serious business and should not only be regarded as a game. .... company in question had a generic domain name such as business.com, it could have made a ...
Erlank, W: Introduction to virtual Property
Wian Erlank* Lex virtualis ipsa loquitur
Lecture:1 Introduction to virtual Property Readers are reminded that this work is protected by copyright. While they are free to use the ideas expressed in it, they may not copy, distribute or publish the work or part of it, in any form, printed, electronic or otherwise, except for reasonable quoting, clearly indicating the source. Readers are however permitted and in fact encouraged to make copies, electronically or printed, for personal and classroom use.
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Virtual property is the next hot commodity. No footnote? No authority for that statement? Well no. You‟ll see why I say that by the end of the lecture. The topic of virtual property is both magical and mythical. It imposes a sense of awe in an audience. This is true for both people inside as well as outside the legal field. There is something intrinsically alluring about the thought of being able to own something that is not there. Even if people don‟t understand the underlying maze of theoretical and practical complexities, they still want to know more. The general field of virtual property as a topic makes for great party conversation. This, in essence, is both an introductory lecture into the wonderful world of virtual property, but more specifically, it is a wake-up call for those who have decided to ignore the relevance of virtual property for our everyday lives. What then, you may ask, is virtual property? And in a true lawyerly fashion I will have to answer that I cannot give you a precise answer. At any given moment virtual property is what the person who hears the phrase wants it to be. It has a very subjective element and as such the concept needs to be narrowed down for the purpose of dealing with it in this short period of time. Some people immediately think that virtual property is property which does not exist. In effect this would mean that it is equated with immaterial property or even intellectual property. True, it is 1
Guest lecture given at the University of Maastricht, for the Masters’ level students in European property law on 12 October 2009. * Hons.BA(Classical Literature) LLB LLM(International Business Law) LLD-candidate at the South African Research Chair in Property Law, University of Stellenbosch, South Africa. 2 Please take further note that this is not a complete academic article and as such not all authorities are cited. A properly cited article will follow this one in due course. If any author was not cited, it is due to the necessary restrictions of writing and giving a lecture.
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Electronic copy available at: http://ssrn.com/abstract=1491118
Erlank, W: Introduction to virtual Property
something that you cannot touch, cannot taste, cannot pick up and take home, but it is still property. Even though things like website addresses (URLs)3 and email addresses are currently classified under intellectual property, we could argue that it is more suited to be reclassified and called virtual property. We could even venture to include certain other accepted immaterial property objects such as bank accounts, stocks, options and derivatives under the umbrella of virtual property. However, I would like to focus on the virtual property which can be found in virtual worlds. I am specifically ignoring IP since that will take us into the murky depths of greed and vested interests which permeates the modern intellectual property law. 4 With regard to the other rights and claims mentioned above, they are the topics for another time. The field of virtual property is already growing so fast that I would be able to give you all a full academic course, comprising of at least the normal seven weeks, and possibly more. But back to the nitty-gritty. Let‟s ignore the positive law for the moment and just look at virtual property from both a factual as well as a subjective viewpoint. Factual, since we can easily define virtual property in a clear and easily reproducible way. Subjective, because virtual property is a very emotional affair for most people who view themselves as owners or users of virtual property. Virtual Worlds: Before we can really start dealing with the concept of virtual property I would like to briefly discuss two other virtual things which are exceptionally important for our understanding of virtual property. Firstly it will explain where the concept of virtual property comes from, and secondly, it will underline the importance of virtual property as a new object of property. Where does virtual property come from then? Well, it comes from virtual worlds.
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A Uniform Resource Locator (URL) is a name or series of easily readable characters which point to a specific internet protocol (IP) address. The URL can be associated with differing IP addresses and is usually easy to remember. For general information see http://en.wikipedia.org/wiki/Uniform_Resource_Locator. 4 If you are interested in this debate, you could do a Google-search on the debate about the applicability of copyright to file-sharing networks, and also for information about the fact that the issuing of a multitude of trademarks has stifled innovation. As you might recall, the promotion of innovation is one of the main reasons why we have intellectual property.
