Practising Law Institute



From PLI’s Course Handbook

Information Technology Law Institute 2008: New Directions: Social Networks, Blogs, Privacy, Mash-Ups. Virtual Worlds and Open Source

#14617

Get 40% off this title right now by clicking here.

18

what you need to know about

virtual worlds: virtual property,

advertsing, and intellectual

property

Peter Brown

Baker Hostetler LLP

Biographical Information

Name: Peter Brown

Position/Title: Senior Partner

Firm or Place of Business: Thelen Reid Brown Raysman & Steiner LLP

Address: 875 Third Avenue, New York NY 10022

Phone: 212-603-2467

Fax: 212-202-7514

E-Mail: pbrown@

pbrown301@

Primary Areas of Practice: Information Technology Law, both transactional and litigation, IP litigation, counseling on new ventures

Law School/ Columbia University School of Law

Graduate School:

Work History: Founding partner of Brown Raysman Millstein Felder and Steiner LLP which merged into Thelen in 2006.

Professional Memberships:

Chair-elect, Commercial & Federal Litigation Section, New York State Bar Association

Board of Directors, International Technology Law Association

Board of Directors, Lincoln Center Institute

WHAT YOU NEED TO KNOW ABOUT VIRTUAL WORLDS:

VIRTUAL PROPERTY, ADVERTISING, AND INTELLECTUAL PROPERTY

by Peter Brown

Late last fall, a 17-year-old Dutch teenager was arrested for stealing “virtual” furniture from several hotel rooms at the Habbo Hotel, a three-dimensional social networking site. The teen, along with five 15-year-olds, are accused of taking the furniture, valued at 4,000 euros, for use in their own virtual hotel rooms. According to police and the company that operates the website, since the furniture was paid for with real money, the teenagers may be found guilty of theft.[1] The incident emphasizes the growing popularity of virtual worlds and raises the issue of how virtual property should be treated under the law. This paper will provide an overview of the acquisition and sale of virtual property in virtual worlds, advertising in a virtual medium, and the legal developments relating to virtual theft and intellectual property.

VIRTUAL WORLDS: THE EARLY DAYS

The virtual world originally consisted primarily of freestanding video machines (such as PacMan, Space Invaders, and Asteroids) and television-based video games produced by companies such as Atari and Nintendo. Interactive play between gamers was limited prior to the introduction of “massive multiplayer online role-playing games” (MMORPSs), which dramatically transformed the virtual world.

Prior to MMORPGs, the only multi-player option was the Multi-User Dungeon (MUD) which first appeared in the late 1970s. Run on a bulletin board system (BBS), these games were text-based and players created the characters, storylines and searches, which usually required them to fight monsters in order to become more powerful.[2] As the Internet expanded in the early 1990s, online games became operational through proprietary network providers (such as Genie and CompuServe), who offered customers the ability to participate in a game for an hourly fee.[3]

Eventually, gaming became more Internet-based, and, in 1996, Meridian 59, considered by some to be the original MMORPG, was introduced. In 1997, Ultima Online[4] hit the market, utilizing a flat monthly subscription fee, thereby opening the door for “massive” playing.[5]

Participants in these virtual worlds create an online “avatar,” a human-like character with a unique, game-related appearance and attributes. The gamers move around the virtual world through their avatar, which is critical to accumulating virtual property, money, land, clothing, or other goods that have “value” inside a game’s virtual world.

Today, these Internet-based video games allow thousands of players to interact simultaneously in multimedia, online virtual environments. Some statistics emphasize that the popularity of this gaming format continues to grow on a daily basis. In China, for example, it is estimated that the total volume of trading in virtual items last year was worth about $900 million[6] and 42% of young people there said “they often feel addicted to living online.”[7] One report forecasts the worldwide market for online gaming will reach $13 billion in 2011, representing a 282% increase over 2005 revenue of $3.4 billion.[8]

THE ACQUISITION AND SALE OF VIRTUAL PROPERTY

Generally speaking, virtual property is described as an asset collected by an avatar within an MMORPG. Each asset is used, traded, or sold within the virtual world to increase the status and power of that avatar.

