Eros, LLC has filed an amended complaint (.pdf) naming Robert Leatherwood, of North Richland Hills, Texas, as the John Doe defendant previously known only by a Second Life avatar’s name, ‘Volkov Catteneo.’ A summons (.pdf) was also issued. Eros is owned by Kevin Alderman (‘Stroker Serpentine’ in Second Life).

Alderman confirmed the identification of newly-named defendant Leatherwood as the person he and Eros’ attorney Frank Taney believe controls the ‘Catteneo’ account. Alderman said that Leatherwood denies that he is ‘Catteneo.’

Richard Slatkin of Fort Worth, Texas, a private investigator hired by Eros, served Leatherwood with the summons and complaint Thursday morning, according to Alderman. Slatkin reported that Leatherwood is nineteen and lives with his grandmother, great-grandmother, and uncle.

Leatherwood admits that he uses Second Life, and has offered several different explanations of his relationship with the ‘Catteneo’ account in an attempt to address two IP traces that ended at different locations where he is known to log on to Second Life, including his home. In an article in the Tampa Tribune, Leatherwood first said that ‘Catteneo’ was a “hacker” who gave him access to the account, and that he would not reveal the hacker’s real name in case ‘Catteneo’ sought revenge. Later, he stated that he would give up the name if he knew it, but that he does not know it because ‘Catteneo’ and he only interacted in Second Life. Two days earlier, according to the article, Leatherwood told Eros’ attorney that he did not know ‘Catteneo’ at all.

Alderman said, “I am saddened that Leatherwood doesn’t understand the severity of his actions and the evidence we have against him. Witness statements, Linden Lab account information, and numerous corroborating sources assure us we have our guy. If he continues to deny his guilt we will seek the full damages afforded to us by law, which are considerable. Regardless of his current financial situation, a prevailing judgment will follow him until satisfied. We offered an extremely amicable and affordable settlement, that would have required a fractional monetary compensation.”

Reuters reported that the Leatherwood family said they needed to speak to an attorney, and that Eros planned to go forward with discovery (which would likely include an early deposition of the defendant) in 20 days, if no settlement had been reached by that point.

‘Catteneo’ (allegedly Leatherwood) previously admitted to a Reuters reporter that he had copied and sold at least 50 of the allegedly infringing items but claimed that his identity was not discoverable because he had provided false information to Linden Lab. Based on earlier filings, it appears that Eros discovered his identity via his IP address, which was provided by Linden Lab and PayPal, and traced to his account via his internet service provider.

‘Catteneo’ did not immediately respond to an in-world interview request, and VB was unable to reach Leatherwood by telephone.

For background information on this lawsuit (an intellectual property claim originally naming a fictitious defendant because the alleged infringer was only known by the name of his Second Life avatar) see VB’s previous coverage.

[Updated 10/25 and 10/26 to add comments from Kevin
Alderman and information from external sources.]

Last night’s Second Life-centered CSI:NY episode was exactly what it was supposed to be: an entertaining 42 minute cops and robbers network television show that touched on law and technology, without exploring either in depth. Regular readers will recall that I don’t like these shows generally, so it shouldn’t be a surprise that I didn’t like this one much either. That said, I was no more disappointed in the legal wrangling (far faster than in reality) or the depiction of technology (predictably over the top) than I am when I watch any mainstream television show that riffs on subjects I’m familiar with.

As for the in-world tie-in experience, I walked through the whole thing as if I was a new user. While it has flaws, it is head and shoulders above any mainstream virtual world tie-ins we’ve seen so far. Moreover, Electric Sheep did something I thought wasn’t possible by making the virtual world experience relatively user friendly, from the initial splash “pick your avatar” screen right through to the large, attractive CSI:NY builds and an engaging puzzle game.

At least as of this morning, I was able to log in easily, and I found about a half-dozen avatars at the sim I was placed in (there are many identical ones) who seemed actively engaged in the puzzle game. Frankly, if you are one of VB’s attorney readers who does not already have a virtual world presence but is interested in exploring these spaces, the CSI:NY entry portal to Second Life isn’t a bad way to start.

There are, obviously, some big issues with the law and technology as depicted in the show. Rather than rehash them here, I’m going to take the lazy editor’s way out and direct you to Shava Nerad’s review, where she calls the show out on a lot of legal and information security details, and describes her (much less successful) in-world experience following the show last night.

Though it is widely understood that profits made running a business that deals in virtual goods or services are taxable, tax agencies have not yet seriously pursued enforcement, and there is an open question regarding when these profits are taxable. Two recent presentations suggest that enforcement is getting incrementally closer, both in the EU and the United States, and more interestingly, both commentators suggested that profits may be taxed even before they are converted to “real” currency.

First, Second Life’s ‘Tax Anderton’ (in real life, a member of The Chartered Institute of Taxation in the U.K.) participated in a Q&A on U.K. tax law. Rivers Run Red has made an audio recording (.mp3) of the event available, along with a summary (.pdf). The presentation is U.K. specific, but covers a wide range of topics. ‘Anderton’ said that though there is no case law or code that directly addresses the question yet, existing laws clearly require users to pay tax on profits that they withdraw from virtual worlds, and may also require payment of tax on profits that have not yet been converted to real-world assets. ‘Anderton’ said that though it is a gray area, “if I were a betting man, I’d say that case law is more likely to decide that regardless of whether you’ve actually made a conversion [to real currency] it will be liable to a U.K. tax.”

Second, Bryan Camp, Professor of Law at Texas Tech University, recently discussed taxation of virtual world commerce with more of a U.S. focus as part of the Metanomics speaker series in Second Life. Camp, like ‘Anderton,’ opined that profits made in virtual worlds could be taxable even before they are withdrawn as dollars. Camp’s suggested that in-world currency may be seen as analogous to barter credits, although he also offered an alternate interpretation and did not come down definitively on either side of the question. He observed that the easier it is to buy real goods with virtual currency (e.g. order a real life pizza) the more likely the IRS will see exclusively in-world profits as taxable. A video recording of Camp’s presentation is available on the Second Life Cable Network.

Practicing Law Institute is offering a Continuing Legal Education (CLE) course on virtual law entitled “Virtual Worlds – The New Legal Frontier” next month. The course will be conducted via live audio on November 8, 2007, from 1:00 to 2:00 PM Eastern and will be presented by Stephen J. Davidson, of Leonard, Street and Deinard in Minneapolis, and Stephen Mortinger, Vice President and Associate General Counsel of IBM’s Systems & Technology Group.

It looks like a good introduction to the key issues. The cost is $299, and the program qualifies for one hour of CLE credit in most states.

From the course description:

With literally millions of active participants from around the globe, virtual worlds are emerging as an important and increasingly valuable venue for social and commercial activity. They are also raising questions about what laws govern conduct in this new space, who has jurisdiction over behavior there, and which courts have the power to control behavior and resolve disputes that arise in the virtual realm.

Do we really need an entirely new legal regime (e.g., new intellectual property laws) and “in world” courts as some commentators suggest, or are the laws, regulations and legal precedents developed over the past ten years for other Internet venues applicable to this new paradigm as well?