legal

Up until now nobody has ever been sued for trademark and copyright infringement in a virtual world. Ongoing debates about this issue generally focus on Second Life, as one can find copies of name-brand shoes, fashion and furniture for sale everywhere without any fear of legal repercussions. That might be about to change.

Herman Miller, makers of arguably the world's most coveted ergonomic office chairs, has established a presence in Second Life and is offering residents a deal: bring in your virtual knockoffs of our chairs, and we'll give you our virtual models. They're not adjustable and they're oversized so as to leave most avatars' feet dangling, but they're "authentic" virtual copies. (If you don't have one to trade the chairs here cost L$300-600.)

Meanwhile, the ultimatum has been given to those who have been creating and distributing virtual goods closely resembling the real Herman Miller designs: cease and desist in your infringement of our trademark and copyright.

The store's representative, MarkSchurman HermanMiller, explained that the concern here isn't loss of profit in virtual chair sales. Rather, the store is just an extension of an existing study in the virtual world and this is their way of engaging the community: "The store was simply a natural extension of the effort," he says, "giving us a presence in-world so that we can actively participate within the community in a way that hopefully adds value and richness. Protecting our intellectual property was an outgrowth of that interest, as we began to look around and realized there were a number of sellers infringing on our designs and brand."

This will likely be a significant milestone in the debate. While Coke was hailed for their approach of encouraging residents to use their trademark within some basic guidelines, one could argue MarkShurman's point as well: "[T]he strength of legal trademarks and copyrights is directly linked to the holder's rigorous defense of them--by ignoring infringement the holder weakens the value of the intellectual property and raises the likelihood others will choose to infringe."

Will legal actions have longer-term benefits in general brand engagement, or would a more open approach be more effective? We may be about to find out.

While many may feel a special affinity to their avatars, some want to make it legal. Alyssa LaRoche runs a design studio called Aimee Weber 3D Content Cration, named after her Second Life avatar. Since the avatar and the brand name are connected in the minds of public, she is seeking legal trademark of the avatar itself.

It’s a general move to protect my brand. We haven’t seen any problems yet, but prior to the trademark, we wouldn’t have been as well protected if somebody wanted to plaster my image all over an unrelated product.

Of course this means that if she wants to protect her brand she can't change the avatar's appearance ever again. In LaRoche's view this isn't much of a sacrifice as Weber is just a character she invented: "Aimee is the Dilbert to my Scott Adams."

Trademarks aren't often enforced in virtual worlds. Speculation on whether Nike would sue someone for the creation and trade of virtual versions of their shoes has been ongoing, but brands like Coke have outright encouraged it as a great way to promote their product. The difference, perhaps, is that the primary focus of these brands is entirely outside of Second Life while the Aimee Weber brand is entirely contained in-world.

Will that make a difference legally? If someone finally gets sued, we'll let you know.

(via Virtually Blind)

The profile of CP Costello, owner of Second Life based real estate business CP Realty, was recently modified to announce incorporation in the 'real world'. While that isn't particularly significant, this shift seems to have motivated them to begin filing class-action lawsuits against those running virtual real estate scams.

[...] we will be hireing a legal team to pursue what we feel is unfair practice in game. First issue at hand will to aquire a court order for RW names of players that cut and ruin sims with adfarms for profit while damaging value of property owners.IF you have land that has been damaged ruined or devalued you need to contact My self in the next few days we will have a group in place for a future class action suit .

This not only has the potential to affect the smaller businesses around Second Life who fall victim to land extortionists, but large real-world companies like Coldwell Banker who have been accused of using extortionist tactics themselves. Anyone perusing the mainland for any amount of time has witnessed the phenomena of tiny 16m plots of land with spinning "For Sale" signs, available for purchase at a high rate. Between this and griefing, the mainland has been all but useless for larger business applications.

To find out more, I contacted CP Costello directly. When I asked about what court this was going to be filed in, he replied: "WE ARE STILL IN THE PROCESS OF GETTING REAL NAMES FROM LINDENS - when i am closer we will be searching out people to join." He declined to comment further.

Whether this class action lawsuit goes any further than a comment on someone's profile remains to be determined, but with the growing legitimacy of virtual worlds as business places, the numerous land scams that cover the surface of Second Life are bound to be prosecuted. We'll keep you posted if anything goes to court.

(via Your2ndPlace)

If there's a way to tell that something is more than a passing fad, the sign might be the deep involvement and buy-in of feds and lawyers.

GovExec reported today that at least 20 government agencies have signed up to an ad hoc group in Second Life. "The group is working to create a federal presence in Second Life and design the processes necessary for agencies to get involved. Apparently more are knocking at the door every day."