The acquisition and sale of these assets, as well as their characteristics, vary with the type of online game being played. For example, in the fantasy-based virtual world of Ultima Online, power and status are achieved by slaying monsters, which either drop valuable tools or relinquish points to the player’s avatar. Conversely, in the 3D virtual world of Second Life, characters make and sell goods and services with the use of the in-world unit of trade, the “Linden dollar.” Thus, unlike arcade games of our past, where players simply strived to achieve a high score, MMPORG players seek virtual assets, such as land, advanced weaponry, or status within the game.

Even so, all of this comes with a real-world price. The value of virtual property is reflected in the amount of money that people will pay to acquire particular game assets, either within the game or via online auction sites. Gamers and entrepreneurs alike have established a marketplace for selling their goods in the real world and delivering them in the virtual world. For example, in the Spring of 2007, a sex business in Second Life sold for $50,000 on eBay.[9] Second Life’s developer, Linden Research, Inc., estimates that its in-world marketplace currently supports millions of U.S. dollars in monthly transactions.[10]

In the fall of 2005, a U.S. resident, using his in-game winnings, purchased a virtual space station for $100,000 in the science-fiction-based game Project Entropia.[11] His reported business plan was “to turn it into a cross between Jurassic Park and a disco,” with grounds spawning dinosaur-like monsters for gamers to kill. He planned to “hire famous disc jockeys to entertain visitors…but still [planned] on netting $20,000 a month from [a] hunting tax and other income.”[12] Project Entropia, released by Swedish game developer MindArk, was the first major online game to allow for the exchange of real world money to purchase necessary or valuable items within the game, though the game has no subscription fee. It is also one of the first games with a convertible in-game currency, where virtual cash can later be converted back to real world dollars or vice versa.

There is “[a] thriving industry of virtual trading sites. One of the largest, , was recently selling a ‘Level 75 Tarutaru,’ an advanced Final Fantasy XI character, for $599.99.”[13] Some games have their own auction sites, such as Sony’s Station Exchange, while others are independent sites where players can sell or exchange their virtual property in lieu of, or in addition to, the game’s site.

Certain game publishers and auction sites, however, have attempted to limit or prevent the sale of virtual goods. For example, Sony, the maker of Everquest, convinced eBay not to list Everquest items on its site, and has even sued other auction sites that have engaged in the trading of Everquest virtual property.[14] Eventually, eBay announced that it would ban and de-list auctions for virtual property on its site altogether (i.e. characters, currency, weapons, attire and accounts from virtual video games), with the exception of materials related to Second Life.[15] Sony softened its position when it created its Station Exchange, where players are limited by a “sanity cap” of $2,000 on the sale of any item, with the company overseeing the exchange.[16] In one popular game, World of Warcraft, there was $682,000 in sales of the game’s gold in October and November of 2005 on eBay, despite eBay’s efforts to curtail such sales.[17]

Similarly, advanced characters for Ultima Online can be purchased by players through the Electronic Arts official website for the game, but the company’s End User License Agreement (EULA) does not encourage the sale and purchase of virtual property through external or online auction sites.[18]

Second Life, one of the most popular virtual worlds in the U.S., also allows for the conversion of its “Linden dollars,” which are purchased using credit cards or are earned within the game. Gamers use this in-world currency to make many unnecessary purchases. One woman, who serves as managing editor of the Second Life fashion magazine “Second Style,” “spends up to four hours shopping, clicking and buying”[19] after receiving her monthly virtual salary (40,000 Linden dollars a month for her services). “After a year and a half, she owns 31,540 items.”[20]

The most expensive item in Second Life is land. Gamers can purchase entire islands for $1675, plus a $295 per month maintenance fee. One virtual landlord owns hundreds of apartment buildings, houses and stores that she rents out for $1.50 to $150 per month. She uses that in-world generated income to pay her real-world bills.[21] In 2006, Anshe Chung, another resident of Second Life, became “the first online personality to achieve a net worth exceeding one million U.S. dollars from profits entirely earned inside a virtual world.”[22] In fact, virtual property sales are having a noticeable effect on the real world. For example, in China, the “fastest-rising currency isn’t the Yuan. It’s the QQ coin – online play money created by marketers to sell such things as virtual flowers for instant-message buddies, cell phone ring tones and magical swords for online games…In recent weeks, the QQ coin’s real-world value has risen as much as 70%”[23]

Additionally, last fall, a U.S. Congressional Committee began investigating if and how virtual assets and income should be taxed.[24] Under current law, players who convert their virtual assets into real-world currencies are required to report their incomes to government authorities such as the IRS. Less clear, however, is how to deal with virtual income and capital gains that never leave the virtual economy.

