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Bragg v. Linden Lab Update – Plaintiff Bragg’s Motion to Dismiss Defendants’ Counterclaims

July 25th, 2007 by Benjamin Duranske

Bragg v. Linden Lab CaptionPlaintiff Marc Bragg recently filed a motion to dismiss Defendants’ counterclaims (pdf) along with a brief in support of the motion (pdf). Bragg’s motion is based on Federal Rules of Civil Procedure Rule 12. There are currently six counterclaims against Bragg in this case. They are available as part of Defendants’ Answer and Counterclaims (pdf):

  1. FEDERAL COMPUTER FRAUD, 18 U.S.C. § 1030
  2. CALIFORNIA STATUTORY COMPUTER FRAUD, CAL. PENAL CODE § 502
  3. BREACH OF CONTRACT
  4. BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
  5. CALIFORNIA UNFAIR COMPETITION, CAL. BUS. & PROF. CODE § 17200
  6. DECLARATORY JUDGMENT

Procedurally, there’s nothing too surprising here; some variation of a Rule 12 motion, depending on the facts of the case, is typically filed at this stage in the proceedings. Substantively, however, there are some interesting claims. And stylistically, it’s certainly among the more colorful filings I’ve read.

Here’s a quick summary: we get our first detailed look at Bragg’s response to the claim that he was banned for using an exploit to buy cheap land — it appears he typed parcel numbers (for land that wasn’t yet publicized as available) into URLs for active auctions, a technique he identifies as “backward browsing.” We also get Bragg quoting Philip Rosedale sounding an awful lot like a mafia Don, and Bragg stating, “in essence, he lied,” regarding Rosedale’s comments on land ownership in Second Life.

All this and more, including the phrase, “dangerous like a cornered rat is a metaphor” (actually, it’s a simile, but it works in context), in the excerpts below.

Before you dive in, one point: the excerpts below come from a brief in support of a motion motion filed by Bragg, and as such they will tend to show Bragg in the best possible light, and show defendants Linden Lab and Philip Rosedale in the worst. Defendants can be expected to answer these points when they file their Response to Bragg’s Motion (and I expect I’ll be repeating this warning about those documents, with the names’ reversed).

Excerpts From Bragg’s Brief in Support of his Rule 12 Motion to Dismiss and For a More Definitive Statement

On or about June 11, 2007, Plaintiff filed his opposition to Defendants’ Motions for Extension of Time. Plaintiff also brought to the attention of the Court statements made by Defendant Rosedale with regard to “price to pay” of filing a lawsuit regarding virtual property. (Defendant Rosedale: “At what point in a dispute are you willing to bring your identity into it, and what’s the price to you of that? I’d say for a lot of people, it would be quite high.”) (Brief, 2-3.)

Contrary to its public representations and those on its website, Defendant Linden now claims that it does not actually “sell virtual land.” Indeed, when Defendant Rosedale stated that “We started selling land free and clear, and we sold the title, and we made it extremely clear that we were not the owner of the virtual property,’ he did not really mean what he said, he did not intend those simple clear statements to reflect the truth of what consumers were being told they were buying. In essence, he lied. Defendant Rosedale most recent statement that he was instead using “metaphors” is disingenuous by definition. Defendants were, in actuality, intending not to permit any consumer to own anything despite their bold worldwide statements to the contrary. Defendants were openly inducing consumers around the world to buy virtual land upon the false premise that the consumers would “own virtual land.” Secretly, however, Defendants intended to only provide consumers with “a license in computing resources.” (Brief, 5.)

Defendant Linden alleges that it set all prices for a “sim” 1 of virtual land “uniformly” at $1000, although later it admits (in legalese) that it set land prices on some virtual land auction pages for a minimum price of $1. (Brief, 6.)

In April, 2006, at least one other consumer (referred to as “M.S.” by Defendant Linden) had obtained multiple pieces of virtual land for a low price, i.e., $1 prior to Plaintiff ever bidding on low priced land. [...] Other consumers were bidding on such land. [...] Plaintiff saw multiple auctions that had concluded for low priced land. [...] Plaintiff was ultimately informed by M.S. where on the internet Plaintiff could locate the auction pages for “sim” auctions as low as $1. (Brief, 6.)

