While global economies have endured a torrid time of
late, business is booming in the virtual economies of Second Life,
Facebook and Everquest. As the economic boundaries between virtual
and real worlds blur, the supposedly liberated virtual worlds are
now
running up against real-world legal problems.
Financial analyst Piper Jaffray estimates that US citizens will
spend $621 million in 2009 in virtual worlds; estimates of the
Asian market are even larger. Research firm Plus Eight Star puts
spending at $5 billion in the last year.
Over in Second Life, trade remains robust. The value of
transactions between residents in the second quarter of this year
was $144 million, a year-on-year increase of 94 per cent. With its
users swapping virtual goods and services worth around $600 million
per year, Second Life has the largest economy of any virtual world
- which exceeds the GDP of 19 countries, including Samoa.
Thousands of users make money selling virtual goods from
clothing and furniture to art and gazebos, as well as services such
as virtual wedding planning, translation or architecture. Several
hundred make thousands of dollars from the trade; the most
successful have become millionaires.
Yet all is not rosy in the virtual Garden of Eden. Just as the
digital revolution has facilitated piracy and copyright theft in
other spheres, those who make a living running businesses in Second
Life have seen their profits eroded by users who have found ways to
copy their intellectual property (IP).
The Second Life case is believed to be the first time residents
of a large virtual world have sued its owner for alleged IP rights
violations by other users. But as the dollar value of virtual
economies climb, it seems likely others will head to real-world
courts to settle disputes, says James Grimmelmann, associate
professor at the New York Law School. "As virtual worlds are
becoming more and more important, and sites and games become more
immersive, these kinds of cases are going to matter more," he
says.
As virtual worlds become more important and more immersive these
cases are going to matter more
The case will also test the US Digital Millennium Copyright Act
(DMCA) which grants the providers of online services with some
degree of immunity to prosecution for copyright infringements
perpetrated by their users. Similar exemptions are provided in
Europe under the Electronic Commerce directive.
"The law in this area is pretty good and should be protecting
people who've got [intellectual property] or who are writing unique
code, but the problem is policing it," says Mark Stephens, a
partner at London-based law firm Finers Stephens Innocent. "So
increasingly people are trying to pin liability on the
gatekeepers."
The lawsuit forms part of a group of related cases in which
those who host online content are being targeted for the
misdemeanours of their users. Last month a US federal district
court dismissed a complaint filed by record company giant Universal
Music Group, ruling that the DMCA did provide video site Veoh with
immunity from liability for copyright violations committed by its
users.
Online service providers such as Second Life's parent company
Linden Lab, are likely to argue they have little control over or
knowledge about users' activities, says Grimmelmann. "My general
expectation is that they probably do have immunity under the
act."
Linden Lab has already taken some steps towards protecting the
IP of its users. In August it issued a "content management
roadmap", including plans for improvements to the Second Life IP
complaints process, new licensing tools, industry-standard tools
for copying content to prevent IP infringement, a trusted seller
scheme and more IP outreach work.
Speaking in a panel discussion at last week's Virtual Goods
conference in San Jose, California, Tom Hale, chief product officer
at Linden Lab, said: "Rest assured we feel very strongly about the
rights of our IP creators and holders and want to protect them as
much as we can in the virtual world. We have a challenge between
our desire to have an open environment and open platform, and also
our obligation to our residents, whether they be merchants or
consumers, or creating for their own interest."
Only time will tell whether Linden will implement enough changes
to placate its critics or whether the issue will be settled in
court.
What is clear is that with so much money at stake, the case will
be watched very carefully by a great many people.
Case study: Trouble breaks out in paradise
Shannon Grei - or Munchflower Zaius as she's known to her
customers - runs a gothic clothing boutique with a difference: its
clientele inhabit the virtual world of Second Life.
Grie is suing the virtual world's parent company Linden Lab with
another Second Life retailer, Kevin Alderman, aka Stroker
Serpentine - who claims to have made more than $1 million selling
sex-themed products, such as beds and rugs with built-in animations
that allow users to engage in virtual sex.
The pair allege Linden Lab allows other Second Lifers to
infringe their copyright and trademarks. Their complaint, filed in
the US District Court, Northern District of California, on 15
September, claims the company "has the technical means to simply
and easily halt the alleged conduct ".
Alderman sued a number of Second Life residents in 2007 for
copyright infringement, and argues Linden Lab has failed to take
decisive action despite being repeatedly warned that pirates were
using tools such as CopyBot and BuilderBot - which enable users to
export objects as files - to infringe his rights.
Michael Aschenbrener, the attorney representing the two
litigants, argues Linden could take further steps to protect
intellectual property rights. "Our understanding is it is
technologically possible to police this, when residents within
Second Life provide the correct information."
There are tools that allow web hosts to prevent the uploading of
video and audio content that it has taken down because of
infringements. However, Linden will likely claim with some
justification that things are not so simple when it comes to 3D
digital goods. Linden refused to be drawn on the specifics of the
case, but said: "Our existing practices around intellectual
property go above and beyond legal requirements."