Quicklinks: Taxes, Blogs, Patents, Lawsuits and More
November 29th, 2008 by Benjamin Duranske
Virtually Blind periodically runs “quicklinks” — items that are not long enough for a full story, but are worth a click. Here’s the current batch.
The Chartered Institute of Taxation will be conducting a seminar on virtual world tax issues at Second Life’s Depo Business Park on Tuesday, the 2nd of December at 3:30pm GMT / 07:35am PST. Here’s a SLURL. It’s a bit early for U.S. readers, but should be well worth attending.
I just ran across a fascinating discussion of Second Life’s “patent peace” policy from a 2006 listserv post. The post was written by Linden Lab’s Gene Yoon, and it sheds a lot of light on the thinking behind the rather non-standard patent clause in Second Life’s Terms of Service.
Interesting twist in the SLART trademark lawsuit (via Massively). It turns out that the avatar ‘Victor Vezina,’ who Richard Minsky named as a defendant (along with Linden Lab) is the avatar of technology writer Victor Keegan, who writes for guardian.co.uk. Keegan says he “was a pawn caught in the crossfire between Linden [...] and Minsky.”
Last year VB covered a video by Second Life’s ‘Bernard Drax’ of a virtual Guantanamo Bay Detention Camp. The video of the installation is up for an “Every Human Has Rights” media award. Congratulations!
There’s a solid breakdown of the Blizzard v. MDY case (.pdf) from the North Carolina Journal of Law & Technology. The interesting thing about this article is that it sets out a potential argument for appeal based on what the Journal sees as the trial court’s somewhat vague restatement of a key test. Definitely worth a click if you’ve been following the case.
This one’s not directly related to virtual law, but I wanted to highlight Geri Kahn’s new California Immigration Lawyer Blog, because Geri is current VP of Finance of the SL Bar Association, and active in virtual worlds.
Also in SL Bar Association officer blog news, Stephen Wu, the SLBA’s President-Elect, recently posted on the possible impact of an Obama administration on virtual worlds. Interesting analysis.
Just came across a list of the top-50 internet and digital law blogs that includes VB. Lots of good sites on here, including a few I hadn’t heard of.
One more blog note: Sean Kane, one of my co-chairs of the Virtual Worlds and Multiuser Online Games committee of the ABA’s Section of Science & Technology Law, is periodically posting to a blog at his new site, Virtual Judgment.
Finally, in case stated-income home loans seemed insufficiently high-risk for your investment profile, some of the usual suspects in the always-entertaining Second Life financial markets are selling securities in Second Life in order “to raise the funds [...] potentially to sue Linden Lab” for incresing the price of some types of virtual land last month; proceeds from the lawsuit supposedly go to investors.
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3 Responses to “Quicklinks: Taxes, Blogs, Patents, Lawsuits and More”
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Benjamin,
It appears that http://www.ace-exchange.com is gone. It does not resolve to a network address and their name servers are equally unresponsive. I checked Google and your link is to the correct domain name, so it’s not a bad link.
I really wanted to check that out, as I was aghast at your summary of their new business plan. Unbelievable.
i read the ginsu piece…. and still LL is using PATENT intentionally? too broadly in the tos… all he refers to is UTILITY Patents.. THEN WHY does the TOS not use that term vs “Patents” in general…
it would seem design patents are quite easy to create and claim from within SL… and thus the problem…
ornamental design is key in visual media nd product design… and should be in virtual products as well….
one day i suggest this TOS terminology will be challenged or changed
FYI for those not following…
—————————————————-
The Difference Between Design and Utility Patents
In general terms, a “utility patent” protects the way an article is used and works (35 U.S.C. 101), while a “design patent” protects the way an article looks (35 U.S.C. 171). Both design and utility patents may be obtained on an article if invention resides both in its utility and ornamental appearance. While utility and design patents afford legally separate protection, the utility and ornamentality of an article are not easily separable. Articles of manufacture may possess both functional and ornamental characteristics.
c3
@1 – It does, indeed, appear the “ACE” site is down. Not sure if it’s permanently down or not, but if it is, it would certainly not be the first SL finance / investment site to fold.
[Edit 12/3/08 - it's back up, at least for now...]
In any case, the prospectus can still be accessed via the Google cache of ace-exchange. Here’s the text from the prospectus cache, in case that disappears too.
————
SOS: Grid Representation Foundation d/b/a +SOS+
Stop Jacking Us, Jack!
Shares to issue publicly 2,500,000
IPO shares sold to date 383,709
IPO shares remaining 2,116,291
Total shares in company 2,500,000
Prospectus
Company Tagline
Stop Jacking Us, Jack!