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Electronic copy available at: http://ssrn.com/abstract=1491118
Erlank, W: Introduction to virtual Property
What then, you may ask, is a virtual world? For the purposes of this lecture and my own studies, I have decided to use a definition of virtual worlds which was given by Richard Bartle.5 In plain, everyday language one could define a virtual world as an alternative non-physical world, in contrast to the real, physical world we live in. More
eloquently
environments
put,
through
“virtual and
worlds
with
are
which
computer-moderated,
multiple
individuals
may
persistent interact
simultaneously.” Let‟s just take a moment and break this down into its base elements. You will also notice that a number of these elements or essentialia as it is called in Latin, will remind you of some requirements of virtual property which I will discuss later on. The first requirement is that the virtual world should be computer moderated. A computer moderated environment means that a computer controls everything about the virtual environment. This usually happens by means of the program or the programmed code. So, what does this mean in terms of virtual property? It means that all in-game aspects that have anything to do with virtual property are managed automatically by the computer without the need for real people to be having any sort of personal interference in the workings of the virtual world. You must also remember that the computers that manage these virtual worlds are not the same as your local desktop or laptop pc at home. These computers are typically arranged in a large array or matrix and linked to each other.6 The next requirement is that the virtual world must be persistent. In this sense persistence means that the virtual world should exist continually and without interruptions. It is essential that the virtual world must always be available to the player to interact with. As soon as a virtual world becomes inactive or is switched off, it only becomes a theoretical world which REALLY does not exist, instead of a virtual one. This requirement of persistence is one of the chief reasons why virtual worlds are so addictive, because, from a player‟s point of view, it would mean that he or she is missing out on things that happen in the virtual world, since they are not logged in and taking part in it. 5
Bartle RA Pitfalls of Virtual Reality (2004) 4. See also Lastowka FG & Hunter D “The Laws of Virtual Worlds” (2004) 92 CLR 1-74 at 5, who focus on persistence and dynamics as essential characteristics of a virtual world. For purposes of the analysis in this section I will use Bartle’s definition. 6
This collection of computers is also known as a server farm.
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Erlank, W: Introduction to virtual Property
The next requirement relates to the virtual world environment. Under normal circumstances a virtual world environment would be representative of our own real world, or at least be familiar to us in some way or another. This is so that the world and its environment should be immersive and persuasive for the player. In a modern virtual world the environment is usually three dimensional in nature, and we can usually navigate our way through it from either a first or third person perspective. 7 The level of immersion is steadily increasing because of the improvement in both computer processing power, as well as graphics-card capabilities.
Where your
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avatar would have been represented on the screen as a very abstract collection of basic pixels 20 years ago, the modern version of your avatar in the same game would consist of numerous layers of computer engineered visual wizardry to make your avatar look as close to real life as possible. Modern developers therefore strive to make the worlds as photo-realistic as possible. The choice of gaming environment may also steer away from the norm in order to recreate fantastical or totally fictional environments. One example of this would be a game which represents the Star Trek universe. If such a virtual world would want to be successful, the developers would need to make it into as accurate a representation of the Star Trek universe as possible, in order for it to be easily recognisable for the fans. In essence, the choice of environment is dependent on the subject-matter of the game. It is in this category that virtual property becomes very important. The property or things that are available for use by the player in the world would help to create a sense of familiarity and believability for the player in the virtual world. These virtual property items would almost always be instantly recognisable and would be based on real world items of property such as an inn or hotel. The player immediately and by instinct identifies these things as property and not as virtual items. The virtual property is also designed with the specific intention that is should be able to emulate its real-world counterpart in both form and function. So, instead of thinking that you are going into a “virtual inn”, you go into an inn and meet the innkeeper, and not an “interpretation
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In other words, a first person perspective gives the player the impression that he or she is in fact viewing the virtual world straight out of the avatar’s eyes. From a third person perspective, the player will usually have an isometric top-down view of the virtual world environment where they can see the avatar in front of them from the same perspective that a bystander or third person could view the avatar. 8 An avatar is the character which represents you in the game. Seen in a different way, an avatar is the virtual world personification of you.
