Some Skepticism

My colleague in legal academia and uber slinky-fan Eric Goldman joined Cory at the Santa Clara Rules &  Borders conference and is attempting to throw a wet blanket on some of the more ambitious legal claims regarding virtual worlds.

First, Eric has a draft paper posted on free speech issues in virtual worlds that discusses the Peter Ludlow media blitz of a year ago.  Eric points out, correctly, that the burden here falls on free speech advocates to explain how the virtual world "company town" situation differs from the common claims, generally rejected  by courts, that the First Amendment protects against "censorship" by private ISPs and forum owners.  He's not convinced that there is a difference.

Second, he's got some ruminations on his blog that take a very similar, very skeptical approach to the possibility of players avoiding the legal enforcement of pro-Dev EULA/TOS terms and claiming rights to virtual property, as has apparently happened in China.  As he points out, we're generally bound by our contracts, so the burden falls on the players to demonstrate some reason the MMORPG situation differs from the standard ISP situation, given that the standard ISP situation may sometimes act to destroy misplaced customer investments.   Again, he's not convinced there should be a difference for MMORPGs.

And I can't say I disagree with any of this -- the burden should fall on those drinking the metaverse kool aid to explain clearly and articulately why legal issues involving immersive virtual social environments should be treated any differently than the prior cases that have involved, e.g., message boards, chat room, and the like.   (If different treatment is indeed desirable from a policy standpoint.) This is not an easy task.  As Dan and I explained towards the end of our first paper on this stuff, the first wave of legal cyber-exceptionalism has largely foundered.  Why should we expect virtual worlds will get a different treatment by the law?  The cool graphics and the 20-30 hour (on average) weeks will probably not be enough to do the trick.

Comments on Some Skepticism:

Jeff Cole says:

I think Goldman unecessarily gives away half of the farm by assuming (conceding) time/money spent is somehow an "investment" (by which he clearly means something acquired for future benefit or return). Why isn't it merely a quid pro quo? Entertainment for money?

Perhaps one could argue that the social network one develops in-game might indeed provide a future return or benefit-- but is it really if it is so fragile so as to be incapable of surviving extra-game.

I've spent quite a bit of (too much?) time/money downing pints and developing social networks in various establishments here is Austin, I certainly wouldn't argue my "investment" in those establishments gives me any claim of right in them. The "investment" was in the network, not the establishment.

And, this: "Intuitively, it seems problematic that participants can lose their investments." Why? People lose on their investments all of the time.

Jeff Cole

Posted Feb 17, 2005 12:49:41 PM | link

James Grimmelmann says:

The interesting stuff isn't cyberspace exceptionalism; it's cyberspace everydayism.

The name of the game with virtual property is not players asserting property rights directly against developers. There are consumer-protection issues there, of a fairly garden-variety clickwrap form-contract variety. If there are inroads onto those contracts, I'd expect the leverage to come from product liability and tort law, not from property. The pressure to strike down certain contract rules as inhibiting alienability that you sometimes see in other areas of property (e.g. numerus clausus and restrictions on servitudes in personal property) are much weaker where one can in fact guarantee that anyone who comes into contact with the property is on notice that the game developer reserves certain rights in it.

The interesting action has to do with virtual property rights held by players as against the rest of the world. I sell a Bone Crusher to you and hand it over, but your check bounces. Can I get replevin, or am I restricted to damages? If the government requests that the game company boot me, is my loss of the Bone Crusher a compensible taking? If you defraud me of the Bone Crusher in the game, is that actionable? What if you took it using a known exploit, later closed, and were banned for it? If you took it by hacking the game server? Can I pass my virtual property by will? How should it be handled if I go bankrupt and my creditors want it auctioned off to raise money?

Where third parties are involved, the contract between player and game company isn't always the end of the matter. Even where the contract itself does turn out to provide the answer, many game companies are going to want to figure out what they ought to put in their contracts about some of the above situations, in order to attract customers.

Posted Feb 17, 2005 12:52:59 PM | link

Richard Bartle says:

James Grimmelmann>Where third parties are involved, the contract between player and game company isn't always the end of the matter.

What's the prevailing feeling about jurisdiction? When I sign a EULA, the EULA says which is the governing law; if I have a dispute with the developer of the virtual world, we know in which courts the issue will be decided.

