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Apr 14, 2009

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1.

Josh, just off the cuff, I think there are 2 strands in your post, both about what developers want:

1) Is X (meaning some state of the law) what developers want? (If lawyers for developers are shocked at 3PB claims, then you're saying they did not intend this.)
2) Is X what developers *should* want?

It seems to me that if we're asking what developers want or should want, then they, like most businesses, *should* want whatever gives them minimum risk and maximum profitability. So they should want the right to prohibit Gliders because, if for no other reason, that right = market power.

When it comes to 3PB doctrine, they *should* ask: does allowing players to enforce certain TOS terms increase our control/profitability or does it decrease our control and increase our costs? If you analogize the developer to the state, there are many examples of private agents being drafted in the enforcement of state rules -- e.g. qui tam writs. Private enforcement of state laws can raise compliance and shift costs away from the government. There may be other benefits as well -- as well as other risks.

Personally, I think in some situations, it would be in the interests of developers to vest some policing power in the online community. Currently, this is pretty common but those powers are technological -- e.g. the propriety police that are deputized in Club Penguin.

It's a close call as to whether the game company would want players to have *legal* claims -- Second Life has said "yes" on this, but we'll have to see how that experiment turns out. My sense is that it depends on whether the developer is really willing to bear the costs of become involved in some way in such suits by , e.g., dealing with discovery. It is hard to see how the developer won't be drawn in, even if they are not named as a party.

I take your point to be that 3PB doctrine, and contract generally, have serious limits, as you noted in your paper. Even with an aggressive unconscionability doctrine and broad 3PB standing, you'd still have issues with MDY-type contract-based overreaching and you'd still have player-player harms that might fall outside the scope of a 3PB action. So I don't see the persuasiveness of your arguments about the limits of contract as hinging on the vitality of 3PB doctrine in this area.

2.

Josh: Thanks for the nice writeup. I think we agree on more issues than we disagree. I think a key point of our agreement is that even in the best case, the value of 3PB is limited in practice.

I think a key point of our disagreement is that I think it is very difficult to contract around 3PB in some cases. The analogous cases I discuss in my essay suggest that the surest way to avoid 3PB is to provide an internal grievance procedure that makes clear disputes are to be handled by the provider, and not the users.

The problem, as Greg points out, is that providers may not want to take the time/spend the money to provide such a procedure. The alternative is an agreement that says "You may not harass other users, but other users have no right to enforce this clause," and I wonder whether that would be considered illusory in this context.

As for the points about contract overreaching, Glider, etc., I tend to think that contract is king - these are click-wrap licenses and people have a choice among worlds. If users for the most part cared about contract terms, we would see some term competition (and maybe we have with Second Life and IP). That said, some anti-competitive provisions should be outlawed - the problem is that no one (to my mind) has really figured out exactly which ones and why. I hope to eventually write an article that addresses this problem not just with virtual worlds, but with contractual limitations on the use of information generally.

Greg: "Personally, I think in some situations, it would be in the interests of developers to vest some policing power in the online community."

Stay tuned for my next essay, called "Virtual Rule of Law," which discusses this and similar points.

3.

Michael:

I hate to chime in too directly here, but there is a bit of a flaw in your choice argument. It's particularly important given the third-party thrust of the discussion.

People have a choice among worlds, but other parties not beholden to the contract do not. A term in a contract that inhibits the behavior of a third actor may be completely inconsequential to the player directly. The player would not be offended or otherwise find it unconscionable, but it would prevent the third party from entering the market.

Traditional market forces of competition and the general notion of scaring away your customers are ineffective in this situation. A third party who wishes to sell software related to a game has a different version of offensive than the actual party who agreed to the contract.

To use the simple example at hand, what if the WoW EULA simply stated that you cannot use commercial software that works with the game? It is very close to that, particularly with the new UI mod "policy". That has no direct impact on players and the players themselves will not complain, nor will they ever show up in court and argue that the term is unconscionable.

However, people that are not a party to the contract are severely affected by such an inclusion. They're on the hook for copyright infringement right out the gate. If they persist, they may wind up on the wrong side of a DMCA action or tortious interference - and all the damage required for the tortious claim is simply hiring people to prevent the activity that is disliked, as no damages were recognized by the judge in MDY other than the salaries of the "hacks" team.

When you have a game with a very big marketshare, the "choice" argument from a player perspective is very misleading and doesn't really do justice to the market chilling effects of these contracts. Term competition is meaningless to the parties of the contract; it only applies (in no small irony) to folks that are not beholden to the contract.

A company today wishing to enter any type of add-on market now has to be more concerned with a contract that they did not even agree to. That is now more important than what should be normal business concerns, such as potential customer base, other competitors, product quality, etc. There is no choice here, other than choosing not to enter a market - and writing away competitors or add-ons with a contract is pretty darn anti-social.

4.

Michael Donnelly sets out an excellent reason to object to the use of tortious interference claims to block third-party software development, and I agree with his analysis.

I would add that the problem of not being able to control one's contractual obligations appears in the 3PB context as well. The problem with a 3PB provision, especially one supplied after the fact by a court, is that the promisor does not know to whom she is making promises.

Any commercial party will agree, I think, that picking one's contractual counterparty is far more important than the terms of the contract. Who you contract with is more important than what is in the contract.

The problem with sub silentio 3PB designations is that they require parties to perform promises to people with whom the contracting party may have no relationship whatsoever. Such contracts are "blank checks."

