Protecting Virtual Property Rights: A New Dilemma

Protecting Virtual Property Rights: A New Dilemma

By Ashley Grimes, Attorney at Law

I. Introduction

A. The Dilemma of Virtual Property

B. Second Life and TOS/EULA

II. Virtual Worlds throughout the Internet Age

A. The Beginning of Virtual Worlds

B. The Emergence of Virtual Property

C. Virtual Worlds Today

III. Second Life: The Beginning of a Second World

A. Second Life: Defining the Virtual World

B. The New User Experience

IV. Second Life Terms of Service and Enforcement on the Grid

A. Defining Terms of Service (TOS)

B. Inadequacy of TOS

C. Second Life Lawsuits: Inconsistency in Developer

Guarantee of Property Rights

V. Commerce and Profit in Second Life

A. Lindex Exchange

B. Potential for Earning in Second Life: The Economy

VI. Solutions to Regulation issues n in Worlds like Second Life

A. A New Jurisdiction

B. Notification and Procedural Consistency

C. Transparency

VII. Conclusion

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I. Introduction

A. The Dilemma of Virtual Property

Development in technology leading to the creation of virtual worlds has brought forth various legal issues that are difficult to understand, define, and solve.[1] What can courts do to ensure that historical rights of individuals are not trampled in the path of technological growth? Courts can attempt to become aware of technological issues in ways that equip the courts to hold the developers of virtual worlds accountable for failure to protect rights of the individuals occupying virtual worlds.[2]Additionally, courts must have laws in place that will guide the cases that are arising from these virtual worlds.[3] This requires initiative by lawmakers to act in creating new laws to protect the new interests created in property rights within virtual worlds. Until such laws are created, courts must act creatively when facing cases dealing with virtual property rights by applying a garden variety of existing laws that will best fit the new and unique issues arising within virtual worlds.[4] Various virtual worlds currently exist, but one virtual world seems to draw more interest than others. That virtual world is Second Life.

B.Second Life and TOS/EULAs

Second Life is just one virtual world that has been created, regulated, and controlled by a developer’s terms of service (TOS) or end user license agreements (EULAs).[5] The developer of Second Life is Linden Lab; other virtual worlds have different developers and different TOS or EULAs.[6] Second Life is exactly what the name implies; a second life where individuals can create a persona that is different from or the same as that which they portray in the real world.[7] Individuals who create a Second Life account begin by choosing an avatar (the physical persona that will move within the virtual world of Second Life-controlled by the individual) and creating a name for that avatar. Within the world of Second Life, individuals interact with other players and discover the reality of this computer-generated world in various ways. For those individuals, Second Life becomes an alternate life that allows them to escape to another world with unlimited possibilities.[8] However, Linden Lab is able to hide this virtual world away purporting that Second Life is merely a contract between users and developers which is governed by Linden Lab’s terms of service (TOS).[9] These TOS give far too much power to Linden Lab because the terms specifically express that Linden Lab can alter any part of the TOS for any reason at any time.[10] If Linden Lab, at its discretion, decides to freeze an individual’s account, that individual could lose up to thousands of US dollars that have been put into Second Life activities (activities including running businesses, developing and running a sim/region, building various objects for the purpose of selling those objects, purchasing objects or items for use within Second Life, etc.).[11] This very new problem of inadequate protection of virtual property rights is not the first problem in history to lack understanding and remedy.

Throughout history, new problems have arisen that failed to fit under any category that society, politics, or culture had created. An example of one of the problems to which I refer is sexual harassment. Sexual harassment in the workplace occurred long before laws were put in place to define the term and create a mechanism within the courts for victims to seek out remedy.[12] People knew that sexual harassment existed and knew that it needed to be dealt with. However, lack in understanding the issue, defining it, and lack in remedy for those who had fallen victim to such treatment left the courts trailing behind.[13] Property right issues in virtual, three dimensional worlds are similar to the emergence of sexual harassment in the way that virtual property right issues exist, lack understanding, lack definition, and lack in remedy. Therefore, there is yet again a new problem, wherein lies no meaningful remedy for those who are victims to the problem.[14]

Property rights in three dimensional, virtual worlds have been simplified into words within a developer’s TOS[15] that significantly fail to protect, enforce, and ensure rights that should be protected.[16] Therefore, due to the new, unique, and complex problems involved with virtual property[17], the solution must be just as new, unique and complex as the problem it means to solve. Professors F. Gregory Lastowka and Dan Hunter were correct in stating that virtual worlds should be treated as “jurisdictions separate from our own, with their own distinctive community norms, laws, and rights.”[18] However, I propose that the lawmakers of each state, within the United States, should create a separate set of laws for virtual worlds that will apply to a newly created jurisdiction; a virtual jurisdiction. These laws would be enforced by real world courts in a very unique way. I will further explain this solution later in this article. This solution would create a new mechanism for virtual property rights which adequately deals with all of the novel issues that arise from virtual worlds; worlds that run just as our physical world, but without the ability to encompass the senses of touch, taste, or smell.

Second life contains an economy, a governing body, political climates, racism, profit, ownership, invention, art, property and anything else one could experience with the senses of sight and sound in this 3-dimensional world. This Second Life virtual world carries over into the physical world very much so in many ways. Profit made in Second Life is converted into U.S. dollars[19] and companies are extended by Second Life or even created solely within the Second Life grid. However, money made within Second Life is often converted into U.S. dollars and used in the physical world.[20] How can this monetary interest be protected and what is the remedy to enforcing such protection? Law makers of each sovereign state must sit down to create new laws that will address the new dimensions created by virtual worlds like Second Life.