Defendants failed to plead that the land auctions had any type of password protection security device, or any notice whatsoever that access to the auction pages was not authorized, any mechanism of any sort to preclude the public or Defendant Linden’s registered users from freely accessing such pages. Defendant Linden has admitted (in legalese), that such internet pages could be accessed by anyone in the world by simply typing a URL address in any internet browser, which they plead is what Plaintiff did. (Brief, 7.)

Plaintiff won the auction [for the Taesot sim] with the high bid of US$300.01. [...] Shortly after the auction, Defendant Linden (from a different Linden e-mail address than that previously used), sent an e-mail to Plaintiff congratulating him on winning the auction. [Attached as an Exhibit.] The e-mail provided: [...] Subject: Second Life Auction: Item Won! Taesot 001 (128, 128) 60592 m2 [...] Congratulations Marc Woebegone! You have agreed to purchase the following item from Second Life: Item Name: Taesot 001 (128, 128) 60592 m 2 / Item Number: 0026198533 / Winning Bid: $US300. (Brief, 10-11.)

Just over two (2) hours following the close of the Taesot sim auction and after Plaintiff had been billed by Defendant Linden, Jack Linden of Defendant Linden wrote to Plaintiff at 6:16 p.m.: Jack Linden: Hi there Marc. Your recent auction appears to have been the result of an exploit. The land will therefore be taken back and your money refunded. (Brief, 12.)

How can this Court hold Defendants to their words when they didn’t say the words they meant? Dangerous like a cornered rat is a metaphor. Saying “own virtual land” and “transfer title” when you really mean a “license to computing resources” is a lie, not a “metaphor.” (Brief, 14.)

As a matter of law, accessing a webpage placed on the internet cannot constitute a violation of California Penal Code § 502 particularly where no password protection or any other security devices were circumvented. (Brief, 19.)

Defendant Linden’s improper purpose in bringing the “criminal” claim [under California Penal Code § 502] so that it could post defamatory portions of the Answer and Counterclaim on its web site should result in an award of costs to Plaintiff. The failure to state a claim pursuant to California Penal Code § 502 was not inadvertent. The game plan is obvious. Defendant Linden will not change any of their fraudulent practices even when the Court finds them unconscionable. For example, Defendant Linden continues to force consumers to “accept” the unconscionable arbitration clause that remains in their latest TOS. Defendant Linden plead a criminal violation against Plaintiff for the purposes of casting a chilling effect on any and all consumers that consider bringing valid claims against them. (Brief, 24.)

The fact that Defendant Linden has admitted (as it must) that several low priced land auctions occurred prior to Plaintiff even bidding on land bars Defendant Linden’s claims. Under California law, there is a duty to mitigate damages and a plaintiff cannot recover losses it could have avoided through reasonable efforts. (Brief, 25.)

Locating a webpage placed on the internet by Defendant Linden and available to the world is simply not actionable as a matter of law. (Brief, 28.)

Defendants have not alleged any violation of 18 U.S.C. § 1030. 18 U.S.C § 1030 originally had no civil remedy, and only after Congress determined that it needed aid in containing the proliferation of viruses and worms and other destructive computer software was the act amended to include a civil remedy. (Brief, 29.)

In order to plead a cause of action pursuant to 18 U.S.C. § 1030, a plaintiff must plead damages meeting the statutory $5000 threshold. Defendant Linden has not done so. (Brief, 33.)

Defendant Linden appears to be advancing an argument that its own employees mismarked numerous items throughout its store. Thus, once it discovered that consumers were purchasing negligently mismarked items, that Defendant Linden then engaged in some process to go through its own store correcting the items that its employees negligently mismarked. It is nonsensical to argue that Plaintiff should be required to pay for Defendant Linden to correct its own mistakes. (Brief, 34-35.)

[Regarding California Business and Professional Code § 17200] Defendant Linden has not (and cannot) allege that Plaintiff was its competitor. Further, Defendant Linden has not (and cannot) allege anything remotely close to a “business” practice conducted by Plaintiff. Further, no representation to consumers or the public at large has been alleged, much less a fraudulent representation. [...] The fact that Defendant Linden has attempted to implement a consumer cause of action against Plaintiff, a consumer, should shock the conscience of this Court. (Brief, 38.)