Meanwhile popular legal blogger Benjamin Duranske recently announced that he was co-chairing a committee on behalf of the American Bar Association. The Virtual Worlds and Multiuser Online Games Committee ("VWMOG Committee") is dedicated to the examination of legal issues in virtual worlds, and has begun work on a Second Life build of their own.

I wonder what their reactions will be to their first griefer attacks?

Today on Virtually Blind Benjamin Duranske covered the beginnings of the discovery phase of the Bragg vs. Linden Lab lawsuit. While he was unable to offer up opinions on what the documents contained for legal reasons (of course), the particular selection of quoted documents is telling enough.

For those of you unfamiliar with the case: Bragg's virtual land in Second Life was seized by Linden Lab for a terms of service violation, and he's suing them on the premise that they would need a more solid legal foothold than that to take assets from him. In their defence Linden Lab is arguing that virtual assets are merely representations of a service being granted and have no inherent value of their own. Bragg's case now revolves around proving that the company has been marketing virtual assets as actual things of value, rather than side-effects of a service.

Now that they are entering the discovery phase of the case, Bragg is asking the court to force the company to hand over relevant evidence. There were two things quoted in Duranske's blog post stand out for me:

Plaintiff’s subjects of discovery include: the allegations and claims set forth in the complaint; representations/communications with third parties by Defendants; the statements, allegations, and admissions made in Defendants’ answer/counterclaims; the use of metaphors in communications by Defendants with third parties including consumers, venture capitalists and other investors; Defendants’ procedures and information surrounding the land auctions in Second Life; the sale of virtual land and the representations made about such sales; the revenue and/or profits obtained from land sales and taxes on such land sales; the drafting of the Terms of Service (“TOS”) Agreement; and, Defendants’ alleged counter claims. Plaintiff also indicated that discovery is needed to determine whether additional parties will need to be joined as Defendants.

... and later:

Plaintiff opposes a blanket confidentiality agreement and that the scope of any proposed confidentiality agreement was unclear to Plaintiff. No such proposed confidentiality agreement has ever been provided to Plaintiff. Plaintiff indicated his willingness to consider a confidentiality agreement to cover specific trade secrets and believes that any such information should be considered on a case-by- case basis. It is Plaintiff s position that confidentiality is particularly inappropriate given that the Defendants sought to obtain confidentiality through their arbitration clause, and that such clause was deemed unconscionable.

This leaves me with many questions, but before getting into them let's dissect that second paragraph because it's a bit dense. I'm not a lawyer but I think what this says is that confidentiality agreements, if they exist with Linden Lab, aren't legally binding in any way because he's never seen one and never had an understanding of what one might mean, if anything. On top of that, he offered them the option of one and they didn't take him up on one. Finally, if Linden Lab wanted to keep anything confidential, they lost that fight back when they lost the arbitration clause.

Perhaps a lawyer can chime in at this point and answer the following questions:

• Does that first paragraph referring to "communications" with various parties include chat logs? EVERYBODY's chat logs? Meaning that not only are our chat logs not confidential but may soon be a part of this case's public record?
• Is it implied here that other people might become defendants in this case as a result of what is discovered? What would make them liable here?
• Is he asking for the records of all previous land sales too?
• Does the official lack of real confidentiality dispense with that long-held rule that screenshots of avatars need to be made "with permission"?

This Friday, I will be moderating a panel discussion in Second Life (as my alter-ego Beyers Sellers). The goal of the panel is to allow the panelists to describe the current state of the markets, and what they would like and expect to see in the future (particularly regarding regulatory and non-regulatory ways to strengthen investor confidence).

Panelists

The following panelists have kindly agreed to take part in the discussion.

• Maelstrom Baphomet, COO of AVIX (or Investor Allen, CEO of AVIX)
• LukeConnell Vandeverre/Sinatra , CEO of WSE
• Arbitrage Wise, CEO of SL Capital Exchange (a proposed exchange)
• Mystik Boucher, CEO of Mystik Designs, listed on WSE
• TraderJohn Susa, Chairman of SL Exchange Commission
• OliveEue Sholokhov, CEO, SL Business Bureau
• Me, Beyers Sellers, Cornell University Professor (moderator)

Details

This will be a Metaversed Geek Meet
Co-sponsored by Dr. Dobbs Journal, Information Week and Cornell University

Dr Dobbs Island, Noon SLT, Friday, July 13th.

If you have questions, please feel free to IM me, or send email to rjb9@cornell.edu. Keep in mind that the panel is not the venue to name names of people you believe are untrustworthy, nor to ask why you lost 3000 Lindens in ABC Company on May 12th, etc. Instead, this is a forward-looking discussion about what could be done better in the future, and what progress will require from exchanges, possible regulatory bodies inside and outside Second Life, and whether/should Linden Lab take any active role.

