Virtual Avatars and Influencers: Legal Aspects in the Marketing World

In the ever-changing digital landscape, virtual avatars and influencers have become a significant trend that has the potential to revolutionize the marketing industry. This trend is relatively new, but it is growing at an amazing rate. More and more companies are recognizing the opportunities that virtual avatars and influencers offer to showcase their brands in unique and engaging ways.

As an attorney who specializes in the legal issues and contracts in this area, I have found that the demand for legal support related to virtual avatars and influencers is rapidly increasing. I am receiving more and more inquiries from clients who are either already active in this area or are interested in integrating virtual avatars and influencers into their marketing strategies. Many are unaware of the legal complexities involved in using these technologies and seek expertise to ensure they are acting in compliance with applicable law.

The dynamics involved in this trend are fascinating. It’s an area that breaks new ground for marketers and lawyers alike. Especially in South Korea, virtual influencers, especially even in combination with AI, are a big topic. There, these are not only available on well-known platforms, but are also already being used as part of “offline” entertainment at events.

What are virtual avatars and virtual influencers?

It is important to distinguish between virtual avatars and virtual influencers:

• Virtual avatars are digital characters used by brand owners for various purposes, such as commercials. They can represent a brand and help create a unique identity. These avatars can be used in promotional videos, on websites, and on social media to convey the brand message in an engaging way.
• Virtual influencers, on the other hand, are avatars modeled after real people who can talk and interact using artificial intelligence (AI). They are able to create content, post and interact with their audience, much like human influencers. Virtual influencers created using Computer Generated Imagery (CGI) are rapidly gaining popularity. On platforms like Instagram and TikTok, they act like real people and have their own social media channels with loyal fan communities, especially among younger users. Their follower numbers are in the hundreds of thousands and they are even able to give live performances and grace magazine covers.
  • Virtual models: they work similarly to their real-life counterparts. One example is Shudu Gram, who had her own photo spreads in various issues of Vogue.
  • Brand-independent Virtual Influencers: They provide insights into their lives and enter into collaborations with companies, similar to their real-life counterparts. One example is Lil Miquela, who collaborates with high-profile brands and is known for her progressive political stance.
  • Virtual brand ambassadors: They are products of a company and fully correspond to their ideas. One example is KFC’s digital resurrection of Colonel Sanders to give the brand a lifestyle twist.
  • Corporate Influencers: They are “employed” by companies and provide their followers with insights behind the scenes. One example is the Instagram avatar Kenna, who regularly shared with his fans his internship in the product development department of a cosmetics brand.

This development shows that virtual influencers are not just a passing phenomenon, but may have a permanent presence in the marketing and entertainment landscape.

Legal challenges and issues

1. copyright

Copyright is a critical aspect to consider when using virtual avatars and influencers. Who owns the rights to a virtual avatar or influencer? If an influencer is based on a real person, is that person entitled to the avatar’s intellectual property? It is critical to have clear agreements on the ownership and use of intellectual property.

In this context, many contracts need to be carefully adapted. It is important to clearly define the rights and responsibilities of all parties involved, including creators, designers, and brands using the virtual avatar or influencer.

A particularly important issue that must be considered in these contracts is the subsequent remuneration under copyright law. This is where §32a of the Copyright Act (UrhG) comes into play. Pursuant to Section 32a UrhG, the author has the right to additional, appropriate remuneration if the originally agreed remuneration is conspicuously disproportionate to the income and benefits that the person entitled to use the work derives from the exploitation of the work. This means that if a virtual influencer is particularly successful and generates high marketing sales, the originally agreed upon compensation of the creator or designer might not be considered appropriate. In such cases, subsequent compensation could be required that is linked to the virtual influencer’s actual success.

2. contract law

The use of virtual avatars and influencers often requires complex contracts between various parties, including artists, technology providers, and brands. As an attorney, I help my clients create solid contracts that protect their interests and avoid potential legal pitfalls.

It is important to understand that there are multiple levels of collaboration involved in the creation and use of virtual avatars and influencers. Artists and designers are often responsible for the visual design, while technology vendors provide the necessary software and AI. Brands and companies that want to use these avatars and influencers need to make sure they have the rights to use them and that all parties are fairly compensated.

