Legal Issues
Property Rights
Virtual Worlds in China

Law and Order in Virtual Worlds
One clear impact virtual worlds have had on the real world are the legal issues that have arisen during their growth. While there are Federal laws to regulate the internet in general, there are not any that deal with virtual worlds specifically. However, current laws are being used in cases involving virtual property and will the outcomes of these court cases will undoubtedly shape the future of virtual worlds.

One fundamental question that arises is to what extent can government even regulate what occurs in virtual worlds?
This question was partially addressed in the case of Voyeur Dorm v. City of Tampa. In this case, Voyeur Dorm was a company which ran an adult website. This website allowed users to look through webcams at young women who were paid to live inside a house provided by the company. However, this house was located in a residential zoning district, which did not permit adult businesses to operate there. The city of Tampa ordered Voyeur Dorm to shut down the house, while Voyeur Dorm claimed that the house did not violate the zoning regulations.
When the district court initially ruled in favor of Tampa, the 11th Circuit Court of Appeals took up the case. The court eventually ruled in favor of Voyeur Dorm, citing that “Specifically, Voyeur Dorm contends that section 27-523 applies to locations or premises wherein adult entertainment is actually offered to the public. Because the public does not, indeed cannot, physically attend 2312 West Farwell Drive to enjoy the adult entertainment, 2312 West Farwell Drive does not fall within the purview of Tampa's zoning ordinance. We agree with this argument—the public offering occurs over the internet in ’virtual space.’“
David Post, a law professor with an interest in Internet Law, responded to the case by saying that "the Eleventh Circuit recognized that there is another place out there that is not in Tampa, that is not anywhere, but is where these people are offering services—The way the court talked is meaningful. It suggests that judges are wrestling with the idea that in some cases we are going to have to come up with new legal frameworks."
Thus from this case, we can see that regulation of the internet as a whole is subject to jurisdiction issues such that local and state governments may not be able to enact much legislation to regulate it. Given the international nature of the internet and virtual worlds, it is even questionable how much real effect Federal legislation would have.

One issue in virtual worlds similar to real worlds is the issue of enforcing copyright. In the court cases so far, we can see that courts are treating copyright infringement in these worlds just as they would in the real world.
The first copyright infringement case in Second Life was Eros LLC v. Leatherwood. In Second Life, users are allowed to copyright objects they create to various degrees, ranging from public domain to a standard copyright. In this case, Eros LLC was a company in Second Life that sold adult accessories to avatars within Second Life. However, Leatherwood found an exploit within Second Life which would allow him to duplicate items created by Eros, and then sell them and reap in the profits himself.
When initially confronted by Eros, Leatherwood was only known by his avatar and believed that he could hide behind the anonymity of the virtual world. However, using methods similar to what the RIAA uses, Eros issued several subpoenas to various ISPs and eventually used private detectives to track down Leatherwood, who was an unemployed 19 year old high school drop out living with his parents. The courts ruled the default in favor of Eros, which meant that they are able to collect damages, although they have not done so as of yet.
In the meantime, a similar case known as the Rase Kenzo case was settled with the infringer paying some fees.
While these cases show how copyright infringement in virtual worlds is as much a crime as it is in real worlds, there are issues about enforcement. Specifically, it is difficult and time consuming to identify copyright infringers, as seen in the Eros case. And it will presumably be more difficult to track down infringement that occurs in an international level, which could easily occur in virtual worlds.

Property Rights
Regarding property rights, virtual worlds fall into two main categories: 1) Those where all in game property is claimed by the game company, or 2) those that claim that users own at least some form of virtual property.
The first case is by far the most common, and seems to be partly to avoid legal issues. For example, the terms of service for Blizzard’s World of Warcraft state that, “All rights and title in and to the Program and the Service (including without limitation any user accounts, titles, computer code, themes, objects, characters, character names . . . are owned by Blizzard or its licensors.”
This issue of ownership complicates ideas such as theft, since items that are taken from a player remain in the game.
Even if we treat players as owning certain items in these games, it is still ambiguous to decide when an action was resulted in theft. For example, if one player attacks a creature and then another player attacks the same creature, who can claim the items that the creature leaves behind?
The closest analogy to these issues comes from card games in the Wild West. Courts ruled that if cheating of breaking of the rules were somehow involved, the people who lost money in these games could claim it back. However, rules are often ambiguous in virtual worlds. Are the rules of the game anything that you can do in the game, since presumably the programmers could code things that would prevent actions that are against the rules? Or are they based on the standard norms of the game? This is tricky because some games have multiple servers the players populate, each with their own set of norms. Conflicts in these games tend to be resolved either by the players themselves or with super-user type players who are given this position by the game company. These issues have not yet come up in a US court.
For the second type of game, where ownership is given to the players, the best example of this is Second Life. In these types of games, the issue of ownership has gone to court.
In 2005, a user named Mark Bragg sued Linden Labs, the owner of Second Life, for unlawfully depriving him of his property in Bragg v. Linden Labs. Second Life allowed users to buy and own virtual land with US dollars through their website. Bragg found a way to buy land before it was put up for auction by directly entering values into the URL of the site, and was thus able to acquire land much more cheaply than what they would be worth at auction. When Linden Labs found out, they banned his account from Second Life, which meant that they essentially took away all of his Second Life property, which included property Bragg had acquired before using the exploit.
While this case eventually involved both parties suing each other and a court ruling that Linden Labs’ Terms of Service arbitration clause was unconscionable and unenforceable, eventually the case was settled. While the settlement has not been disclosed, it is known that Bragg received access to his account back.
Since this case was settled, there were no precedents set. However, a mock trial conducted by a Harvard Law School class found the following points. First, Bragg did have legal ownership of the property he had owned in his account in Second Life. Second, Bragg used an improper exploit and Linden Labs was justified in taking back the improperly acquired property. And third, that Linden Labs was not justified in confiscating property that was acquired before the exploit.
If these same conclusions were reached in a US court, they would have fascinating repercussions. For example, since property is owned in Second Life, if they go bankrupt are you allowed to demand that property back? The full nature of property ownership in virtual worlds is still unexplored.

Virtual Worlds in China
China is a stark contrast to the United States in terms of legal issues and virtual worlds because they are one of the most active in pursuing government regulation of the internet, such as the infamous great firewall of China.
In particular, China has passed anti-addiction regulations to limit the amount of time users can spend on online games. These measures work by handicapping the user after a time limit has been reached, for example by preventing them from using certain abilities or capping any loot or experience they can gain after that time period. These regulations work partly by tying a user’s login to a national identity system.
Property rights issues have also cropped up in China. In 2005, a Chinese gamer stabbed and killed his friend after his friend sold the gamer’s virtual sword for real money. While the gamer contacted police, they could not do anything since there were no laws involving virtual theft.
In contrast to the US, one Chinese court in 2003 ordered a game company to restore items to a gamer after his account had been hacked and his items looted. This seems to indicate that a game company has some measure of legal responsibility in maintaining the property rights of their users. However, Chinese courts do not have a strong history stare decisis, so it is unsure if this policy will remain standard in China.

Since many virtual worlds can still be considered nascent, most of these issues are still unresolved. In the near future, we can expect many of these issues to stay within virtual worlds, such as property issues in World of Warcraft. This is partly because most game companies and gamers would prefer to leave the courts out of what many still consider games. While there are no new laws that deal with virtual worlds specifically, we can definitely expect many new rulings on ways to interpret current laws to these brave new worlds.