Cr1m3 and (No) Puni5hm3nt?

Excuse the l33tspeak, but it's gonna be a while before I get it out of my system.

Now that we have this brand new forum (thanks be to Teddy C) on interesting social aspects of virtual worlds, I wanted to start out with a question that's been bugging me for a while. A little while ago the fabulous Julian posted a fabulous entry on his fabulous Play Money blog.

Like most of his Play Money deals, it involved him acting as the middleman in the sale of a virtual asset in UO. But this particular asset was very unusual and he quickly discovered that it had been "stolen" in-game by an avatar with high-level thieving skills. So he became a virtual fence for an asset that he knew to be stolen. He questioned the ethics of this action but concluded that, since stealing is an in-game skill, the theft took place in-world and was not properly thought-of as theft.

My question is whether this holds up IRL? Could the victim bring a criminal action against the thief or Julian? It's undeniable that the asset has a tangible value IRL, and that the asset, as the usual common law definition requires, was "appropriated with the intention permanently to deprive" the owner of it. Is the argument that "theft" is permissible in-world sufficient to insulate Julian from a fencing charge?

Maybe. But I want to be in court the day that you try explaining skill-trees to the 70 yo judge...

Comments

[Edward Castronova]

1.

"But I want to be in court the day that you try explaining skill-trees to the 70 yo judge..."

Philip M. Pro, the US Circuit Court judge who presided at the mock trial on virtual thievery in Vegas in July, was not 70 by a long shot. But he wasn't a spring chicken either. And all he needed to know was that there were goods that people paid money for. End of story.

[Dan Hunter]

2.

I think that value in the real world gets you part of the way. But there are lots of things IRL which have value but which can't be stolen because they're not property (eg services), or we conclude that there are reasons against providing legal protection (it was once the case that "whiteness" was conceived of as being property--and defamation actions against those who claimed that I had tainted blood were run as actions against property--but we've moved on since then). But as Greg and I conclude in our longish piece, it's not crazy to think of virtual assets as property.

So the issue seems to come down to whether the cultural difference between VW and RL means that you are permitted to steal property of value within the world when you're not allowed to do this IRL. I still don't know what the answer to this might be.

[Julian Dibbell]

3.

I agree with Dan that establishing the value of virtual items only gets us halfway to end-of-story. But it's not obvious to me where the remaining ambiguity lies.

In my case, the one Dan refers to, the facts were clear: The stolen item was stolen in a manner that the rules of the game permit both implicitly and explicitly (a character role-playing a thief used the games "hiding" and "stealth" skills to do the deed). In the case of the Vegas mock trial Ted refers to, the facts were also clear: The stolen item was stolen in a manner prohibited not only by the rules of the game but by federal law (the victim's account with the game company was hacked). No rule broken in the first (other than the golden rule); federal law broken in the second. And that, I think, is the end of the story.

Not convinced? OK, time for my favorite MMORPG-meets-money analogy: the poker game. Consider a poker game during which one player has, through subterfuge, deprived another player of a substantial pile of poker chips. Was the victim deprived of real value? Certainly. Was a crime committed? This depends entirely on the nature of the subterfuge. If it was that form of deception known as bluffing, then no. If, on the other hand, it was the form that involves waiting for the beer-bleary victim to get up from the table to go to the john and scooping a bunch of his chips over to your side of the table, then I'd say there's a case.

[Edward Castronova]

4.

Intriguing point about poker. It makes me wonder - suppose I start a Vegas casino with a special room for no-holds-barred poker. Meaning, anyone can do anything to anyone else; it's all part of the rules. Full-on PvP. Go in there, lay down aces and eights, and a guy can shoot you. If you complain, the casino says, "hey, those are the rules of the room, you agreed when you entered." I imagine those rules would be subject to some kind of court challenge; I bet the casino could be sued; I think the act of shooting another person is still illegal, even if both parties agree beforehand not to hold the other accountable.

I guess the point is that States don't ask for jurisdiction, they arrogate it to themselves and defy anyone to stop them. We are lucky the State leaves bluffing in poker alone. We're also lucky it bans dueling. I'm not sure where the line is in synthetic worlds.

[Greg Lastowka]

5.

