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LEGAL ISSUES

A Virtual World Spawns a Very Real Lawsuit

Users of virtual world Second Life are seeking very real money to compensate them for their in-game loss of property ownership. Here's how the case affects you.

James Duncan Davidson/O'Reilly Media, Inc.

Second Life creator Linden Research and its founder Philip Rosedale

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A group of gamers is suing the creator of Second Life, accusing the company of taking away the plaintiffs' ownership rights to virtual "land" without reasonable compensation. (Yes, the gamers are suing for something that doesn't technically exist. But the $5 million lawsuit is very real.) The suit seeks class action status.

The complaint, filed in Pennsylvania federal court says that, during the early 2000s, Second Life creator Linden Research and its founder Philip Rosedale promoted commerce and virtual property ownership within Second Life, inducing some 50,000 people to invest as much as $100 million of real money in virtual properties. Citing press releases and media interviews, the suit alleges that the company claimed it would protect members' rights to their virtual property, and that those properties could be used as a source of revenue for the owners.

"What you have in Second Life is real and it's yours," the suit quotes Rosedale as saying. "It doesn't belong to us. We have no claim to it." (The complaint is peppered with Rosedale quotes, painting the founder and former CEO as the driving force behind the property rights concept.)

According to the complaint, Linden distinguished the then-struggling Second Life from other multiplayer role-playing games by trumpeting the idea of ownership. Members paid monthly fees for their holdings that the company likened to property taxes. "Linden made a calculated business decision to depart from the industry standard of denying that participants had any rights to virtual items, land and/or goods," says the suit.

The plaintiffs allege that Linden then quietly changed its contract terms and the language on its website, deleting the ownership concept. For example, a question on the FAQ page that read "Why would I want to own land?" morphed into "Why would I want to have land?" The plaintiffs were never notified of the apparent change in policy – or compensated for the loss of ownership rights.

The four plaintiffs are seeking more than $5 million in damages for what they say is fraud and violations of California consumer protection laws. (Why California law? A previous lawsuit against Linden – more on that, later – ruled that Linden's terms of service are subject to California law.) 

The lawsuit comes as the nearly seven-year-old Second Life defied the general trend of decline in virtual worlds, announcing it had a record first quarter this year: Transactions hit $160 million, a 30 percent jump over the same period last year. The company also broke unique user records in March, with 826,000 – up 13 percent compared to last year.

A Linden company spokesman was not immediately available for comment.

A lawyer from the firm representing the plaintiffs says the case could break new legal ground, defining actual rights in virtual places.

"It's a unique case," lawyer Robert Bracken of Pribanic Pribanic & Archinaco told the Los Angeles Times. "It shows how the Internet has come to dominate our lives."

This isn't Linden's first time in court over property rights. A much-publicized 2006 case – Bragg v. Linden Research – was settled out of court for an undisclosed sum (though not before a Pittsburgh judge ruled Linden's terms of service subject to California law.) In the case, Pennsylvania lawyer – and plaintiff – Marc Bragg claims Linden froze his account and confiscated his assets after a land deal soured. He sought $8,000 in restitution.

Last updated: May 3, 2010

COURTNEY RUBIN

Inc. contributing editor Courtney Rubin was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.




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