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Erlank, W: Introduction to virtual Property
of computer data and bits”. Imagine what a virtual world based on the Star Wars films would be without a lightsaber! The next element refers to interaction. If a player is unable to interact with the virtual world then the world loses its virtual world status and merely becomes an abstract artwork or movie. Interaction usually takes place by means of the player manipulating his or her avatar in such a way that it can interact with other avatars or virtual property. There is a tangible relationship between the level of immersion and believability in the virtual world for the player on the one hand and the level of interactivity. As such, a big part of interactivity lies locked up in the level of destructibility of virtual world items. Gamers seem to find it more fun to be able to interact and be able to destroy things in a virtual world. This makes one immediately think of one of the perks of ownership: you are able to destroy property which belongs to you. Interaction is not only important for the player – avatar – object relationship, but also for the social relationships9 that players have with other players. Players can interact by going on quests together, talk, eat and even kill each other (in the virtual sense). The last element is that there must be a participation of multiple individuals. This is a key component of a virtual world and also for the existence of virtual property. If there was no opportunity for multiple people to take part in the game at the same time, it would mean that it is just a normal game that you play by yourself on your Playstation or Xbox, and it would not be a virtual world.
As such, the
individuals who join up to play a virtual world game, behave in much the same way as they would have in the real life, but the only difference is that they now do it in a virtual environment. It is because of this that most of these virtual worlds are referred to as Massively Multiplayer Online Role Playing Games („MMORPGs‟). Many of these virtual worlds give you the capability to customise the way your avatar looks in almost all aspects. You are able to choose your avatar‟s race, allegiance, skin and hair colour, body type, sex, clothing and even its moral values. Appearance in virtual worlds goes even further than just changing the clothes or race of your avatar. Many virtual worlds make provision for you to make use of body 9
For more details on the social aspects of virtual worlds, you could look at the documentary film called Second Skin (2008).
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Erlank, W: Introduction to virtual Property
language to show how you feel. Avatars can be (told) to yawn, tap a foot in impatience or shrug amongst other things. Because of this, players form a bond not only with their own avatars, but recognise other players by the appearance of their avatars. In other words, you as player become so immersed in the virtual world that the other players‟ avatar becomes as real to you as if you knew the person in real life. The last aspect to touch on here is the fact that all virtual worlds make provision for players to communicate with one another. In some of the very old ones, you still have speech bubbles appearing over the heads of avatars in a comic-book fashion, showing what they are saying. But as technology and the speed of internet connections have advanced, players are able to make use of voice over internet protocol (VoIP) technology to chat to each other in real time in the same fashion as you would make a normal telephone call. All of this is designed and incorporated into the game to further the social aspects of the game. As you can probably see by now, participating in an online virtual world is not a lonely affair which is left to a select (and usually clear defined) few, but is becoming a way of life. In fact, many people find that they are able to better participate in social circles by means of virtual worlds, than they would have in real life. I would like to give you the example of an island in Second Life, which was created with the specific intent to house players (via their avatars) who suffer from Asperger‟s Syndrome. The virtual environment gives them a safe space in which they can practice on honing their social skills in non-threatening situations. Another relevant example is that many educational institutions are giving classes in virtual university classrooms in Second Life. This enables students from all over the world to see and participate in the lectures via the virtual world interface. What I am trying to bring under your attention by these two examples is the fact that virtual worlds can also be used for serious business and should not only be regarded as a game. Some statistics. Before moving on to the specifics of virtual property, I want to give you a few statistics about virtual worlds and property. Some of these are a bit dated, but others are fairly new. However, for our purposes it will suffice to illustrate how massive the