Defendant Linden should be ordered to attach the entire chat logs that it cites selectively. Otherwise, Plaintiff is left to try to formulate a response to incomplete and selectively quoted chat logs. Additionally, Defendant Linden can obtain the benefit of only selectively quoting such chat logs to avoid any discussions that would assist Plaintiff in securing dismissal of the case pursuant to Rule 12(b)(6). Accordingly, should this Court not grant Plaintiff s Rule 12(b)(6) Motion, Plaintiff requests that the Court order Defendant Linden to attach the entirety of the alleged chat logs to an Amended Counterclaim. (Brief, 39.)

Presently, this Court is faced with Counterclaims brought against Plaintiff, which include allegations made against at least two other individuals, if not more. Defendant Linden has included at least two users, identified by user names S.S., M.S. and D.S., in their counterclaims alleging violations of computer and business practice statutes. Defendant Linden makes clear in its counterclaims that at least one of these users are alleged to have participated in the alleged violative conduct prior to Plaintiff. Further, Defendant Linden’s failure to identify these individuals makes their joinder not feasible.

Additionally, Defendant Linden admits that its own employees (who remain unidentified) apparently negligently put the wrong prices on the low priced land. To the extent that Defendant Linden is truly seeking to hold Plaintiff responsible for Defendant Linden having to “go through its own store” and correct all its mismarked items, Defendant Linden would have to sue its own employees. Defendant Linden having to sue itself, in essence, is nonsensical and renders joinder of the indispensable Linden employees impracticable. Given the same, Plaintiffs Rule 12(b)(7) Motion should be granted and the Counterclaims dismissed with prejudice.

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Posted in Bragg v. Linden Lab, Civil Procedure, Contract Law, Criminal Law, Lawsuits, Linden Lab, Property Law, Providers, Second Life, Virtual Law, Virtual Worlds & Games |


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15 Responses to “Bragg v. Linden Lab Update – Plaintiff Bragg’s Motion to Dismiss Defendants’ Counterclaims”

  1. on 25 Jul 2007 at 3:05 pm1 Ashcroft Burnham

    I do not know the details of the legal regime governing this dispute, since I am not familiar with US law. However, on first principles, my comments so far would be as follows.

    1. The claim

    In the law of property, there is a principle called numerus clausus, to the effect that only certain kinds of things can be owned, and that property rights can take one of a limited number of forms. By contrast, there is no numerus clausus of contract: one can contract about anything, and acquire any sort of contractual right, unless there is a specific legal prohibition against it.

    Server use rights are not in the numerus clausus of property: one cannot “own” the right to host one’s website at Ben’s Bargain Net Hosting Company. Even if Ben’s Bargain Net Hosting Company advertised its services on the basis that one could “own your own website!”, no ownership rights would – or could – be created. One cannot get around the numerus clausus principle simply by declaring a right to be a property right: such a declaration is ineffective, and the right is still a contractual right.

    Furthermore, it cannot really be said that Ben’s Bargain Web Hosting Company are lying when they say “own your own website!” in their marketing material, as the claim – taken literally – is self-evidently meaningless: it simply does not make any sense to conceive of “owning” a website’s hosting. The only sensible construction of a statement that is self-evidently meaningless when taken literally is that it is not meant literally, assuming, that is, that a suitable non-literal interpretation can be found. Thus, it is obvious to anybody who understands what it means to own something that “own your own website!” must mean, at best, that the contractual arrangements between Ben’s Bargain Web Hosting Company and its customers are such that the customers, more or less, and subject to any express contractual provision in the terms of service, are entitled to treat that portion of the host servers on which their website is hosted as if they owned it, such that they have a sense of (but not, of course, the actuality of) ownership over their website, in the abstract (rather than the servers, or the ability to use them, in the concrete).

