue of owning digital assets
The event moderator, John Manoochehri, wondered who owns virtual lands and what happens when the server goes down: is that land no longer available? Is the law clear on who owns what and who is liable for lost digital assets?
Barath suggested that when we think about the concept of virtual land ownership, we need to identify what exactly constitutes virtual land. Is it a collection of digital bytes residing on a server within a specific environment? In reality, it boils down to the ability to exclude others from accessing or profiting from objects in the virtual space. This access right is usually achieved through contractual agreements. He suggested that one way to look at ownership issue could be through the lens of responsibilities: who is responsible for what?
Paul Jurcys offered an example of user-generated data (e.g., data individuals generate through the use of wearable devices or mobile apps). Historically, data has been viewed as a public good, not owned by anyone and freely accessible: “Information wants to be free.”
Defining data as an asset proves challenging due to its intangible nature and the absence of clear boundaries. However, if we think about the data collected and stored in one secure locker (e.g., user A’s personal data cloud), such data becomes unique and clearly defined and could meet the legal requirements to be considered as a “thing”. Paul emphasized, that as we generate more data in our daily lives, it becomes crucial to explore the concept of ownership and the necessary conditions to claim it.
Max Sills noted that ownership of digital assets hinges on a stable legal and enforcement regime. In the absence of law, ownership becomes irrelevant as power dynamics prevail. To establish a meaningful concept of ownership for digital assets, competent and vested legal and enforcement systems are necessary to ensure stability between parties.
“Look at a developing country where there is no stable government. It does not matter who owns a piece of property because if you come on someone's property, they'll kill you.” - Max Sills
Additionally, Max addressed one of the most remarkable recent development: Japan Copyright Law modification allowing to train AI on any data. In a global environment, the competition among legal regimes becomes more and more apparent. As we move forward, the existence and choice of legal frameworks play a crucial role in defining ownership.
The issue of ownership in the digital age involves complex considerations of excludability and rivalrousness. While private property traditionally relies on excluding others from its use, data poses challenges as it can be used simultaneously by multiple parties. The question arises: How can one retain ownership and prevent others from accessing their data? This issue remains unsolved in the data age, leading to resistance against traditional ownership premises. Japan's recent legal development allowing the use of copyrighted data for training datasets reflects the evolving nature of law in response to the value and accessibility of data.
The panelists agreed that conventional ownership frameworks struggle to encompass the characteristics of digital assets, which often escape excludability criteria while being beyond rivalrousness. This is quite an exciting domain to follow because new approaches are evolving fast.
Are new laws for avatars needed?
The next topic that the panelists were asked to discuss revolved around avatars: as avatars are becoming our agents in various real-life and virtual environments, who is responsible for their behavior? Is it the person whom the avatar is representing? Or is it the provider of the virtual platform for avatars to interact with one another? How about third parties who embed AI-powered features into avatars?
Paul Jurcys from Prifina noted that there are three categories of avatars that we can envision: (i) those that really act for the sole benefit of the individual herself (e.g., my own avatar that helps me better understand my sleep patterns); (ii) avatars that act as our agents (e.g., help my buy tickets to my favorite band’s concert); and (iii) avatars that interact with other agents in virtual words. Only the avatars in the latter category are likely to cause harm and lead to complex legal issues.
“It is important to realize that avatars are not independent/autonomous entities; they are extensions of individuals' digital identities and act as human agents. The legal debate surrounding independent and autonomous avatars with legal personhood is mostly theoretical.” - Paul Jurcys
Max Sills offered a very clear answer to this question of avatar liability:
“I think everything will become corporate law. Corporations already have rights of free speech, they can commit crimes. … Establishing LLCs (limited liability corporations) for avatars will be the market-oriented way to organize liability.”
Charting Legal Frameworks for the Digital Frontier
As we are witnessing rapidly evolving digital technologies, many intricate questions remain unanswered: who owns virtual representations of the real world? Is it possible to flex the legal muscle of current laws and regulations or are these laws outdated?
Barath noted that copyright and intellectual property laws are just one of the possible tools to address the issue of digital ownership. Paul suggested that creators and developers would benefit immensely from clear rules that define what are the rules of the game. In this regard, recently adopted amendments to the Japanese Copyright AI provide a valuable guidepost and increase regulatory competition between Europe, Japan and US.
“As we're moving forward, we need to think about new regulations that would not be reactive (based on things that happened), but forward-looking. … What kind of framework could we build based on what we anticipate from the new technological revolution?” - Paul Jurcys
Max Sills made a great observation about financial incentives: For ownership to exist, there must be a financial system and a bustling market where transactions occur.
“ Similarly to the “least cost avoider” approach which is applied for liability, rules defining the allocation of ownership should be based on the cost-benefit analysis: Who can utilize the assets in the most efficient way?” -- Paul Jurcys
The panelists agreed that current legal frameworks that exist to help navigate in real laws will evolve and be adapted to how humans interact with one another in digital environments. Forward-looking, incentive-based, transaction-cost-reducing rules are desirable and needed.