And remember there's always self-help options when the law won't step in. Back in the frontier days, you could get shot over misinterpreting the norms of poker... Reminds me of the one where the cowboy pulled out his gun, pointed it at his opponent across the table and said: "You're cheating -- You ain't playing the hand I dealt you!"

[Dan Hunter]

6.

I like Ted's analogy a lot (you should've been a lawyer, analogies are supposed to be our stock-in-trade). Of course Julian might say that killing is a wholly different animal from thievery. So change the analogy a tad, and have the no-holds-barrred room indicate that you can't kill, or otherwise inflict any crime against the person, but crimes against property are allowed. Imagine then the fraudsters who fleece the n00bs, using marked cards, cards-up-the-sleeves, video-cameras, etc. What would or should be the response of a court where the aggrieved n00b says that card-shark Julian has committed any number of property crimes (obtaining property by deception, fraud, forgery, etc) against him?

Julian will rightly point out that the n00b should've read the conditions of entry, but situations where victims "consent" to crimes are really complex. Generally the victim's consent is not going to excuse the accused (witness the gruesome cannibalism case in Germany recently), and specifically in this case I doubt that a blanket Terms of Entry on the door is gonna get you there.

[Edward Castronova]

7.

Call me morbid. Google "gruesome cannibalism case in Germany" and you get:
http://www.smh.com.au/articles/2002/12/14/1039656260495.html

[Julian Dibbell]

8.

Loving the analogy fest. Let me try one:

kids who aced the analogy section on the SATs : the legal system :: rocket scientists : the space program

How'd I do?

Seriously, Ted's no-holds-barred casino room is a good one, especially with Dan's no-physical-violence proviso, which brings things a little closer to the original cases. Here's the last piece that's missing, I think:

Not only is no physical violence allowed in the room, but you are also not allowed to bring any foreign objects into the room. You can't even bring your own clothes in. The house gives you a goofy costume (river-boat gambler; cowboy) and some poker-playing equipment, along with certain cheating devices (the odd spy cam; a marked deck). It also hands you a fat manual that explains how to work these devices and how they may be used against you. Anyone caught tampering with the devices is kicked out and their winnings confiscated.

OK, so now the analogy has gone baroque to the point of ridiculousness, but at least we've got a poker game that works like a MMORPG.

Now: What judge, 70yo or otherwise, is going to have time to hear somebody's complaint about having been "cheated" out of their money by someone who used the approved house methods of cheating?

On the other hand -- and here we arrive, finally, at what I believe to be the center of ambiguity in this discussion -- what about the person who loses money to someone employing the unapproved methods of cheating? That is to say, to an actual cheater?

This is the gray area. In real life, as far as I know, the person who loses money to a cheater at cards has no legal recourse. Likewise, the casino that loses money to people who count cards at blackjack can't have the card counters arrested. It can only ban them from the premises.

Where it gets weird is that if you translate the casino and the card counters into the networked world, you get game companies and exploiters. And while I would have thought the game companies would be just as unprotected legally as the casinos, when I brought the question up with expert hacker defender Jennifer Granick (who played the defense attorney in the Vegas mock trial we've been discussing) she wasn't so sure.

Here's the thing. Role-playing a thief in accordance with the rules of the game is legal. Gaining unauthorized access to an online computer system is a federal crime. But which of these characterizes the activities of the exploiter? The guys who dupe gold on UO tend to think of themselves as playing the game at a meta-level -- looking for loopholes in the architecture (the implicit rules of the game) to get ahead. The game company, on the other hand, certainly sees this as a violation of the explicit rules of the game, and perhaps as indistinguishable from exploiting a security hole to get access to unauthorized functions of their computer systems.

All the game company has to do, then, is find a prosecutor whose view of the hacking statutes is sufficiently ample to bring suit. And as Ms. Granick assured me, finding just such a prosecutor would probably not be too much harder than indicting a ham sandwich.

[Ren]

9.

I couldn’t resist…

Virtual items are not property. Hence the issue is not the in-game theft, but the act of advertising something for sale, then taking money for it when it is not possible for you to own that thing – is this not fraud ?

Now, it's been argued that what is being sold is not a thing (or a set of rights to a thing \ concept as in an intellectual property transaction) but rather a service. I grant that this can be the case, but in all virtual-item transaction I’ve seen its not.

Easy solution – lock up Julian anyway.