    Thus, when Linden Lab tell people that they can “own virtual land!” when they use SecondLife, it is meant as literally as when Electronic Arts tell people that they can “Build and run your own city” on the back of the box of Sim City 4. Nobody yet has thought to sue Electronic Arts or Maxis because they find that, upon purchasing Sim City, they cannot actually “…sculpt mountains, gouge valleys and summon volcanoes to create a world imagined only by you”. The land is virtual, and so is the ownership: it is a simulation of land, and the right to use it is a simulation of ownership. The land is not imaginary: it is real something, just not real land. Similarly, the rights over it are not imaginary: they are real rights (contractual rights, governed by the express provisions of the Terms of Service), but they are not real ownership rights.

    Overall, therefore, on first principles at least, the claim – in so far as it is a claim about property, or a claim about being mislead about property rights – is misconceived.

    2. The counterclaim

    Again, the allegation in essence seems to be that Bragg wrongfully accessed web pages by typing in a URL, rather than following a link, and then used services accessed through those web pages that would normally be services in relation to which there was a great deal of competition from other users, but where, because not many users would think to type in the addresses, rather than only follow links, the competition would be much reduced, and Bragg would be able to obtain the services in question at a cheaper price than he would had he only followed links.

    Evidently, he was using the system in a way in which it was not designed to be used, but that ought not alone be enough for it to constitute actionable wrongdoing, one cannot sensibly be said to acquire by designing something the power to force people to use the thing exactly as one wants them to use it: that would be wholly oppressive.

    When analysed carefully, all that Bragg has done is typed in web addresses, and used the services on the web pages that he found by doing so. Given that designer’s intention cannot alone sensibly be said to found any rightful claim of wrongdoing, can it sensibly be said that there is a rightful generalised prohibition on using web pages that, while fully publicly available, are not widely publicised? If I, perversely, put some information that I don’t want anybody to see on the web, but simply do not link to the page in question, and somebody finds it by chance, can it sensibly be said that that person has done wrong by me? If I, perversely, put up a poster that I don’t want anybody to see in a secluded spot, and somebody nonethless does come past, sees it, and uses the information to her or his own advantage, has that person done any wrong? Has that person done wrong even if he or she knows that the person did not want anybody looking at the poster?

    If a web page is publicly available, without a password, one ought be entitled to act on the basis that it is for public consumption, whether the owner of the website wanted it that way or not. If people do not want their web pages being viewed, they ought take the simple expedient of protecting them with a password, or the even simpler expedient of simply not publishing them. It is oppressive to create duties on millions of people not to look at something that is apparently publicly available just so that those who do not want it made available, but carelessly do so, need not face what would otherwise be the inevitable consequences of their carelessness.

    So, if first principles win out at least, the counterclaim ought fail, too.

    3. Conclusion

    On first principles, both the claim and counterclaim ought be defeated. The most sensible way of Linden Lab dealing with practices that are not in themselves unlawful, but are contrary to the way that things are supposed to work, is by exercising the powers that everybody who uses SecondLife expressly agrees that they should have in the Terms of Service (and, after all, nobody has to use SecondLife, so it is disingenuous to suggest that anybody has been forced to accept the terms), which is precisely what it did here. When a party to a contract, especially a professional, commercial, arm’s length party to a contract for something that is about as far from necessary as it is possible to get, expressly agrees in that contract that the other party to that contract may exercise certain powers, it is disingenuous indeed subsequently to claim that the other party ought not have those powers in the first place, even though the other party was only prepared to provide the service that was the subject of the contract on the express condition that it had those powers.

    Nobody forced Bragg to use SecondLife: he did so voluntarily on the basis that, by doing so, he gave Linden Lab the power to suspend his account (etc.) if they thought it necessary. They did think it necessary. He now claims that Linden Lab acted wrongfully in exercising the powers that he expressly agreed that they should have. On first principles, his claim ought to fail. To the extent that US law does not follow that conclusion, it is defective in principle and ought be changed.

  2. on 25 Jul 2007 at 5:19 pm2 Benjamin Duranske

    Ashcroft – thanks for the comment.

    One question. You compare LL’s policies to Electronic Arts telling people that they can “Build and run your own city” on the back of the box of Sim City 4.