Some of the key elements to consider in these contracts are:

• Transfer of rights: It must be clearly defined which rights (e.g., usage rights, marketing rights) are transferred to the virtual avatars and influencers and under which conditions.
• Compensation and post-compensation: How are artists, designers, and technology providers compensated? Are there provisions for subsequent compensation if the avatar or influencer is particularly successful?
• Liability and warranty: Who is liable if something goes wrong or if the avatar or influencer acts illegally in any way? Are there any warranties regarding the quality or functionality of the avatar or influencer?
• Term and termination: For what period is the contract valid? Under what conditions can the contract be terminated?

Creating these contracts requires a deep understanding of the legal, technological, and creative issues involved in using virtual avatars and influencers. As an experienced attorney in this field, I specialize in developing customized contracts that meet my clients’ specific needs and goals.

3. personal right

The right of personality is particularly relevant when a virtual influencer is modeled on a real person. It is important to clarify whether the use of the image or likeness of a person requires the consent of the individual and whether there are any restrictions on how the image may be used.

When it comes to 100% invented characters, the situation becomes even more complex. Since these characters are not real people, they have no personal rights of their own. However, they may be considered the intellectual property of the creator or the company that owns them. In this case, the rights to the character may be protected by copyright and trademark law.

Another interesting problem arises when virtual influencers are subjected to insults or hostility. Since they are not real people, they cannot be personally offended. However, such attacks could be considered attacks on the company behind them, especially if they aim to damage the reputation of the character and thus the brand. In such cases, the company could take legal action to protect its interests.

It’s also important to keep in mind that if a virtual influencer engages in any kind of offensive or harmful behavior, it can have repercussions for the company behind it. The company could be held responsible for the virtual influencer’s behavior, and it is important for companies to implement policies and controls to ensure that their virtual influencers’ behavior is in compliance with legal requirements and ethical standards.

Overall, the field of virtual influencers is legally complex and requires careful navigation to protect both the rights of real people and the interests of companies using the technology.

4. competition law and misleading statements under the UWG (Unfair Competition Act)

Competition law regulates how companies may compete with each other. When using virtual avatars and influencers, care must be taken to avoid misleading or unfair business practices. For example, portraying a virtual influencer as a real person could be considered misleading and violate the Unfair Competition Act (UWG). Companies need to ensure that their marketing practices are transparent and honest.

One of the challenges in this area is the imprint. Who is considered a virtual influencer provider? Is it the company that owns the influencer, or could the influencer itself be considered a vendor? As a rule, the masthead should contain information about the company running the virtual influencer, including the company’s name, address and contact information.

The question of the AI holder’s liability is also complex. It could be argued that if it is clearly communicated that it is an AI and an avatar, the liability of the AI owner could be limited in certain cases. However, this depends on the nature of the avatar’s behavior and the applicable legal requirements.

Another emerging issue is the development of technology that makes it possible to create avatars that are almost indistinguishable from real people. If an avatar is so realistic that it could be mistaken for a real person, additional legal challenges related to deception and transparency could arise. It may be necessary to introduce specific disclosure requirements to ensure that the audience is aware that the influencer is an avatar.

Overall, it is critical that companies using virtual avatars and influencers are aware of the legal framework and take proactive steps to ensure that their practices are in compliance with competition law and other relevant laws. It is also important to keep an eye on evolving technologies and the resulting legal challenges.

Conclusion

Virtual avatars and influencers are an emerging phenomenon that opens new horizons in marketing. At the same time, they bring with them a host of legal challenges. As an attorney specializing in the legal aspects of this field, I strive to help my clients take advantage of the opportunities this trend presents while being aware of the legal challenges.

We are in an incredibly exciting time. Artificial intelligence alone is a fascinating field, but combining AI with modern graphics to create virtual influencers is a huge and exciting topic. It has the potential to change our society in many ways, from the way brand messages are conveyed to complex issues related to deepfakes. Deepfakes, as discussed in this article, raise their own legal challenges, including issues of authenticity of evidence and protection of privacy rights.

If you are interested in integrating virtual avatars or influencers into your marketing strategy, I am available to advise you on legal matters and ensure that you are best prepared for the legal challenges that arise from this innovative technology.

Let’s explore the world of virtual avatars and influencers together and find out how they can enrich your business while carefully navigating the legal aspects.

I firmly believe that providers with virtual avatars have a huge future ahead of them in Europe. It’s already a huge trend in Asia, and the combination of AI, animation and games in particular has enormous revenue potential. I look forward to hopefully working with some of the vendors in the future, both legally and in other ways.