ARE VIRTUAL WORLDS AN ADVERTISER’S DREAM?

A recent report from The Conference Board, a business membership and research organization, stresses the importance that virtual worlds have come to play in the real-life business world. “Leading companies including Cisco, IBM, and Dell already have a substantial presence. Retailers such as Circuit City and Sears also have a presence, and information services providers such as Reuters have built large installations that offer a menu of financial data, including videos of up-to-the-minute news clippings.”[25] One of the primary reasons businesses have emerged in the virtual world is to advertise their products and services. Specifically, they can “rent or build billboards and use other in-world channels to advertise products, or place products in high-volume”[26] areas of a virtual world.

But does advertising in a virtual world really help business? Washington, D.C., startup Electric Sheep Co. sure thinks so. The company, only a year old, assists businesses in making their presence felt inside Second Life. It has been “booking six-figure deals from members of Fortune 500 [companies] who want to engage their customers.”[27] The cost to hire Electric Sheep to help with a company’s advertising can range from $10,000 (for an in-world speaking event) to several hundred thousand dollars a year (for a full-time presence, complete with private island and virtual construction year-round).[28] In fact, says Electric Sheep, the company has been turning business away given the popularity of its services.

Others, however, are not so sure that advertising in the virtual world really does help business. To date, according to one commentator, there has been little return on investment for the companies that have chosen to market in-world, yet there are still at least 50 major companies who have spent millions doing so.[29] Among them are companies such as MTV, Coca-Cola, American-Apparel, NBA, and . But American-Apparel has already closed the doors to its virtual shop. Coca-Cola, on the other hand, is still hedging its bets. It has created Coke’s Virtual Thirst Pavilion, although the company’s interactive marketing director concedes the results have not been substantial. The NBA also opened an elaborate island in May, 2007, though they have only had around 1,200 visitors.[30]

Another interesting approach to in-world advertising came with the creation of the in-world Second Life Bar Association, where real-world attorneys can join, advertise their real-world services, and attract clients. Interestingly, the group’s founder, an intellectual property attorney from Kirkland & Ellis, chose not to practice in Second Life because he believed that “if you’re going to represent yourself as an attorney [in-world] you’re potentially in violation of unauthorized practice laws”[31] or conflict of interest rules. Some law firms, such as D.C.’s Greenberg & Lieberman, have opened virtual offices. A partner at that firm estimates that his firm has earned $20,000 in revenue from its Second Life office. Greenberg lawyers are apparently unconcerned that joining this virtual Bar Association or advertising your services in-world may lead to violations of solicitation and advertising guidelines under various state Professional Responsibility rules.

It remains unclear whether companies, or professionals such as attorneys, will begin to make more money thanks to their efforts in-world. But it is likely that as these virtual worlds continue to become more popular, so, too, will the idea of taking a business’s advertising into the virtual sphere.

VIRTUAL THEFT, REGULATING THE INTANGIBLE, INTELLECTUAL PROPERTY AND RELATED LEGAL ISSUES

Is Virtual Property Worth Fighting Over?

Most gamers feel that their virtual assets will be protected against theft or destruction. But lately, virtual theft has emerged as a real problem. In South Korea alone, an astounding 22,000 claims of virtual property theft were reported to police in 2004.[32] Generally speaking, virtual theft involves the hacking or subverting of the online game system by another, causing a player to lose any or all of his virtual assets.