This article will address the history of virtual worlds like Second Life, the various dimensions that exist within Second Life, and how current concepts within Second Life are defined and understood. Second Life TOS, enforcement of TOS, creation of property within second life, property ownership, and commerce and profit will also be explained in detail. This article will explain the basics of the economy that exists within Second Life along with current businesses that operate within the virtual world. Finally, legislative initiative as a resolution along with ideas for a virtual jurisdiction will be put forth within this article. The first step to understanding how to approach a new problem that has arisen from virtual worlds is to understand what, exactly, virtual worlds are.

II. Virtual Worlds throughout the Internet Age

A. The Beginning of Virtual World

We live in a time when technological advances happen all around us constantly and those advances seem to intertwine with our everyday lives in one way or another. One of the most unique advances in technology is the creation of virtual worlds. These virtual worlds have been called games by outsiders, although they have developed into so much more. There are two main characteristics which separate virtual worlds from online games: (1) stagnant character; and (2) interaction between and among users.[21] A game is stagnant in the sense that a game remains in the state the user leaves it in once a user decides to pause a game or save the progress within a game. However, a virtual world is continually changing, advancing, and moving. Virtual worlds are not stagnant as games are. Rather, virtual worlds are active 24/7 and continually change, despite a particular user’s absence from the world. If a user logs off, other users remain logged on and the virtual world continues to exist.[22]

Two undergraduate students attending the University of Essex, Roy Trubshaw and Richard Bartle, were the first to create a continual world where users could interact via text with other users. The 1979 emergence of the first truly virtual world, known as MUD1 (Multi-User Dungeon 1), marked the debut of a virtual world that allowed users to interact with one another on a social level and allowed for a continual world to exist even as users logged on and off.[23]

MUD1 was a text-based game which permitted up to thirty-six users to socialize simultaneously.[24] The release of MUD1 allowed users to engage in texted chat with other users, although the primary goal was not that of a social nature. MUD1 encouraged users to climb levels within the game; the top level being that of a “Wizard.”[25] Users had no incentive to socialize with other players unless an attempt was being made to activate a command such as typing “Kill” to extinguish a nearby avatar in which a player could then earn points. However, the game did allow for users to type messages that could be viewed by other users even if there were no points awarded for such communications.[26] Although MUD1 was the beginning of the virtual world era, it was not until LambdaMOO’s (Lambda MUD Object Oriented) creation in 1990[27] that the first legal issues concerning virtual property rose to the surface. [28]

B. The Emergence of Virtual Property

LambdaMOO was one of the first virtual worlds where a user could create real and personal property that belonged to the user.[29] This type of ability within virtual worlds is one that has produced debate over what rights users (within virtual worlds) and the developers (creating these virtual worlds) should have over such property. One of the most basic issues with virtual property is that virtual property remains physical only within the confines of a computer screen and so the property ceases to exist in the real world as we know it. [30] Therefore, the problem of which laws to apply to rights in virtual property within virtual worlds becomes open for debate. Is an object within a virtual world considered tangible if a user can physically move that object from one location to another within that world? Alternatively, is the object intangible because it cannot be extracted from one’s computer and into the real world as we know it? The debate is far more entailed than the matter of distinguishing whether virtual property is tangible or intangible.[31] Furthermore, the intrigue and confusion arising from legal issues surfacing from virtual worlds like LambdaMOO has only become more rampant as technological advances have expanded the possibilities within virtual worlds.[32] Today, virtual worlds are so detailed, dynamic, and limitless in the sense of what they offer, that many individuals are spending a significant amount of time and money within them.[33]

C. Virtual Worlds Today

Advancement in technology and the internet gave way to more improved virtual worlds that made use of the commercial Internet rather than the low bandwidth internet service of the outdated dial-up internet.[34] The first two virtual world providers to take this step towards harnessing a better internet were Archetype interactive and Origin Systems. Origin Systems was able to make use of an existing user base and expanded that user base with its virtual world, Ultima Online, to over 240,000 subscribers as of April 2001.[35] Virtual worlds to follow were: Microsoft’s Asheron’s Call, Final Fantasy IX, Sony Online’s EverQuest. However, none of these virtual worlds provided user’s with the ability to create their own property.[36] Ultimately, despite many advances in virtual worlds, there was not really a three-dimensional equivalent to the text based LambdaMOO in the sense that none of these new three-dimensional virtual worlds allowed users to create their own content in the way that LambdaMOO did.[37] That would all change with the emergence of Linden Lab’s Second Life.

