The tricky issue of whether gamers have rights in their virtual property has resurfaced in a $5 million lawsuit filed by four buyers of Second Life real estate who claim the creator of the virtual world has illegally stripped them of their property.

Second Life "property"

Real-world courts have yet to address virtual world property rights but a Second Life gamer, Pennsylvania attorney Marc S. Bragg, won an important procedural victory in 2007 when a judge ruled that Linden Lab could not privately arbitrate property disputes despite the provisions of its terms of service (TOS). That case settled a few months later.

Bragg's attorney, Jason A. Archinaco of Pittsburgh, is now representing the four plaintiffs — two from Florida and one each from Pennsylvania and Wisconsin — in a proposed class action filed earlier this week against Linden Lab alleging false advertising, fraud and conversion, or theft, of their virtual property.

The plaintiffs say they acquired virtual land in reliance on Linden's representations that “if a consumer purchased land in Second Life, the consumer owned such land.” But those representations were a “profitable lie” and the plaintiffs' assets “have been deliberately and intentionally converted, taken, 'frozen,' or otherwise rendered unusable by the Defendants.”

“The sad reality is that Defendants are simply planning a return to their original business model, i.e.. that consumers truly own nothing, through deceit,” the suit says.

The proposed class includes all Second Life players who have owned virtual land since November 1993, with a subclass of players whose assets have been converted. The lead plaintiffs and class members have allegedly suffered damages in excess of $5 million.

Linden opened Second Life in 2003 and the “massively multiplayer role-playing game” (MMPORG) now boasts some 200,000 “residents” and 12,000 “profitable in-world business owners.” Bragg filed his first-of-its-kind suit in 2006, alleging Linden illegally seized his virtual property.

The company claimed that Bragg breached Second Life’s terms of service by using an “exploit” in the game — that is, he had discovered how to hold an unauthorized auction of a property that was not yet for sale.

But U.S. District Judge Eduardo C. Robreno denied Linden's motion to compel arbitration in May 2007, finding that the arbitration clause in the TOS was “not designed to provide Second Life participants an effective means of resolving disputes with Linden. Rather, it is a one-sided means which tilts unfairly, in almost all situations, in Linden’s favor.” Bragg v. Linden Research, 487 F.Supp.2d 593.

The class-action case has also been assigned to Robreno and the plaintiffs say his ruling on the arbitration issue in Bragg is binding. “Defendants' TOS is very similar, in essence, to the fine print on the back of a ticket checking your automobile with a valet or, similarly, entrance to a theme park,” they argue.

The litigation of Bragg's claims never reached the merits of whether he truly “owned” his virtual property. But New York's highest court has recognized a claim for conversion of electronic data, finding that “the tort of conversion must keep pace with the contemporary realities of widespread computer use.” Thyroff v. Nationwide Mutual Insurance Co., 8 N.Y.3d 283 (2007).

According to the class action, a Second Life player's assets “are stored as electromagnetic records on Linden's servers.” More than $50 million has been “paid by consumers to Defendants for virtual land pursuant to the false representation of ownership,” the suit says.

By Matthew Heller
4/20/10