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Quick commentary.  I don’t recall a lawsuit of this type being successful.  Maybe my readers can update my knowledge.  But one of the compelling arguments, the “real estate” argument, does remind one that in property law there is “real property” law and then all the other types of law.  I’m not going to get into that (RE law being one of the reasons I’m a big-city and not a small-town lawyer), but I’m interested in seeing how this lawsuit rolls out.  Read the complaint and I’ll be really looking forward to seeing if any of my readers think it is different than the previous ones, or if this one may be successful.

Jay Moffitt is a Tennessee attorney. This blog is for entertainment and educational purposes only and does not consitute legal advice or create an attorney/client relationship. Jay Moffitt is not certified as a specialist in this area by Tennessee and Tennessee does not certify specialists in this practice area. All comments will be answered promptly and courteously as long as they are germane to the discussion and do not contain specific game names or incidents.

From Lawsuits and Settlements Web site (talking about the California state law factor) ; and story from the Vancouver Sun.

A slightly different take…The Lawsuit and Public Relations, from Gamasutra.  Other lawsuits, after the jump….

Linden Lab “land-owners” sue for the change in Terms of Service over the years

In California… AGAIN… article here at this online mag.

The story from Virtual Worlds News… ; From the Los Angeles Times Business blog;  the always dependable Massively

Linux Users sue for loss of that capability on PS3 (via the latest PSN update “killing” any Linux installation).

Gamespot article here….; and from Kotaku. 

All of these lawsuits are very complicated, and interesting, and I hope to discuss them in full, at a later date.

Jay Moffitt is a Tennessee attorney. This blog is for entertainment and educational purposes only and does not consitute legal advice or create an attorney/client relationship. Jay Moffitt is not certified as a specialist in this area by Tennessee and Tennessee does not certify specialists in this practice area. All comments will be answered promptly and courteously as long as they are germane to the discussion and do not contain specific game names or incidents.

The9 lost that right earlier this year. As reported fully on Bloomberg News in April of this year, “The9 Ltd., a Chinese online-game provider, fell the most since November 2007 in New York trading on speculation the company failed to renew its license to operate the “World of Warcraft” game. ” That same article noted that “NetEase, China’s second-biggest online games provider, rose 2 percent to $29.79, a record high.” Those rumors were substantiated as NetEase is now the provider for WOW in China.

For more specifics on the class-action lawsuit, you can part of the law firm’s press release at Coughlin Stoia Geller Rudman & Robbins LLP , and also reference the complaint itself at their their home page.

There is also a very concise summation of the case on JLM Pacific Epoch which distill the scenario in a couple of paragraphs. One notable quote, “Shares in The9 dropped 18% to $8.35 on July 15, after The9 reported a $36.9 million or 72% reduction in 2008 net income due to the loss of its operating license for World of Warcraft.”

If you’re desiring a little more background information on China and gaming, you can read:

Gamedaily: China to See Nearly 65 Million Online Gamers This Year

Gameindustry.biz interview with Blizzard(WOW publisher) about the size and scope of the manpower and computer resources used to run the online world across the globe

Gamasutra article from September 21 that World Of Warcraft Restarts Commercial Operation In China. The most notable quote: “Close to half of World of Warcraft’s 11.5 million users are Chinese — but analysts such as Lazard’s Colin Sebastian have estimated that, due to the Chinese business model and licensing structure, the region accounts for just 6 percent of WoW revenues”.

And an article from 2005, but still extraordinary in its relevancy, by “Gaming Steve”. It details his reading of the public disclosure required, and some financial truths, and then further some estimates, that can be gleaned from that public information.

I will be following this case as it unfolds, and hopefully we will all learn what level of transparency is required by a gaming company, publisher, or distributor in its public statements. As the money made from virtual worlds and games increases exponentially, we will most likely look forward to an increase in similar types of lawsuits.

Jay Moffitt is a Tennessee attorney. This blog is for entertainment and educational purposes only and does not consitute legal advice or create an attorney/client relationship. Jay Moffitt is not certified as a specialist in this area by Tennessee and Tennessee does not certify specialists in this practice area. All comments will be answered promptly and courteously as long as they are germane to the discussion and do not contain specific game names or incidents.

