by Playfuls Staff
9th October 2006
On October 4, 2006, a first-of- its-kind lawsuit was filed in Chester County, Pennsylvania seeking remedies for a series of virtual land deals gone sour. The lawsuit was originally filed in magistrate court on May 1, 2006 and re-filed with[more] a more detailed complaint because of importance of issues being addressed in the case.
The suit names Linden Research, Inc. and its CEO Philip Rosedale as Defendants and seeks financial damages in the thousands and specific performance requesting a return of the land and access to it, in part for a breach of a virtual land auction contract, fraud and violations of the Pennsylvania Unfair Trade Practices and Consumer protection Law and California Unfair and Deceptive Practices Act, among other claims. This suit is unique because the land does not actually exist in the real world and no law has yet been created in the United States with regard to the unique nature of virtual land.
Jason Archinaco, Esquire, a partner in the commercial litigation department of White and Williams LLP, filed suit on behalf of Marc Bragg, known in the virtual world as "Marc Woebegone," in Chester County, Pennsylvania, located approximately 25 miles west of Philadelphia, PA.
Bragg purchased virtual land, known in Second Life as "sims," using real US currency. Bragg was apparently accused of obtaining a piece of virtual land through an "exploit" in the game. The Defendants told Bragg that they were going to "unwind" the transaction and refund his $300 paid for the land at issue. The Defendants never honored their word. When Bragg complained, the Defendants simply denied him access to his account and "stole" all of his virtual belongs, land and even $2000 in cash. The Defendants removed his name from all the virtual land he owned, provided him no refund and then resold the virtual land and kept the proceeds for themselves. The Complaint further alleges that Rosedale himself has admitted that simply taking someone's virtual land in Second Life is wrong and has compared such acts to a crime. When Bragg could not resolve the matter privately with the Defendants, he was forced to turn to the courts for relief.
"This is the first dispute of its kind in the United States," says Archinaco. "Other courts outside of the United States have recognized the important rights a gamer has in his virtual property. The issues in this case are important, not only to those participating in Second Life, but also to the estimated 10 million consumers playing online game who are accumulating and trading virtual property on a daily basis here in the United States. At its core," Archinaco states, "the Defendants are making a lot of money by inducing consumers into buying virtual land with the promise that the consumers own the land. That promise, appears to be untrue."
The Complaint also draws parallels between virtual property and real world property and contains a request for specific performance asking the courts to provide Bragg access back to his virtual land so that he can use and exploit it. The suit says the virtual land is unique, just like real land, and that damages alone will not fully compensate Bragg. The Complaint seeks to reinstate Bragg into Second Life. The Complaint further seeks a declaration that the virtual land sold to consumers is no longer owned by the Defendants.
"The Defendants sold the world they created to the consumers, including Mr. Bragg," Archinaco says. "This is not a game being played with monopoly money. Real money is being paid for the virtual land and you can't simply sell land to someone, then prevent the person from using and exploiting the land. In many respects, this is just as if Mr. Bragg bought an island, only to have the person who sold him the island place a fleet of battleships around it preventing him access to it. The answer isn't 'tough luck.' Those acts frustrate the entire purpose of the contract are unconscionable and wrong. The virtual embargo should be ended and Mr. Bragg should be provided
access back to his land."
"I was hit over the head with a virtual club and my real world money taken," says Bragg. "This case is not just about the money; the amount of money involved hardly warrants the time and effort the lawsuit will require. It is more about the fundamental importance of players' rights and requiring the creators of these virtual economic universes to respect real world laws and real world peoples' rights in these virtual worlds."
Second Life's creator, Linden Lab (Linden Research, Inc.), a San Francisco, CA-based company, was founded in 1999 to create a revolutionary new form of shared 3-D experience. Second Life has since grown with a population of over 800,000 "residents" with an economy worth over U.S. $60m per year. The game facilitates over $250,000 U.S. dollars daily from its users that are used for purchases of virtual items like cars, homes, clothing, and land. These monies are converted into Lindens, the Second Life form of currency, which operates on its own exchange. The company has
attracted over $11m in venture capital, and has backing from some high profile players like Jeff Bezos, founder of Amazon.com and Mitch Kapor.
Second Life is one of the many real-life Internet gaming phenomena to hit the market in recent years. Although generally referred to as games, virtual worlds have become a big business. Estimates place real world transactions of virtual items and goods above $100 million a year and potentially as high as $1 billion a year. Large corporations, including Microsoft, Sony and Vivendi- Universal, the publisher of the wildly successful Worlds of Warcraft, occupy the space. The designers of such games are increasingly becoming recognized as near-celebrities and, in fact, high-level departures from established companies have been occurring.
Recently, several high level virtual world creator defections occurred with several team members and designers of Worlds of Warcraft, who departed to form their own company Red5Studios.