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Linden Lab Sued for Alleged Breach of Virtual Land Contract

May 18, 2006 at 6:23 pm - by Dale Dietrich

Categories: Virtual Property Cases

A Pennsylvania lawyer, Marc Bragg, is suing Linden Lab, the publisher of Second Life, alleging the company unfairly confiscated tens of thousands of dollars worth of his virtual land and other property. The suit seeks financial damages in the thousands, in part for a breach of a virtual land auction contract and for violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. Linden Lab froze Bragg's account after a suspicious online auction in which he acquired significant plots of virtual land for far below market price. Bragg reportedly acknowledges exploiting the auction interface but maintains that the onus is on Linden Lab to run their auctions securely. Sources: Wired | Joystiq | 1Up.com | Kotaku | PR Newswire GamePolitics.com Dale's Comment: As noted in my earlier comments, following virtual property theft convictions in China, legal rights to virtual property will likely be recognized in the west. It was only a matter of time before this kind of law suit was filed. Dale's Comment (May 21 Update): In a May 20th e-mail from Mr. Bragg, he indicated that he was in the process of revising the complaint and, once finished, will e-mail me a copy of it for posting here. He also had this to say in his e-mail:

I'm doing this because what the company did was wrong, just plain ethically and I believe legally wrong, and I believe letting other consumers know about it is important. Having nearly $8,000 + / – U.S. dollars in the game and countless hours of adding value to the game by building and enhancing the development of in game concepts, I don't think it's right for the company to freeze the assets they claim I rec'd title to when I bought them. Tossing me from the game, I could really care less. But freezing assets when they're in error, is not right. And not even a phone call.

I also spoke with Paul Coates, another prospective complainant, who explained the situation as follows. From time to time Linden Lab's puts in-game virtual property up for auction. The auctions are run for real $U.S. dollars on the Second Life/Linden Labs website. Minimum bids are established by Linden Labs for each new virtual property (from as low as $1.00 to as high as $1,250.00). When an auction is complete the winner has 7 days to claim, and pay for, the virtual property. If the virtual property is not claimed, the second-highest auction bidder is sent an e-mail and given the option to purchase the virtual land. However, if neither person claims the land, a glitch in the Linden Labs auction system allowed for the auction to start anew, with NO minimum bids. As I understood it, Mr. Bragg, Mr. Coates, and other players realized that this was happening, waited for this to happen, and when it did, bidded in the no-bid-minimum auctions. Just as with the first auction, winners of the second no-bid auctions, were sent an e-mail from Linden Labs indicating they had won the second auction and were instructed on how to pay for and claim their virtual property. This effectively allowed the purchase of virtual property at prices below that which Linden Labs had set. It is important to understand, from Linden Labs perspective, that it has a financial stake in these new virtual properties, especially the expensive ones, as they must expand their IT infrastructure (adding new servers etc.) to support them. The problem is, according to Mr. Coates, that Linden Lab's response, when they realized what was happening, was to treat these players with one broad brush – as if they were hackers that had somehow intentionally hacked the system, rather than, admittedly, taking advantage of a flaw in the system that Linden Labs had established. Linden Lab's response was to ban these players, with no way to appeal. The players are upset because they have spent real-world money to play the game, purchase their virtual property, and then they were abruptly shut out of the game, their virtual assets (paid for with real U.S. dollars) ceased, with no recourse or appeal. If a representative from Linden Labs contacts me with their side of the story I will update this story with their response.

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1 comment

1  val { 11.17.06 at 3:49 am }

This is indeed a landmark case in the making. The TOS of Second Life is also similar to the TOS of World of Warcraft, Everquest, Ultima etc… Basically, you have no rights and the publisher and service provider have all the rights. You do not own the character that you developed even though you have invested thousands of hours and dollars. This has to change. Many of the rules are arbitary and self-serving such as the battle against gold farmers. Rules such as not being able to sell your character because your characters are owned by the publisher comes from the dark ages. But until Mark came along, no one did much about it other than complaint.

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