CEO’s Real Life Name
Mike Lorrey
CEO’s Real Life Location
New Hampshire
Board of Directors
IntLibber BnT – CEO, Director
Little Gray – Chief Counsel
Board of Directors
Hermit Barber – Chairman
Meshed Gears – Director
IntLibber BnT – Director
SOS Officers
Aminom Marvin
Burnam Bedlam
Cummere Mayo
Cube Republic
Dragoness Navarathna
Hermit Barber
IntLibber Bnt
Poet String
Rico Roizman
Selkit Diller
SOS Officers
Slithery Eel
Tina Knibber
Save Our Openspace Sims, Hold LL Responsible
Recent declarations by Linden Lab propose to increase tiers on open space sims by 67-233% by January 1st. After marketing and selling open spaces, Linden Lab is asserting that they are ‘abused’ and represent ‘greater value’ than they anticipated.
Nobody has the right to unilaterally change the terms of a contract after it is made, without the agreement of all the parties. Linden Lab’s restrictions on open sims and much higher fees than were the case at the time they were sold represents such changes. Linden Lab’s acknowledgment that their network infrastructure is incapable of supporting the product they have already sold constitutes admission on their part that the representations they made on these products were incorrect, and if anyone in Linden Labs expressed concern about the loads being placed on the networks prior to such sales, the sales may have been been fraudulent. Linden Lab’s elimination of grandfathered tier rates, represents bait-and-switch tactics. Given many of their sim customers are also competitors against LL’s mainland land business, this also represents illegal anti-competitive action which could fall under anti-trust or even RICO statutes.
In order to put SOS on a business footing, and establish a basis for the representation of avatars on SL and on other grids in the future, the managers of SOS have formed “The Grid Representation Foundation” as a US 501c organization. In addition, in order to preserve the value of their Open Sim investments, users may need to take specific steps and legal advice may be advisable. SOS intends to obtain this advice on behalf of OS all users. These steps require funding.
As such beyond the peaceful protesting, activism, blogging, and other methods SOS members are using to convince LL to change their policy, so also there must be a legal component. To fund the initial legal steps, we have projected a $10,000.00 USD budget which we anticipating raising from our members. We anticipate that earnings from damages in any litigated or settled case will exceed the legal expenses. SOS intends to repay this, together with a reasonable return, to those funding the legal process.
The easiest way to manage raising and distributing the funds, with total transparency, is to use the existing microcap system within Second Life. For this reason, we are organizing this IPO: To raise the funds to obtain legal advice for the members and the organization, to cover operating expenses, potentially to sue Linden Lab, with the expectation of earning back the investment in legal expenses; plus damages to be distributed to those funding the case. Should the challenges to Linden Lab fail, the funds may be fully or partially lost, but the good that they do for the users will continue.
Regards,
Hermit Barber
Business Overview
Projected budget for litigation: USD $10,000
Sue Linden Lab to rescind their Open Space Tier Policy, and recover legal fees plus damages. Pay out recovered funds and excess damages at the conclusion of the case.
Business Strategy
Discussing the legal strategy would be counterproductive, but the litigation will go hand in hand with a concerted protest, blogging, and public relations campaign which has already begun and is evident in the SL and mainstream media.
We are also encouraging our members and the SL public to boycott the Lindex currency exchange and use the ACE Currency Exchange instead. Half of currency trading fees on ACE will be to the benefit of the Fund to further our legal budget and eventually to pay net dividends in the event of a successful outcome of this case in excess of 100% of the funds donated to this cause.
Business Strengths
The justness of our cause, the strength in numbers, the power of public and media support.
SOS is incorporated in the US State of Iowa as a nonprofit corporation. We are operating as a charitable organization and have applied to the IRS for charitable status so that gifts to the organization can be made tax deductions.
The Articles of Incorporation of The Grid Representation Foundation have been submitted to ACE.
All GRF directors RL names and addresses have been included. Additional inworld directors may submit that information to ACE as a support ticket on this website.
Initial research by chief counsel indicates that bait and switch is an offense falling under Racketeering, Influenced, and Corrupt Organizations Act statutes, and as such, any civil litigation claims falling under RICO can receive up to trebel damages in a successful suit.
Linden Lab sold approximately 10,000 openspace sims between March 1 2008 and Oct 31 2008. This equates to 2.5 million USD. Suing as a class, we would be entitled to collect 7.5 million USD in a successful verdict, plus legal expenses.
Use of Capital
2.5 million L$ converted to USD = 9500 USD
Additional revenues: SOS will earn 0.5% on every currency trade on ACE for the duration of the crisis, possibly adding significant additional funds to the legal effort. Any extra currency trading earnings not spent by the legal team will be returned to investors as a dividend along with settlement funds.
Risk Factors
We could lose the case but still spend the money. LL could shut us down for having the temerity to oppose their policy. This could drag on for years. SL could simply go away.
Should we lose the case, any unspent moneys will be returned to the originators, and US based donors should be able to claim the remaining amounts as a business cost (if they report SL income) or tax deductible donation (if not). This is the best we can do to mitigate this risk.
The first step in any strategy will be to obtain an injunction against LL imposing their policy or interfering in group activities for the duration of the case. The duration of the case could, alone, end their attempts to impose this policy.
As for SL going away, that is up to LL and whether they continue to make bad decisions that damage their relationship with their user base.
Management
IntLibber BnT
Hermit Barber
Other members of management, both in RL and SL, to be named once they provide RL Identity Information.