III. Second Life: The Beginning of a Second World

A. Second Life: Defining the Virtual World

Second Life is a virtual world that was created by Linden Lab, a California based corporation.[38] Second Life allows users to interact with one another through the use of a virtual persona known as an “avatar.”[39] Imagine being able to choose your favorite character, person, or object and then being able to model a figure with that choice in mind. Further imagine, once your creation is complete, being able to physically move your character, person, or object through a virtual world (under your control) as an extension of yourself. Your creation and extension of yourself is called an avatar in Second Life. Your avatar can pick up items, interact with other avatars, go dancing, project your voice into a sim to allow debate or conversation with other avatars in real time, and so much more. Your avatar can send private instant messages or send messages in a local chat where everyone else in proximity can see your text and communicate back in a group setting. Your avatar can spend time with another avatar and, if the time spent grows into a virtual relationship, you can both choose to reveal your real world identity so that a real world relationship can pursue. Your avatar can go jogging, walk a virtual dog, take a bath, and even watch real world movies on a virtual television in Second Life with other avatar friends. The list goes on and on as to available activities and ventures within Second Life. All of these activities occur on a sim and sometimes extend into real life if a user so chooses.[40]

What exactly is a sim? A sim is most similar to what we would term as a city in real life. Second Life is quite often referred to by users as the “grid.” The grid generally describes the nature of the space within Second Life. Maps of Second Life contain a number of squares arranged on the map as a grid. The map is labeled with geographical locations known as regions or sims (short for simulators).[41] However, traveling to a desired destination on the map is not the same as travel in real life. A user simply opens up the map by clicking the map icon usually placed at the bottom of the viewer window (much like the window that pops up when you click on whatever web browser you have downloaded on your computer). The user then may click a spot on the map and the location will then show up in the map tool box (usually to the right of the map). Finally, a user clicks the teleport tab in the map toolbox which then teleports the user to the location selected on the map.[42] Finally, a user need only click the teleport tab and he/she will be automatically transported to that location. Every location in Second Life exists within a region/sim. Sims “cover an area of 65,536 virtual square meters and are often subdivided into smaller parcels, which residents can purchase for their own use.”[43] The name of the region can be seen by simply looking at the teleport url. The teleport url pinpoints the user’s current location (the location is found in the top of the viewer window) What is a viewer? This question is more easily answered.

A viewer is akin to a web browser. Users may select from a variety of available viewers online or users may download the default Second Life Viewer that exists on the Second Life website. The name of the default viewer is Viewer 2. The user downloads the viewer file, installs it, and opens it once installation is complete. The user may then enter login credentials to gain access to Second Life. Different viewers display user tools, such as the map, in different locations. Each viewer also looks different aesthetically from other viewers. Regardless of the viewer chosen by a user, all viewers for Second Life connect users to the virtual world of Second Life.[44]

The user may log in at the “last location” where the user was when he/she last logged off of Second Life. Alternatively, the user may login to a “home” destination if the user has permission to set a place as their home (this requires consent from another user to share that user’s home or the user may purchase his/her own home through Linden Lab’s website). One of the most unique aspects of Second Life is the ability of users to shape and alter their own sims, objects, and avatars. Users can even purchase items called AOs (Automated Overrides) which will adjust the user’s avatar movement to his/her liking. If a user wants his avatar to walk with confidence and to move in a way that may attract females, that user need only purchase Vista Animation’s Irresistible Man AO.[45] This very ability for users to create, build, and continually change their virtual world and the promise of ownership is the very reason that law suits have emerged from use of Second Life.[46] Linden Lab even portrays a logo in a clip showing what Second Life is. That logo is “Your World Your Imagination.” [47] When did Linden Lab decide to give users ownership of their virtual world creations?

Second Life was released in June 2003 followed by an incredible promise in a November 2003 press release. The press release gave Second Life residents “ownership of in-world content by the subscribers who make it.”[48] A Second Life resident is simply a user who creates an account with Linden Lab and logs into the virtual world of Second Life. A resident is also a user, player, etc.; these terms are used interchangeably.[49] The press release refers to in-world content and many may be confused about what in-world content is. Greg Lastowka explained content as a term used “to describe a particular form of information that can be presented to an audience.”[50] However, the term content within virtual worlds is much more complex than the general term of content.[51]

Within Second Life, residents have a toolbox that appears within the viewer when a resident right clicks on any object in Second Life and then selects the edit tab that appears. This toolbox contains various icons at the top; one which looks somewhat like a magic wand. If a user clicks on the magic wand icon, the pointer (the arrow that normally appears on the screen which indicates where the mouse pointer is) turns into a magic wand and various three-dimensional shapes appear within the tool box (including a sphere, cube, cylinder, etc.).[52] A user can select one of the shapes by left clicking the three-dimensional shape. The user can then create that three-dimensional shape by moving the magic wand to an area within the virtual world and left clicking. Whatever three-dimensional shape the user chose becomes an object within the virtual world with one click. For example:if a user chose a cube; when the user left clicks an area within Second Life (i.e. the ground), a box will appear on the ground. The user can then alter the dimensions of the box by clicking on the various edges and dragging them in different directions. This type of item is an example of user-generated content within Second Life. [53]

Users can use the tools provided in the user’s toolbox to “create objects ranging from houses to rocket ships and from televisions to holographic projectors.”[54] Users can even place texture and color on those items with the use of the toolbox. The end result is a three-dimensional figure that can look more realistic than an item in a Pixar film. So many possibilities exist within Second Life and the possibilities only continue to expand. Despite explanation of various terms and definitions that exist within Second Life, one will have difficulty in grasping how real Second Life is without walking through the new user experience or having this experience described in detail. Understanding how real Second Life is to those who step into the virtual world is key for lawmakers who hope to legislate in a way that protects user’s rights. This understanding is also key because it will aid in informing lawmakers on what type of legislation is needed to protect those rights. What is the new user experience like?

