Intellectual Property laws and Virtual Worlds

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Welcome to the Future of Virtual Worlds article series. In these articles, I will try to analyze all the things that speaks for and against the success of massive virtual worlds, such as Second Life and its future iteration, Project Sansar.

Keep in mind as you read, that I am not a legal expert, nor am I a technical expert on virtual worlds. I am a programmer with an interest in copyright laws and social behaviour.

In the first part, I will talk about what the law says about intellectual properties in virtual worlds.

What counts as an Intellectual Property?

World Intellectual Property Organization (WIPO) defines IP as:

creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce


In short, it is the right you have to a concept you’ve created. It doesn’t matter if it is the lyrics to a song, a poem, a drawing, a sketch on a napkin or the highly detailed blueprints to an inter-dimensional portal. If you thought of it, it is your intellectual property.

A few problems

There are a few problems with IP laws, as it is today. There are some pretty hard cases to solve and these cases usually end up in the court, where a judge will have to make a decision on how to interpret certain laws.

For example, what happens if you design an inter-dimensional portal, only to see on the news that Professor Richards have just built one himself?

If his is exactly like yours, then you might suspect plagiarism, but what if it’s just the case of two people with the same idea? You would both have the rights to your own blueprints and your own concepts, but who “owns” the portal?

That is for a court to decide

When a court decide on an issue for the first time, it is called a precedence. This means that if a similar case ever comes to light, the lawyers and the court will have an interpretation to go by. The new judge won’t have to analyze the lawbooks and the rules as hard, since there’s already another judge who has done that.

Often times, a fringe case might pop up, and a new precedence might have to be set. Three such cases has happened in the virtual world Second Life.

Eros LLC v Leatherwood

In 2007, a SL user with a successful business found out that another user had copied one of his items and sold it for a third of the price. The man, named Kevin Alderman, decided to file a lawsuit against the other user.

Since the requirement to use a credit card when signing up had been removed, Alderman and the court had no way of identifying the user. The judge ruled that Linden Lab, the owners of Second Life, should provide the IP address of the user, so the court could track the user down. The user was found to be teenager Robert Leatherwood.

This set a precedence that the owner of a virtual world could be subpoenaed for alternative methods of identification of their users, if the user has not made their identity public.

Bragg v Linden Research

Marc Bragg was a real estate lawyer, who discovered that he could develop real estate in Second Life. Although he agreed to what the Terms of Service (TOS) said at the time, that all he produced was code on Linden Labs servers, he claimed he still gained “title and ownership rights separate from the code”.

He claimed that user’s valuables in Second Life was stored as electromagnetic records on the servers, rather than being part of the code Linden Lab produced. Linden Lab claimed that Bragg had simply been given licence to use the code they produced.

When Linden Lab banned Bragg for going against the TOS, he filed a lawsuit against them, claiming they had wrongfully seized his property.

The case set two different precedences.

First, that the mandatory arbitration in the TOS, as it was written, was unenforceable. This means that even though the TOS stated that all court proceedings would take place in a California court, the proceedings could be moved to another court by the plaintiff.

Secondly, that talking to a person in a virtual world could be enough for the court to consider that the two had met.

Evans et. al v Linden Research

Several thousands of people had been banned by Linden Lab by 2010. One lawyer decided to sue Linden Lab over the loss of profit and property this had caused, on the behalf of all US residents who had been banned. Linden Lab managed to stall the hearings for several years by trying to force the hearings to be held in California. However, after the precedence in Bragg v Linden Research, the hearings were moved to Pennsylvania, where they ended up on the same table as Bragg v Linden Research.

The very same judge that had arbitrated the earlier case got the new case in 2013. She spent a great deal of time researching and analyzing every aspect of the case. She eventually agreed that everything a user creates, buys or rents is to be considered property.

This precedence forced Linden Lab to repay over 57 000 users for their lost property. This included money left on the account, land rented and inventory, both created and purchased. In all, Linden Lab was forced to pay a combined sum of US$175 000.

How did this affect virtual worlds?

