About two weeks ago, after more than eight months of exchanging motions and responses, hearings and arguments, both sides in the Second Life land dispute case were dealt a substantial victory and crippling blow in a ruling by the U.S. District Court. How is that possible, you might wonder. Although Judge Eduardo C. Robreno did not decide to completely dismiss the case, as the defendants at Linden Research sought, he did conclude that it was improperly brought in Pennsylvania and ordered the case transferred to California. Judge Robreno essentially split the difference, but I think there’s more to it than that. Read on…
For those of you not familiar with the case here’s a brief synopsis: The plaintiffs allege that during the early years of Second Life, the company and it’s founder and CEO Philip Rosedale made representations that the rights to land that was offered in Second Life were actual property rights with the benefits and legal obligations that accompany real land. The company denies this was ever the case and sought to dismiss the action for a number of reasons, including lack of jurisdiction due to a binding arbitration clause and improper venue. Judge Robreno, who also presided over the famous Bragg v. Linden case in 2007, denied the plaintiffs’ efforts to conduct the trial in the Eastern District of Pennsylvania, which appeared to be a key part of their trial strategy. For those of you not familiar with virtual world case law, it was the same place where Marc Bragg achieved his nominal victory against Linden Research four years ago. The plaintiffs likely sought to use that decision as collateral estoppel to march right past the formidable terms of service agreements that would arguably stop the case in its tracks. Clearly this is not 2007 anymore and many things have changed since those rough and tumble days.
Although Judge Robreno did not dismiss the case outright, there does not appear to be much left for the plaintiffs to cling to even if they do decide to bring their case in California as required by the Terms of Service’s forum selection clause. From what I can determine, the second major part of their strategy was in arguing that the contracts, to which the individual plaintiffs all clicked “I agree,” remained fixed in time once their accounts were closed. This would mean that, even if users agreed to modified terms of service in subsequent accounts, the previously closed accounts would only be bound by the rules at the time they were closed. This is a rather complicated argument and it essentially rests on the contractual concept of consideration–benefit in light of the bargain.
Here the question is, when Linden changed the terms of service, did the plaintiffs get anything new in return? Traditionally, the right to log into Second Life is all the new consideration that was required. If, however, they had walked away from their closed accounts, there would be no new benefit for them to receive and thus no consideration. It should be fairly simple but what makes it complicated is the idea of these closed accounts. It raises the question whether the contract terms follow and bind the individual account (of which a human may have many, even if it’s technically against the TOS) or if the contract follows the player. I think it is clear, and apparently so does Judge Robreno, because he barely gives the idea a line of discussion in his opinion.
According to the plaintiffs’ website, they are going to carry on the fight in California courts. I wish them luck. If anything, regardless of the outcome, the matter will give us more insight into what the courts think about standard form contracts and the rights of players with respect to those contracts. Watch this space for more updates as they become available.