B. The New User Experience

An individual hears about Second Life from a friend, who perhaps uses Second Life to run a virtual business, to escape from the stress of real life, to socialize with geographically distant friends, to keep in touch with family while carrying out military duties overseas, to find a soul mate, or to engage in artistic expression through creating within Second Life. The list could go on and on. However, regardless of the information that leads and individual to Second Life, all new users experience the feeling of being a “newbie.” Once first time users create a Second Life account and pick from a choice of default avatars to represent their virtual selves, they all login to a welcome area. Imagine a virtual world appearing on your computer screen where you are free to move around within it by using your avatar to explore.

First, you approach various signs that inform you about teleporting, communicating with others, following rules, and how to search for new places to travel to within the virtual world. As you walk down the path following the arrows to the help center, you start to see signs appear that have locations listed on them by category and name. You can choose any sign and right click to select a teleport tab that pops up which will take you to your chosen destination. As you walk through this virtual world, various notifications pop up describing your user inventory, informing you that you have an instant message from a nearby avatar, etc. You start to type messages to other users to figure out what it means to “rezz” an object or how you are supposed to change the way your avatar looks. You see so many terms that you have never seen before and this world seems to have its own creations, different from the real world, yet almost as real. You actually lose track of time as you interact within this virtual world forgetting that you are not actually physically there.

Other avatars approach you with job opportunities and ways to earn money in this virtual world. You laugh to yourself thinking “what can I do with virtual currency?” You later find out that you can actually convert your earnings in this virtual world into real world currency. Not only do you learn that you can earn a living in this virtual world if you are willing to put in the time and effort, but you learn that you can actually purchase many goods within the world that will belong to you by way of your personal inventory. A personal inventory is a folder within your viewer screen where all of the physical objects you own are placed. The personal inventory contains an outfit folder, object folder, note card folder, etc. You can create additional folders and name them in whatever way is best for your own organization of your virtual property.

Within the personal inventory, you can even store an entire virtual house. Second Life has a mechanism for packaging large items into a small object called a rezzer (which usually looks like a box with fireworks inside). The rezzer is the equivalent of a zip file. However, to unpack your virtual house, you will need to select it from your personal inventory by clicking it and dragging it onto an area outside of your inventory box. Once you unclick the mouse, the box will remain where you placed it and a little notification will appear where a tab labeled rez will be available for you to select. The moment you click on the rez tab, your virtual house begins to unpack before your eyes. Once the house if finished rezzing, you can walk inside and think about furnishing it. All of the virtual items have a price of course. There are some places that have free items, but the quality is usually very low. However, you can choose how much time you want to invest into earning on Second Life or you can simply use money from a credit card with funds that are most likely obtained through real world credit or a steady job. The possibility of earning money in Second Life is very real, but takes time just like in the real world. [55] The economic flow of US dollars into and out of this game and the impact resulting should remind lawmakers of how important regulation, within virtual worlds like Second Life, is.

IV. Second Life Terms of Service and Enforcement on the Grid

A. Defining Terms of Service (TOS)

The terms of service (TOS) between Linden Lab and the residents of Second Life is a contractual agreement that users must agree to in order to gain access to Second Life.[56] When a user first logs into the Second Life grid, a box pops up requiring the user to click accept before login will complete. The contents within this box are the TOS, also known as EULA. The TOS address the limitations of Linden Lab’s liability, account registrations and billing, conduct in Second Life, user ownership of creations, privacy rights of users, general provisions, additional terms and policies, etc.[57] The TOS explain in section 7.7 that Linden Lab grants a limited license to users so that users may “use, reproduce, distribute, prepare derivative works of, display, and perform the Linden In-World Content solely In-World as permitted through the normal functionality of the Service and under these Terms of Service, except that photographs, images, films, and videos of Linden In-World Content may be used in other areas of and outside the Service as provided in” Linden Lab “Snapshot and Machinima Policy.”[58] This definition refers to the “Linden-in-World Content License” and seems to directly contradict the logo that is proudly displayed on various portions of the Second Life website: “Your world your imagination.”[59] The TOS give Linden Lab the right to terminate Second Life or any user account at any time for any reason or for no reason at all.[60] The extremely one-sided TOS fail to give any real protection to users, but rather seem to insulate Linden Lab instead.[61]

B. Inadequacy of TOS

The inadequacy of Linden Lab’s TOS will only become more apparent as Second Life continues to grow in economic importance and size as demonstrated by the number of users accessing the virtual world.[62] The occurrence of property disputes and the hesitance of law makers in drafting laws to guide these virtual worlds will harm the economic potential of these worlds and the real world because of the ability for income to be transferred over into real world economy via exchange or sales on websites such as Ebay and Amazon.[63] EULAs and TOS are inadequate because they fail in providing any substantial protection to player interest, allow for inconsistency and arbitrary enforcement, and don’t satisfy the expectations that player’s have in regards to protection of their rights within the virtual world. The inadequacy of TOS definitely can lead to abuse of user rights.

