1	MMORPG LAW: The Wild West or a New World Order? Indie MMO Game Developer Conference By: Lawrence G. Walters Weston, Garrou, Walters & Mooney www.GameCensorship.com
2	INTRODUCTION MMORPG’s – a major industry with uncertain legal implications Cyber-Economies Virtual Property Gambling Issues Cyber-crime Cyber-Bullying
3	THE ROLE OF ROLE PLAYING GAMES
4	MMORPG REALITIES MMORPG’s are the best-selling video game genre. The addiction rate of MMORPG’s appears to be twice that of crack cocaine. Substantial Growth Expected Total active MMORPG subscriptions now exceed 16,000,000. WOW consumes 62% of the marketplace, but other games are closing ranks
5	CYBER-ECONOMIES Virtual values are attributed to intangible goods. Complex barter systems have developed allowing players to trade game artifacts, avatars, “virtual” real estate, etc. Numerous online currency traders have established viable businesses exchanging real for virtual coin. Cyber-economies are influential markets: Edward Castronova calculated that if Everquest’s game world were a real country, then its cyber-economy would make its GDP 77th in the world, putting it somewhere between Russia and Bulgaria.
6	VIRTUAL PROPERTY RIGHTS? What claim of ownership-rights can be afforded to virtual objects? How will disputes over virtual property be initiated and settled? The United States, and most other countries, lack a legal precedent for deciding virtual property cases. How far can / should user Terms of Service go in determining the rights of players with respect to other players?
7	“VIRTUAL SWEATSHOPS” Underpaid ‘players’ grind out high level characters to sell for corporate profit. Game manufacturers argue that this violates intellectual property rights, while ‘power levelers’ contend that they have a right to trade time for money. Who ‘owns’ the character? Are numerous rights involved?
8	ART IMITATING LIFE? Role-playing games offer avatars an escape from reality, but are also causing real world legal concerns. Games like Second Life are increasingly becoming catalysts for setting legal precedents. MMORPG’s offer the good and the bad – all that real life has to offer.
9	Case Study: Black Snow Interactive v. Mythic Entertainment Black Snow was one of the first “virtual sweatshops” to open up shop, selling gaming currency, items and avatars on auction sites, like eBay. Mythic Entertainment, developer of Dark Age of Camelot, told Black Snow to cease all sales of Camelot-related items. Previously, Mythic only prohibited the sale of individual items, but was concerned that these sales were violating the User License Agreement.
10	Black Snow v. Mythic continued… Black Snow filed a lawsuit claiming unfair business practices in U.S. District Court. Developer Mythic claimed intellectual property rights while Black Snow argued that players have a right to the time spent building avatars and such. Unfortunately, this suit was dropped before a precedent could be set. Turns out, Black Snow’s principal owners skipped out on a $10k fine from the FTC, miscellaneous debts and unpaid attorneys’ fees.
11	CASE STUDY: A VIRTUAL LAND DEAL GONE WRONG… Marc Bragg v. Linden Research Second Life allows players to own content that they create. Marc Bragg found a way to purchase virtual land below market value and invested thousands of real-world dollars to resell the property at an increased price. Linden Research, Inc., creator of Second Life, terminated Bragg’s user account. Bragg filed a civil suit in Pennsylvania demanding $8k.
12	Second Life Land Deal Lawsuit Settled Bragg v. Linden Research, Inc. – After Marc Bragg, aka Marc Woebegone, found a way to purchase virtual property and resell for a profit, Linden Labs caught wind and terminated his account. Bragg sued Linden Labs for breach of contract and unfair trade practices in West Chester, PA. The settlement terms were not disclosed.
13	Legal Implications of Bragg Case As a result of this case, Linden Labs changed its Terms of Service regarding dispute resolution after a Judge ruled that the TOS “constituted a contract of adhesion” and was not valid. Decision can be critical to enforcement of user terms throughout the online gaming industry. All are probably ‘adhesion’ contracts, but should be enforced nonetheless.
14	Right to defend virtual property? Property rights are highly valued and afforded protection under the Constitution…but do these rights extend to virtual property? In China, one Legend of Mir 3 player killed another after his cyber-sword was stolen. He was sentenced to life in prison. What recourse do players have for deciding property disputes when that property is really just a series of 0s and 1s?
