Judge Rules Against Second Life Terms Of Service

A judge has ruled against online world Second Life's TOS, continuing the saga between Linden Labs and a user who sued the company to re-open his suspended account, in which he had invested thousands of real dollars on virtual property -- legal commentary within. According to a statement from earlier this month, written by the plaintiff, Marc Bragg -- himself a lawyer -- the case began with a virtual land deal Bragg made in April of last year. After Bragg had, of his own admission, "learned of a way to purchase virtual land significantly below market values," he began investing thousands of real world dollars in virtual property, hoping to resell the land at a profit. After an April land-grab, however, Second Life operators informed Bragg that the land had been purchased through an exploit, rescinding the purchase and subsequently terminating Bragg's account, apparently without explanation or citing terms violated. According to Bragg, Linden refused to offer credits, refunds, or further communication. The latest opinion from presiding Judge Eduardo C. Robreno, available online via Bragg's website (pdf), comes down not so much to the full legality of virtual ownership -- though the matter surely lies in the subtext -- but rather in the language of Linden's terms of service. The judge found Linden's terms of service an unconscionable "contract of adhesion" -- a "take-it-or-leave-it" agreement necessary to enter Second Life, that granted Linden Labs unfair power over those who agreed with it. Specifically, it was the TOS arbitration clause - outlining how legal questions would be handled - and its relative obscurity filed under a section marked "miscellaneous" that concerned the judge. To learn more, we talked with Dr. S. Gregory Boyd, an associate with Kenyon & Kenyon in the New York office, and author and editor of the textbook 'A Business & Legal Primer for Game Development', who said the legal community was "surprised" by the judge's decision. "It is interesting to note that previously, in the Black Snow case, that the arbitration clause was found enforceable," said Boyd, referring to an unsettled case from 2001 between Mythic Studios and Dark Age of Camelot gold farmers whose accounts were similarly suspended. "I think the legal community that follows these cases were really surprised that the clause was not found enforceable," Boyd added. "However, it appears that the court found defects in the Second Life agreements that are not found in the industry as a whole. The issues that prevented arbitration in this case, do not have to affect the other game companies." What Boyd particularly noted, though, was the judge's summary of the case prior to his judgment: "Judge Robreno writes about the subject matter in a way that shows he has an excellent grasp of the underlying technical issues. Virtual property is arcane by any standard and people in the industry have been afraid that the judicial system may not ready to get into these issues because they are so new to society generally. It is clear from Robreno’s writing that he really understands virtual property." "Linden Labs has always been a respected leader in the industry because of its commitment to intellectual property rights of users," Boyd concluded. "Second Life sets up a nearly unique virtual world to work through these issues. By that, I mean that Linden Labs have created a place where the users are freely granted intellectual property rights by the company and the company maintains a currency exchange with the US dollar. This type of system allows in-game intellectual property to be freely equated with money. However, that relationship may have invited this type of dispute."