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'Second Life' Spawns First-Impression Issues

Real-world legal issues involving private property and IP piracy are beginning to arise from the virtual world known as Second Life, as two recent developments illustrate.

At the Fortune magazine blog Legal Pad, Roger Parloff tells of Anshe Chung, Second Life's first virtual millionaire. This is not Monopoly money, Parloff writes, explaining that Chung's Second Life holdings have made her real-world wealthy, "i.e., someone whose holdings in a make-believe world are legally convertible into genuine U.S. currency worth more than $1 million." (Read her announcement of how she parlayed $10 into $1 million.) How does her achievement raise legal issues? Parloff explains:

Some online game companies have attempted to prohibit, through click-through agreements, the real-world buying and selling of online property created by players, which the companies maintain remains the company's intellectual property. ... Second Life, on the other hand, openly authorizes and facilitates exchanges between its currency and real-world currencies, so that particular legal issue does not arise. Still, you might ask whether [Second Life developer] Linden Lab is courting legal liability if its servers should suddenly go down one day, destroyed, say, in some real-world earthquake, leaving Second Life denizens devoid of "property" or at least expectations in which they've invested so much real time and money.

Meanwhile, in a Business Week article, The Dark Side of Second Life, Catherine Holahan discusses the increasingly vexing problem of piracy within Second Life, in which users copy others' characters, objects and buildings, "potentially eroding the value of people's virtual property." In fact, she writes, piracy is just one aspect of a larger "crime wave" sweeping the virtual world and causing many users to demand "an official system of law and order." The piracy problem, in particular, has Second Life users "plenty worried," she writes:

Andrea Miller, a Las Vegas marketing director who co-owns the Panache clothing store in Second Life, says she is concerned about her creations getting ripped off. She closed her store, which handles about 20,000 Linden dollars a day, in protest of what she believes is a lack of sufficient action by Second Life's creators. "You believe your work will be protected," says Miller. "But it's just not. It's disheartening."

These virtual disputes may lead to real-world lawsuits, Holahan suggests. But there is also pressure on Second Life's developer, Linden Labs, to come up with its own procedures for dispute resolution. The site's creator, Philip Rosedale, told a recent "town meeting": "Longer term, Second Life is going to have to develop its own law or its own standards of behavior."

At ZDNet's IP Telephony blog, Russell Shaw explores this idea further. What if a clothing designer or a musician uses Second Life to demo creations for real-world clients? he asks. What if those creations are hacked or misappropriated "and my ability to use SL as a demo for real-world aspirations and real-world dollars is compromised?" Shouldn't that be actionable in a real court? he wonders. You can take Shaw's poll, or tell us what you think by adding a comment below.

For now, at least one real-world jurist is making himself available to residents in Second Life, if only as a lecturer -- 7th U.S. Circuit Judge Richard A. Posner.


Posted by Robert J. Ambrogi on November 28, 2006 at 05:39 PM | Permalink | Comments (1)


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