Web's 'Wild West'

Copyright 2006.
Warren Communications News, Inc.
All Rights Reserved.

WASHINGTON INTERNET DAILY

Tuesday, May 9, 2006 Vol. 7, No. 89

ONLINE GAME SPURS LAWSUIT over virtual land deal gone sour.
Pa. lawyer sues Linden Lab for damages. (P. 3)

Web's 'Wild West'

Online Gamer Sues Over Virtual Land Dispute

A virtual land deal gone awry has led to a real world
court battle pitting a Web-savvy attorney against Second
Life, a 3-dimensional Internet world game created by San
Francisco-based Linden Lab. The lawsuit, perhaps the first
of its kind, was filed in W. Chester, Pa., small claims
court. It seeks $8,000 in financial damages, in part for a
breach of a virtual land auction contract and for violation
of the state's Unfair Trade Practices and Consumer Protection
Law.

Lawyer Marc Bragg, who specializes in consumer rights
and cyberlaw cases, bought virtual land using real U.S.
currency after learning how to buy property significantly
below market value and sell it at a profit. Bragg claimed
that Linden employees allowed an auction where he bought the
property, but then cut off his account without explanation.
The company has since refused to offer Bragg a credit or
refund, he said. Bragg said his calls to customer service
and Linden's lawyers have gone unanswered.

Second Life, an online game inhabited by more than
200,000 people from around the globe, is one of many Internet
simulation-game sites to gain steam in recent years, Bragg
said. The game allows players in a virtual environment to
gamble, have sexual encounters and buy and sell real estate.
Some players have turned their virtual endeavors into
real-world incomes by creating virtual clothing stores, dance
clubs and adult nightclubs, Bragg said. Some speculate that
there are in-world players collecting 6-figure real-world
incomes from virtual entrepreneurial efforts.

Bragg, who owns a couple of hundred units of virtual
land where he built a casino and condos, was working on
establishing a blues club before he was booted from the game.
He claimed that Linden is holding about $2,000 of his money,
which he has tried unsuccessfully to transfer back to his
account via PayPal. "These games are like the virtual Wild
West, but Linden Lab is still obligated to honor real-world
contract law and consumer law, even if their world doesn't
really exist," he said.

Second Life's total virtual economy accounts for an
estimated $60 million annually and the game generates
thousands of dollars daily from members buying virtual items
like cars, homes, clothing and land, the complaint said.
Money invested through the game is converted into "Lindens,"
Second Life's currency. The company has attracted $11
million-plus in venture capital, and has backing from
Amazon.com founder Jeff Bezos and other high-profile industry
leaders, Bragg said.

The suit brings to light complex issues that haven't
been addressed in the real world about the popular sites,
Bragg said. Since the game uses currency that can be
converted into U.S. dollars, he questioned how items like
gambling revenue, income from virtual land sales and other
virtual purchasing issues will be addressed by Linden and
other companies like it in the future. Bragg said he wants
to get the squabble out of the way quickly. If the dispute
is resolved in his favor and Linden lets him return to the
game, Bragg said he would continue to play Second Life. If
the firm refunds his money on the condition that he leave the
community, that's fine too, Bragg said. "There are plenty of
other things to do in life," he told us.

The Better Business Bureau in Oakland, Cal., which
handles complaints about San Francisco firms, processed 2
cases involving Linden in the past 3 years. One involved
billing or collection issues and the other dealt with
customer service. Both were resolved. A spokesman for the
Cal. Attorney Gen.'s Office said he hadn't heard about any
cases involving Linden and a spokeswoman at the state's Dept.
of Corporations, which handles various licensing and
regulatory issues, didn't know about the case. Bragg sent a
letter to the FTC informing the agency of his dispute over
Second Life. The case is being addressed by Linden's
attorneys, who wouldn't speak with reporters before filing
documents with the court, the firm's marketing dir.,
Catherine Smith, told us.

George Washington U. law prof. Orin Kerr said the case
is "just a standard breach of contract claim, not a claim
about 'virtual land.'" Bragg is claiming he bought a set of
rights that the defendant didn't give him, said the former
DoJ Computer Crime & Intellectual Property Section lawyer.
Despite the online angle, it's "pretty old-fashioned," he
said.

