A Federal judge in the Eastern District of Pennsylvania issued a new 46 page order (.pdf) in the Bragg v. Linden case denying Philip Rosedale’s motion to dismiss the portion of the lawsuit directed at him for lack of personal jurisdiction, and also denying defendants’ motion to compel arbitration.

Commentary

First, I’m excited to see how thoroughly the Court dug into these issues. The Court could have granted or denied these motions with little discussion, but it didn’t. The Order states: “Ultimately at issue in this case are the novel questions of what rights and obligations grow out of the relationship between the owner and creator of a virtual world and its resident-customers. While the property and the world where it is found are ‘virtual,’ the dispute is real.” You can tell that the Court “gets it” right off the top.

Regarding the motion to dismiss Rosedale for lack of personal jurisdiction, the bar for establishing personal jurisdiction is pretty low, so I wouldn’t read too much into that part of the Court’s decision. Realistically, there are a lot of ways Rosedale can get himself out of the case later, and personal jurisdiction is fairly easy to establish.

But the denial of the motion to compel arbitration? That is a pretty big deal.

Understand initially that arbitration provisions are enforced all the time, and defeating one isn’t ever a simple thing. Moreover, when there’s complex technology and somewhat bizarre issues involved, the smart money says there’s a good chance the Court will let alternative dispute resolution procedures play out before it tackles the case.

The smart money would have been wrong this time. The Court held that Linden Lab’s Terms of Service amount to a “contract of adhesion” that “provide[s] Linden with a variety of one-sided remedies to resolve disputes, while forcing its customers to arbitrate any disputes with Linden.” In other words, the arbitration provision — though equally applied to both Bragg and Linden — is unconscionable because the rest of the Terms of Service (particularly those provisions that give Linden Lab unilateral, unlimited ban rights) aren’t “mutual.”

Bottom line is that this is a pretty extraordinary decision which, assuming it survives an almost certain appeal, will likely be cited as the seminal decision in virtual law for the foreseeable future. It will certainly force Linden Lab to revisit their Terms of Service, and in the end, it will result in virtual world participants being viewed somewhat more as “citizens” of these spaces and somewhat less as gameplayers subject to the whims of the provider.

There are a lot of issues raised by this Order, among them: the impact on the other provisions of the TOS, the possibility for special rights for participants in virtual spaces, and whether this will encourage other law suits. Readers, please consider sharing your thoughts on these issues, or any other issues raised by this Order. There’s a lot to digest here, and I’d love to hear your thoughts.

Quick note to welcome readers who are visiting Virtually Blind for the first time after following the link in this Reuters article on trademark misuse in virtual worlds (particularly in Second Life). If you’re looking for the VB post that was discussed in the Reuters article, you can find it here.

I’m quoted in the article, both for background and for my position that Linden Lab isn’t in a position to police for trademark infringement on behalf of companies. Just to be totally clear, I do believe that virtual world providers have an obligation to follow up once allegations of trademark abuse are made, and I’m a little surprised that Linden Lab appears to be issuing warnings (not suspending or closing accounts) for trademark violations. I just don’t think that it is practical to expect virtual world providers to do the initial detective work to discover misuse of marks.

I’ve been out of town for a few days, so I’ll get caught up by way of VB‘s regular feature, “Quicklinks.” Here’s today’s batch.

• Tony Walsh is asking readers for input on trademark reporting in Second Life. He recalls (as, vaguely, do I) some mechanism in Second Life for reporting trademark violations to Linden Lab. Neither of us can find it now. He’s interested in your recollections, and I’m curious too.

• Blizzard (operator of World of Warcraft) is suing Peons4Hire, a group that sold World of Warcraft gold to players (and apparently advertised their services heavily in-world). The reaction in Bilzzard’s forums is almost universally positive.

• Second Life CEO Philip Rosedale was recently quoted in an Information Week article saying that “everything in Second Life is marked with your identity and name. If you break the law in your locality in real life, and we can facilitate people going after you, we have no problem with that.” The writer asked whether this would apply to an authoritarian regime’s request for information. Rosedale didn’t directly answer, but did say that “preserv[ing] people’s freedom as much as we possibly can” is important.

• A post on a Second Life project called the “Justice List” and an interview with ‘Ashcroft Burnham,’ one of the driving forces behind the project, recently appeared on the Secondlife Newspaper Daily News. The idea of the Justice List is — in extremely broad strokes — a proposed grid-wide, opt-in justice system that uses formal judicial procedures and parcel ban lists. [Disclaimer: Though I am not personally involved in the Justice List project in any meaningful way, I have discussed the project with 'Ashcroft Burnham' in my capacity as President of the Second Life Bar Association, and some SLBA members are part of the project.]

At one point, I thought Virtually Blind was flirting with overspecialization, but I came across this today: a new blog called Second Life Law.

The site’s promising name aside, SLL appears, at least for now, to be a largely automated aggregator for Second Life news in general (and the aggregator needs a little tuning; it is currently displaying an article on the Pirates of the Caribbean ride at Disneyland). There is a little original content buried in there though, and the news does tend toward the business/legal end of things, so Virtually Blind is pleased to welcome another site to the tiny virtual law blogosphere. We’ll be checking in regularly to see what they’re up to.