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Bragg v. Linden Lab CaptionThere are two developments in Bragg v. Linden Lab this week. First, Marc Bragg made several new discovery documents available on his website. Second, Linden Lab responded to Bragg’s motion to dismiss Linden Lab’s counterclaims, providing more detail on its claim that Bragg used an exploit to buy land at less than its full value.

Readers just finding this coverage can read more about the Bragg case in previous VB posts. The discovery documents posted this week are as follows:

I am not going to run excerpts from these documents because they’re not terribly interesting without answers (I’ll run excerpts with the responses, if they are illuminating) but one new wrinkle in this case does jump out: Linden Lab apparently changed the Second Life website around the end of August, removing the longstanding “Own Virtual Land” button, and replacing it with one that says “Get Virtual Land.” Also, the text, “Second Life is a 3D Online Digital World imagined, created, and owned by its residents,” appears to have been edited to remove the word “owned.” These requests largely target information related to these changes.

I’m not sure how much mileage Bragg can get out of these requests. At least for now, the “own virtual land” language does still appear on the Second Life website in the “What is Second Life?” section. Moreover, there is a Federal Rule of Evidence (FRE 407) that prohibits introduction of evidence of a subsequent remedial measure “to prove negligence [or] culpable conduct,” though I’ve typically seen the rule used in product liability cases, and there are exceptions. I’d be interested in reader thoughts on this.

Turning now to Linden Lab’s response to Bragg’s motion to dismiss:

Stylistically, Linden Lab’s response could not be more different that Bragg’s brief in support of the motion to dismiss. Where Bragg’s brief was fairly combative (recall the “cornered rat,”) Linden Lab’s response is rather reserved.

The parties also take very different approaches to the “story” here. Though Bragg devoted several pages to Philip Rosedale’s comments, the only mention of them in Linden Lab’s brief is an introductory sentence stating that the case is not about how “how computing resources that emulate property in the virtual world Linden maintains called ‘Second Life’ were described by the company founder.” Instead, Linden Lab uses its introduction to describe in significant detail Bragg’s land purchases. Both parties appear to be using these initial briefs to lay out their stories and educate the Court as to their primary arguments as well as argue the motion, a fairly common practice.

Though I’ve excerpted quite a bit of Linden Lab’s brief, I have not included the arguments from case law or the arguments regarding standards of pleading because they won’t interest more than a handful of readers.

Excerpts of Linden Lab’s response to Bragg’s motion follow.

As always, I must make a few important points here. First, remember that the excerpts below come from a brief in support of Linden Lab’s position, and as such they show Linden Lab in the best possible light and show Bragg in the worst. This is the same warning I gave when Bragg filed the motion originally, with the names reversed. Second, as is my policy on live filings, the excerpts below are presented without commentary. Finally, please attribute any typos here to my OCR software, not to Linden Lab’s attorneys.

Excerpts from Linden Lab’s Brief in Opposition to Bragg’s Motion to Dismiss Linden Lab’s Counterclaims

This case is not, as Bragg wants the Court to believe, about whether so-called “virtual land” is governed by the same laws as real property. Nor is it about how computing resources that emulate property in the virtual world Linden maintains called “Second Life” were described by the company founder. Rather, this case involves the simple question of whether Linden has the contractual and legal right to protect itself and its Second Life users from the type of “exploit” in which Bragg spoofed the system into allowing him to obtain an in-world advantage that violated the published terms of use to which all users must agree.

Simply put, Bragg learned from another Second Life user how to spoof the in-world virtual land allocation system to enable him to acquire so-called regions (or “sims”) for less than the minimum starting bids of $1,000. Linden detected the exploit and put a stop to it and, in accordance with the express terms of its Terms of Service (“TOS”), prevented Bragg from having computer access to the misappropriated virtual land and suspended his account and associated funds.