A central issue in this case may be whether Linden's
purported knowledge that users are buying and selling virtual
objects created in Second Life in the real world can prevent
it from terminating a user's account for doing so, said
Lauren Gelman, assoc. dir. of Stanford Law School's Center
for Internet & Society. "As more objects are created in
virtual spaces like Second Life, it will be interesting to
see how courts draw lines between the virtual and real
world," she told us. -- Andrew Noyes

"Lawyer Marc Bragg, who specializes in consumer rights
and cyberlaw cases"
I think he changed his law study.

Damnit Marc.

At least we know why he hit "download" in the first place--carrer advancement shopping opportunity, hoping for that gilded phrase "precident-setting case".
No real surprises there... go for the fastest-growing, recently VC-funded products and grab your piece of LL $cream pie.
Case won or lost, your name--and your firm's--is in the papers. Law firms make Associate attorneys Partners for such things, and if it's your own practice, so much the better--more pie and the staff to go with it.
...and then move on the the next unsuspecting product....
<repeat process>


....and there we have the golden question that, sadly, likely brought him to us in the first place--the real legal points he was out to make: taxation, regulation, etc... In other words: International, Federal, State & Local.

hmmm...
Does this mean when I sell my 512m US$10-plot I may need a Virtual Real Estate licence in the future? and then file an ammended return? Does LL give me an IRS1099? lol
Yeah,...ok, not really laughing at that one...
Or at the phrase above, "and other companies..."

Preditory law... Shameful what some think of as "game", no?

I expect the 'precedent setting case' will be a big win for the Company, all things considered.

And may make the legal team here look pretty good, once the final results have been splashed all through the papers.


The Ginsu - it slices, it dices... now how much would you pay?

*strokes chin in thought about new product: Voodoo dolls with pin-sticking animation & maniacal giggling Av sounds...*

[Edit: I am soooo going to hell.... ]

I dont get all that excitement.

We all pay (or should pay) tax in our own countries and if I am correct then LL already got their act straight about that.

Do we get a tax refund if we buy foreign items?

What about gambling in SL? What about people who don't actually pay taxes (I don't cash out)? I think if the IRS takes a look at SL, and they see what we know, then there will be a lot of complications.

Dunno about the gambling but as I read it some time ago then when we transfer Lindens to real money at that moment we need to pay (or pay) tax. I also remember something about 600$ bariere.

What I know is that my government wants a share of all the money I make (doesnt mather how or when) and I need to fill all in on my tax bill. Its up to them to decide if I have to pay tax over it. In my country even Escorts (ho's) and Weed dealers (coffeeshops) pay tax

Sometimes we pay to much and we get a refund.. Most of the time they just leech us dry and then give us a few euro's back so we think we get a refund

If they think we make 100 here they will tax us for 1000 and its up to us to proof they are wrong.

I think it is fair and reasonable that the rule of First Life law should apply here. After all real commerce and economic growth will not happen without it.

The most important consideration imho is going to be the ability to enforce contracts, thus enabling many content creators to move beyond the concept of "first mortgage" only.

For example.....I "own" land in Dreamland and would like to be able to sell motor boats, cars, aircraft etc. However as I do not have scripting skills I would need to purchase full permission copies from creators. However as things stand it would be very unlikely I would be able to get them at any fair and reasonable price because as things stand they could not prevent me from selling multiple copies on at any price (and with any permissions) I so choose.

The law of contract could specify that I could purchase an original, and sell it on in a certain way. If I failed to comply contract law could compel Linden to take action against me, OR in my country the content creator could take effective action in the small claims courts, without the need for expensive legal representation.

Contract law may also assist land owners/land renters. Currently I rent land out (subject to terms and conditions) but I need to depend on the standard Second Life rent-o-matic boxes. Groups are not an option. In return my tenents have to trust that I will honour my side of the bargin. I agree that at present (for me) the amounts of money are only a few dollars weekly, but that may not be the case for big land owners renting out any number of sims. Having some legal inforcement seems desirable on both sides of the transaction as it may offer comfort for all involved.