One of the first virtual theft cases was Li Hongchen v. Beijing Artic Ice Technology Development Co., in which a Chinese appellate court ruled that the defendant game developer was required to restore the plaintiff’s virtual property to him after it had been stolen by a third party through hacking of the plaintiff’s account. Li claimed that he had accumulated a virtual weapons arsenal after spending tens of thousands of Yuan and playing for thousands of hours, and that the company failed to protect his property. The defendant was required to restore the weapons at a cost of 1,140 Yuan (about $138) and pay most of Li’s court costs.[33]

Additionally, although property rights are generally thought of in terms of tangible items with physical characteristics, regulating the intangible is not an unfamiliar concept. The concepts behind video games require the regulation of intangible intellectual property rights, such as copyrights in the visual components and trademarks in the game characters of video games. Owners of intangible rights are able to, among other things, sell, license, or transfer their property, but in some situations are required to allow public use at the conclusion of the term. For example, a patent holder for a new video game controller would have no right to stop others from making or using similar controllers at the expiration of the patent term. Some have suggested that the same should occur for virtual property, though for shorter periods than traditional intellectual property.[34]

Still others argue that virtual property rights should be given to players for restricted periods, given the time-limited and contingent-upon-payment nature of subscriptions. While a player may not be able to claim property interests in the entire world, one might legitimately claim interests in each small entity of the virtual world where his labor comprises the greatest part of the value of that entity.[35] As a result, some may reason that an extension of time-limited property rights for these items may not only enhance the individual’s play for the current time but also enhance the overall virtual world upon the item’s public release at the end of the term.

Why Gaming Companies May Oppose Granting Legal Rights in Virtual Assets

Gamers often feel that the time and money spent on acquiring virtual property is substantial enough to warrant legal protection for these items. Some maintain that playing the games comprising these virtual worlds can involve the same effort – if not more – as real world work. Many are even spending real world money to improve their avatars. These gamers believe that real world markets for virtual items shows that these goods possess value and deserve protection under the law. Many also see virtual property in terms of functionality, both in the virtual world and in the real world. In the virtual world, each item has a purpose and function within the video game and can be traded for another item to be used for a different purpose.

Those opposed to the extension of legal rights to virtual property owners express concern over possible liabilities. These gaming companies worry that they could be held liable for economic losses suffered by players when, for example, the company chooses to discontinue the game. Moreover, they fear that if players are given legal interest in virtual property, their profits will be depleted by an influx of demands for restoration of property or compensation for permanent losses. In addition, extending property rights to virtual items creates further incentives for system hacking and game manipulations. When hackers or pirates enter the virtual world to plunder virtual property and then sell it in the real world, they often prevent dedicated players from being able to acquire or keep these assets through play alone. These acts could potentially make the virtual economy unstable and wipe out virtual fortunes, which might leave the game companies responsible for compensating their players.

Second Life has attempted to curtail some of these worries. Its website expressly states that residents “retain full intellectual property protection for the digital content they create in Second Life, including avatar characters, clothing, scripts, textures, objects and designs. This right is enforceable and applicable both in-world and offline, both for non-profit and commercial ventures. You create it, you own it – and it’s yours to do with as you please.” It is possible that Second Life has taken the onus off the game company to zealously protect its users’ rights via litigation and has allowed the players to enforce their own rights. This may potentially protect the company financially as well, since they will not be involved in litigation between gamers, but instead make it the gamers’ sole responsibility. However, it is yet unknown whether or not this will be successful.

Ownership of Computer Code vs. Ownership of Virtual Property Itself

Some game developers view ownership of virtual property as rights arising from the underlying computer code or data that produces the desired output which is seen as an object on the video screen when the game is played. Therefore, the display of a picture (such as a magical sword) without the underlying software-based attributes would have no real value worthy of protection.

To date, there are no regulatory rules or statutory laws in the United States that directly or explicitly govern virtual property. Rather, a common method used to address legal issues arising out of online gaming is through the use of computer code and contracts.[36] Through the code used to design and run the online game, the maker may unilaterally control what takes place in the game. Still, it remains an open question whether gamers should have any due process or property rights with respect to the disposition or removal of their virtual holdings.