When players fall out with other players, though, the chances are they haven't signed any contract between one another. Does this get treated just the same as if I agreed to buy something from you over the phone but reneged on the deal? Or is the location of the server or broker service important?


Posted Feb 17, 2005 1:31:52 PM | link

M. Scott Boone says:

I agree with James with respect to the fact that these disputes are simply consumer-protection issues.

Sure, there may not be a difference in how we treat the binding effect of a MMOG EULA and how we treat the binding effect of other clickwrap contracts. However, that doesn't mean I don't think there is a problem with enforcing the EULA against players to to deny them the ability to sell in-game objects (assuming there are property rights in such objects). The problem is with all of these contracts, not just the MMOG EULA's.

And, I think it may be ab attle fought with property (in addition to product liability and tort). The kicker will be a dramatic increase in digital rights management, especially if rights management jumps out of the digital realm and into the physical world. I think we are starting to see this, or at least the possibiities for this, with automobiles. THe consequence is the erosion of traditional property rights or the erosion of individual property ownership itself.

Posted Feb 17, 2005 4:33:19 PM | link

greglas says:

James> The interesting stuff isn't cyberspace exceptionalism; it's cyberspace everydayism.

Or as David Post responded to Jack Goldsmith: "plus ca change, plus ca le meme chose"

Yes, that's very true -- there's bound to be a thousand very new and interesting legal doctrinal puzzles raised by MMORPGs, just as there have been by search engines, chat rooms, digital music, etc., etc. -- and the puzzles will be solved in ways we can't predict now.

But as Dan and I said in the Virtual Crime essay, there's something about the nature of these spaces that *should* make them raise slightly different questions for the law and make us uncomfortable about equating them with other online activities. Primarily, I think it's the fact that they're styled as games.

Posted Feb 17, 2005 10:23:39 PM | link

Eric Goldman says:

Great comments. Jeff's comment is particularly insightful, so it prompts me to clarify my post.

I agree that it would be odd to characterize the garden-variety enthusiast's time and money spent on entertainment as an "investment." Instead, I chose the word "investment" because there could be situations where someone is actually trying to build a business in a virtual world. Even in this more extreme circumstance, where someone is truly investing capital (time and real cash), I still think that a termination-for-convenience EULA is too weak a foundation to give them any protection.

Of course, if this extreme investment case doesn't warrant overriding the EULA, then I have even less interest in overriding the EULA for someone whose entertainment is degraded by an account termination.

Posted Feb 18, 2005 10:59:14 AM | link

Peter S. Jenkins says:

Greg>As he points out, we're generally bound by our contracts, so the burden falls on the players to demonstrate some reason the MMORPG situation differs from the standard ISP situation, given that the standard ISP situation may sometimes act to destroy misplaced customer investments.

I read Eric's brief paper with interest and I must say that his discussion of the switching issue is just a use of the classical rhetorical device of setting up a "straw man" argument,i.e. saying that your opponent's weakest argument is, in fact, his main argument and then proceeding to demolish it. The switching argument is really a bit of a red herring - there are much stronger arguments that can be made for free speech in MMOG's, e.g. reaching individuals who can be said to "live" in the game due to spending more time there than anywhere else, i.e. not just 20 or 30 hours per week but in some cases up to 60 or 70 (Yee survey), the commodification argument (Balkin) [note: now that EQ has Pizza Hut I think I finally know what the "magic circle" is!], and the dangerous precedent setting effect of denying free speech in virtual worlds that are already more than merely games (due to Ebaying, IGC etc.)However, even having set up his straw man argument, Eric does not effectively dispatch it. He attempts to do so by saying that switching an ISP has the same switching costs as switching a MMOG. However, I recently voluntarily switched both my ISP and my MMOG (SL to EQ - I like variety and also I'm looking forward to the pizza!)The ISP switch only involved about 10 minutes or so to export my list of contacts etc. and I never missed a beat. On other hand, about 30 hours or so after switching my MMOG, I am nowhere near the level of inter-connectedness, networking, assets etc. that I enjoyed in my old MMOG. I expect that it will take me probably another 100 or 200 hours to get there. What MMOG's has Eric been playing? Eric also refers to the Prodigy Networks case and says that it almost sank the Internet until Congress enacted s.230 of the Communications Decency Act, which provided immunity to ISP's and virtual world owners for controlling user content they deem objectionable. However, Eric conveniently skirts around the point that s.230 also provides immunity for the MMOG owner from vicarious liability for user speech, regardless of whether the owner attempts to regulate user speech or not. It is this latter prong of s.230 that has been the savior of the Internet not the first prong. This latter prong is perfectly consistent with free speech in MMOG's. Finally, Eric's portrayal of MMOG free speech advocates as "moralistic" seems to be an interesting attempt to piggyback on the current misguided fad of portraying First Amendment supporters as members of the religious right. However, this attempt ultimately fails when one realizes that free speech in MMOG's has also been used for leftist causes such as in-game peace rallies (e.g. the Polygons for Peace rally in There).