The way that Linden Lab’s TOS are constructed does not do much more than immunize the developer from all legal liability. The developer may alter the agreement and users are automatically subject to these alterations by simply logging into Second Life after the alteration has taken place. One of the more drastic provisions allows Linden Lab to take away all of a player’s currency, property, and content at any time if Linden Lab believes the user to be in violation of the TOS. This type of action can have devastating effects and leads to extreme unfairness.[64] If Linden Lab decided to shut-down Second Life, according to the TOS, it could do so without any notice to users. This means that users would not be able to cash out any Linden Dollar balance held in their account. Considering that some users have earned up to $1,000,000 in US dollars through business dealings within Second Life[65], this portion of the TOS would leave wealthy users with high Linden Dollar balances (possibly thousands to hundreds of thousands in US dollars) with absolutely no way to recover the financial loss. This result is an extreme abuse of user rights in a way that would benefit Linden Lab to the detriment of its users. This type of result would most certainly be deemed as substantive unconscionability under contract law.[66] Another issue that seems to surface with Linden Lab’s TOS is the issue of inconsistency.

C. Second Life Lawsuits: Inconsistency in Developer’s Guarantee of Property Rights

Linden Lab seems to make certain representations in press releases which are inconsistent with the TOS and enactment of TOS. Linden Labs’ CEO, Phillip Rosedale stated:

We believe our new policy recognizes the fact that persistent world users are making significant contributions to building these worlds and should be able to both own the content they create, and share in the value that is created. The preservation of users’ property rights is a necessary step toward the emergence of genuinely real online worlds.[67]

Mr. Rosedale expresses the importance in preserving ‘users’ property rights, however, the TOS fail to lend any type of protection to such property in the event of discontinuation of the service. No notice is required and no compensation provided in such an event. One Second Life user actually sued Linden Lab when it froze his account due to Linden Lab’s belief that Bragg (Second Life user) engaged in activity violating TOS.[68]Linden Lab immediately froze “Bragg’s account, deleted his avatar, and denied him access to all of his virtual property, including his nightclub.”[69] This all occurred despite representations made by Linden Lab various times. Rosedale even remarked on user ownership of property in Second Life proclaiming, “What you have in Second Life is real and it is yours. It doesn’t belong to us. You can make money.”[70] Ultimately, the amount of damages that Bragg was suing for exceeded $75,000 USD as required in order for diversity jurisdiction to apply.[71] This means that Linden Lab’s action of freezing Bragg’s account and denying him access caused him to lose over $75,000 USD. How can Linden Lab claim that user’s own their virtual property when the TOS allow Linden Lab to unjustly enrich the company without any explanation or accountability for its actions? One of the aspects of Second Life which seeps into the real world is the commerce and profit within the virtual economy.

V. Commerce and Profit in Second Life

A. Lindex Exchange

Commerce and profit would not be an issue in the real world seeping over from Second Life unless there were some means of exchanging the virtual currency into US dollars. However, Linden Lab provides a currency exchange, known as LindeX, to its users allowing them to convert Linden Dollars to and from U.S. dollars.[72] Users from other countries may also exchange currency over LindeX. However, this article focuses only on the U.S. currency since Linden Lab is a company existing in the state of Californa. [73] Currently, 2,500L is worth $10.09 USD. This means that approximately 247.83L = $1 USD. This should help in giving non-users an idea as to the value of a Linden Dollar. Other virtual world currencies such as Entropia’s Project Entropia Dollar (PED) have an exchange rate of 10 PED = $1USD.[74] There is certainly no doubt as to the potential for economic growth and earning within virtual worlds like Second Life due to the ability to convert the virtual currency into real world currency.

B. Potential for Earning in Life: The Economy

Users within Second Life are able to engage in endeavors to earn money such as opening a business, buying and selling real-estate, advertising, etc. Some users have made up to one million in USD, while others simply earn enough to sustain a comfortable living in both Second Life and the real world. Some users even engage in non-profit endeavors such as opening a sim to create a world where other users can come to enjoy the creativity of that user. One Second Life user, Anshe Chung, became Second Life’s first millionaire[75] through engaging in various virtual world real estate transactions. The million that Chung made was in USD, not in Linden Dollars. With such high amounts of money flowing in and out of Second Life, law makers must act in protecting user investment as the TOS clearly fail to do so. The economy within Second Life, given its lack of protection for invested users, also has the ability to harm those who open up a sim/region as a non-profit place where other users can travel to in order to enjoy the creativity of the sim owner.

I was able to interview the owner of a sim which has a very high traffic volume. Traffic is calculated by gathering data over a 24 hour period. A traffic count of one would mean that a user visited the sim for 5 minutes within a 24 hour period. However, a traffic number of 66,002 would indicate that 66,002 avatars visited a sim, each remaining for at least 5 minutes (all of this occurring within a 24 hour period).[76] Ravenal Ashby, owner of the sim called Crossroads (located at in the Second Life grid) has invested several hours of her time and a great amount of money into the creation and upkeep of her non-profit sim. When asked how much time she dedicated to maintaining the sim each week, she replied “I work 50 hours a week at my real life job. I work 24 hours a day at Crossroads. How, I don’t know but it is what it takes.”[77] I asked her how she was able to work 24 hours a day at crossroads and she informed me that she carries a mobile device where she is available to users 24/7 and that she also is available via her skype account. She has “game masters” who know how to reach her if needed. She described it as a “24/7 on call situation.”[78]

The final question I posed to her asked how much of a loss it would be to lose the sim if she were unable to pay tier (monthly rent- also known as Linden Lab tax)? She replied “Thousands and thousands of REAL US dollars.”[79] If a non-profit sim owner would be able to lose this amount of money due to inability to pay rent on her land to Linden Lab, imagine how much for-profit sim owners would lose if the sim were taken away by Linden Lab in compliance with the one-sided TOS. A solution to problems with TOS is certainly needed when such a vast economy exists within Second Life and when economic spillover into the real world occurs daily.[80] What is the solution to address the problems that are not addressed by TOS, or worse, problems that arise from Second Life TOS?