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Erlank, W: Introduction to virtual Property
phenomenon of virtual worlds really are. Some of these latest statistics have surprised even me! Castronova describes the economy of Everquest’s Norath in the same way as if it were a normal real world economy. 10 He provides statistics relating to such activities as production, labour supply, income, inflation, foreign and currency exchange. He notes that by the late summer of 2001, Everquest had a subscriber base of more than 400 000 players and showed a growth of more than ten percent in two quarters.11 At that stage Sony‟s monthly revenues from Everquest alone amounted to approximately $3.6 million! Bear in mind that this was eight years ago and only in relation to one virtual world. At that stage the average player of Everquest spent as average of 20 hours a week playing the game. A new documentary dealing mostly with the social and interrelationship aspects of virtual worlds was recently released. It‟s called Second Skin. If you are looking for it, please take care that you find the 2008 film by director Juan Carlos PineiroEscoriaza. It was released in the USA in August of 2009. Please note that some of the other films by that title would not be suitable for family viewing. In this documentary they give a few more updated statistics like the following: 1. There are 50 Million MMORPG players at the moment 2. One in three female gamers date someone whom they met in a virtual world for the first time. 3. The ratio for male to female gamers is one female for every ten single males. Take note that nothing is mentioned about the attachment status of the females. 4. Half of all MMORPG players view themselves as being addicted to playing or participating in the virtual world. 5. Four out of five gamers are part of a guild. 6. The first expansion pack (which is an ad-on to the original game) of World of Warcraft, called The Burning Crusade, made $96 million USD in one day. Compare this with the highest grossing film in 2007, which 10
Castronova E "Virtual Worlds: A First-hand Account of Market and Society on the Cyberian Frontier" (2001) No 618 CESifo Working Paper. 11 Which was up from about 320 000 subscribers in March 2001 Castronova E "Virtual Worlds: A First-hand Account of Market and Society on the Cyberian Frontier" (2001) No 618 CESifo Working Paper 9.
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Erlank, W: Introduction to virtual Property
only amounted to $60 million USD. As the documentary only deals with the first expansion, I would like to mention that whereas the first expansion sold 2.4 Million copies in the first 24 hours, the second expansion called World of Warcraft: Wrath of the Lich King, sold more than 2.8 million copies in the first 24 hours. 7. World of Warcraft has more than 11,5 million monthly subscribers and is estimated to hold about 62 percent of the MMORPG market. 8. Blizzard‟s (the developers of World of Warcraft) annual gross earnings for 2007 was $1.2 Billion USD. 9. The total value of virtual world goods in 2007 was estimated to be $20 Billion USD worked out at an exchange rate of 10.44 gold to the USD. This translates into an average market price for an avatar to be $868 USD.12 10. Addiction to Virtual World gaming is equated to alcohol addiction, and reform programs even use the same 12 step program to beat addiction that the Alcoholics Anonymous program uses. They only exchange the word alcohol for gaming in their charter. What this boils down to is that virtual worlds equals money. The more time you spend online, the more your virtual world worth is, and of course, the more moeny is made by the developers. Economic aspects In Castronova‟s study he goes on to conclude that even though the behaviour that is elicited by players might seem to be only addiction, there must be some other factor which is responsible for their behaviour. He finds that a player in a virtual world experiences an alternative reality or a different country in which he or she may choose to spend most of his or her life as he or she wishes, free from the constraints of reality. In the competition between Earth and the alternate virtual world, Earth then seems to be the less appealing option. 12
When we talk about the value of an avatar in this way, we could equate the virtual world account to a bank account. You get your access to the virtual world by means of the username and password which you possess. Therefore, anyone who possesses your username and password, is (from the perspective of the developer) the owner of the account. By means of this analogy you can see that if you “sell” your username and password, the buyer gets the ownership of the avatar and as consequence the whole virtual world patrimony that is associated with it.
