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Thursday, May 31, 2007

Double Trouble on the Virtual Property Front

Yesteray brought huge news for those of us who study virtual property. And then it brought huge news again.

First, the Bragg v. Linden lawsuit just survived a motion to compel arbitration. That suit started when Second Life caught a player gaming their in-world land auction system and confiscated his ill-gotten virtual gains. He strenuously disputed their story and claimed he was an innocent landowner misled by Linden Labs’ (Second Life’s developer) repeated claims that players really “own” the virtual land inside of Second Life. The suit squarely pits developers’ allged right to make changes to their worlds against players’ alleged rights to be secure in their property. As a legal matter, I think the developers ordinarily have a much better case, but Bragg’s attorney has been able to dig up a whole bunch of Linden PR materials that really make players’ rights sound pretty darn unrestricted. They’re bad facts for Linden, whether or not they end up being legally relevant.

Yesterday’s decision was just a prelude. After procedural wrangling that took the case from small claims court to state court to E.D. Pa., Linden moved to compel arbitration. The Second Life terms of service include an arbitration clause, but Judge Robreno blew away the arbitration clause as unconscionable. Drawing heavily on Comb v. Paypal, he emphasized the nonmutuality of the clause, its California venue, and the effects of its fee structure. It’s hardly a blanket rule against arbitration in virtual world contracts, but it would invalidate a lot of extant arbitration clauses. It also reaches the opposite result than the only other virtual world arbitration case thus far: the Blacksnow case.

The other big news was a new would-be class action in the Southern District of Florida. This one is particularly interesting in that while it involves Blizzard’s fantastically successful World of Warcraft, Blizzard isn’t a party. Instead, the plaintiff, who maintains that he’s a typical WoW player, is suing virtual trading company IGE. He alleges that IGE isn’t just a trader; it’s also engaged in gold farming, paying people in third-world countries to play WoW for fourteen hours a day racking up gold and items. IGE then floods the virtual in-world markets with these items, in violation of the WoW terms of use and to the great harm of all the innocent players who don’t pay for IGE’s services and are therefore at a competitive disadvantage. The case doesn’t quite sound in property law—all the causes of action involve interference with contract or commercial fraud—but its implications for virtual property issues could be profound.

Neat stuff. Hat tip: TerraNova

Posted by James Grimmelmann on May 31, 2007 at 06:34 PM in Intellectual Property | Permalink


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Tracked on Jun 9, 2007 12:45:00 PM


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Posted by: gold1343 | Jan 20, 2009 10:12:59 PM

very good

Posted by: kjc | Nov 13, 2007 10:32:08 PM

Sadly, no. The journal is not very flexible with that. You could email me if you'd like.

Posted by: Steve | Jun 1, 2007 11:41:33 PM

Hi. By my reading of the order (not being a lawyer), the entire terms of service was declared both procedurally and substantively unconscionable (not just the arbitration clause, p.28,p.32 the words "..the TOS are.."). I'm just wondering if that's accurate?

Oh, and this blog post links to the Second Life TOS, and I thought it would be a good idea to point out that the TOS has changed since Bragg's account was terminated. On example addition around 11/22/06 was "Your intellectual property rights do not confer any rights of access to the Service or any rights to data stored by or on behalf of Linden Lab." which I think could be relevant to anyone following the link from this post.

Also, Steve, will that Ohio Northern Law Review will be publicly available on the net?


Posted by: justpassingby | Jun 1, 2007 11:51:19 AM

Yea, I definitely address this issue in a forthcoming piece on Bragg in the Ohio Northern Law Review.

Posted by: Steve | Jun 1, 2007 6:54:42 AM

Possibly the more interesting question: does Linden really want to win? Should it? Wouldn't it be better for its business if it could credibly commit to strong property rights in what people purchase from it?

Posted by: Paul Gowder | May 31, 2007 11:53:03 PM

That strikes me as the dynamic; he's going to hold up their statements and argue a variety of contractual and consumer protection grounds for why he should be able to get around the contract. Virtual property as such will only come in as filtered through what Linden reasonably meant to say about it, and what Bragg reasonably understood them to be saying about it. But that's not nothing.

Posted by: James Grimmelmann | May 31, 2007 8:27:12 PM

I've been closely following the Bragg case for some time. It doesn't seem like that one is likely to turn on fundamental issues of virtual property rights either. Linden will seek to enforce the terms of the contract, and Bragg will assert some kind of equitable claim (e.g. estoppel), and the court will decide the (contract) issue before it. Is that how you see it?

Posted by: Steve | May 31, 2007 7:24:43 PM

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