Perspective: When virtual legal chickens come home to roost

Netizens are spending more and more of their time living their lives online in virtual worlds. But while many virtual world interactions are not real and take place in fictitious places, virtual disputes increasingly are landing in real courts back in terra firma.

Second Life is one of the best known virtual worlds. Through interactive computer simulation, participants act through their avatars and are able to see, hear, and work with simulated objects in a computer-generated environment.

Participants, who come from the United States as well as various other countries, number in excess of 9 million people, according to Linden Research, Second Life's owner and operator.

Second Life residents are governed by terms of service which specifically allow users to retain all intellectual property rights in the digital content they create or own in Second Life. Although we're talking about a virtual world, users conduct transactions that cumulatively involve more than $1 million per day.

But when dollars are at stake, disputes inevitably follow. And just as it is true for real world transactions, this is becoming true with respect to virtual world transactions that involve real money.

Even virtual interactions that do not take place in real life can lead to real legal action in our brick-and-mortar courts when actual monetary interests are affected.

This brings us to the case of Eros LLC v. Thomas Simon. The complaint was recently filed in federal court in New York on behalf of several plaintiffs. Let's focus on the allegations of the lead plaintiff, Eros.

Eros is engaged in the sale of a number of adult-themed virtual objects for use within Second Life. Eros alleges that through the marketing efforts of its CEO (referred to as "Stroker Serpentine"), Eros' products have become very well-known in Second Life.

Indeed, Eros alleges that its products have built a reputation within Second Life for "performance, quality and value" (we won't go there in this piece), and consequently, are among the best-selling adult-oriented virtual objects in Second Life.

Among the Eros products are the SexGen Platinum Base Unit v4.01 and the SexGen Platinum-Diamond Base v5.01. Eros alleges that it has used the SexGen trademark to sell these Eros items in Second Life and that the trademark has become famous and distinctive.

Eros also asserts that it has filed an application to obtain a federal trademark registration for the SexGen trademark and that it also has filed applications for copyright registrations for the Eros items.

What's the rub? According to Eros' complaint, along comes defendant Thomas Simon, who is known as Rase Kenzo in Second Life. Simon allegedly has been making unauthorized copies of Eros' products and has been using Eros' trademark without permission.

The complaint asserts that Simon has been selling unauthorized copies of Eros' products while misrepresenting that these copies are authorized and legitimate copies of Eros' products. Accordingly, this has led to alleged consumer confusion as to the origin of the products.

Eros complains that Simon has been trading off of the reputation and goodwill associated with Eros' products and trademark, unjustly profiting from this wrongful conduct. Eros contends that sales and profits have been siphoned away to Simon.

The Eros complaint raises a number of causes of action. It not only seeks an injunction barring Simon's conduct, but also requests triple damages, attorneys' fees, and further statutory damages.

The complaint is detailed and reads just like a complaint that addresses transactions and conduct in the real world. However, here, one must step back and realize that the true transactions and conduct have occurred in a virtual world created on the Internet.

Assuming the complaint stands up and the litigation proceeds, the unmistakable point is that even virtual interactions that do not take place in real life can lead to real legal action in our brick-and-mortar courts when actual monetary interests are affected. If the stakes only were virtual, then perhaps the disputes could be resolved by judge and jury avatars in a place like Second Life. But that might not be resolution enough when money's at stake.

Biography
Eric J. Sinrod is a partner in the San Francisco office of Duane Morris. His focus includes information technology and intellectual-property disputes. To receive his weekly columns, send an e-mail to [e-mail] with "Subscribe" in the subject line. This column is prepared and published for informational purposes only, and it should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.

More Perspectives

[rcardona2k]

Virtual arbitration: the pixel's court?

You brushed upon this briefly but, IMO, Second Life should a have
virtual judiciary. It should start with Justice of the Pixel courts or
its YouTube equivalent in arbitration: The Pixel's Court. Appeals
could be handled by the Circuit Courts of Pixels and final appeals
to the Supreme Pixel. Then after all avenues are exhausted, bring
it on IRL.

my two pixels --

[dp3lw]

It's a game...

The only arbiter would be the game provider. If you bring litigation against someone in the real world then you should pay all costs and the case should be thrown out.

[Highlander7500]

It's a game, really?

Some people, especially those who do not spend any time in SL
might call this a game because there are games in SL. Others,
especially those of us that started in some of the early electronic
communities like CIS (before it was CI$) would call this a
community. I can see where property disputes will pass back
from SL to the RL in this context.

