Once concepts belonging purely to science fiction, virtual reality
(VR) and augmented reality (AR) have changed from being
mere constructs of our imagination to a powerful marketing
tool with tremendous business potential. Since their explosion in
popularity back in the early 2010s, many brands have jumped on
the bandwagon to take advantage of the technology and reinvent
their customers’ retail experience.
In particular, VR and AR are gaining ground in Asia’s retail
scene. The Chinese government has even backed the
development of VR in its national development initiatives.
As part of its mandate to bolster new areas of economic
growth, China has stated in its 13th five-year plan that,
amongst other emerging cutting-edge fields, it will spur
innovation and industrial application in VR.
VR and AR present retail companies with a plethora of
options to connect customers with their products like
never before. Using AR technology, Rebecca Minkoff and
Lacoste allow its customers to virtually try on their clothing
through a phone or mirror screen. With a VR headset,
Alibaba transported its customers to Macy’s New York
store as part of its 2016 Singles Day shopping festivities,
and through its Buy+ and Alipay tools, allowed them to
make purchases in the VR environment by simply nodding.
Thanks to these interactive retail tools, Alibaba’s sales on
Singles Day 2016 rocketed to US$17.8 billion, far beyond
the total of US$14.3 billion in 2015.
While use of VR and AR in the retail sphere could result in
great benefits for companies, caution should be exercised as
such technologies are not without their potential legal risks.
In addition to compliance with local and international data
privacy regulations, enterprises should pay special attention to
any biometric data that is collected through VR/AR. Due to
the immersive nature of VR/AR technologies, biological traits
of such customers are often measured and recorded through
features often found in VR/AR, such as facial recognition
and body tracking. Such biometric information is classified as
sensitive personal data in many countries such as Australia
and India, and requires special treatment. For instance,
consent must be obtained before collecting sensitive personal
data, and such data cannot be shared by related corporate
bodies in the same way as they may share other personal
As with any technology, VR/AR are vulnerable to cyber
attacks. Companies should ensure that proper safeguards
are in place to protect customer data. These safeguards
include vetting VR/AR service providers to examine their
technological and security capabilities, periodically reviewing
VR/AR service providers’ authentication policy and access
control policy, and having appropriate encryption for secure
transmission of data.
In some APAC countries, local restrictions may impede or
even prohibit certain application of VR/AR technologies.
Take Pokémon Go as an example. China has banned the
popular AR game following the China Audio-video and
Digital Publishing Association’s decision that the game poses
geographical information security and customer safety risks
to Chinese citizens. The decision stemmed from the frequent
traffic accidents caused by distracted Pokémon Go players
and the state’s national security concerns over the game.
In South Korea, the launch of Pokémon Go was delayed
because of the game’s reliance on Google Maps, which was
restricted in the country for national security reasons. It is
therefore imperative for businesses to thoroughly understand
the local landscape and restrictions in its targeted jurisdiction
before launching any VR/AR offering there.
Intellectual Property Rights
An understanding of local regulations on intellectual
property rights is also important for enterprises when they
are engaging VR/AR service providers. While legislation on
copyright across jurisdictions often contain exceptions where
copyright-protected works may be reproduced without the
owner’s consent, companies should ensure that any usage
of their copyrighted works falling outside of such exceptions
are closely controlled. For example, Hong Kong’s Copyright
Ordinance permits the incidental inclusion of copyrighted
work in a sound recording, film or broadcast. This means that
a VR/AR service provider may include copyrighted work on
its VR/AR platforms without the copyright owner’s consent
if the inclusion is incidental. Hence, where the engagement
of the service provider involves use of copyrighted materials
falling outside such exceptions, enterprises should exercise
extra caution in regulating such uses, such as restricting the
reproduction of the copyrighted materials through a license
agreement with the VR/AR service provider.
Ownership of VR/AR content is another issue that must
be addressed in the VR/AR license agreement. In order to
create a VR/AR experience, VR/AR service providers have to
convert the company’s materials into VR/AR content. Brand
owners must push for ownership of such content in the
licensing agreements with their service providers. In particular,
content ownership in relation to live events and online
streaming must be clearly set out.
Although VR/AR is becoming increasingly prevalent in the
market, there is yet to be any established search engine for
VR/AR content on the internet. This makes the search and
monitoring of infringing activities challenging at this time. It is
therefore more important than ever for companies to bolster
protection of its intellectual property through contracts and
defensive registrations to meet the added level of risks that