Copy of the public record lawsuit, Eros v Linden Labs, may be found here.
I know to most followers of virtual worlds a lawsuit within Second Life is not news, it’s a huge world, and it is the most litigious by far of the MMOs. (Massivelly Multiplayer Online games)But this one is a class action by Eros, a company that already has two judgments against other in-game players.

Patent Arcade has a short note about the classification of the interests that are claimed for the lawsuit.
Just a little background; for those of you not familiar with Second Life and its litigious history, you may want to review Virtually Blind.  As a fundamental foundation,  the Terms of Service of Second Life give some limited copyright protection to innovators in its virtual world. Uniquely, the Second Life content is almost all user-created, and thus a climate for disagreement over ownership would and could often become a fact.

Well, on to the alleged facts of the case (and pack a lunch). Eros is a provider within Second Life of certain erotic articles for sale. The complaint lays out how the plaintiff alleges the Defendant, Linden Labs (administrator/owner) of Second Life is not protecting plaintiff’s property rights within the game. (Note in the above paragraph hos Second Life TOS does allow some limited property rights, in distinct contravention to most terms of service in MMOs.) The problem is best summarized in a quote from an incredibly on-point article about virtual worlds:, p. 416 “Where the provider does not enforce the contract against a breaching user, it falls to third-party users who have been harmed to attempt to enforce the breaching user’s agreement with the provider–a contract to which the harmed user is not a party due to the hub and spoke nature of multiple separate user agreements with a single provider.” Risch, Michael, Virtual Third Parties, Santa Clara Computer and High Technology Law Journal, Vol. 25, p. 415, 2009.

So the plaintiff, after having in the past sued its fellow players, has resorted to suing the actual service provider. Is this practical legal advice, or going after the “deep pockets”? Opinions vary.

Massively (Daily News About MMOs) has an indepth interview with the CEO of Eros in which he outlines the various prongs of the lawsuit. Filing in California, it uses certain California state law issues, as well as Lanham Act and Trademark Act infringement allegations. The key part of their allegations state “Despite Linden Lab’s actual knowledge of such widespread activity, it has taken no substantive action to prevent, limit, or prohibit such widespread infringement.”

Gameslaw also devotes a short section to the case. It notes as well that it is a further bringing of real-world law into the virtual world, and references an earlier case that first “pierced the veil” on anonymous game players. I agree with its assertion that the primary legal importance of this is its nature as a class-action against the world administrator, rather than an individual against individual case for infringement.

Metaverse Journal takes a conciliatory view and sides partially with Linden Labs. They quote CEO Alderman of Eros, LLC, as saying that Linden Labs is doing 1.2 million per day in virtual transactions. He states that the problem is systemic.

The last article outlining the case, ironically, is New World Notes, a newspaper within Second Life. According to their information, “previous to his career as a virtual adult content entrepreneur, as he relayed in a recent documentary, Kevin Alderman was a plumber. As Stroker Serpentine, however, according to MediaPost, he’s grossed over $1 million dollars in content sales.) Or to put it another way, if Linden Lab had not managed to develop a successful virtual economy, he would probably not have the money to sue Linden Lab. ”

Just a couple of random tidbits to keep you “in the loop” about the scope of such lawsuits:
Roughly 12 percent of Americans, or more than one in 10, have bought a virtual item at some point in the last 12 months, according to a new (July) study by analyst firm Frank N. Magid Associates and commissioned by virtual currency provider PlaySpan., according to Virtual Economies; and directly from Linden Labs: “Now at nearly USD$50 million each month in user-to-user transactions, the Second Life economy is on an annual run rate of more than a half billion US dollars,” from an article by Virtual World News.

This lawsuit should be of interest both from the class-action standpoint and from the virtual-goods standpoint. It will be focused on by legal scholars for years to come.

Jay Moffitt is a TN attorney. His statements do not constitute legal advice, and no attorney-client relationship is created. Jay Moffitt claims no certification in the subject matter, and TN does not offer a certification in the subject matter. Post copyright September 25, 2009.