Setting the Virtual Stage

Virtual Real Estate

We begin our immersion into the world of computers and the law by analyzing the four year old case Bragg v. Linden Research, Inc. 487 F. Supp. 2d 593. In Bragg, the plaintiff who is apparently a lawyer brought suit because Linden Research(the maker of Second Life) closed his account after the plaintiff allegedly used an exploit to acquire a Second Life parcel of land at far below market value. Bragg brought claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, California Unfair and Deceptive Practices Act, California Consumer Legal Remedies Act, fraud, conversion, intentional interference with contractual relations, breach of contract, and tortious breach of the covenant of good faith and fair dealing along with violation of California Civil Code section 1812.600.

After removing to Federal court defendant Linden attempted to compel arbitration as stipulated in the Second Life EULA which Bragg had agreed to. The Second Life arbitration agreement at the time stated:

Any dispute or claim arising out of or in connection with this Agreement or the performance, breach or termination thereof, shall be finally settled by binding arbitration in San Francisco, California under the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with said rules…. Notwithstanding the foregoing, either party may apply to any court of competent jurisdiction for injunctive relief or enforcement of this arbitration provision without breach of this arbitration provision.

If the arbitration agreement stood, the parties would be forced to arbitrate their claims leading to more expense to Bragg, a substantial likelihood of a smaller award for damages and most importantly the arbitration was to be confidential so that future plaintiffs bringing actions against Linden would not benefit from precedent. Fortunately for Bragg and gamers worldwide, the court found that the arbitration clause was unconscionable because it, coupled with other terms of the EULA which allowed Linden to cancel accounts for any reason, allowed the stronger party to choose its forum while forcing the weaker party to only one forum(arbitration in SF). Another important factor was the cost differential. Although the parties couldn’t come to an agreement as to the cost of arbitration, the average of the estimates provided was over $10,000. If this provision was upheld, it was clear that many plaintiffs would be kept from having their day in court as it wouldn’t make sense for a person to spend tens of thousands of dollars to litigate small claims which are more typical.

So what does it all mean for gamers everywhere? At least in California contract conditions which put the weaker party in a disfavorable position so as to keep it from having its day in court will not be enforced. Furthermore, at least in the context of Second Life where the defendants had an ongoing advertising campaign claiming that gamers could actually “own” property the courts will uphold a gamer’s right to protect his virtual property from unfair taking by game companies.

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