15	Second Life Resident Sues Player for Copyright Infringement Eros, LLC v. John Doe – Kevin Alderman, aka Stroker Serpentine, sued John Doe (avatar Volkov Catteneo) for copying his SexGen Bed. The SexGen Bed is a virtual bed that allows players to choose from over 150 sexually animated scenes. Retail: 4,000 Linden Dollars. Defendant’s true identity was obtained via Subpoena. Alderman amended his suit to name Robert Leatherwood of Texas.
16	SEXGEN SUIT SETTLED Alderman and Leatherwood settled with Leatherwood agreeing not to copy or sell any of Alderman’s merchandise. The settlement did not involve a monetary amount. Since the parties settled the suit amicably, a Judge will not rule on whether trademark and copyright law extends to the virtual world, creating legal precedent. Note: Eros is involved in a similar suit, Eros v. Simon, filed in federal district court in New York.
17	VIRTUAL GAMBLING UIGEA outlawed online gambling for American players in October 2006, by banning the acceptance of money for the purpose of illegal gambling. MMORPG’s do not use recognized currency in game. Does the UIGEA apply to Linden Dollars or other virtual currency?
18	Gambling Poses Risks to Online Gaming Sites UIGEA allows Attorney General to identify sites violating the law. A.G. can demand that Internet Service Providers shut down sites that allegedly violate the law. Service providers have the opportunity appear and be heard on the closure request. No Due Process for affected online game site.
19	Second Life Bans Online Gambling, Unregulated Banks Second Life follows industry trend; bans online gambling after UIGEA took effect. After the ‘World Stock Exchange’ robbery and Ginko financial collapse, Second Life bans unregulated banks: “Any bank, ATM from offering interest or any direct return on an investment, unless it has proof of a real world government registration or financial institution charter.” Ginko ended up owing more than $750,000 to customers after experiencing a run on the bank, depleting reserves.
20	STATUTE OF FRAUDS Generally requires that contracts for the transfer of real-world property must be in writing. Would a chat log suffice as a written contract? What is a ‘signature’ in virtual worlds? Does the issue of duress impact contracts between avatars?
21	CYBER-CRIME Cyber-stalking, harassment and cyber-bulling are common forms of misconduct and aggression within virtual worlds, sometimes causing real life harm. Online communities and social networks have formed to manage deviant behavior within virtual games. Prosecutors and game companies becoming more sensitive to complaints of this nature.
22	CYBER-BULLYING: HOW REAL IS THE THREAT?
23	Free Speech Concerns re: Cyber-Bullying Have we criminalized common school yard disputes just because they occur online? How do we define “bullying” in cyberspace? Can we protect the right to engage in annoying or offensive speech while regulating ‘bullying?’ Do we impose an age restriction on these laws so they don’t apply to adult conversation?
24	CYBER-BULLYING: XBOX LIVE Terry Haynes has received several racial threats and has been the victim of cyber-bullying while playing Xbox Live. Mr. Haynes fears these virtual threats will transfer to the real world, harming him and his family. What is Microsoft’s policy? Haynes says 10 instances required for action. Microsoft has now agreed to assign an investigator to investigate threats.
25	FREE SPEECH PROTECTION Video Games deemed ‘protected speech’ by the courts in numerous cases Government must establish scientific proof of ‘harm’ caused by video games before restrictions on game content will be upheld Politicians / Lawmakers use child protection as justification for censorship
26	CENSORSHIP IN MMORPG’S Watchdog groups dedicated to eradicating child porn and online predators take aim at MMORPG’s demanding censorship. Mystere, an avatar in Everquest, posted a fan-fiction piece on a message board with references to rape. The story was written from the persona of an elf, but yet Sony removed the post and banned Mystere. Are avatars entitled to First Amendment rights, namely freedom of speech and expression?
27	CONCLUSION MMORPG’s represent the future of videogaming Cutting edge legal issues will be addressed in the context of MMORPG’s Property ownership, criminal activity and harassment represent key issues for the future Free Speech must be guarded despite the calls for child protection as justification for censorship.
28	THE END.