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Erlank, W: Introduction to virtual Property
Virtual Property as new property Juliet Moringiello, in one of her blog entries13 explains how and why it is problem to equate virtual property to intellectual property. Typically, when lawyers hear the term virtual property, they immediately think of intellectual property. Courts tend to think in the same way. She mentions the US domain name case of Dorel v. Arel 14 which dealt with the following question. Can a judgement creditor reach a domain name by means of garnishment? 15 The problem was that under the applicable statute that applied, only a property right could be garnished. In order to make the outcome fit to the facts, the court looked to trademark law as subset op IP law for help.
The court then concluded that if a domain name is eligible for trademark
protection, it is seen as property and therefore also garnishable; if not, then it is not property and hence not garnishable. Moringiello then explains the problem in the following way. If a domain name is eligible for trademark protection, it cannot be transferred without the goodwill of the business to which it is attached, and as result is of nearly no use for the creditors. On the other hand a generic domain name which is incapable of being protected by trademark can be extremely valuable to creditors, because it can be transferred for a substantial amount of money.16 So what can we learn from this example? You will notice that by trying to squeeze in a domain name under the category of a trademark, it lost all its value to the creditors. Thus, we need to look at redefining it as a virtual property right which is capable of subsisting on its own. Now that aside, the problem which we should identify here is the fact that disputes that take place only in a virtual world tend to mirror disputes which take place in the tangible world. As such, they tend to be solved in the virtual world in a manner analogous to the way in which the real world would have dealt with them. To be able to deal with disputes relating to virtual world assets in the real world we should deconceptualise it form the fact that it only deals with intangibles. Moringiello sums it by saying that we ought to put aside tangibility as a determining factor in 13
Moringiello J “More on what virtual property can do for property: The problem of analogy” at http://lawprofessors.typepad.com/property/virtual_property/ (2008) PropertyProf Blog (05 October 2009). 14 Dorel v. Arel 60 F. Supp. 2d 558 (E.D. Va. 1999). 15 For the civil law students: garnishment here could be equated to seizure or attachment. 16 To understand this, you need to bear in mind that the company has gone bankrupt. Once a company has been declared bankrupt or even if rumours about such an incident start, you will find that the goodwill pertaining to the company quickly dissipates. Think of the current case of DSB bank. No, one would be interested in buying their domain name now that the bank has gone under. On the other side of the coin, if the company in question had a generic domain name such as business.com, it could have made a tidy sum of money. Business.com recently sold for $7.5 million USD.
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Erlank, W: Introduction to virtual Property
viewing virtual property, but rather concentrate on the other aspects of property rights. Even the media has started using interesting aside here is the fact that even the media has started to refer to URL‟s as virtual property. In a recent Reuters article 17 it was mentioned that General Motors have “roped off a bit of virtual real estate” which they could use in the event that they would seek bankruptcy protection. They registered gmrestructuring.com and gm-restucturing.com in early April. I should mention that Moringiello has written a paper in which she argues that the principle of numerus clausus should be applied to virtual property.18 She argues that because the questions that relate to the legal nature of assets in virtual worlds tend to mirror the questions that arise in connection with intangible rights in general, it leads to the understandable confusion about the classification of these rights as contractual or property rights. This should be done so that the courts that have to deal with disputes relating to virtual property should have mandatory property types or categorisations to which they can resort. This could lead to one way in which people (like virtual world developers) could be limited in their ability to muddy the waters of property by customising such rights by means of the contracts which are usually created by the electronically presented click-wrap forms and End User Licence Agreements (EULAs). Up till now we have discussed what virtual worlds are, and how players interact with them. We have also looked at the interaction between the player, the virtual world and virtual property. But now we need to look at the following critical question. I think that we can all agree by now that virtual property is important, but what is it? Is it a contractual relationship? Is it a right? If so, what type of right? Could it be a property right? To help with these questions I would like to briefly refer to Joshua Fairfield‟s classification of virtual property.19 In his article entitled “Virtual Property” he claims that virtual property needs to have three characteristics (that we could also call essentialia). These essentialia are: that it virtual property must be rivalrous, persistent and have interconnectivity. Do these requirements sound familiar? If they do, it is because they sound a lot like the requirements that are needed for a virtual 17