    Isn’t there a fair argument that, basically, you’re not expected to spend real money on garbage collection and sewer placement in Sim City 4, but that you are in Second Life?

    I think Bragg’s point here is going to be that this is fundamentally different than a video game because of the money involved. “Build and run your own city” is clearly a fiction (like “the cookies are made by elves!”) Why? Because Sim City 4 is a self-contained game-world that can’t impact your or anyone else’s real life in any real way. Basically, everybody knows they’re not running a real city.

    “Own virtual land” is a little harder sell as an obvious fiction.  It’s not just that it has been (and continues to be) marketed that way.  In addition, you have to pay real money every month for the equivalent of “utilities,” you have real people who may come to depend on the real services you provide there (all of which you’re encouraged to sink time and money into by the advertising) and you may even make decisions about your real life (like quitting your job) in light of the “ownership” that you are told you have.

    I’m not saying you’re wrong, necessarily, but also I don’t think it’s quite as simple as saying that what Linden Lab has told people is the equivalent of “the cookies are made by elves!”

  3. on 26 Jul 2007 at 6:04 am3 Bragg Gets Cheeky | Metaverse Network

    [...] More Bragg vs. Linden legal documents have come to light via Virtually Blind, but these are a little different. With a heavy amount of editorial content and examples of valid metaphors (”Dangerous like a cornered rat” is a new one for me), Bragg’s motion gets almost whimsical at times. Defendant Rosedale stated that “We started selling land free and clear, and we sold the title, and we made it extremely clear that we were not the owner of the virtual property,’ he did not really mean what he said, he did not intend those simple clear statements to reflect the truth of what consumers were being told they were buying. In essence, he lied. [...]

  4. on 26 Jul 2007 at 9:00 am4 Ashcroft Burnham

    Ben,

    I don’t think that the distinction that you draw here is a relevant one, since it is perfectly possible to imagine paying for various elements of a computer game. Suppose Sim City 5 (when it is released some years in the future) is a multiplayer game, and people are able to exchange Simoleans for real currency in a similar way to the way in which they are able to exchange Linden Dollars for real currency. Would that mean that the claim that players can, “sculpt mountains, gouge valleys and summon volcanoes to create a world imagined only by you” would be made dishonestly because the players cannot literally summon volcanoes?

    Bear in mind how the argument had progressed, first by making it clear (using the numerus clausus principle) that “own your own virtual land” makes as much sense as “own your own website” (i.e., no sense at all if it is construed truly literally), and then by making the point that statements that are obviously incoherent or false when taken literally but have an obvious non-literal meaning that is true (such as the statements on the back of the Sim City 4 box) cannot sensibly be described as dishonest.

  5. on 26 Jul 2007 at 9:39 am5 Benjamin Duranske

    Ashcroft: As always, interesting points. And for the record, I’m asking these questions more to get as clear as possible a picture of your argument than I am to actually disagree with you. I can see arguments both directions on this one.

    That said, I still see at least one problem. Let’s assume you’re right that the claim “Own virtual land!” is impossible if construed literally. I think we can agree on this: that will only be instantly clear to people who are pretty well versed in contract and licensing law. Consider that it took you, a lawyer, four fairly detailed paragraphs to explain it. Could consumers really be expected to understand that, in the same way that they’re expected to instantly comprehend that “you can summon volcanoes” or “the cookies are made by elves” aren’t true? I’m not so sure.

  6. on 26 Jul 2007 at 10:29 am6 Ashcroft Burnham

    Ben,

    is “own your own virtual land” any more or less obviously incoherent than “own your own website?”. In any event, if the point is that those with a limited understanding of the law will not understand the numerus clausus principle, there is every chance that they will also not understand many of the other aspects of ownership that make it distinct from a contractual right. The impression conveyed by “own your own virtual land” is, I should suggest, the same as that created by “own your own website”: that one will be provided with a service that gives one a sense of ownership. That is reinforced by the Terms of Service, which make it as clear as ever it could be that the right acquired is a contractual right in respect of which Linden Lab have considerable contractual powers, inconsistent with literal ownership of virtual land by their customers, but, if exercised sparingly (as they are), and only for good reason, entirely consistent with a service that gives a strong sense of ownership.