Ren

[Dan Hunter]

10.

I'm interested, Ren, why you think that virtual assets are not property. Just because they exist as a consequence of a service doesn't mean that they can't also be treated as property. I can provide a service as a freelance author, but the product which I create is copyright and clearly treated as property for almost any use I can think of.

[Ren]

11.

Because to be property a non-physical thing has to fall under one of the defintions of non physical (intelectual) property. For copyright they must be a Work. The fail to meet the tests as drafted under UK, UK and EU law.

See either my paper or Molly's for the full legal explantion of why.

www.ren-reynolds.com/downloads/HandsOffMYavatar.htm

www.mollystephens.com/Note.htm

ren

[Dan Hunter]

12.

Ren, I don't think your bright-line rule works in practice. There are lots and lots of examples, but take the most important form of property, that of real property. Though there may be physical land involved in real property transactions, *every* single interest is intangible, from the fee simple, through the old-style fee tail and other outdated forms, leaseholds (including long leaseholds in your country which serve a variant form of freehold), to lesser interests like licences and interests in possession. You can tell that these things are property by asking whether these interests can be traded or securitized, or more simply, by asking whether it's possible to obtain financing for the purchase of an interest. Or even use the older approach of asking whether these interests can be enforced by the owner against the world at large (except for those with prior, competing, or better interests in the same subject matter)

There are many other examples of intangibles which have become propertized, including the IP interests you mention, but also including cell-lines, factual stories, etc.

Though each of these may demonstrate some variations in their protection (length of duration, whether the interest is protected at common law or the subject of statutory intervention, etc etc) I don't think you can plausibly claim that intangible property only exists where Parliament/Congress/the legislature says so.

[Ren]

13.

Dan,
But with Intellectual property the definition of what is and is not property seem to be fairly well defined, and there are many cases where, when something falls out of these definitions it is not seen as property. Moreover congress has ruled that stretching the definition of IPR in some ways is an abuse with related remedies, I don’t know how this could stand if there were not hard limits.

>You can tell that these things are property by asking whether these interests can be traded or securitized, or more simply, by asking whether it's possible to obtain financing for the purchase of an interest.

I don’t agree with the traded point at all. If I have half a kilo of cocaine that I just paid a lot of money for and intend to sell for much more money, do I actually own it ? I certinaly posses it, but that’s a different matter.

Moreover, (1)can you get finance to buy a virtual item, (2) I don’t see the fact that someone will lend you money to do something makes it property – see the cocaine example.

Ren

[Dan Hunter]

14.

I don't want to hog things here, but let me just say that I don't think the cocaine example does much. There are lots of examples of things that are property on first principles, but which for various reasons we decide as a matter of public policy should not be freely traded. Cocaine is one example. Children are another (pace Judge Posner).

I accept that we can certainly decide not to grant property interests in virtual assets. But I'm hard-pressed to work out what would be the public policy reason so to decide.

[bing]

15.

The reason why there are no free markets in cocaine and babies (despite all Judge Posner's attempts) is that they're explicitly bad for society. I think it'd be a stretch to say that virtual items aren't property.

Julian said it: it's all in the rules of the game. By playing, you're aware and implicitly consent to the possibility of your items being stolen.

[Ren]

16.

I’m writing a long reply to Dan’s last post. But someone has just argued on MUD-DEV as follows:

Avatars are a collection, rights in a collection are separate form any individual item, players own the collection by virtue of their actions e.g. sorting and selection; but through the EULA they transfer rights to the game company – hence game companies own avatars.

My only issue with this is that ownership of a collection requires both sorting and selection. The developer sorts as they define the database schema, the player selects as they define the name of the avatar and through play, define the other elements.

So neither player or game company have meet both of the tests. Hence I assume neither is owner. Alternatively, the collection could be in joint ownership ? Is there a test case that covers this ?

Ren
www.renreynolds.com

[Dan Hunter]

17.

If you assume that copyright is the appropriate rubric, then there are issues of protection of code, data, derivative works (or "joint works" under the UK system), and so forth. Each of these are dealt with differently depending on the jurisdiction (eg US has limited protection for data, UK (see British Horseracing) and Australia (see Telstra v DMTS) have fairly broad protection that isn't dependent on selection and arrangement) and on the issue you're addressing. It will also differ depending on the fact situation: not all VWs are built the same way, some are built on other developer's engines, etc. In short, as Greg mentions in his latest post (http://terranova.blogs.com/terra_nova/2003/09/copyrighting_th.html) it's complicated.