Hals T, GM stakes virtual property in case of bankruptcy may 15 2009 www.reuters.com (05/10/2009) Moringeillo J Towards a system of Estates in Virtual Property 19 Fairfield JAT (2005) Virtual Property. Boston University Law Review, vol 85, p 1047. 18
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world to exist. We discussed this at the beginning of the lecture. Of course we can decide to add to these characteristics, but for brevity‟s sake I will look only at the requirements mentioned by Fairfield.20 The rivalrousness of virtual property refers to the fact that only one person owns and controls the property. Because of this he or she is able to exclude others from doing the same. We could also just call this the competency of exclusivity. The rivalrousness of such property could be equated to what is called scarcity in economical terms and is what creates the economical value of the property. The second characteristic is persistence, and goes hand in hand with the persistence requirement for virtual worlds. If a piece of property is persistent, it means that it does not cease to exist or disappear permanently when a virtual world citizen logs out of the virtual world and turns his computer off. If the property was not persistent, then no one would be willing to invest in the acquisition of the property and it would become valueless. This brings us to the final characteristic, interconnectivity. This is the same as the virtual world requirement of interaction. Interconnectivity enables multiple players to be online and interact within the same virtual world making use of the same common resources. All of this must be able to occur simultaneously. The fact that people are able to visit and use the same virtual property immediately increases the property‟s value. You would also want other avatars to be able to see and experience the new house that you have created in Second Life. They can come and visit and interact with your property by sitting on the couch and pouring themselves a virtual glass of wine. If there was no interconnectivity, only you would be able to see and experience your property. Maybe we should just take a mental breather here and briefly think about the situation. By this stage most of you will concur with me when I say that there is such a thing as virtual property. The problem is just that it is not generally recognised by real-world legal systems and courts. If we were to concede that you are able to have rights in virtual property (apart from the contractual rights that you acquire from the EULA), it must also follow that someone is able to own this property. Let‟s leave aside the question of the owners‟ identity for the moment and return to that later. Once we accept that you can have virtual property ownership, we would need to look
20
For the analysis I will use Barfield’s discussion. Barfield W On money, taxes, and Property in Virtual Reality. (2008) Spingerlink online article 10.1007/s10055-008-0097-7.
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Erlank, W: Introduction to virtual Property
at the consequences of this. Barfield21 mentions three interesting issues. The first interesting aspect of virtual property ownership relates to the economical impact that it has on the real world. Keeping in mind the statistics that I showed you earlier on, I would like you to think about this. Economists have estimated that in 2002 already, the real world trade in virtual items was responsible for creating a combined gross national product of virtual worlds which was equivalent to, or more than some third world countries. The second interesting thing to take note of is the fact that the sales market for property in virtual worlds sometimes transcends into the real world. The developers of the virtual world Entropia Universe has contemplated issuing players with a real world ATM card with which they could draw real world money out of their virtual world bank accounts. This would be automatically converted to real world currency by the virtual world‟s treasury. This immediately raises concerns about tax law, money laundering and currency exchange regulations. However, these concerns are also valid for normal transactions which take place in the real world and concerns virtual property. For this reason it is inevitable that governments will start to take an interest in the regulation of the sale of virtual property. In fact, even though there is still a large amount of academic debate about whether virtual world assets should be taxed, it has already started to become a bit of a moot point. This US internal revenue service is already investigating the taxation possibilities of virtual assets and Australian tax officials have stated that as soon as a virtual world transaction has any real world consequences, it will attract the attention of the Tax Office. Following on from this possible taxation of virtual property is the fact that the whole debate about the ownership of virtual property suddenly becomes much more interesting. If a developer would keep on arguing that the players only have a mere licence to use the game (as they do in most cases), it could mean that the developers themselves would become liable for the taxation of the transactions if they do not want to share the joys of ownership with the players. I do have some more info on the taxation issues if you are interested,22 but I will let that suffice for the moment.