VI. Solution to Regulation Issues in Worlds like Second Life

A. A New Jurisdiction

Gregory Lastowka & Dan Hunter propose that “courts will need to recognize that virtual worlds are jurisdictions separate from our own, with their own distinctive community norms, laws, and rights.”[81] These authors were correct in stating the need for a jurisdiction for virtual world legal issues. However, given the dynamics of issues in virtual worlds and the unique nature of virtual world property, I suggest that each state within the US designate a virtual world court where cases arising in virtual worlds will be tried and decided. These courts would be created through the power of the Congress as expressed in Article 3 of the United States Constitution.[82] Once created, these courts should become the first to try cases via the internet by actually logging into the virtual world where the dispute occurred (Second Life for example). Plaintiff and Defendant could log on with the court simultaneously and the case would be tried using voice chat via the virtual world.

Jurisdiction would be determined by the state where the developer of the virtual world is incorporated and this would be expressed in the virtual world developer’s TOS. The state virtual laws of the state where the developer resides would apply (Hence the need for each state to create its own virtual world court). Law makers of each state would need to collaborate to create laws for each virtual world in existence. This would be a lengthy process. However, due to the dynamic and unique aspects of each virtual world and the difference in economy, such action would be necessary. What type of laws and regulations should law makers first turn focus to in drafting these new laws?

B. Notification and Procedural Consistency

Among the most deficient aspects of the TOS is that of the procedural inconsistency. Law makers should create laws that require developers to implement fair and just procedures when implementing TOS similar to the kinds of procedural standards that exist within creditor procedures in trying to collect on a debt.[83] Despite the reason for Linden Lab suspending an account, there must be a process in place. There should be a notification requirement giving notice to the accused of possible suspension of the account. Furthermore, the user should be able to convert any Linden Dollars into US currency.

The reason for a currency cash-out allowance is simply that unfairness results when Linden Lab is able to enrich itself with the currency of a user without cause. Also, one user may commit an extremely fraudulent act that grossly violates TOS and causes significant monetary damage to another. However, what if that user only has 5Linden in his/her account? On the other hand, imagine another user’s account is frozen, but the freeze is due to an error or misinformation. What if this innocent user has 70,000L in his/her account? Both users lose their accounts; however, the innocent user suffers significantly more than the user committing a fraudulent act. Linden Lab should put a section into the TOS describing how, if at all, it will assess a fee for damages occurring as a result of a user’s illegal activity. If Linden Lab does not do so, legislation requiring developers to write such procedures into the TOS needs to be drafted. Linden Lab will then keep more cases out of court as it will be able to effectively deal with issues in a way that solves those issues without the need of a trial in a virtual court. If, however, a case does still go to trial in virtual court with the improvement of Linden Lab TOS, the court may apply the TOS in coordination with the laws created by the lawmakers of the state where jurisdiction applies. There should be interplay between laws created for virtual worlds and contract law regarding agreements like TOS. If Linden Lab wishes to collect virtual currency or real world currency, the amount should be in relation to a crime committed or law broken within the virtual world.[84] Transparency would aid Linden Lab as well by allowing users to hold Linden Lab accountable for abusing its power in a way that violates virtual world laws.

C. Transparency

A final suggestion for the improvement of users’ virtual property rights deals with the need for developer transparency. Developers should be required to report any disputes they handle in virtual worlds in a manner that makes such reports available to the public. This type of reporting would aid in holding developers accountable for unfair TOS by drawing attention to unjust outcomes in application of certain sections of TOS. This alone would most likely encourage developers to improve TOS so as to avoid law suits by users against developers in the virtual courts.

VII. Conclusion

Many commentators call for a solution to abuse of virtual property rights by indicating that a new jurisdiction should exist within virtual worlds, separate from our own jurisdiction.[85] Virtual worlds have developed to such an extent in recent years that many law makers and academics are noticing new legal issues arising that have a greater chance of impacting the real world as economies within virtual worlds expand.[86] Millions of dollars are being put into and taken out of virtual worlds each year[87] and this occurrence requires law makers to not only turn attention to virtual property rights; but it requires law makers to draft new legislation to aid in protecting rights of individuals who invest time and money into virtual worlds. Second Life is unique in the promise that developers made to users, claiming that user content would be owned by users. Such a guarantee encourages users to invest more into Second Life as they have more of a stake in the content created within according to Linden Lab comments in press releases.[88] However, Linden Lab has abused user rights and expectations by causing significant financial loss to certain users due to inadequate TOS and lack of developer regulation.[89]

The solution to this problem expands on Lastowka and Hunter’s suggestion for courts to recognize “that virtual worlds are jurisdictions separate from our own, with their own distinctive community norms, laws, and rights.”[90] However, I propose adding onto the solution by suggesting the creation of virtual world courts in each state within the US and new laws drafted by state law makers for each virtual world. I further propose that the laws drafted require developer notification and procedural consistency, transparency, and allowance for accused users to convert Lindens Dollars to USD. This conversion should be allowed to occur before Linden Lab freezes an accused user’s account as long as the currency was not acquired in correlation with the violation in which such user is accused of committing within the virtual world. This approach extends a garden variety of laws that would appropriately address the unique nature of virtual property.[91]