The short answer is, as you indicate, "look at the EULA." They give everything to the developer. For better or worse, assuming their appropriate scope and enforceability, then EULAs rule.

[ren]

18.

Thanks for the comments, i have the text of all the laws, what i'm having difficulty with is the case interpretation, as from text (US, UK collectoins and UK databases) the situation seems clear to me i.e. unless all conditions are met then something is not property.

>For better or worse, assuming their appropriate scope and enforceability,

But that's exactly what i'm not assuming but trying to work out. If the EULA talks about a transfer of right, then the right must be had to be transfered, the EULA cannot create the right i.e. you cant use contract law to create property law.

ren

[Dan Hunter]

19.

Ren: "the situation seems clear to me i.e. unless all conditions are met then something is not property."

Don't you mean "unless all conditions are met then something is not *intellectual* property." The statutory system creates the IP rights, but is silent on other property interests. Just because the legislature creates a new form of property (IP) there is no reason to think that this removes the ability to find other new types of property at common law. There are special conditions by why legislatures can preëmpt judicial lawmaking (which differs depending on jurisdiction) but none of these conditions are present here, I think.

Ren: "the EULA cannot create the right i.e. you cant use contract law to create property law."

I guess it will depend on the terms of the contract. But the EULA doesn't create the property interest, it just transfers it to the developer.

[ren]

20.

>Ren: "the situation seems clear to me i.e. unless all conditions are met then something is not property."
>Dan: Don't you mean "unless all conditions are met then something is not *intellectual* property."

Yes, sorry in the office so typing between other things.

> the ability to find other new types of property at common law.
OK, so I need to work out how exactly IP is created at common law and what the extent of the rights so created are. I’m not sure I get how this works at all.

>Ren: "the EULA cannot create the right i.e. you cant use contract law to create property law."
>Dan: I guess it will depend on the terms of the contract. But the EULA doesn't create the property interest, it just transfers it to the developer.

But my point is exactly that there may not be a property interest to transfer. I need to look at these test cases when neither of two or more parties meet the requirements under law – whether they jointly hold property interests or whether neither does.

Ren

[Greg Lastowka]

21.

Ren, you might want to look at this:

http://www.ca9.uscourts.gov/ca9/newopinions.nsf/999D1D5B0D734B6088256D6D0078CB88/$file/0115899.pdf?openelement

[Ren]

22.

I’m wrong.

I’ve just checked the text of the law and the cases, as opposed to my notes on them. And indeed property rights are granted when there is selection or arrangement. Hence in the case of an avatar or I presume just about any other piece of virtual property, developer-publishers have rights in virtue of arrangement, and players have rights in virtue of selection. The player rights are then transferred by the EULA.

There is a some slight ambiguity in what actually constitutes the database we would consider, but other than that things seems clear as, in the rest of my work I cant see anything that would pre-empt the collection \ database right.

So anyone selling a virtual item clearly is in breach of copyright and contract then, mmmm, my wrongness certainly does not make it any less interesting.

Ren

[DivineShadow]

23.

Very interesting reading! I had read news about the sex.com case but not this; shows some of the technicalities these guys employed against each other.

Ren,

"So anyone selling a virtual item clearly is in breach of copyright and contract then, mmmm, my wrongness certainly does not make it any less interesting."

Pardon my cluelessness here. How do brokers (brokering trades where one part is cash, the other virtual) or auction sites come out with what you're saying?

The other question I also see here is: Do these EULAs hold up?

At any rate, after reading Julian's dealing with that piece of 'stolen' virtual property, it was only inevitable that he would sink into the full-time criminal carreer. :)

[Ren]

24.

DivineShadow
>Pardon my cluelessness here. How do brokers (brokering trades where one part is cash, the other virtual) or auction sites come out with what you're saying?

Well, I’m only now starting to re-think things from the ‘it is property’ perspective, so I’m really not sure.

One thing that makes this a grey area is whether the sale of an item does breach the rights of the copyright holder. Sale does not involve making a copy, so it’s not absolutely clear if a breach has occurred.