Gotta go - my pizza's here!

Peter S. Jenkins

Posted Feb 20, 2005 10:50:58 PM | link

Eric Goldman says:

Peter, I'm grateful for your comments to my paper. I apologize if my paper read as if I was setting up a strawman. I certainly was not trying to do that; I was merely trying to respond in the most detail to the argument I thought was most convincing.

The immersive argument, in particular, is pretty unconvincing. I can declare myself part of some the republic of Sealand or the republic of Goldman or the republic of Delusional Beliefs, get others to agree with my vision, and demand some autonomy accordingly. See, e.g., But this is fantasy--we still live in the real world and are governed by real world laws. Wishing it were different will not make it so.

The commodification argument is interesting, which is what prompted my post about whether we can recognize any economic interests that are predicated on a EULA that says that everything can be taken away. I've concluded that such a EULA is too shaky a foundation to recognize economic interests built on it.

As for the "dangerous precedent" of denying free speech argument, I argue in the paper that in fact we benefit by allowing service providers to dial up or down the amount and type of speech that they will tolerate in their environments. I may have not convinced you, but my short essay addressed that argument very directly.

As for switching costs, I have two observations. First, different people will incur different levels of switching costs in any virtual environment. For some, the switching costs are enormous; for less-invested players, the switching costs are less. Second, switching costs are a matter of degree--how much is too much? My point was that switching costs exist in a lot of places, and we need a principled way to distinguish when they matter and when they don't. Certainly the correct answer is NOT that they should matter only when we don't like what the provider is doing.

You're correct that I didn't get into all of the implications and motivations of Sec. 230. I do agree with you that the blanket immunization is the key to the law.

Finally, I apologize if my use of the word "moralistic" unintentionally suggested a link with right wing views. Instead, I was targeting those (of any political persuasion) who respond to private censorship by taking the position that we should tell private actors what to do. I will fix the wording in my article.

Thanks again for the comments. Eric.

Posted Feb 21, 2005 2:00:30 PM | link

Jeff Cole says:

I dunno.

If I ran a paintball range, and hid guns/equipment on the range for players to find during their play, there are very few players (read: none?) who would think they actually "owned" anything they were given to play and found during play. Perfect examples of bailments. I have yet to see a convincing argument why virtual items acquired in game are not bailments.

In a previous thread (to which I am too lazy to link), Greg bailed (pun intended) by arguing that he was not sure there was "possession" of such items sufficient to create a bailment. But, if there is sufficient possession to assert outright ownership, then there is sufficient possession to create a bailment.

In one of his papers, Balkin floats the idea (without any substantive argument or analysis) that the players might assert a bailment argument to support their ownership. That seems completely backwards to me.

But all that is plain ol' vanilla property law. Not nearly as sexy as intellectual property.

I think we should be extremely careful about creating completely new rules "just because."

It is a testament to the immersive effect of these worlds (separate and distinct from immersion in any specific world's milieu) that these legal discussions are even taking place (OK, who dosed the kool-aid?). That we even refer to these spaces as worlds.

Especially when the social networks at issue seem not to be viable outside of their silicon womb. Indeed, isn't such unviability absolutely essential to any argument for regulating these spaces? Why should we be particularly concerned about or develop new legal rules to protect social networks the links of which are so tenuous, or the nodes of which are unwilling to take their nodes and links elsewhere?

Eric is right to be skeptical.

Jeff Cole

Posted Feb 24, 2005 9:05:14 AM | link

greglas says:

Jeff --

I think Eric is right to be skeptical as well. I guess the key question is just whether we'd all end up better or worse if we called virtual property "property"? In the case of domain names or trademarks, there's a significant back and forth about whether the interest should be characterized as a property interest, and I'm generally on the anti-property side. With regard to cybertrespass law, I'm very much on the anti-property side.