“Virtual land” in Second Life is different from the objects and other content users create within Second Life. “Virtual land” is part of the Second Life service; Linden provides Second Life users a license to use the services associated with “virtual land” pursuant to the TOS and as long as tier fees and any other charges are paid. Because the “virtual land” itself in Second Life is not content created by a user, but rather a graphical representation of server space in the form of land features that are produced by Linden, a user does not obtain or retain intellectual property rights in “virtual land.” Rather, “virtual land” is analogous to a canvas or blank page on which one may create his or her own original content: the user could have intellectual property rights in what he or she creates on it, but not in the canvas – or “virtual land” – itself.

The only way Linden authorized users to bid on parcels of “virtual land” it had offered for sale by auction was by entering a bid on the Auction Details page for a parcel listed on the main auction page. (Id., ~ 29). As such, any means of obtaining parcels of “virtual land” to be offered by Linden by auction other than by entering a bid on the Auction Details page for a parcel listed on the main auction page was a violation of section 5.2 of the Terms of Service and contrary to the Auction FAQs, and therefore not authorized by Linden.

The TOS to which Bragg agreed provided, among other things, that Bragg would: (a) not “take any action or upload, post, e-mail or otherwise transmit content that violates any law or regulation” (b) not “take any action that would violate any right or duty under any law or under contractual or fiduciary relationships” (c) not “interfere with or disrupt the [Second Life] Service or servers or networks connected to the Service, or disobey any requirements, procedures, policies, or regulations of networks connected to the Service” (d) “use the Service only as offered by Linden at its web site or partner websites and not through any other means” (e) not “create or provide any other means through which the Service may be accessed or used, as through server emulators” Further, the TOS explicitly states that Linden is simply granting to Second Life users “a non-exclusive, limited, fully revocable license to use the Service and the Linden Software during the time you have paid for but only as long as you are in full compliance with these terms and conditions [listed in the TOS].”

On April 29, 2006, Bragg caused the 48-hour period to begin for an unauthorized auction for an entire region or “sim” known as “Pak,” Auction No. 0026198533, by making a bid of zero. About five minutes later, at Bragg’s direction, User D.S. caused the 48-hour period to begin for an unauthorized auction for an entire region or “sim” known as “Taesot,” No. 0026198533, by making a bid of zero. Neither auction ever publicly appeared on the main auction page. Bragg subsequently entered bids of U.S. $5.00 for both “sims,” and a bid for $25.00 for the Taesot “sim.” For most of the auction periods for both “sims,” the only bidders were Bragg and User D.S., working together. But with only minutes left in the auctions, User S.S. swooped in and began bidding. When the auction for “Pak” ended on May 1, 2006 at 1:00 p.m., User S.S. was the high bidder at $151.00. When the auction for “Taesot” ended five minutes later, Bragg won the auction with the high bid of U.S. $300.01. As Bragg was the winning bidder in Auction No. 0026198533, his Second Life account was automatically charged U.S. $300.01 and he obtained the parcel known as Taesot.

Bragg submits emails from Linden to Bragg regarding the fraudulent “Taesot” auction purportedly to support his allegation that this auction was somehow authorized by Linden. See, e.g., Motion at 11. Of course, these emails prove nothing of the sort. As Linden has alleged, Bragg engaged in a fraudulent actions that resulted in Linden’s computer being “tricked” into starting an unauthorized auction. These emails simply confirm that Linden’s computer system was tricked into starting the unauthorized auction.

Shortly after Linden put Bragg’s “Marc Woebegone” account on administrative hold, on May 1, 2006, and before Linden had completed its investigation, Bragg sent Linden an instant message demanding that Linden honor the fraudulent Taesot auction purchase and threatened that he would be filing a lawsuit against Linden. Linden did not yield to Bragg’s demands and threats. As such, the very next day, on May 2, 2006, Bragg sent Linden a letter demanding, among other things, that his account be reactivated, that he be reimbursed for the amount of his fraudulent winning bid for the Taesot parcel and that “my expectation interest in the profit from that sim be added to the amount reimbursed based on at least the average selling price of land in” Thereafter, after finalizing its investigation and determining that Bragg had indeed participated in a fraudulent scheme against Linden, Linden placed Bragg’s Second Life account under the user name Marc Woebegone on “fraud hold.” At the time Bragg’s account under the user name Marc Woebegone was placed on administrative hold on May 1,2006, the account had a cash balance of U.S. $1,970.79, and that remains the balance in that account as of the date of this Counterclaim. This did not include the U.S. $300.01 that was deducted from his account for his fraudulent purchase of the Taesot parcel.