Bottom-up approaches and standards are very likely to emerge. One good example of such bottom-up regulation is Creative Commons licenses that help people manage their own copyrights with regard to works published in the current internet-based environment. The panelists agreed that we will see similar solutions emerging for more complex digital assets such as data, or three-dimensional representations of the real world.
“From a legal perspective, we're gonna see a really chaotic period (which is happening now), and then … it will be very exciting.” - Max Sills
Unlocking the Lifelong Value of Data: Personalization of Consumer Experiences in the Insurance Market
Prifina’s CEO Markus Lampinen spoke to Alex Bond on the podcast about the current trends with personal data and how individualized data-driven innovation could be introduced to the insurance services market.
Markus: My name is Markus Lampinen, I'm based in San Francisco where I run a company Prifina. We help make products smart. We do this by embedding sensors into different types of physical products. For example, I'm wearing - not that you can see it on the podcast - a really nice kimono-based silk jacket produced by a Tokyo-based company Ichijiku. This jacket has an embedded sensor that can measure a number of different things around, e.g., how the jacket is doing, surrounding data like humidity, etc. Our role at Prifina is to overlay different types of datasets like the sensor data and correlating them with other types of data, e.g., your heart rate when you wear the jacket.
Prifina allows companies to build different types of applications that enable them reimagine the end-user experience for how we interact with not only physical products but data. Our vision is that in the future, have more data than ever - how can we use it to create new experiences? Something that's different from what we've had?
Alex: That's great. I think that when people hear about sensor-driven technology in clothing, they think about performance, sportswear. But it's much more than that, isn't it?
Markus: That's right. We work with pro athletes that want to improve their performance, e.g., top basketball clubs. For them, it's about understanding performance, recovery, sleep, stress, hormonal activities, and so on. From a player’s point of view, how can players themselves understand what's going on with their body and their environment to essentially get better? But it's not just about performance sports, it's also about stress - how do you manage stress?
There is a lot of data that we already have, e.g., our sleep data.
We can go all the way to, for example, luxury fashion and thinking about how does the clothing that you wear impact your your mood or happiness? As for all this data, we're kind of sitting on this goldmine: we, individuals, have so much data but we're just not using it. It's a huge opportunity.
With user-generated data, it is possible to build new types of experiences.
Alex: We're now talking at the MENA Insurance Summit. How does this relate to, for example, insurers?
Markus: We work with a lot of insurance companies around the world are looking look at preventative health, mental health and wellness. If you can make your policyholders healthier and happier, then they're going to be better customers for the insurance company, because they have very similar incentives as the insurance company does.
Alex: Okay, applications are really wide for the insurance industry. … Markus, you explained that it's not just about kind of tracking the data, but it is about the lifetime value of a product that is enhanced by your own data.
Markus Lampinen: Indeed, the lifetime value is one important aspect of a product. How are you maintaining your car? Are you driving it too fast, and so on and so forth.
But then, we get into this very delicate balance as well: the data should benefit you as an individual, not the insurance company alone. At the end of the day, for example, when it comes to different types of collectibles, tracing the entire value chain (where everything came from, who actually owns it, etc.) becomes important, especially for maintaining the value and also secondary transactions.
This fits into a broader conversation about what is authentic, especially in the digital environments powered by applied AI and deep fakes. We have Barack Obama thats now trying to sell you some skin care product. How do you know that something is authentic?
But our focus is very much on reimagining the whole of the consumer experience using data. There are incredible applications as we move forward. For example, cars generate a lot of data. So do you as an individual. What if you could just enter into the car which already knows that, am I a five star driver today? Or that I am only a three star driver today? If you slept really poorly of if you had a little bit more than one drink…? We're not talking about sharing it anywhere, but using your own data for your own benefit.
That’s where there's this interplay between all the data that we have and all the things around us. How can we tie them into a unique importable experience going forward? It's a very, very big theme, of course, but that's kind of something that we look at as an inevitable trend.
Alex Bond: I think people are just starting to wake up to be protective of that. I’d like to finish with one more question: what does it mean for insurance? I'm an insurance guy. What about applications for the insurance sector?
Markus Lampinen: Sure. Insurance emerged as a very clear secondary market for personal data use-cases. Let's take an example. After today’s summit here in Doha, I'm traveling to Switzerland where we're working with our partner that has a sensor embedded into both the left and the right ski boot as well as the helmet.
So you can actually get your triangulate the skier and their position to maybe help them improve. Now, performance athletes may care about the angle of tilt on their 760 turn on the mountain. But most skiers don't.
But if you start essentially hitting this type of data on skiers, could you create individualized insurance per skier per day in dynamic conditions? Could you give them incentives to ski safer based on those? These are some things that are currently really hard to price dynamically. But if you started having this type of data, could he actually create almost like reverse marketplaces for these types of products? Could you do this on, let's say, a resort by resort basis? You can also use it as, let's say recommendations for routes on different types of ski resorts. You can also use it for insurance products as well.
So that's been very much our foray into thinking about starting off in a very, very clear value prop for the individual, but then realizing that there's this entire ecosystem.
Alex Bond: Markus, you've been very generous with your time. Thanks for being a guest.
You find the entire conversation on , here it is.