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Oct 25, 2006



This is just a republishing/archive of the unknownplayer.com coverage. That original coverage was excellent journalism, though, so if you missed it the first time, this is a good opportunity to review the case.


In particular, note that the the court granted Mythic's motion to compel arbitration. This ruling is perhaps the most legally significant bit from the entire case. On the one hand, it's the strongest statement we have from anywhere on the enforceability of EULAs. On the other, it's an illustration of why it may be hard to develop a body of virtual world law: all of the potentially interesting cases may be shunted off to arbitration. (Second Life, for example, has an arbitration clause, so I would expect tem to move to compel arbitration in the Bragg case.)


Very interesting. In one of the links from that site there's a comment by Mark Jacobs of Mythic in an interview:

In granting our motion, the Judge ruled that the arbitration provision in the EULA was valid, and that Blacksnow and the Blacksnow principals had agreed to that provision by playing the game. This was one of the key points of the lawsuit.
Another link on the site points to an article that says in part:
The case between BlackSnow and Mythic centered around the question of ‘who has what rights when gamers are playing online in a virtual world?’ Mythic maintained that (as per their EULA) they owned their virtual world and all property in that world. Gamers, by paying for the game and “earning” things online, were essentially renting the software and the virtual experience. ...

It is very common for players to ignore the Code, saying either “I never agreed to that” or “That isn’t enforceable”. Well, yes you did, and now it is. [Emphasis added]

This is relevant to several recent topics here on TN, including the active "Chains of Contract" discussion and the perennial "SL owns all your stuff" discussions. Here we have a significant and directly applicable legal ruling that EULAs are enforceable, and that by clicking on "I Agree" and playing the game you are bound by them, various wishes and quasi-legal theories to the contrary.

I've asked before but never really gotten an answer: is there any relevant legal basis for presuming that EULAs are not enforceable as is? Any decisions in cases similar to the Mythic one that run counter to it?

I know laws might change in the future, but anything is possible in the future. As things stand now, is there any basis at all that might support the idea that a typical MMOG/VW EULA is not as solid as it appears? If not, discussions of asserting "players rights" or legally considering virtual objects as players' property, etc., are pretty much moot.


Probably so. My point above was that the federal judge in the case ruled that Mythic's EULA was enforceable, which thus sent the parties to arbitration. As long as judges continue to see EULAs with arbitration clauses as enforceable, it's unlikely any disputes involving them will come to trial -- so no appeals are possible (and arguments based on weak EULAs are moot). To weaken the EULA, some judge somewhere will have to toss out some or all of its provisions, which will open a whole different can of worms (personally, I wouldn't hold my breath for this to happen).

Per my earlier question, is there any similar/relevant software-oriented case in which a EULA has not been upheld by a court, either by trial or by a judge's ruling?


Mike -- well, not a virtual world EULA, that's for sure, but online form contracts can be invalidated in cases where they conflict with public policy. See http://pub.bna.com/eclr/021227.htm

In relevant part: "Having considered the terms of the User Agreement generally and the arbitration clause in particular, as well as the totality of the circumstances, the Court concludes that the User Agreement and arbitration clause are substantively unconscionable under California law and that arbitration cannot be compelled herein. Good cause therefor appearing, IT IS HEREBY ORDERED that the motions to compel individual arbitration are DENIED."

Btw, it's probably worth mentioning the enforcement of Blizzard's EULA became an issue in the BNETD case and was upheld there.

Btw, I don't know how much to read into the court's ruling on this in Blacksnow -- did Caldwell even show up to argue the arbitration clause? (I suppose the documents probably answer that question -- I just forget the answer.)


Thanks Greg. Good info (I especially like that the EFF included a link to a relevant Penny Arcade strip as an "External Resource" :) ).

It's interesting that in both cases, the unconscionability of the terms of service were at issue. In the Paypal case their arbitration clause was denied due to what the court saw as an absence of mutuality, but that this was not the case with Blizzard. In neither instance is the overall enforceability of EULAs successfully challenged (as the Blizzard order states, this is covered by both California law and the Uniform Commercial Code).

There's also some interesing reasoning in the Blizzard order to the effect that

Parties may waive their statutory rights under law in a contract. See, e.g, The Older Workers Benefit Protection Act, 29 U.S.C. § 626(f) (2004) (statute outlines minimum requirements for waiver of statutory right to sue under the ADEA). In this case, defendants gave up their fair use rights and must be bound by that waiver.
I don't pretend to understand the intricacies of this, but this (and the preceding text about the defendants in this case having given up their statutory "fair use" right to reverse engineer Blizzard's software by virtue of the contract embodied in the EULA) could be important for claims about statutory rights superceding contractual agreements.

All of this, IMO, is important for the evolution of virtual worlds. I expect as VWs continue to develop and provide different experiences for users, we'll see new case law emerge. Hopefully it won't be one-sided either in favor of developers riding roughshod over users, or users asserting entitlements that cripple development efforts.


Yes, that's certainly my hope as well. I'm sure we'll have interesting times ahead as we try to find the right balance. As Josh says in the Chains of Contract thread, and as I argue in my Planes of Power article, part of getting this balance right entails figuring out which legal-theoretical frameworks (speech? contract? games? property? tort? association?) should take priority in dealing with these issues.


More chips with that spam?


Good grief. Who left the Spambot signal on?

Dang it, how many times did I tell them that installing it thing beside the Bat Signal was a bad idea...?


oops I over clensed, accidentally removed this one:

obDisclaimer: IANAL and not even a country doctor...

Enforcing a EULA's arbitration clause doesn't necessarily mean that an immutable precedent on the legality of EULA's have been reached. Arbitration clauses in any sort of contract are very common, seem to be considered a reasonable condition by most judges and are a very attractive option to those same people since if it solves the issue, that's one less case they need to deal with.

I'll WAG that if one wanted to contest the legality of EULA's they'd actually need to try the case, lose and then appeal that decision by questioning the legality of EULA's.

Posted by: John K. | Oct 25, 2006 11:56:05 AM

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