Thus, imagine a third party developer who creates software that improves gameplay (like, for example, the Setpoint software that turns my mouse into a MMORPG killing machine). They have two concerns. First, they have no input over the contractual terms to which they are bound: whatever the game god puts into its customer contracts binds the third party developer under an MDY tortious interference theory.

Further, if any of the employees of the developer do click through the contract in order to avoid a DMCA claim, as in Davidson & Associates, they will be held to the contractual promises in the EULA not only to the game god, who may actually permit the practice, but also to every other signatory of the EULA.

These are two powerful disincentives for developers to enter this market, and it seems to me that neither is resolved by the fact that consumers may have a choice of contract.

5.

Josh: I agree with your comment. This is why the "intentional" part of the beneficiary is so important. "Don't harass other users" is intentional - other users are potential beneficiaries, non-users are not.

Michael Donnelly: I would call it a "feature" rather than a flaw, but drawing the line is a difficult question. We routinely require our users to do things that make things costly or impossible for third parties. Lexis and Westlaw do not allow students to use their free access for their law firms. Does this hurt law firms? Of course, but we live with that because the alternative is that westlaw starts charging law students (and more importantly professors) for access.

Now, where you draw the line is an open question - at some point we allow add-ons through a variety of doctrines: antitrust, fair use, idea/expression, etc.

Even so, while I am sympathetic to the "virtual world add-on market" that might never be due to restrictive user agreement, the rule of reason tells me that this might not be such a bad thing. If user happiness is based on perceived fair play, then it makes perfect sense for providers to require fair play, even if that means that wonderful add-ons never get invented.

The result is no different for other hub and spoke contracts, like securities. There are wonderful automated trading tools, which get shut off in certain circumstances when their use might screw up the market.

Those who want wonderful add-ons should invest in their own worlds where they are allowed. If they do not want to spend the money to do that, they should not presume to tell those who have made the investment what add-ons they should allow. If they do choose to make the investment, I wonder how many users will flock to a world where those with more money win all the time.

Just to make clear that I am sympathetic to the desire for certain add-ons, let me a) point to an article I published years ago looking at these issues: http://papers.ssrn.com/abstract=885341 and b) point out that in that article I make clear that customer need for compatibility is critical. Thus, I think that add-ons that allow people to move their virtual possessions to another world should be allowed, for example.

6.

On a side note, I'll add that much good can come from open API's - Zittrain's "The Future of the Internet and How to Stop It" makes a compelling case for the value of generative systems as opposed to closed ones. I guess I just wouldn't go so far as to call such closed systems anti-competitive unless they involve some significant market power (e.g. the old AT&T not allowing third party phones).

7.

i liked this story it was fun do more

8.

On a side note, I'll add that much good can come from open API's - Zittrain's "The Future of the Internet and How to Stop It" makes a compelling case for the value of generative systems as opposed to closed ones. I guess I just wouldn't go so far as to call such closed systems anti-competitive unless they involve some significant market power (e.g. the old AT&T not allowing third party phones).


thanks so much

9.

Even so, while I am sympathetic to the "virtual world add-on market" that might never be due to restrictive user agreement, the rule of reason tells me that this might not be such a bad thing. If user happiness is based on perceived fair play, then it makes perfect sense for providers to require fair play, even if that means that wonderful add-ons never get invented.

The result is no different for other hub and spoke contracts, like securities. There are wonderful automated trading tools, which get shut off in certain circumstances when their use might screw up the market.

Those who want wonderful add-ons should invest in their own worlds where they are allowed. If they do not want to spend the money to do that, they should not presume to tell those who have made the investment what add-ons they should allow. If they do choose to make the investment, I wonder how many users will flock to a world where those with more money win all the time.

Just to make clear that I am sympathetic to the desire for certain add-ons, let me a) point to an article I published years ago looking at these issues: http://papers.ssrn.com/abstract=885341 and b) point out that in that article I make clear that customer need for compatibility is critical. Thus, I think that add-ons that allow people to move their virtual possessions to another world should be allowed, for example.

Posted by:lilly

10.


In my opinion, when the first EULA/s were written, no author with a ”legal background” made his constribution. Than copy/paste system worked.In the case of Romania, EULA/s seems to be a joke, since every contract have to have a written form : ”verbe volant, scripta manet”. The internet develop very quick and from my point, the legal system ( which in main cases, Europe, where most of the law is objective by nature) which should some how ”norm” it, was overdue. Seems that now we are in ”ancient” form of law, where the strong ones makes the set of rules to bend to. This is kinda sad, because we have so many good ”hands” in law fild.

Back to EULA, I would like to add, that is I make an comparison with a written commercial contract goes like this :

1.CC (coomercial contract) has a consensual, bilateral,onerous, comutative and transitive (by ownership)character.The legal capacity of the law subject is also strict limited (see legal guardian, some special interdictions). Also the object is the selling/buying of a mobile or imobile thing.The rights and obligations are very strict also.

2. EULA/s gives virtual disclaimer and liability. I buy a virtual thing and I don/t know what character code has. The real ”products” have at least labers where I can read what I buy, what are the period of time which I get guaranty. After I agree with EULA, I go in VIRTUAL SHOP of a game and buy an ”RELIC” for my character. In the description I see that is used for increasing the ”LIFE” for example of my avatar, but the others details are forgotten ( what clan/role can use it, what is it made of - due design choice and so on). Also in most of the cases, the ”broke” merchandise can/t be shift back because you are teh subject of EULA/s disclaimer. Maybe I don/t want my money back, maybe I want another item. No EULA/s terms for that.Selling policy in most of game cases is a big joke.

11.

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12.

Hahaha, how ironic!

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