Bragg argues, without citing a single case, that Linden has failed to state a claim under Penal Code Section 502, as a matter of law, for two reasons: (1) Linden has failed to allege that Bragg “circumvented some security such as password protected files”; and (2) Linden placed the “webpages” on the internet, and because they were “available to the world,” Bragg did not engage in “hacking” into the website “without permission.” (Motion at 27-31). But Bragg fails to apprise this Court that the United States District Court for the Northern District of California specifically rejected the exact same arguments by a defendant seeking to dismiss a Penal Code Section 502 claim. See Facebook, Inc. v. ConnectU LLC, 2007 WL 1514783, *2-*3 (N.D. Cal. May 21, 2007) (denying Rule 12(b)(6) motion to dismiss Penal Code Section 502 claim). In Facebook, the plaintiff alleged that the defendant violated Penal Code Section 502 by accessing the plaintiff’s website, which was available to registered users of the website, and collecting email addresses from the website. *1. The defendant filed a Rule 12(b)(6) motion to dismiss, arguing that the complaint did not allege that its “access” to the Facebook website was “unauthorized” or undertaken “without permission.” Id. at *2. The defendant further argued that it accessed information on the Facebook website that was accessible to all registered users. Thus, the defendant argued that it did not engage in “hacking” or other “unauthorized” access, and thus, could not as a matter of law be found liable under Penal Code Section 502.

Thus, the court held that the complaint sufficiently alleged a Penal Code Section 502 claim because the plaintiff alleged that the defendant had “knowingly” accessed the plaintiff’s website “to use data thereon in a manner not authorized or permitted by” the plaintiff. Id. The court found that it was not necessary under Penal Code Section 502 that the plaintiff allege that the accessed data be password protected or secured, nor did the court find that the defendant was required to have engaged in “hacking.”

Bragg’s argument is twofold, that: (1) Bragg engaged in “backwards browsing,” which Bragg defines as “modifying a URL,” to access virtual land auctions; and (2) that the CHP has found that “backward browsing” is not a violation of Penal Code Section 502. (Motion at 29- 31). However, Bragg starts from a faulty premise-that he simply engaged in “backwards browsing.,,12 This simply ignores the actual and express allegations in the Counterclaim. Linden alleges that Bragg “use[d] an artifice or ‘exploit’ to access the auction detail pages in advance of the legitimately conducted auction.” (CC, ~ 40, see also id., ~~ 41-42). This went beyond simply “modifying a URL.”

Bragg misstates the CHP Report, which summarized the CHP’s investigation of the downloading of a digital file from the Governor of California’s website. The CHP conducted an exhaustive investigation into the matter, including the circumstances of the Angelides Campaign’s access of the file. The CHP interviewed twelve different people, collected images from 11 computer workstations, and conducted a forensic analysis of the Governor’s Office computer system. CHP Report at 4. After this investigation was concluded, the CHP found that “[w]hile the system was not originally designed to be accessed in this manner, the modifications of the URL in this instance did not constitute a criminal offense.” CHP Report at 2 (emphasis added). Thus, the conclusion of the CHP was limited to the specific facts of that matter.

But the facts of this case are necessarily different. Here, discovery will serve to replicate the CHP’s exhaustive investigation in that matter. Only through discovery, and the facts discovered therein, can the Court determine whether, “in this instance,” Bragg violated Penal Code Section 502. Linden is entitled to interview (at least) Bragg (through deposition), image his computer, and conduct discovery akin to that conducted by the CHP to determine how he accessed the auction detail information for the unlisted auctions. While Bragg argues that he simply engaged in “backwards browsing,” Linden is entitled to test that assertion through discovery. And, even if Bragg engaged in just “backwards browsing,” as he asserts in the Motion, it still may very well be that “in this instance,” “backwards browsing” alone may still constitute a Penal Code Section 502 violation.