    In summary, if one understands the law well enough to be able to understand the distinction between a service giving a general sense of ownership and literal ownership, then one can only be expected to realise that what is on offer is the former, not the latter, since the latter simply does not make sense in the context.

  7. on 26 Jul 2007 at 12:44 pm7 Benjamin Duranske

    One could argue that “own virtual land” is different than “own a website” because there is a deep-rooted understanding in society about what regular “land ownership” is, whereas “website ownership” is the kind of thing most people would feel they need to do some research to figure out. I see your point though, and I think it’s a pretty good one.

  8. on 26 Jul 2007 at 2:09 pm8 Ashcroft Burnham

    Ahh, but there isn’t deep-rooted understanding of what owning virtual land is. If the point is that the “virutal land” is similar to actual land by analogy, then, of course, there is no reason to believe that “ownership” of such virtual land is not also only similar to ownership of actual land by analogy, which it is in this case.

  9. on 26 Jul 2007 at 2:38 pm9 Benjamin Duranske

    I think that question — was it reasonable to assume comsumers would draw that analogy — is right at the heart of this. I very much hope it gets to the point where the Court addresses the question directly.

  10. on 26 Jul 2007 at 3:15 pm10 Ashcroft Burnham

    But, remember, the contest is between one concept that is legally incoherent, and another that is not.

  11. on 26 Jul 2007 at 5:59 pm11 Benjamin Duranske

    As I understand it, the question here (at least as to your first point) is whether Linden Lab advertising “Own virtual land!” to consumers can sensibly be described as dishonest, not which interpretation is “better.” In other words, whether it’s reasonable for consumers to get it wrong based on what they’re saying, and whether that’s something they should have known would happen.

    (Though there’s another sticky problem here, and that’s that Bragg actually isn’t an average consumer, he’s a lawyer. And the law essentially says he has to argue his case, using the facts about him, so that might make this argument a little — or maybe even a lot — harder.)

  12. on 28 Jul 2007 at 6:14 am12 Ashcroft Burnham

    Perhaps, though, he will be able to argue (with some plausibility) that he is an exceptionally bad lawyer, and thus does not have the first clue about such things.

  13. on 20 Aug 2007 at 12:34 pm13 Virtually Blind - Virtual Law | Legal Issues That Impact Virtual Worlds » Blog Archive » Bragg v. Linden Lab Update: Linden Lab Serves Interrogatories, Amends Counterclaims Regarding Conspiracy Allegation with Chat Log Details

    [...] Linden Lab has also filed an amended set of counterclaims (the original is available here).  Aside from cleaning up some typos and changing a few words here and there (e.g. “…to ensure that Bragg was appropriately punished and forever barred from Second Life,” becomes, “to ensure that Bragg was appropriately deterred and forever barred from Second Life,”) the big changes involve how the counterclaims address the way that Bragg bought land.  Notably, this document appears to have been filed partially due to the positions taken in Bragg’s motion to dismiss the counterclaims.  [...]

  14. on 28 Aug 2007 at 10:12 am14 Virtually Blind - Virtual Law | Legal Issues That Impact Virtual Worlds » Blog Archive » Bragg v. Linden Lab Update - New Motion to Dismiss Counterclaims Filed; Complete Chat Logs Available

    [...] Plaintiff Marc Bragg has filed a new Rule 12(b)(6) motion to dismiss (.pdf) regarding Linden Lab’s counterclaims against him, and a supporting brief (.pdf). Some readers will recall that Bragg filed a 12(b)(6) motion already but in the interim, Linden Lab amended its complaint. The amendment added quotations from chat logs that shed light on Linden Lab’s claim that Bragg used an exploit to buy land in violation of a California criminal law prohibiting unauthorized computer access for fraudulent purposes. Bragg’s new motion amplifies points made earlier, and addresses this material. [...]

  15. on 25 Oct 2007 at 4:15 pm15 The Better EULA Blog » Via Terranova: do users own Second Life?

    [...] discussion points out that this is the result of Bragg vs. Linden, which raises the question: does this, and did that case, represent an ideological shift on Second [...]

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