These for precedences from these three court cases shaped the virtual landscape we see today. Linden Lab was forced to update their TOS to reflect the court rulings, and so did every other virtual world out there. Now, instead of saying that you get licence to use the owner’s code, it says that the owner gets licence to use your property. They have to gain that licence, otherwise they wouldn’t legally be able to send the digital information from their server to all other user’s computers, meaning nobody would be able to see it.

As an effect of this update in the TOS, some legally knowing people pointed out that this means Linden Lab could potentially profit off the user’s creations. This caused a mass migration of content creators from Second Life to other virtual worlds.

The fact is that Linden Lab would not be able to profit more on selling the user’s goods than they already profit on users buying the tokens (L$) to trade for the goods in the first place.

The fact that the owners must provide alternate identification of their users is also a problem. The owners have an obligation to the justice system to keep track of who you are, in case a legal dispute comes up. It has not happened with Second Life yet, but as many know, servers are routinely hacked for just this kind of information. If Linden Labs servers were to get hacked, millions of users could have their identities revealed. Even if the hackers don’t have the means to track the IP, they can still make relational databases, such as mapping the alts of people or mapping where in the world users are.

Not just the court

Legal issues are not just bound to court proceedings. Since 1998, all businesses that deals with the US must adhere to the Digital Millennium Copyright Act (DMCA). Part of that is to adhere to so-called takedown notices.

If someone feels someone else has done something to their intellectual property, that they don’t agree with, they can send the company a DMCA takedown notice. The company can then judge if the notice is correct or not. If it is correct, the company should remove the content immediately. This means it is the company, not the user, that is responsible for the content.

If the case goes to court, the user might be held ultimately responsible, but everything short of that goes through the owners of the platform.

A notable case happened in 2011, when the United States Marine Corps filed a takedown notice against Linden Lab. They required that all items bearing their logo, the likeness of their equipment and their name or abbreviate name (USMC) was to be removed. Linden Lab agreed and thousands of items from hundreds of content creators were removed over night.

This stirred some controversy, for several reasons.

Those with legal knowledge soon noticed that the takedown notice stated a trademark had been breached. This was true, nobody argued with that, but trademarks are not copyrights and shouldn’t be handled through the DMCA directives. This means the claim most probably would be considered false, if it ever ended up in court.

Furthermore, some of the content creators had licence by the Secretary of the Navy (SECNAV) to reproduce the items and use the name and logo, as detailed in Marine Corps Order 5030.3B. Linden Lab did not even check which users had this licence before removing the items.

Even further, some claimed that the designs were in the Public Domain, as some of the real life counterparts of items removed were for sale to the public in surplus stores. The law is not entirely clear on this point, as sale to the public does not mean lack of trademark.

 What does this have to do with the future of virtual worlds?

Well, all of these things put legal limitations on all future virtual worlds. We already see the effects of these cases on sites like Facebook, Youtube and Twitch, sites that are a lot similar to virtual worlds. We also see the same TOS changes as Second Life made in other virtual worlds, such as IMVU and Habbo. Likewise, we see changes brought to those sites by legal influence being projected onto Second Life.

Any new virtual world built will have to come with these legal standards to begin with, and any future legal precedence will have to be implemented.

Every time this happens, it limits the scope of what the users can do and it limits the reach of the virtual platform.

Everyone should have rights to their creations, no matter what platform it is built upon, but this brings restrictions to the platform. In its youth, Youtube was a freehaven for content creators. We saw millions of people uploading their creative ideas and many profited off them. Then a few high-profile cases of IP theft was brought to court and it changed the landscape of Youtube. The owners realized the platform was much bigger than they had anticipated and implemented automated systems to monitor the creations uploaded, which has now severely limited what anyone can do on Youtube. Even uploading things completely within the legal bounds is a hassle, because of the maze that is the legal system.

Same thing happened just a few months ago on Twitch, where thousands of users had their recordings muted because of some noise detected in the background that someone claimed to own.

Second Life, InWorldz and IMVU all have channels to submit DMCA takedown notices, to expedite the process. This has lead to several millions of creations being removed each year.

There is no true creational freedom, not even in the virtual world… or maybe I should say especially in the virtual world.

And that’s just talking about the intellectual property laws… Next time we’ll tackle other things that might put a cane in the wheel for the virtual reality, so join us then.

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