Use of End User License Agreements and Terms of Service to Try to Restrict User Rights

Contractually, developer’s utilize End User License Agreements (EULAs) and/or Terms of Service (TOS) to augment their ability to regulate the game, defining the respective rights and responsibilities of the parties. Most provide rules to be followed during play and the consequences of failing to follow these rules. Nevertheless, it has been argued that current rules, such as EULAs, may not be enforceable in all cases if valuable property interests are at stake.[37] Therefore, if the maker of an online game were to decide to unilaterally terminate the game, those players that may have accumulated real world wealth in their virtual property might be left without a remedy under certain terms of the maker’s TOS or EULA provisions, unless a court, using traditional contract and equitable principles, were to decide otherwise.

For example, Second Life’s TOS states that “…you agree that Linden Lab has the absolute right to manage, regulate, control, modify and/or eliminate such Currency as it sees fit in its sole discretion, in any general or specific case, and that Linden will have no liability to you based on its exercise of such right.” Which begs the question – does Anshe Chung, the first real-world millionaire as a result of the virtual world, really have $1 million real world dollars? Or, as per the TOS, can Second Life take it all away? So far, it is unclear what a court would decide in this situation.

Implicating Copyright and Trademark Law

Given the increasing popularity of virtual worlds, certain issues surrounding intellectual property matters have also begun to emerge. In one of the first cases dealing with IP in the virtual world, Marvel Entertainment, Inc. sued NCSoft Corp., the publisher of City of Heroes. At issue was whether players, using a content creation engine in the game, could create avatars that resembled famous Marvel comic characters without implicating the plaintiff’s copyright and trademark rights.[38] In December 2005, a settlement was reached but its terms were not disclosed.

Many questions regarding a game maker’s exposure to copyright and trademark liability remain unanswered. For example, could a software company be secondarily liable for infringement by merely providing software tools that enable a user to create an avatar that mimics another entity’s trademark or copyrighted work? With respect to trademark law, the sale of virtual goods may constitute “use in commerce” under the Lanham Act. In another trademark context, can items in the virtual world create a “likelihood of confusion”? Can the unauthorized creation of trademark goods give rise to possible dilution claims against gamers?[39] Site liability would be governed by the principles of secondary trademark liability, as laid out in Inwood Labs. v. Ives Labs., 456 U.S. 844, 854 (1982): a party that “intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement…is contributorially responsible for any harm done as a result of the deceit.”

Trademark issues pose unique issues that would not apply in the copyright context, particularly since the Digital Millennium Copyright Act (DMCA)[40] safe harbor provisions do not apply to Lanham Act violations. Furthermore, it remains unclear whether the CDA[41] immunity provisions would protect game makers from trademark violations by gamers in virtual worlds. Gucci v. Hall, 135 F. Supp. 2d 409 (S.D.N.Y. 2001), may suggest that the CDA does not offer such protection given its holding that CDA immunity was limited by virtue of the statute’s language that “nothing in this section shall be construed to limit or expand any law pertaining to intellectual property.” According to the court, “…Section 230 does not automatically immunize ISPs from all intellectual property infringement claims. To find otherwise would render the immunities created by the DMCA from copyright infringement actions superfluous.” More recently, in Eros, LLC et al v. Simon et al, No. 1:0-cv-04447 (E.D.N.Y. filed Oct. 24, 2007), Internet retailers brought suit alleging infringement for sale of “counterfeit” virtual goods to Second Life players. The claim alleges federal trademark claims, including Lanham Act counterfeiting, copyright infringement, and civil conspiracy.

Novel Issues Related to Copyright and Contract Law

Advancement in the virtual world may be important not only for entertainment purposes, but also for monetary gain. In fact, software developers have introduced “cheating” applications that allow gamers to bypass a game’s internal controls and advance more rapidly without the usual time and effort, thereby raising novel issues related to copyright and contract law.

