Class Action Lawsuit Filed Against Second Life

Big news in the Virtual World front today: Second Life is back in the legal hot seat as users brought a class action lawsuit today challenging Linden’s land policy and other practices.  The 64-page complaint, filed on April 15, 2010 in Federal court in the Eastern District of Pennsylvania, alleges that Linden Labs and former president, Phillip Rosedale, engaged in deceptive and misleading behavior with regard to the extent of player rights to the virtual territory that it began selling in 2003.  When it transitioned from a traditional MMO model of owning all land and content created by users to the revolutionary position of allowing users to retain the rights to their content it made headlines far beyond the usual gamer and techo-obsessive circles.

The complaint, which can be read in full here (PDF), explains that for nearly 3 years, Linden used the opportunity to own land with all the rights of real land owners as one of the world’s primary selling points, along with the right for users to retain ownership in creative content and designs they made in the game.  After the Bragg v. Linden lawsuit settled in 2007, however, Linden began moderating its language about ownership, gradually replacing all such terms with what amounted to a limited license right to access content, rather than ownership.

While this would be within their right for future, prospective buyers, the plaintiffs to the suit argue that Linden also changed its Terms of Use unilaterally, and essentially retroactively, so that land that was formerly “owned” became licensed or leased.  This is the equivalent of Best Buy telling you that the DVD you bought from it two years ago was now its property again and that it could reclaim it at any time.  Linden claimed the right to do this through a change to its Terms of Use that it required users to agree to before they could access their in-game land and content.  By not giving users the opportunity to sell off their game assets and convert their Linden$ back to real dollars, the parties claim that Linden Lab unlawfully converted their property without compensation.

I will be following the progress of this suit closely as it progresses, although that could take quite a while.  What I think is most interesting about this complaint is the fact that it relies heavily on “precedent” that was established by the Bragg case.  Indeed, it is apparent that the plaintiffs chose to file their diversity suit in Pennsylvania for the sole purpose of using statements from Linden and Rosedale during that proceeding, along with the  court’s ruling on the viability of Linden’s arbitration clause, as a petard upon which to hoist the defendants.  For those of you readers not familiar with the strategy of offensive, non-mutual collateral estoppel, it is a legal principle based on the fact that the defendant already lost on a point in a similar suit and thus cannot re-litigate it.  It’s very handy for the plaintiffs in this case, as there are what appear to be some fairly damaging admissions from that first go-around.

I’m still reading through the complaint and I will post more that I find once I’ve had a chance to read the whole thing, but this is an exciting development, however it turns out, as it may finally give us legal scholars some new court precedents to more clearly understand the limits of virtual property and consumer rights in virtual worlds.

Stay tuned!


About Justin Kwong

An attorney in the Twin Cities and adjunct professor at William Mitchell College of Law where I teach a seminar on the law of virtual worlds.
This entry was posted in Contracts and Agreements, Litigation, Virtual Items / Virtual Goods, Virtual Worlds and tagged , , , , , , , , , , . Bookmark the permalink.

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