It certainly looks like it has. As someone has taken money for something they don’t have property rights in. So while there is not movement of the asset (no copying) there is a transfer of control – I’m re-checking the UK and US acts to see what they say about this, I cant remember them making any comment; my present feeling is that its more breach of contract i.e. you are transferring licence.

Greg \ Dan – what’s your take on whether this is a breach and if so, what of ?

If virtual items are property then brokers and sites set up specifically for the trade, then I assume they are aiding any breach that might occur.

Ted \ Julian – what exactly is the structure of this secondary and tertiary market. Does Julian etc take a % of each deal, do the likes of Marquee Dragon take a % of that % or of the deal it self ?

What contracts are involved ?

>The other question I also see here is: Do these EULAs hold up?
I think that bits do and bits probably do not, in respect of virtual asset sales, then as I suggest; its breaking the EULA that is what’s at issue. It strikes me that this is all civil law stuff, I’m not sure if any criminal acts are going on, though I do still wonder about deception on the part of the seller.

Ren
www.renynolds.com

[DivineShadow]

25.

"It certainly looks like it has. As someone has taken money for something they don’t have property rights in. So while there is not movement of the asset (no copying) there is a transfer of control "

Ren, let me be devil's advocate here... (or dummy's mouth). For the sake of argument let's assume virtual items as they are in a game are covered under IP law, and that the game company is the sole owner of these rights. Then the seller in a real-n-virtual transaction may have taken money for something he doesn't own, but the receiver doesn't own the merchandise he's been sold after the sale!; It's still fully under the control of the original 'owner'; you could say this is fraud from the buyer's perspective, but I suppose that will depend on what was stated as being sold (lets put that aside for the moment). Evidently, the item can't be sold since the supplier doesn't ever have it as property and the buyer will never get it as a consequence. It seems the only things that could be traded here would be ingame access to the property in question, knowledge of how to access the item (i.e.: "on the floor of my house"), a service to help another acquire the item, or a service to acquire the item and subsequently transfer it within the bounds of the EULA.

Now, if I am transferring access to the resource, weather *ingame* or *out*, then I have to have been licensed to access the resource in the fist place. This is certainly not simple. The EULA only gives me right to access "the service" and "content" within it, but never licenses (or excludes) the access to specific content inside of this "content" balloon. I am essentially given a blanket license to the "content" and "service". In a virtual item sale nobody is transferring me any access I don't already have a license for. So in essence nothing is happening. Well, maybe someone is paying for access to something they already have a license to. I have a hard time thinking that it is illegal for someone to access content or control content for which they've been already licensed for.

[ren]

26.

I’m pretty much stuck in the same place.

There has been a transfer of control for cash. I think ownership is still a little moot. Avatars most probably fall under the collection owned by the games company, with any rights to players having been transferred under the EULA (let’s not get into generic issues over shrink-wrap, click-wrap licences here). Individual items I’m still a little unsure about as it’s difficult to be precise about how copyright in a collection would be interpreted in this specific case.

However
- exchange of items between players is part of the game, so that can’t be against the contract with the player.
- no copy was made when the item was transferred

So its looks like copyright per say does not directly apply. What is at stake is rather the terms of the contract between company and player.

Which is where I get confused:
- Can a company enforce a contract that says you can exchange things between each other, but not for money ?
- Especially if it’s the case that such transfer don’t breach its right of copyright ?

So it seems that if a company does try to prevent sales then its doing so on the strength of contract, and a grey area of enforceablit at best.

As to what players are up to then, excepting potential breach of contract, they are free to sell control over these items to whom ever they want. Well that’s my thought right now.

I put a longer post to this effect on MUD-DEV:

http://www.kanga.nu/archives/MUD-Dev-L/2003Q3/msg00899.php

ren
www.renreynolds.com

[DivineShadow]

27.

"- Can a company enforce a contract that says you can exchange things between each other, but not for money ?"

