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