[1] See Philip Stoup, The Development and failure of Social Norms in Second Life, 58 Duke L.J. 311, 311-312 (2008)(Describing the debate among lawyers and legal scholars over the “role, presence, and effect of real-world regulations on the internet and property in cyberspace”). See also Greg Lastowka, User-Generated Content and Virtual Worlds, 10 Vand. J. Ent. & Tech. L. 893, 895-909 (2008)(Attempting to define various concepts within virtual worlds). See also Juliet M. Moringiello, What Virtual Worlds Can Do For Property Law, 62 Florida L.R. 159, 169-171 (2009) (Discussing questions and answers regarding virtual property). See also James Grimmelmann, Virtual World Feudalism, 118 Yale L.J. Pocket Part 126, 126-129 (2008) (Discussing whether or not virtual objects should be treated as property). See also Lyria B. Moses, The Applicability of Property Law in New Contexts: From Cells to Cyberspace, 30 Sydney L.R. 639, 639-640 (2008) (Discussing whether or not virtual goods and land within virtual worlds can be treated as objects of property). See also Bobby Glushko, Tales of the (Virtual) City: Governing Property Disputes in Virtual Worlds, 22 Berkeley Tech. L.J. 507, 255-258 (2007) (Comparing virtual and physical property).

[2] See Glushko, supra note 1, at 252 (arguing that end user license agreements governing virtual worlds fail to protect player investments).

[3] See Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593, (E.D. Pa. 2007). See also Evans v. Linden Research, Inc., 2012 U.S. Dist. LEXIS 58024 (N.D. Cal. Apr. 25, 2012). See also Complaint, Eros, LLC v. Simon, No. 1:07CV4447 (E.D.N.Y. Oct. 24, 2007), available at [hereinafter Eros Complaint]. See also Amaretto Ranch Breedables, LLC v. Ozimals, Inc., 790 F. Supp. 2d 1024 (N.D. Cal. 2011). See also Fahy v. Linden Research, Inc., 2010 U.S. Dist. LEXIS 109591 (E.D. Pa. Oct. 13, 2010).

[4] See Jack M. Balkin, Virtual Liberty: Freedom to Design and Freedom to Play in Virtual Worlds, 90 Virginia L.R. 2043, 2046 (2004).

[5] See Viktor Mayer-Schoenberger & John Crowley, Napster’s Second Life?: The Regulatory Challenges of Virtual Worlds, 100 Northwestern University L.R. 1775, 1792-179 (2006). See also Viktor Mayer-Schoenberger, Virtual Heisenberg: The Limits of Virtual World Regulability, 66 Wash. & Lee L. Rev. 1, 4-5 (2009). See also Grimmelmann, Supra note 1, at 127. See also Glushko, Supra note 1, at 268-270.

[6] See Glushko, Supra note 1, at 252.

[7] See Albert C. Lin, Virtual Consumption: A Second Life for Earth?, 2008 BYU L. Rev. 47 (2008) (analyzing the environmental impact of virtual living).

[8] See Id. at 49. See also Mayer-Schoenberger & Crowley, Supra note 5, at 1781.

[9] Second Life, Terms of Service, (last visited October 9, 2012).

[10] See Second Life, Terms of Service, section 1 available at (last visited October 9, 2012) (Expressing Linden Lab’s right to alter the contract at any time; any new terms added or taken away considered as accepted by users if users log into Second Life after the contractual change-material changes will take place 30 days after notification to users) and section 10.3 (limiting Linden Lab’s liability for any loss in profits out of or in connection with the service (including modification or termination by Linden Labs of the agreement). See also Glushko, Supra note 1, at 252.

[11] “In World” Interview with Ravenal Ashby, Owner of Crossroads, Second Life Sim located at within the Second Life Grid. See also Crossroads Website, Crossroads Roleplay, (last visited Oct. 19, 2012) (Describing Crossroads).

[12] See California State University, Development of Sexual Harrassment Law, (last visited 10/9/2012).

[13] See Id.

[14] See Moses, Supra note 1, at 639-641. See also Glushko, Supra note 1, at 252.

[15] See Mayer-Scheonberger & Crowley, Supra note 5, at 1792.

[16] See Glushko, Supra note 1 (Describing the inadequacies of EULAs and TOS).

[17] See, e.g., Mayer-Schoenberger, Virtual Heisenberg, Supra note 5, at 4 (Discussing whether there is a regulative constraint within virtual worlds that allows real world regulators to regulate virtual worlds effectively).

[18] F. Gregory Lastowka & Dan Hunter, The Laws of the Virtual Worlds, 92 Cal. L.Rev. 1, 73 (2004).

[19]Ashley S. Lipson & Robert D. Brain, Computer and Video Game Law: Cases, Statutes, Forms, Problems & Materials 511 (Carolina Academic Press 2009).

[20] See Mayer-Schoenberger & Crowley, Supra note 5, at 1781-1789 (Describing virtual worlds).

[21] See Lipson & Brain, supra note 19, at 506.

[22] Id.

[23] See Mayer-Scheonberger & Crowley, Supra note 5, at 1783-1784.

[24] See Lipson & Brain, supra note 19, at 506.

[25] Id.

[26] See id.