As an example, and not using the "mature" area - the objects of
highest value in SL are fashion objects. Everyone who is not a
newbie wants their avatar to look great. You might think this
involves clothes, but you would be wrong. The most important
objects, and that's what they are called, are shapes and skins.
Think of these as your real life body with the skin. Shapes and
skins help define an avatar's personality. Shapes and Skins are
also some of the more complex objects to create. IP disputes on
these types of objects may surface because of the SL value in $L
which translate to $ in RL (Real Life). The "mature" object
referred to in this letter is just the attention-grabber.

Taking it one step further, many RL cities and major
organizations are constructing their own plots of land in SL.
Many employ their own branding and culture. If it's a city, they
use it to showcase tourist or business partnership elements. It
will be interesting to see how disputes between these groups are
resolved.

Labeling SL, or any virtual world, as a game is uninformed.
Games are scripted and operate within set parameters, even
massive multi-user games. SL and virtual worlds on the other
hand are open and evolving based on the interactions of the
community....just like in RL.

[Fireweaver]

Your argument is flawed

It doesn't matter what the context is. There are entire legitimate, tax-paying businesses that operate based on the content they create for this game. The fact that it's inside a virtual world is irrelevant.
A company is creating content and legally selling it to make real world money. Another entity steals this and sells it on their own to make real world money.
That's theft and the company who created the content not only deserves legal protection, but the thief deserves punishment like any other thief.

[digitalshaman]

excellent subject ... why dont we figure out software

... liability first? you know, making bad software pay for being
bad ... without that every case could be decided on how faulty /
buggy the software is ... dont see too many suits over the strength
of RSA, but perhaps the insurance industry needs some
benchmarks on bad software suits, first.

does the ninth amendment cover the doppelgangers' rights?

[[d i g i t a l i s]]

[csven]

Hard to read this article when...

...one of the first things stated as a fact is a mistake:

"Participants, who come from the United States as well as various other countries, number in excess of 9 million people, according to Linden Research, Second Life's owner and operator."

Wrong. "# of SL Residents" != "# of Participants".

From the LL webpage that provides the data being referenced here:

"A Resident is a uniquely named avatar with the right to log into Second Life, trade Linden Dollars and visit the Community pages."

One "Participant" might have 3, 5 or 25 "Resident" accounts. And a large number have 3 due to some earlier requirements Linden Lab imposed on those participants who wanted to create Groups. Consequently, this article is factually incorrect.

If journalists want people to trust what they're saying, they need to be accurate in their reporting.

[247mark]

The point is...

The point of the article has to do with real world litigation that arises as a result of interactions in a virtual world. It doesn't matter if there are only two Participants/Residents/Whatever-you-want-to-call-them or whether Linden Labs made you mad for having to sign up three times. Who cares? Sinrod is an attorney, not a journalist, and as a legal analyst on technological issues, he does far better than most forum participants whose qualifications consist of owning a computer for 10 years and maybe a computer science degree. The LA Times and The NY Times, arguably two major newsworthy outlets, often have retractions/corrections. The quality of the information is not significantly reduced because of an error concerning a tangential issue and any intelligent reader would know that.

[roomancer]

Sue the turkey!

As a designer with a valued reputation in another virtual world, I congratulate Eros for taking the matter that far. It takes intellect and talent to create for the masses, and it is not fair to see anyone come along and profit from other people's work.
I am also a denizen of SecondLife, and have 2 stores loaded with things I made. I already know how hard it is to start out and how hard it is to get a reputation and start bringing in money.

[play7]

MORE BS form the great LINDEN LAB!

Its a joke. Just more and more ways for Philip Linden to get people to the game. They use all kinds or public relation angles to get more memebers. Remeber 9 million is not real members. More like 2 to 3 millions.

[Hired_Gun]

Second Life Customer Service is nothing but a line for players to call to be told Linden Labs WILL NOT do anything about anything that happens on their Grid.
I got scammed in a mainland deal?.got pissed off?..called LL?only to be told they would investigate.
Well needless to say nothing was done within the timeframe that allowed me to recieve a refund from either PayPal or my Bank.
So Be It?I frackked up and it only cost me 12$ to learn?cheaper than a night out drinking.
So Linden Labs makes me pay 9.95$ a month +5$ a week Land Maintence Fee
WHAT THE HELL FOR?
If they readly admit they can do nothing about what happens inside their game.
Why Pay Them to have Non-Existent In World Support
Now the same day ?as this land problem?they charge the WRONG PAYMENT METHOD for my account?I had updated the payment inforamtion that same Morning and made a purchase to confirm it was moved to my new payment method.
Now I log into my bank account only to see they had charged the wrong account?I called ?Billing Support??support my arse?they made me feel a fool..then told me they would do nothing about this problem either.
So I decided to Google any Message Board Associated with SL and tell the players my problem.
DON?T LET LINDEN LABS STEAL YOUR MONEY!!!!!!!!

Keep a free account or don?t play at all.
Just my .02 on the matter
HiredGun Destiny