As virtual worlds continue suffering through legal growing pains, both mainstream press and the blogosphere are covering virtual law more often. There are a number of errors that pop up in these stories with surprising regularity. Here, in the opinion of VB’s editor, are the top five fumbles.
Fumble #5: “The cases are settling, so the lawsuits will stop!” For better or worse, this is pretty silly. First, about 95% of all lawsuits settle — that’s just how it works. Second, only one of the three major virtual law cases last year actually did settle outright (the Bragg case) and since Bragg got his virtual land back and is, once again, a Second Life resident, you have to figure he did fine in that deal. The other two cases (Eros v. Leatherwood, and the six-creator lawsuit against Thomas Simon, aka ‘Rase Kenzo’) in fact ended in formal judgments of liability (albeit, respectively, by default and consent). These are all, in some sense, plaintiff wins, and wins encourage lawsuits. In reality, three things will dictate whether there are more or fewer suits in the future: (1) the number of people using virtual worlds, (2) the amount of money at stake in actionable claims, and (3) the availability of effective in-world dispute resolution tools.
Fumble #4: “People shouldn’t go to jail for negligence!” This usually shows up as an outraged response to an article where a lawyer says that a company or individual could be held “liable” for something fairly innocuous. Generally, all the lawyer is saying is that the person or company might be subject to civil liability — a lawsuit. There’s no prison for people who breach contracts or, in most cases, for executives who act negligently, just a loss of money and some bad press following a videotaped deposition, hundreds of interrogatories, and a lengthy trial… of course, some might argue that fate is actually worse. [Addendum: criminal negligence exists, though it is not usually what "liability" is referring to here. See comment #2.]
Fumble #3: “Real life law doesn’t apply to virtual worlds!” This argument pops up less and less now, largely thanks to the three fairly high profile lawsuits that concluded last year, discussed above. You still see it in the comments following mainstream articles about virtual law, however, and not infrequently in “whoa, dude,” blog posts too. It’s just a knee-jerk reaction to the fact that virtual worlds appear game-like. The law, of course, is widely applied to the “virtual” already — consider domain names, websites, electronic books, file sharing services, and more. These spaces are no different.
Fumble #2: “The contract says it’s not money, so the law doesn’t apply!” Two people cannot privately contract to change the law. Consider this case: an employer and an employee sign an agreement that the employee will be paid $2.00 an hour, well under the federal minimum wage, but include language that “the payment of this amount of money shall represent a full payment of minimum wage under federal law.” The clause means nothing, because employment law isn’t concerned with what these people privately agreed — the employer is still on the hook for the violation. Similarly, users of virtual worlds have TOS agreements with the provider that say that the provider does not have to buy back the currency, and that under the agreement, the currency represents merely the right to use the service. That does not mean that the currency, in fact, has no value from the standpoint of criminal law, tax law, securities law, or any other area that invites analysis of value.
Fumble #1: “If no one’s been convicted, it must be legal!” This is by far the most common fumble analysts make regarding questions in virtual law. It is fed by the (admittedly appealing) idea that virtual worlds are “just different.” It is nonsense. Consider this: nobody has figured out how to kill with a blue laser beam yet. If someone does so though, it would be completely reasonable to say that the act is illegal even before a jury finds a defendant guilty of that particular method of murder. Juries evaluate facts, the law is what it is. The fact that people just recently figured out how to defraud each other using prim-based ATMs, in-world messages, and avatars, doesn’t change the fact that the underlying fraud is, itself, illegal.
[Edited 1/14/2008 re: Comment #2.]
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