[27] See Mayer-Scheonberger & Crowley, Supra note 5, at 1784.

[28] See also Lipson & Brain, supra note 19, at 507.

[29] See id at 506.

[30] See id at 509.

[31] See Grimmelmann, Supra note 1 (discussing the relationship between developers and users and addressing the question of whether or not in-world objects should be treated as property) See also Lipson & Brain, Supra note 11, at 505.

[32] See Mayer-Schoenberger, Supra note 5, at 1-3 (discussing the degree of attention law makers and courts are beginning to give to issues within virtual worlds).

[33] See Mayer-Schoenberger & Crowley, Supra note 5, at 1782-1789 (discussing statistics of hours individuals are dedicating to virtual worlds and cost and profitability associated with virtual worlds).

[34] See Mayer-Schoenberger & Crowley, Supra note 5, at 1785-1786.

[35] See Id. at 1786.

[36] See Id.

[37] See Id.

[38] See Stoup, Supra note 1, at 315

[39] Second Life, What is Second Life?, http://secondlife.comwhatis (last visited October 15, 2012).

[40] Id.

[41] See Stoup, Supra note 1, at 315.

[42] See Second Life, World Map and Mini-Map, available at (last visited Oct. 18, 2012).

[43] Id.

[44] See Second Life, Second Life Viewer, available at (last visited Oct. 18, 2012).

[46] See Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593, 595 (E.D. Pa. 2007).

[47] See What is Second Life, Supra note 39 (Portraying a video that attempts to inform potential users on the possibilities in Second Life).

[48] Press Release, Linden Lab, Second Life Residents to Own Digital Creations (Nov. 14, 2003), available at

[49] See Second Life Forum Archive, Who Coined the Term “Resident”, (last visited Oct. 15, 2012) (Response by Robin Linden explaining how Linden Lab decided to call users residents).

[50] See Lastowka, Supra note 1, at 895-896.

[51] See Id.

[52] See Anthony R. Curtis, How to Build in Second Life: An Introduction to Constructing Anything in a Virtual World,

[53] See Id.

[54] Stoup, Supra note 1, at 317.

[55] Rob Hoof, Second Life’s First Millionaire, Business Week Online, Nov. 26, 2006, (Describing Anshe Chung, Second Life’s first millionaire –millionaire in US dollars).

[56] See Second Life, Terms of Service, (last visited 10/19/2012).

[57] Id.

[58] Id. at TOS 7.7.

[59] See Second Life, What is Second Life?,

[60] See Second Life, Terms of Service, (last visited 10/19/2012).

[61] See Glushko, Supra note 1, at 270-271.

[62] See Glushko, Supra note 1, at 270.

[63] See Id.

[64] See Id. 270-273. See also Second Life, Terms of Service, (last visited 10/19/2012) (Sections 11.3-11.7 Describing that Linden Lab may terminate all accounts if they decide to suspend the service which does not constitute a Material change that requires advance notice).

[65] Rob Hoof, Second Life’s First Millionaire, Business Week Online, Nov. 26, 2006, (Describing Anshe Chung, Second Life’s first millionaire –millionaire in US dollars).

[66] See Glushko, Supra note 1, at 273.

[67] Press Release, Linden Lab, Second Life Residents to Own Digital Creations (Nov. 14, 2003), available at

[68] See Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593, 596 (E.D. Pa. 2007).

[69] Glushko, Supra note 1, at 268.

[70] Michael Fitzgerald, How Philip Rosedale Created Second Life, Inc., Feb. 2007.

[71] See Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593, 609 (E.D. Pa. 2007).

[72] See Mayer-Schoenberger & Crowley, Supra note 5, at 1789.

[73] See Second Life, LindeX, (last visited Oct. 18, 2012) (login required).

[75] Rob Hoof, Second Life’s First Millionaire, Business Week Online, Nov. 26, 2006, (Describing Anshe Chung, Second Life’s first millionaire –millionaire in US dollars). See also “In World” Interview with Ravenal Ashby, Owner of Crossroads, Second Life Sim located at within the Second Life Grid (on file with author).

[76] See Second Life, Forums, (last visited Oct. 18, 2012). See also also “In World” Interview with Ravenal Ashby, Owner of Crossroads, Second Life Sim located at within the Second Life Grid (on file with author).

[77] “In World” Interview with Ravenal Ashby, Owner of Crossroads, Second Life Sim located at within the Second Life Grid, at 5 (on file with author).

[78] Id.

[79] Id.

[80] See, e.g., Second Life, LindeX, (last visited Oct. 18, 2012) (login required).

[81] Lastowka & Hunter, Supra note 18, at 73.

[82] U.S. Const. art. III, § 1.

[83] See, e.g., 11 U.S.C. § 501.

[84] See Glushko, Supra note 1, at 274 (Describing the impact destroying or confiscating user property could have on economic growth of virtual worlds).

[85] See Lastowka & Hunter, Supra note 18, at 73.

[86] See Mayer-Schoenberger & Crowley, Supra note 5, at 1781-1789.

[87] See Moses, Supra note 1, at 640.

[88] Press Release, Linden Lab, Second Life Residents to Own Digital Creations (Nov. 14, 2003), available at (on file with author)

[89] See Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593, 609 (E.D. Pa. 2007).

[90] Lastowka & Hunter, Supra note 18, at 73.

[91] See Balkin, Supra note 4, at 2046.