Navigating the reality of legal terrains in Malaysia

Imagine a world where you could experience a complete liberation from screen-bound experiences and venture into a world of extended reality (XR) in your daily lives – from watching your favourite football games, pursuing educational courses, forging new connections to conducting your work.

This imagination of XR is no longer science fiction but the next big wave in computing since the upsurge of remote working arrangements post-pandemic.

The application of XR may sound too far-fetched but many have indirectly experienced elements of XR such as Augmented Reality (AR) filters when using Instagram, TikTok, Facebook, and other social media platforms on their mobile phones.

XR is an emerging umbrella term describing the current immersive technologies namely, AR, Virtual Reality (VR), Mixed Reality (MR) as well as those that have yet to be created.

XR blurred the barrier between physical reality while VR created an environment where humans can form digital twins of themselves in the shape of avatars to interact with other beings, objects, or locations in a three-dimensional digital sphere.

Other example of human interactions in the XR realm is the use of holograms for live interactions with celebrities, even the posthumous ones, allowing the fans to enjoy such interactions from their location.

Recently, business titans have been making waves in the world of metaverse – creating commercial activities and transacting business in a fully virtual world.

The metaverse is far more encompassing than XR.

It has its own composite technologies which includes VR platforms, machine learning, blockchain, non-fungible tokens (NFT), digital currencies, and human sensory such as hand-tracking, eye-tracking, and speech input.

Although still in its infancy stage, Metaverse is set to galvanise the future of the meta-world given the strong interests of mega corporations such as Meta and Microsoft.

As technology is fast-outpacing the development of the law, there is no clear set of laws regulating acceptable transactions or conducts in the XR environments, even in Malaysia.

A report by World Economic Forum noted that the existing law is cautious in regulating offences in the XR environment as there is a need for a study to establish functional boundaries and societal expectations on behaviours in the immersive world.

Data Privacy Risks For AR features to work, it requires applications on mobile gadgets that superimpose digital content over the real-world environment, while for VR, it requires the use of headsets that allow users to fully navigate virtual spaces.

However, to deliver these experiences, AR and VR devices and applications gather significant amounts of personal data to create an immersive experience for the users.

With AR and VR technology, data on the users’ biometrics, geolocations, IP addresses, activities, conversations, and transactions in the virtual world can easily be gathered and in essence, create novel data privacy issues for users due to the scope, scale, and sensitivity of the information they collect.

There is a concern that these data can be misused by technological companies or third parties.

Product Liability or Insurance Disputes The downside of AR and VR is the potential to distract users from the ‘real-world’ environment that poses a liability risk.

An analogy can be drawn from the mobile phone game, Pokémon Go, sending users negligently roaming around cities in search of virtual pets.

If these distractions from AR and VR result in the users getting injured or suffer psychological effects, it could provoke litigation for claims in product liability or insurance claims against the XR technology developers.

Virtual Offences Taking an anecdote from the sci-fi movie, ‘Ready Player One’, where the two main characters in haptic suits could feel realistic sensations generated in the virtual world.

Such a scenario can be considered a virtual criminal act as the battery can be felt physically and may result in a genuinely traumatic experience.

Similarly, if criminal intimidation is inflicted on another user in a VR realm environment or there is evidence of involvement of bribery, corruption, anti-competitive practices, and money laundering, can these acts be considered a punishable offence? And if so, under which jurisdiction does these offence fall under?

The current legal framework in Malaysia is inadequate to prosecute XR-related crimes under any jurisdiction.

Hence, there needs to be a special legal framework that balances the freedom of technological use, a platform that promotes the digital economy and the need to protect public security.

Intellectual Property On the subject of ownership, licensing and the use of XR technologies, it concerns intellectual property issues which must be considered by enterprises developing and using XR technologies.

The application of AR, VR, MR and XR is widely being used in education, healthcare, construction, marketing, and many other industries.

When technologists are developing XR-related technologies, clear contractual terms must be carefully drafted to prevent disputes.

Often, XR developers are uncertain about the ownership of the technologies that they have developed resulting in loss of future financial success.

A research from PWC also noted that intellectual property issues are gradually becoming contentious as major players and start-ups seek to build their portfolios of patents to protect their latest innovations from the competitors.

It is pertinent for major industry players and policymakers to work harmoniously to address the legal and regulatory issues and at the same time, develop a comprehensive and technology-neutral regulatory framework that provides a space for continuous innovation of AR, VR, MR and XR technologies.

Puteri Sofia Amirnuddin is a Senior Law Lecturer whom integrates the use of Augmented Reality, Branching Automation and Design Thinking principles in teaching law. She is also the Programme Director for Master of Laws programmes and Co-Director of VORTEX (Advocacy & Research), Taylor’s University.