But I think you can make plausible normative and economic arguments for the pro-property position in some cases -- for instance, in the case of commercially farmed exploits that devalue the play experience. At a conference last week in Michigan, someone was (very cogently, imho) arguing a pro-virtual property approach based on the application of standard law & economic externalities approaches (something Dan & I didn't take up). If we take that step, it doesn't solve the player/owner issue at all, ab initio -- maybe you're right that a bailment (if we've got property) is one way to treat the player "possession" of the stuff--but we've got to take the property step first. I forget what I said in the previous thread, but I was probably just trying to understand how you'd apply the capture/possession concept in Pierson v. Post to 1's in 0's in a database.

Posted Feb 24, 2005 11:02:12 AM | link

Barry Kearns says:

M. Scott Boone> Sure, there may not be a difference in how we treat the binding effect of a MMOG EULA and how we treat the binding effect of other clickwrap contracts. However, that doesn't mean I don't think there is a problem with enforcing the EULA against players to to deny them the ability to sell in-game objects (assuming there are property rights in such objects). The problem is with all of these contracts, not just the MMOG EULA's.

I couldn't agree more. One of the reasons I found the California Law Review article that I referenced in another thread so fascinating, is that it very clearly outlines the dangers associated with current EULA/TOS and clickwrap contracts.

IP owners have begun using these devices in a manner that makes them into "private legislation", designed to (in effect) override state and even federal law, much of which is designed to delicately balance the rights of IP owners with the rights of IP users:

(from the linked paper)

"In Sony, the Supreme Court stated that "[copyright] protection has never accorded the copyright owner complete control over all possible uses of his work." [FN167] Yet in a world governed by Judge Easterbrook's radical freedom to impose terms by shrinkwrap "contract," there is no reason that such a conclusion should pertain. Instead, the imagination of shrinkwrap drafters can come close indeed to achieving the type of complete control that Sony expressly denied them.

Consider the following example of that complete control. Although the Act limits the copyright owner's rights to "public" distribution, [FN168] publishers who follow the logic of ProCD, Inc. v. Zeidenberg may amplify their statutory rights simply by wrapping books [FN169] in cellophane, subject to the limitation that the buyer is barred from passing the purchased copy on to a friend. [FN170] Nor is there any reason that the publisher should stop there. It could likewise require the reader not to skip chapters, not to read any paragraph more than three times, [FN171] not to reveal the surprise plot twists to family or acquaintances, and certainly not to quote in a book review the few short excerpts that the fair use doctrine would otherwise permit. [FN172]"

Further on, we see what I consider to be the heart of the matter when it comes to EULA writers misusuing copyright and clickwrap contracts to give themselves "extra" rights:

"Because U.S. copyrights are infinitely divisible, contract is the only sensible means for dividing up spheres of exploitation. On the other hand, those convinced by the foregoing discussion can harbor no doubt that not every device unilaterally imposed under the rubric "contract" can pass constitutional muster. ProCD v. Zeidenberg clearly illustrates that phenomenon. The question therefore remains where the dividing line lies between the permissible and the forbidden. Abstracting from the above criticism of the Seventh Circuit's decision in ProCD, the appropriate dividing point emerges organically from the copyright monopoly that Congress, acting within the framework of the Constitution, bestows upon authors. If a copyright owner contracts to exploit a work up to the limits of his constitutionally and congressionally conferred monopoly, he is acting legitimately; conversely, if an author uses contract law to enlarge that monopoly to apply to exploitations beyond its congressionally sanctioned orbit, she is behaving illegitimately. That latter conclusion follows whether the expansion derives directly from state law [FN207] or as a matter of contract law, which ultimately derives its enforceability from the same body of state law."

Greg, is "Pierson v. Post" a good example to MMO players that kill-stealing is definitely nothing new under the sun? =P

Posted Feb 24, 2005 11:47:13 AM | link

Jeff Cole says:

Greg, I would adopt the Pierson v. Post concept that by subjecting items to the control of the player constitutes "possession."

Conceptually, the intangibility of the items just isn't a problem for me ... 1s and 0s, or atoms ... what's the difference, really? It's the relationships between the tool, the possessor, and other would-be possessors that the law is supposed to manage.



Posted Feb 25, 2005 8:51:54 AM | link