Bragg argues that the CFAA only outlaws certain types of behavior, such as sending computer viruses, worms, utilizing destructive software, or altering, damaging or destroying a computer. (Motion at 40). Not true. Sections 1030(a)(2)(C) and 1030(a)(4) of the CFAA simply outlaws intentionally accessing a computer “without authorization or exceed[ing] authorized access.” 18 U.S.C § 1030(a)(2)(C) and (a)(4). The term “exceeds authorized access” is defined in the CFAA as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C § 1030(e)(6).22

Further, case law has made clear that while the “majority of CFAA cases still involve .classic’ hacking activities,” the scope of the CFAA is much broader: “Congress’s 1994 amendment of the CFAA was intended to expand the statute’s scope to include civil claims challenging the unauthorized removal of information or programs from a company’s computer database.” Pac?fic Aerospace, 295 F. Supp. 2d at 1196 (noting the “ease with which a plaintiff may be able to satisfy the ‘unauthorized’ element”).

As previously noted, Bragg’s argument that since Linden purportedly “placed” the auction web pages “on the internet for the world to see,” Linden cannot state a CFAA claim against him is false. See, e.g., EF Cultural Travels, 274 F.3d at 579-84 (Ist Cir. 2001) (holding that a CFAA claim was properly brought where information was obtained from a website that was available to the general public in a more efficient manner). Here, Linden alleges that Bragg’s access of the auction detail information that Linden had not listed on the main auction page was unauthorized. (See, e.g., CC, ~~ 40-42,63,87).

Thus, Linden has properly alleged that Bragg’s access to Linden’s computers was without authorization or exceeded authorization.

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3 Responses to “Bragg v. Linden Lab: Response to Bragg’s Motion to Dismiss Counterclaims Filed; Discovery Continues”

  1. on 15 Sep 2007 at 4:47 amCyn

    Another possible “subsequent remedial measure” is the new auction system, announced this week.

  2. on 15 Sep 2007 at 2:25 pmTaran Rampersad

    Concur with Cyn.

    My thought on what Bragg is requesting:

    In the context of the internet, people make decisions based on the information available at the *time*. While Bragg may be an attorney, he may not have had the technical background to understand that what Linden Lab offers is really 3d web hosting in an environment which they control, and in a legal sense ‘own’ means something quite different than Linden Lab ‘pwnership’. :-)

    As such, I would have to say that Bragg’s case has definite merit – but in the context of what he was banned for, this becomes a real question mark. Finding a way to get web hosting cheaper using someone’s system is probably not what I would say is illegal (but I am not a judge or jury), but it certainly is underhanded. I’d also say that if he really saw this as ‘ownership’, as he is trying to demonstrate, it does seem unethical in a more increased sense.

    That said… its unfortunate that this is the case which Linden Lab *chose* to allow to get into virtual property rights; they should have settled and let Bragg back in… and probably nailed him for something else (because if he did this, he would be likely to do something else). Or keep him around as someone who tests the system and make him a de facto white hat.

    But I’m not Linden Lab. As it is, I think what he is doing is useful – because I believe a jury would take on the case of ‘ownership’.

    Frankly, I think Linden Lab lawyers have been smoking too much crack.

  3. on 18 Sep 2007 at 8:51 pmAlberik

    It’s frankly bizarre, after the contract of adhesion ruling in this very case, that Linden lab would try to impose a new contract of adhesion where the arbitration system is apparently an ex parte determination by Shyster Linden and Bloodsucker Linden in the privacy of the LL legal branch. It’s really hard to see how any court, particularly one outside California, can read the new TOS and answer with anything except hysterical laughter.

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