I hope to see you there!

Rob

Note to Press and Bloggers

These meetings get packed out really fast. If you're interested in attending and are a member of the press or blogging community please IM 57 Miles, or email nick@metaversed.com and I'll do everything I can to make sure you get in, and help arrange interview opportunities and provide any other information you might need. ~Nick

Two legal battles involving Linden Lab, creators of the virtual world of Second Life, have made recent headlines. The first was that the French association Familles de France had their lawsuit dismissed today on the grounds that their submitted evidence was "unduly biased". The group, whom many compare with Jack Thompson, were attempting to hold Linden Lab accountable for the graphic content in Second Life being made available to minors. They have been ordered to compensate Linden Lab for court costs.

Meanwhile a response to the Bragg vs. Linden Lab case on the official company blog has users questioning the value of vitual assets. In order to validate their seizure of Bragg's virtual assets for violations of the Terms of Service, they are making the argument that the assets themselves aren't objects as such but services (in the form of server space, CPU time, software useage, etc) and can be activated or deactivated at the company's discretion. Further analysis by others points out that Bragg's act of taking advantage of land mistakenly marked at a low cost is done every day by automated scripts, or "land bots", and Linden Lab has historically refused to act upon it.

Though there's no mention of any kind of legal document to support it, and the information is coming from a third party, it does appear at least that Coca Cola, who's virtual thirst campaign in Second Life asks residents to create a vending experience in the virtual world that captures the "spirit" of the brand, have released their trademark to residents.

My friend Vint Falken reports that she received the following message from SLX, a web based shopping engine for the Second Life: "We have spoken to Coca-Cola and they have released their trademark to SL Merchants. Therefore, any of your items that were disabled on June 7, 2007 have been retrieved….". The email was in follow up to a take down of a "coke suit" Vint had made and put up for sale on the site.

A lawsuit in progress against Linden Lab has already set an important precendent regarding "Terms of Service Agreements" and virtual worlds. The lawsuit itself regards a land dispute, and Linden Lab moved to dismiss the case or move the proceedings to private arbitration. They were denied on the basis that the Terms of Service were agreed upon in an unfair "take it or leave it" situation where the user had no bargaining power according to 3pointD.

While in another situation that might not have mattered so much, Second Life is advertised as a place where people can earn real money. As a result, it is subject to a higher set of standards and cannot arbitrarily decide what the rules are.

This will have extremely broad ramifications for virtual worlds in the future. You can view the full legal brief here.

A spokesperson for Blizzard Entertainment, creators of the world's most popular online game World of Warcraft, announced today that they are engaging in legal action against a group of gold farmers called Peons4hire. The point of contention is not, as some might assume, about gathering in-world currency for sale in the real world. Rather, the lawsuit concerns Peons4hire's constant soliciting of sales from in-world players through spam broadcast in the game's messaging system.

From the Blizzard forums:

Blizzard has filed a federal lawsuit against the operators of Peons4hire, a popular gold-selling organization which many of you have no doubt seen advertised. As part of the lawsuit, the operators of Peons4hire have been asked to immediately cease all in-game spamming efforts by all entities and websites under their control.

If this organization refuses to act accordingly, further legal action will be taken.

While players seem to universally support the move, many are confused about why this smaller "gold farming" house is being targeted instead of one of the larger ones like IGE who are responsible for as much, if not more, in-world spam. When asked about this, their answer was brief: "Our efforts to combat this type abuse will be ongoing," said Blizzard spokesperson Eyonix, "Do not underestimate the value of the message this action will send to to others who participate in similar abuse."

This may mean that Peons4hire is the first target in order to establish a precedent, and future lawsuits against larger virtual currency trading companies will follow.

A successful lawsuit in this area won't just affect Blizzard, or even just currency traders. The specific complaint is about sales solicitations. If successful, all virtual worlds will have a precedent to refer to when dealing with unscrupulous sales practices.

Watch Metaversed for further details.

The UK's Fraud Advisory Panel is calling upon the government to extend financial regulation into the virtual world of Second Life as fears grow over money laundering, fraud and terrorism according to the Telegraph. Second Life, and other virtual worlds could be used to transfer large sums of money wth pretty good anonymity:

The FAP, a watchdog established by the Institute of Chartered Accountants in England and Wales, says that criminal or terrorist gangs could use the game to move funds and avoid surveillance. Other risks, it says, include credit card fraud, identity theft, money laundering and tax evasion.

It's a wonder it's taken them this long to figure this stuff out. Virtual currencies traded against the USD are of course obvious targets for crooks, though I'm certain really large transactions are flagged by Linden Lab, creators of Second Life, and forwarded on ot the authorities.