21
Barfield W On money, taxes, and Property in Virtual Reality. (2008) Spingerlink online article 10.1007/s10055-008-0097-7. 22 Chapter 2 of my LLD (should be out by the end of next year) and Barfield’s article.
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Caselaw:23 The third area mentioned by Barfield is the issues surrounding the protection, or to state it as alternative, the theft of virtual property. Many authors argue that this is one of the major reasons why players should get recognised property rights in their virtual property. In other words virtual property owners should be able to protect their property. While there are numerous critics who sharply object to acknowledging property rights in virtual items, it is - interestingly enough - the area where courts have found it intuitively logical to accept that property rights do exist. Even though the courts usually do not explicitly state this, you can infer this from the judgements of the few cases that have been heard so far. I will now briefly discuss some of these cases with you. China It would seem as if the Eastern Legal systems have been fast in the uptake with the concept of protecting virtual property. In fact, to date, the most cases that deal explicitly with virtual property have come from China. For example, the Beijing‟s Chaoyang District People‟s Court in China recently ordered that a virtual world developer had to return virtual property to a player who had his account hacked. The hackers gained access to his account and basically looted it of all valuable assets. The gamer in question had spent two years of his time and approximately 10 000 yuan (which translates to roughly $1200 USD) on pay as you go cards that enabled him to participate in the game. In the process of playing, he collected weapons and managed to level his character24 in the game Honyue, also known as Red Moon. The court found the developers liable for the loss suffered by the player due to security loopholes in their software which enabled the hackers to steal the player‟s property.25 South Korea
23
For the purposes of this lecture document I will not fully discuss all the cases. This will be dealt with in the reworked article that will follow shortly. 24 Levelling refers to the increase in experience, status, wealth and power that an avatar gets as it progresses through the virtual world. 25 See Ma M Online games and Virtual Property, 2009, Matindale-Hubbell www.martindale.com (05/10/2009) where Ma, discusses the five leading Chinese virtual property cases.
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There have also been a number of South-Korean cases. I will not go into details, but in most cases they concern incidents where one player forced another player to transfer virtual property to his avatar in the virtual world. US Bragg v Linden Research. Complainant was denied use of his virtual world assets. Australian The Australian example is not a case and the affected parties never appeared in court, It is however a good example of why virtual property should be protected. An Australian businessman, who was one of the most trusted and well known players in the virtual world of EvE Online, was the manager in charge of a bank in the virtual world. Because of his trusted status, other players were willing to deposit their earnings and profits measured in gold with his bank. The bank manager then also succumbed to the effects of the credit crisis and was in dire financial straits in the real world. As a result of this he stole all of the bank customers‟ money and converted it to Australian Dollars. He then proceeded to use his ill gotten gains to pay of his mortgage. The last time I checked the only after effects of this was that he was banned from the game. In China he would have been convicted of theft. Dutch I would now like to entertain you with the fact that a Dutch case which dealt with the theft of virtual property was recently decided.26 In a manner of speaking the Dutch courts accepted that there must be a protectable property right which was infringed upon, otherwise they would not have convicted the perpetrators for theft27. I will deal only briefly with this case here, as I have already started to write a case discussion which deals with the case more extensively. The case was heard in Leeuwarden, by a full bench criminal court of the first instance. In essence the facts are as follows. Two Dutch teens were convicted of stealing virtual game items from another teen. All three of the boys played the game Runescape, which is a large virtual world and has millions of players. What is especially interesting about this 26 27
LJN: BG0939, Rechtbank Leeuwarden , 17/676123-07 VEV. The court even took judicial notice of the details of the virtual word!
