Applied Simulation Second Life Lawyers

“Second Life,” the wildly popular virtual 3-D world, now claims nearly 3.5 million members and an actual economy in which more than $1 million changes hands every day.

But this new frontier remains a Wild West world that seems to lie beyond the reach of the law. As “Second Life” continues to expand, it has drawn the attention of legal scholars and practicing lawyers alike.

Unlike virtual games, where players strive for success by acquiring powers for their avatars (a player’s virtual-world alter ego), “Second Life” is not a contest. San Francisco-based Linden Lab created “Second Life” as a platform on which people could create an imaginary life for themselves using digital tools that Linden Lab provides. Its purpose was to become a world for free expression.

When it first opened in 2003, it was a bit of a flop.

This was largely because it followed the model established in the virtual game world, which prohibits ownership. The public reaction seemed to be: What was the point of creating houses, cars, clothes and tattoo parlors for other players if you can’t own — and sell — your ideas?

So in late 2003, Linden Lab CEO Philip Rosedale made a revolutionary announcement that people who create or build something on “Second Life” retain the intellectual property rights to it. There was one caveat, however — Linden Lab retained the contractual right to terminate a player’s account at any time.

Attracted by the concept of ownership rights, people began joining “Second Life” in increasing numbers.

They have opened business to plan virtual weddings, operate a virtual casino, create virtual pets, and sell virtual clothes to be worn by virtual people. Real-world businesses have also gotten in on the action, with American Apparel, Sears, Circuit City and Adidas all opening virtual stores. There are political campaign headquarters — including one for John Edwards, which was virtually vandalized late last month. Reuters has even opened a news bureau in “Second Life” to cover all this bizarre activity.

For some, “Second Life” has become much more than a game.

Although transactions in “Second Life” are paid for in Linden dollars, players buy this virtual currency with real-world money via a credit card — and businesses can exchange Linden dollars for real dollars through virtual currency exchanges, such as www.gamingopenmarket.com

Last November, “Second Life” resident Anshe Chung announced that she had earned profits exceeding $1 million in American money from the Lindens she’d acquired as a land dealer on “Second Life.”

With all these transactions taking place, there just had to be a role for lawyers.

Real-life suit over virtual land

One of the people drawn to “Second Life” was Marc S. Bragg, a lawyer in West Chester, Pa., whose diverse legal practice includes real-estate transactions. Attracted by the idea of buying, developing and selling virtual land, Bragg joined “Second Life” in an attempt to make money.

His relationship with “Second Life” became a public issue in May 2006 when he filed suit against Linden Lab, alleging that the company unfairly confiscated thousands of dollars worth of his land and property by shutting down his account over a land deal. He said that he found a way to buy land far below market rates — he paid $300 for a large piece of land called a “sim,” which usually goes for around $1,000.

“Second Life” members criticized Bragg on message boards for allegedly hacking into an HTML code on an auction list, but his lawyer on the matter defends Bragg’s actions.

“It wasn’t like he broke into a bank,” said Jason Archinaco of White and Williams in Pittsburgh. “Linden Lab put the auction pages there and he found them.”

Bragg is asking for $8,000 in restitution, and Linden Lab has filed a motion to resolve the case via mediation in San Francisco.

Archinaco argues that Linden Lab can’t have it both ways — it can’t say players have ownership rights and then retain the right to throw anyone out of the game at any time and confiscate all their property.

The stakes in the Bragg case may be relatively low, but lawyers who follow legal issues in the virtual world believe it’s important because it points out the inherent conflict between the creators of “Second Life” and its residents.

Who has the rights?

Joshua Fairfield, a professor at Indiana University School of Law, pointed out that “intellectual property rights” to a virtual object can be rather limited.

People who make and sell objects in “Second Life” “have an IP interest in the design, but they’ve created the item using the tools in ‘Second Life,’” he said. “Second, by uploading it to ‘Second Life,’ they have sublicensed it to Linden Lab for purposes of use and display. [Linden Lab] can use what [residents have] created in its own promotional materials.”

While “Second Life” creators have intellectual-property rights, he said, Linden Lab owns the underlying code — which provides the basis for it to do whatever it wants.

This difference between the rights of the game owners and those of residents is the central question to be answered in determining how new virtual worlds will develop, Fairfield said.

“I think that sooner or later courts are going to have to decide whether they’re going to permit contracts be the absolute kings of the Internet or are we going to say that we like property and we don’t want private property to be wiped out by contract,” he said. “It’s a stark question. Right now, contracts — the end-user license agreements — are trying to wipe out private property. The question is whether that’s a good idea.”

Paul N. Tauger, who chairs the intellectual property entertainment practice group at Schnader, Harrison, Segal & Lewis in San Francisco, said that from an owner’s perspective in the virtual world, a strong contract serves to protect the integrity of the game.

But he’s not sure how ironclad the service agreements really are.

“If people are making money off these things as players, do they have a cause of action against you for breach of contract if you are deprived of the benefit of the bargain?” he asked. “The answer is: I don’t know.”

Lawyers crossing over

Last fall, Harvard Law School professor Charles Nesson taught a course — “CyberOne: Law in the Court of Public Opinion” — which took place entirely in “Second Life.” Students were required to join “Second Life” and create their own avatars to attend the class. In addition, the general “Second Life” public was invited to attend, and many did. It was the first time in history that large upright chipmunks and other animals took part in a law class.

Since then, other law professors in other schools have also held classes in “Second Life.”

Some lawyers have joined “Second Life,” created lawyer avatars and virtual law offices (see “Step into my parlor,” above).

And one firm sees “Second Life” as a useful marketing device. Greenbert & Lieberman, a Washington, D.C., intellectual-property firm, has a gazebo-like building in one corner of “Second Life” with a large rotating blue block with the firm’s name in the air above the building.

Inside, the building has law books and places visitors can click on to receive information about patent cases and patent processes. Players can also teleport to the law office, where partner Stevan Lieberman holds meetings between his avatar and the avatars of other players — his clients.

He said the building has generated some real-world business in the 10 months since the firm set up shop in “Second Life”: one patent application and “a couple of contracts.”

He’s convinced that his firm is on the front edge of using virtual technology for marketing.

“These are the Web pages of the future,” he said.

Where’s the court?

Meanwhile, the future of legal systems in “Second Life” and its inevitable imitators remains an open question.

Fairfield, the Indiana law professor, doubts that there will ever be courts in virtual worlds.

“You need to talk and see witnesses to decide disputes,” he said. “The people are in real space, the records are in real space. There’s nothing gained by moving a court online.”

And the concept of criminal law in virtual worlds is limited, he pointed out, because avatars are not real. Furthermore, he said, avatars are coded to be impenetrable. They can’t really be harmed, raped or killed.

“But even if you could, if for example you hacked a person’s client and forced them to engage in certain acts, that wouldn’t be rape. That would be a violation of the Computer Fraud and Abuse Act — because you hacked their computer.”

But Ethan Katsh, a professor of legal studies at the University of Massachusetts, believes that legal institutions will evolve in virtual worlds.

“How do you resolve conflicts that occur within these worlds? The larger they grow, and the more complex they become, the more the need for dispute resolution grows.”

Beth Simone Noveck, a professor at New York Law School and director of the State of Play Academy, a center for learning and scholarship within the virtual world, predicted “the evolution of mechanism, both technological and rule-based, that will allow people to manage disputes over IP.”

“I think you’re going to see a class of lawyers and dispute-resolution people emerging in-world,” she said. “I think you’re going to see dispute-resolution services and some of it will be driven by lawyers in the real world.”