I’m not sure how I missed this story when it first emerged last winter. A company that designs and sells virtual animals in Second Life is suing a competing animal maker over the IP behind the way the companies make money. It’s a fascinating case for a number of reasons. So I was excited to dig in and learn more when Wall Street Journal reporter Justin Scheck contacted me a week ago to get my views on the events taking place both online and in a Northern District of California Courtroom.
To get an idea for what’s going on, the article in the WSJ is a good start. To even more briefly summarize, the issue centers around an intellectual property dispute (Amaretto Ranch Breedables vs. Ozimals, Inc. between two companies over the idea of selling virtual food to purchasers of virtual pets, which keeps the animals from wasting away. I’m not sure how this even made it to court, as it was initially brought primarily as a copyright complaint under the DMCA. That would be great, except that copying an idea isn’t copyright infringement. Whoops! Regardless of the merits of that issue, the most interesting thing about the case was that the defendant, Amaretto sought a temporary restraining order (TRO) against Linden Lab, maker of Second Life, to prevent them from shutting down their horse food operation. The reason being that if the company couldn’t keep selling its food, the horses would die within 72 hours. Exactly how this would cause irreparable harm to creatures that can be reanimated with a couple of lines of code is beyond me, but it was apparently enough to sway the judge to grant the ex-parte TRO against Linden.
This represents a major shift in strategy and a fairly remarkable divergence from existing law. As the information service provider, there are at least two safe harbors that should apply to Second Life, not to mention the good ole First Amendment. I’m going to leave most of the detailed analysis of the legal issues to Prof. Goldman since he tackled them better than I probably can way back in January, but suffice it to say that it’s a rather interesting and unique situation. One thing I will say is that the idea of arguing “irreparable harm” as a justification for the TRO is certainly noteworthy. This is probably not the last we will see of this argument in online environments, so be on the lookout.
I wanted to use the rest of this post to follow up on a couple of the other issues mentioned in Mr. Scheck’s article. First off, he’s right that there aren’t any other virtual worlds that provide users with the opportunities to make and market their own virtual items. It’s impressive to see how the market manages to adapt quickly to consumer demand. As one store owner said, “The chickens were huge” in 2009, “then the bunnies came out and they were huge,” and “then the cats,” until eventually the market turned to horses. I like the idea of people driving demand versus the monolithic command economies of Farmville and other closed virtual worlds. It’s certainly not free of controversy, but then again, Zynga probably has more in common with the Chinese economy than Soviet Russia.
All in all, I’m glad to see that Second Life’s economy continues to thrive amidst the multitude of offerings competing for people’s attention. I just got an email from a friend of the blog (Aladek) that Blizzard’s forthcoming Diablo III will feature an auction house where users can buy and sell virtual items for real money. This is a complete 180° for the company that has gone to court many times to keep third party businesses from selling gold from its wildly popular World of Warcraft for real money. More on this as it develops.