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case is that the boys not only stole the virtual items, but did it by using extreme force. They beat the other boy up and even threatened to kill him with a knife. The fact of the matter is that it would have been very easy for the court just to convict the two boys of assault and leave the matter at that. The court, however, chose to deal with the facts as argued by the prosecutor: that they stole virtual property. After analysing the facts of the case and the applicable sections of the legislation (Artikel 310 van het Wetboek van Strafrecht), the court found that the stolen property is able to fulfil all the requirements of being classified as “goed” or property28 as it is defined in the legislation. Some of the criteria which the court found to be relevant were the following.
According to the court, before something can be classified as “goed”
under the Artikel, it has to have value for the possessor thereof. The value does not need to be expressible in monetary terms and as such I infer that it would include items with purely sentimental value. The court referred to the fact that virtual worlds has become a huge phenomenon and that players attach a lot of value to their “virtuele goederen”. The court even mentions that one of the places where these virtual items are sold and traded is in the schoolyard. It then found that the virtual property had value for both the complainant as well as the accused. The court explicitly stated that the items did not need to be physical items (stoffelijke voorwerpen) and that it could be equated to electricity and money held in an account (giraal geld). Another important aspect is that there has to be transfer of factual (not physical) control from the accuser to the accused. The sentence was one of community service for 160 hours which had to be finished within 12 months. If this was not done properly, 80 days of confinement to a youth detention facility was mandated. The important thing to take from this case is that a western court was willing to recognise for the first time, that: a. There is such a thing as virtual property, and b. That it is important enough to protect. I have been unable to ascertain if there are any appeals pending about the case, but my initial investigations did not reveal any. In fact, I would be surprised if this was indeed taken on appeal, since the case was very clear cut as far as I am concerned. 28
Please note that the meaning of “goed” is defined in statute and includes both material as well as immaterial things under that definition.
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Erlank, W: Introduction to virtual Property
However, there was a mention in one of the news articles dealing with the case that the lawyers were planning to appeal. It is indeed a victory that such a judgement has at last emerged from a western legal system. In conclusion I would like to point out the place where virtual property touches on the field of European property law. If one was to consider the Dutch case which I have just discussed as a kind of test case, then it is not unthinkable that a case could be brought to the ECJ dealing with similar facts. Even though the ECJ is not a criminal court, nor a court of first instance, a person from a jurisdiction which denies him or her the right to get his or her virtual property back via court proceedings could approach the court. Then they could argue that the ECJ should (indirectly) create a European virtual property right by means of negative integration. In theory one could argue that as soon as one jurisdiction explicitly recognises a virtual property right, then you will be able to argue that under the four freedoms you should be able to have that right protected all over the EU. If this was not accepted, then it would mean that if you had a real virtual property right in the Netherlands, you would lose it as soon as you crossed the border to another country. Also problematic for trying to regulate this in a national forum is the fact that virtual world span across national borders due to their nature of being based on the internet. Game servers are usually either American, European or China based, and as such using the server would be governed by supra-national laws. Should we fall back to lex rei sitae when trying to deal with this problem? Would that mean that if the European server for World of Warcraft was located in the Netherlands, that any EU citizen who used the virtual world would have virtual property protection? As you can see, this is a very important and actual question for which immediate answers should be found. This of course links up with the argument for including virtual property rights in the numerous clauses as mentioned earlier. Before we conclude this lecture I would like to take a quick peek into the crystal ball. Even though many of you do not currently see the value of protecting or recognising virtual property, it will most probably become so important within the next 10 to 15 years that we will all be able to look back and wonder how we were able to live without it. Think of mobile phones as an example, 10 years ago, they were a rarity, but nowadays almost everyone has at least 1 mobile phone, and many have more than one. We should also in all probability see that the way in which we interact 16
Erlank, W: Introduction to virtual Property
with the internet and sites that we visit on a daily basis, such as facebook, will transform into three dimensional virtual worlds, in much the same way as we are able to use Second Life. I could continue for another few hours and I will still not be able to cover all the basics of virtual property. I trust that you will accept this as a suitable introduction to the field and continue to carry the flame for the acceptance of virtual property rights into our traditional legal systems.
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