For example, in late 2006, a case filed in the U.S. District Court for the District of Arizona sought a ruling that a software maker’s software tool did not violate a video maker’s intellectual property rights. In response, the defendant counterclaimed that the plaintiff’s software program violated the anticircumvention provisions[42] of the DMCA by enabling users to circumvent the security measures of its online video game and “cheat” by automatically performing in-game tasks and advancing characters’ levels with little human effort.[43] The defendant also sought injunctive and monetary relief under copyright law, claiming that the plaintiff committed contributory copyright infringement by inducing to install the cheating software and thereby violating the game’s TOS and EULA.

Recent litigation has also been brought regarding right of publicity issues. In a state appellate court decision,[44] a California court ruled against a celebrity plaintiff who alleged state common law and statutory right of publicity and privacy claims, as well as trademark violations, against a video game maker whose character resembled the celebrity. In affirming the trial court’s dismissal of the plaintiff’s right of publicity claims in the context of online gaming, the appellate court wrestled with the balance between a celebrity’s right to control the commercial exploitation of his or her likeness or identity and the First Amendment right of free expression, which can be an affirmative defense to an allegation of misappropriation of one’s likeness.[45] The court determined that the video game character was “transformative” and therefore protected under the First Amendment.[46] As for the alleged Lanham Act violation, the court found that given the many dissimilarities between the video game character and the plaintiff, any public confusion arising from a mistaken assumption is easily outweighed by the public interest in free artistic expression, so as to preclude application of the Lanham Act.[47]

Some Jurisdictional and Choice of Law Issues

Courts may also be faced with jurisdictional questions never before raised.[48] For example, with gamers from across the globe engaging simultaneously in virtual worlds, should there be a theft within this virtual world involving players from different countries, the legal systems of at least two nations might then grapple with jurisdictional as well as conflict of law issues. In such a situation, a court might have to decide if any prior agreement as to jurisdiction and governing law for virtual world infractions and disputes is valid, or, in the absence of such an agreement, which country’s law would apply. Depending on the nature of the dispute, the facts of the particular case, and the parties involved, the jurisdictional and choice of law issues may prove even more challenging for a court.

To avoid forum and choice of law disputes, many TOS and EULAs now contain arbitration clauses, which has resulted in little precedent regarding disputed issues between players and game makers. Additionally, arbitration clauses also make it easier for players to raise issues and for gamers to respond to them in a cost-effective manner. However, in Bragg. v. Linden Research, Inc., No. 06-4925, 2007 U.S. Dist. LEXIS 39516 (E.D. Pa., May 30 2007), the court determined that under California law, the defendant’s arbitration provision was procedurally and substantively unconscionable since it was essentially a “contract of adhesion” replete with a variety of one-sided remedies. Finally, some gamers have even begun to lobby game markers to include virtual arbitration processes in their TOS.

CONCLUSION

Given the immense popularity of virtual worlds in recent years, it is extremely likely that the issues raised throughout this paper will continue to come into the spotlight. And with that will undoubtedly come more involvement by the courts, the legislature, and the gaming community as a whole.

-----------------------

[1] ‘Virtual Theft’ Leads to Arrest, BBC News (Nov. 14, 2007), available at .

[2] RPG Evolution, The Mud, available at (last visited Nov. 28, 2007).

[3] Darren Gladstone, Online Evolution Part 1: Origin of the Species (Nov. 3, 2005), available at .

[4] Ultima Online is a trademark of the Electronic Arts company.

[5] See generally MMORPG History available at (last visited Nov. 28, 2007). Note also that although all MMORPG games are interactive, only some are a simulation of a real world with real economies (so-called “virtual worlds”).

[6] QQ: China’s New Coin of the Realm? Wall Street Journal (Mar. 30, 2007), available at .

[7] America’s Emobyte Deficit, The Economist (Nov. 27, 2007), available at .

[8] See Press Release, Online Game Market Forecasted to Reach $13 Billion by 2011 (Jun. 6, 2006), available at .

[9] $50,000 for ‘Second Life’ Sex Business (Mar. 27, 2007), available at .

[10] See generally What is It?, available at .

[11] Virtual Property Yields $100,000 (Nov. 11, 2005), available at .

[12] Man buys virtual space station for $100,000 (Nov. 9, 2005) available at .

[13] QQ: China’s New Coin of the Realm? Wall Street Journal (Mar. 30, 2007), available at .

