2008 starts with two developments in the Florida-based federal class action lawsuit against virtual property dealer IGE. First, the court has granted (.pdf) plaintiff Hernandez’s motion (.pdf) to drop Hong Kong-based defendant Internet Gaming Entertainment Ltd. because plaintiff was not able to serve the complaint on that defendant in the allotted time (U.S.-based IGE U.S. LLC remains in the case). Second, in a virtual law first, the Florida Attorney General’s Office of Economic Crimes has opened an apparently related investigation regarding IGE’s business activity in Florida, and has subpoenaed extensive records regarding IGE’s sales of “virtual goods.”

For the full background of this case, see VB’s complete coverage. In brief, plaintiff is suing IGE on behalf of essentially all World of Warcraft players on the grounds that IGE, by farming gold, spamming chat, camping spawns, and generally diminishing the World of Warcraft experience, allegedly prevented players from receiving the full benefits Blizzard intended them to receive as third party beneficiaries of Blizzard’s Terms of Use and EULA.

Hong Kong Defendant IGE Ltd. Dropped

Plaintiff Hernandez dropped his claims against Hong Kong-based defendant Internet Gaming Entertainment Ltd. because he was not able to serve process on IGE Ltd. within the 90 day extension period (.pdf) granted by the court last August 31. This is not terribly surprising; service via the Hague Convention frequently takes much longer than 90 days.

Florida Attorney General’s Office of Economic Crimes Opens Investigation

In regard to the investigation opened by the Florida Attorney General’s Office, the Newsome Law Firm (which is running the Hernandez case) reports that the Attorney General’s Office of Economic Crimes has issued an investigative subpoena (.pdf) to IGE U.S. for documents, “pursuant to the Florida Deceptive and Unfair Trade Practices Act in the course of an official investigation.”

The subpoena is the first formal document created as part of a U.S. governmental investigation that takes the existence of “virtual goods” as an accepted fact, even listing them in parallel with “goods” generally. Although it obviously has no formal value as “precedent,” it represents another instance of virtual property being recognized by a governmental body to which attorneys can refer in order to provide context.

The subpoena is extensive, seeking detailed information about IGE’s gold farming activity, business dealings in Florida, relationship with Affinity Media, and much more. Following are some key excerpts identifying categories of documents sought by the Office of Economic Crimes.

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Welcome to 2008! I’m not sure if it’s my inner litigator telling me to avoid going on the record with things that can make me look foolish, my inner philosopher telling me that the calendar change from December to January is a pretty arbitrary construct, or my inner skeptic telling me that predictions are just parlor tricks, but for whatever reason, I’ve been reluctant to do the traditional blogger’s New Year’s predictions, so I put it off until now. That all said, I’m pretty immersed in this stuff at the moment, as I’m doing a comprehensive editing pass on Virtual Law (slated for publication in April) so predictions are dancing through my head like last week’s visions of sugar plums. Besides, I’ve got a mountain of paper here, and I want to put off working on New Year’s Day for a few more minutes.

Toward that end, here are ten predictions for virtual law over the next year.

1. A major virtual world or game provider will be named in a class action lawsuit for failing to enforce its terms of service.

2. At least one country will block access to Second Life, citing content that violates local law.

3. The SEC or a foreign securities enforcement group will declare the sale of shares of virtual world companies for virtual currency an act covered by securities laws.

4. A virtual world featuring gambling will go online, with servers based in a gambling-friendly jurisdiction.

5. A state bar association will issue an ethics opinion on virtual world activity.

6. A congressional committee will investigate money laundering and terrorism-related activity in virtual worlds.

7. A virtual world’s chat log retention policy will spark resident protests.

8. The IRS or a foreign tax collection entity will issue a bulletin, notice, or written determination that income made in virtual worlds is taxable.

9. There will be a lawsuit between virtual world users claiming breach of contract and fraud.

10. A free-form virtual world featuring a true currency (e.g. the provider accepts liability for outstanding currency) will be announced.

Agree? Disagree? Think I’m completely nuts? Add your own to the comments, and I’ll credit any that you nail in posts next year.

I’ll look back at 2007 and wax nostalgic later in January, when VB celebrates its first year anniversary, but for now, I do want to briefly thank all of VB’s readers for giving me and the other VB writers your attention over the last year. Editing VB has been a lot of work — much more than I imagined — but also an enormous amount of fun. I can’t wait to see what happens next.

Pacific Epoch reports that China’s State Administration of Radio, Film and Television (SARFT) and Ministry of Information Industry (MII) are set to jointly release regulations for online video and audio programs in 2008. The regulations reportedly will allow only state-owned firms and state-controlled companies to broadcast video and audio programs online, and all programs are subject to MII approval. Virtual worlds and social networking sites will all presumably now be subject to further government censorship (ahem, regulation).

Silver lining…the new regulations only apply to professionally published programs, not user-generated content. Therefore, YouTube-style sharing may still flourish. Also, this could be promising news for the booming Chinese blog market. The China Internet Network Information Center (“CNNIC”) just published a “Survey Report on Blogs in China 2007.” According to the report, as of November 2007, the number of blogs in China has reached 72.82 million , with 47 million blog writers, one fourth of the total netizens.

Chinese blogs cover almost all areas of people’s daily life, including cultural, military, and economic topics. In light of the regulation of state-controlled companies, blogs seem poised to become the primary source for the Chinese people to share and obtain information.

Shanda, developer of MMORPG The World of Legend, has been ordered to pay 5,000 Yuan (US $679) and apologize to a gamer for taking away his virtual tools, reports Pacific Epoch. The gamer discovered six virtual items worth more than 1,500 Yuan (US $204) missing from his game account on November 22, 2006 (perhaps the Sword of 1,000 Truths), and contacted Shanda regarding the disappearance. Shanda said that the company had taken the items in accordance with a police investigation regarding the sale of stolen virtual items. But Shanda failed to follow police instruction and return the items after the investigation ended.

Apparently the gamer is not satisfied with the apology — after nearly a year away from the game, the gamer now plans to take Shanda back to court. He plans to sue for the 150,000 Yuan (US $20,367) he claims to have spent in-game over five years.

Haven’t found the World of Legend EULA yet but would be interested to see what it says about ownership of virtual property. This case highlights the potential conflict a Chinese MMORPG developer may face when caught between protecting the user and cooperating with police investigation.

Happy holidays. Remember, when it comes to loot, need before greed.