For one I don't think it can, and secondly I think a case can be made to the point of all exchanges having an ultimately monetary value. Without going into too much trouble to find a substantiation for this, you have LETS and other barter and exchange systems which are clearly considered monetary value exchanged and taxed by the govenments. I doubt you can categorize an exchange for money differently than an exchange for another object, and even if you somehow managed to do that you might bring in a nastier deamon into the picture: Official Currency. As I recall most/all countries have laws governing what can be used to legally cancel debts, and a trade in a virtual world involves the cancelling of a debt with an un-approved currency. This is *very* shaky ground for a game company to trod upon, especially given the drastic consequences that might come out of this.

"I put a longer post to this effect on MUD-DEV:"

Very nice post there. I think we're both on the same step here. I don't believe a company can dictate trade granularity (of anything, real or virtual) to such a degree that allows it to control the currency of exchange, the medium, the locale and the instruments used without stepping into the government's "nasty zone" of trade regulation, antitrust, monopoly and even discrimination.

[dan]

28.

It's not transferring control of the items. The game company retains the control. It's only transferring temporary access to those virtual items. That access is very transitory, based not only on ingame activity, but on the actions of the game company itself in the management of its virtual world.

So when I "sell" an item, or 1 million credits, to another player, I'm transferring into that player's range of access (not truly control, because the game company can at any time make that item poof) the "item" in question. in reality he's paying me for the service of making that access available to him.

An interesting question would be: How does this all compare to the service wholesellers and retailers of the game software itself provide, considering the licenses and EULAs in place on that software?

The game company retains ownership of the software itself too, or so they claim. So what exactly is the Software Etc. selling me?

And how is that different from me when I "sell" 1 million isk to another player?

I'd love to see someone try positioning a game with an entirely different model, one where the players actually DID own IP rights to their characters/avatars. The company then might act more in the role of broker or host for interactions, rather than "owning" the IP, and charge a fee for playing trusted third parter (much as Verisign does with PKI certificates). The game company would certify that the avatar had not been tampered with outside the scope of the virtual world, but would in the license require that players absolve it of all responsibilty for accidental dissolution of their IP should something catastrophic occur (though not from lack of due dilligence or nefarious intent).

It would move responsibilty around a bit. It would probably provoke better customer service on the host company's part (and result in higher fees but the players would actually "own" the product of their labor within the virtual world, with all attendant rights of transfer and such).

It would be a shift of the scope in going from hourly fees to monthly flat rates: revolutionary. It would result in games of the sort being taken a lot more seriously.

I suppose it would be somewhat analogous to the trading card games, where the publishing company owns the IP rights, but the the players own and trade their cards.

[Dan Hunter]

29.

Just to pick up on one thing that dan said: "It's not transferring control of the items. The game company retains the control. It's only transferring temporary access to those virtual items." Well, one can say that about any property transfer. I own my house which (leaving aside the mortgage, the liens, the caveats and the other encumbrances lodged on it) only means that I in all the world is entitled to use/exploit/etc it...subject to the rider that the State can resume it at any time. The law of eminent domain differs in each jurisdiction, but doesn't seem very different to the virtual asset situation discussed here. The State here is the Developer, and they can resume the asset whenever they want to.

The approach that dan suggests, that the developer embraces the property model, is seen to some extent in Second Life and There, and was definitely a feature of the Extropian Project before it (seemingly) fell over. These developers embrace property because they can tax it (2L) or control the market for it (There).

Whether they are prepared to go the next step and provide limitations upon their resumption of property--in other words, create a whole law of "takings"--is an open question. But it's not one that I'd be betting on.

[DivineShadow]

30.

"I suppose it would be somewhat analogous to the trading card games, where the publishing company owns the IP rights, but the the players own and trade their cards."

Interesting....

If a trading card company stated on their shrinkwrap license (applies to end purchasers, not distributor, obviously):

9) You are forbidden to sell or trade or aid the sale or trade of the cards contained herein unless you are selling/trading it in exchange of other cards of our brand. You can only do this at our facilities conveniently located accross the globe. Any other trading/selling beyond the stipulated here constitutes a breach of this EULA and your license to posess the trading cards shall cease to exist. You grant us the irrevocable right to investigate your activities to detect potential breach of this contract. If, at our sole discretion, we find you in breach of this contract you consent to our search and seizure and subsequent destruction of any and all materials branded by our company in your posession worldwide, or in the possesion of any members of your household or to any extent we deem appropriate with no refund.

This may be tangential due to some differences, but still...Hmmm... Good for putting some things into perspective.

Wanna buy?