[14] David Becker, Real Cash for Virtual Goods: Racket or Way of Life?, (Feb. 8, 2005), available at .

[15] eBay Delisting All Auctions for Virtual Property, (Jan. 26, 2007), available at .

[16] Rob Walker, The Way We Live Now: Consumed, the Buying Game, New York Times Magazine (Oct. 16, 2005).

[17] See Blizzard Shuts Down Cheaters, Red Herring, The Business of Technology, Dec. 22, 2005, available at .

[18] See Electronic Arts Terms of Service at .

[19] Even in a Virtual World, ‘Stuff’’ Matters, New York Times (Sep. 9, 2007), available at .

[20] Id.

[21] Id.

[22] Anshe Chung Becomes First Virtual World Millionaire (Nov. 26, 2006), available at .

[23] QQ: China’s New Coin of the Realm? Wall Street Journal (Mar. 30, 2007), available at .

[24] IRS Taxation of Online Game Virtual Assets Inevitable, (Dec. 3, 2006), available at .

[25] See Press Release, More Companies Are Using Virtual Worlds, The Conference Board (Sep. 10, 2007).

[26] Id.

[27] Second Life Dreams of Electric Sheep, , available at .

[28] Frank Rose, How Madison Avenue is Wasting Millions on a Deserted Second Life, Wired Magazine, 7/24/07.

[29] Id.

[30] Id.

[31] Lawyers Find Real Revenue in Virtual World, Legal Times (Jul. 31, 2007), available at .

[32] Mark Ward, Does Virtual Crime Need Real Justice?, BBC News (Sep. 29, 2003), available at .

[33] See Online Gamer in China Wins Virtual Theft Suits, (Dec. 20, 2003), available at .

[34] See generally Gregory Latowka & Dan Hunter, The Laws of the Virtual Worlds, 92 Calif. L. Rev. 1 (2004).

[35] Id. At 63.

[36] See generally Jack M. Balkin, Virtual Liberty: Freedom to Design and Freedom to Play in Virtual Worlds, 90 Va. L. Rev. 2043 (2004).

[37] Id. At 2071.

[38] Terdiman, Faux Hulks Can Keep Fighting Evil Online, (Dec. 14, 2005), available at .

[39] Sipress, here Real Money Meets Virtual Reality, The Jury Is Still Out, (Dec. 26, 2006), available at .

[40] The DMCA was enacted in 1998 to implement certain obligations under the WIPO copyright treaty and to address a number of significant copyright-related issues in the digital environment. The DMCA contains a number of exemptions from liability for service providers.

[41] The CDA created criminal liability for the creation, transmission and display of obscene, indecent and patently offensive materials to minors over the Internet and commercial online services. Section 230 protects interactive service providers from civil liability in various situations, including defamation, negligence, and even fair housing.

[42] These provisions prohibit the circumvention of technological measures used by copyright owners to protect their works.

[43] MDY Industries, LLC v. Blizzard Entertainment, Inc., No. 06-02555 (D. Ariz., Answer and Counterclaim filed Feb. 16, 2007).

[44] Kirby v. Sega of America, Inc., 144 Cal. App. 4th 47, 50 Cal. Rptr. 3d 607 (2nd App. Dist. 2006).

[45] Comedy III Productions, Inc. v. Gary Saderup, Inc., 25 Cal. 4th 387, 404 (2001).

[46] 144 Cal. App. 4th at 61-62.

[47] Id. at 62.

[48] Given the lack of judicial precedent, a U.S. Court confronted with jurisdictional questions involving virtual property disputes may look to the developing case law involving other Internet-related jurisdiction matters. Indeed, the international nature of Internet commerce has raised issues with respect to U.S. subject matter and personal jurisdiction and extraterritorial service of process. See e.g., McBee v. Delica, 417 F.3d 107 (1st Cir., Aug. 2, 2005). The appeals court ruled that a U.S. court has subject matter jurisdiction in a trademark dispute involving a foreign defendant only if the activities of which the plaintiff complains “have a substantial effect” on U.S. commerce.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download