Are virtual-reality games the new Wild West,
and if so, who will
police them?
By Danny Bradbury

A group of online gamers discriminates against others for not speaking English, in clear violation of human rights laws. A virtual games hosting company forbids homosexual players from forming a gay guild. A gamer murders his online colleague in real life, following a disagreement over a virtual sword that only existed on a hard drive. 
    These events, all of which occurred in the real world, were spawned within massive multi-player online games (MMOGs) so immersive they are changing the way people live their actual lives. 
    The concept of multi-user games is not new. Text-based MMOGs were played on very early personal computers. The difference today is that faster processing and broadband connectivity have created visually stunning and immersive virtual world experiences. Whereas players once typed "Go north" or "Look at table," modern games allow them to wander the lush landscapes of Second Life, Eve Online, Star Wars Galaxies and the granddaddy of all multi-player games, World of Warcraft. 
    In fact, World of Warcraft boasts almost seven million registered players worldwide, easily dwarfing the population of the Metro Toronto area.

A popular technology will always spawn a sub-economy—just look at eBay—and in the MMOG petri dish virtual economies have flourished. Most games feature their own in-game currencies, virtual gold used to purchase everything from experience points to spells, and virtual goods such as clothing and weapons. In turn, these virtual goods and currencies are often traded by players for real money, in what amounts to a basic exchange of money for time, according to Joshua Fairfield, an associate professor of law who studies virtual economies at the Indiana Law School. 
    "The game companies love it when people who don’t have a lot of time in real life buy accounts and play," Fairfield said. "These people buy their way in. It’s the basic exchange of someone else’s time for your benefit, in the same way that someone might build your house and you’d pay them money. That’s a basic exchange and it’s continued unabated online."
    The gaming sub-economy is intrinsically linked to the real one, and firms have sprung up to capitalize on this. Gamer trading network IGE, for example, provides an auction service for players selling in-game equipment on the Internet.
    This property may fetch real dollars, but its virtual nature can cause problems. "The thing that comes up is, what if something is done to a gamer, whether by the gaming company or by another gamer?" said Chris Bennett, a lawyer specializing in computer games at Vancouver-based Davis & Company. "A lot of these gaming firms are based in the U.S. A Canadian gamer who had his account shut down and lost $1,000 of real-world stuff probably won’t go down to LA and sue the gaming company to get his money back. It’s just not worth it."

A Canadian gamer might not, but maybe an American gamer would. Philadelphia-based Marc S. Bragg, also a lawyer, is plan ning to sue Linden Labs, a California firm started by former Real Networks CTO Phil Rosedale. Linden Labs created Second Life, an online game in which "residents" spend their time buying parcels of land on which to develop their own virtual homesteads. 
    A scripting language built into Second Life enables residents to program their own objects, which can be anything from bouncing balls that follow you around, through to flyable airplanes or even huge buildings with ornate facades, streaming-video screens and music systems. They can then sell these objects to each other, which is precisely what Bragg did, building a business for himself as a virtual real estate developer.
    "People go to Second Life to work, to earn a living," said David Fleck, vice-president of marketing at Linden Labs. "They can create substantial incomes that either enhance or even completely replace their real-world incomes." Entrepreneurs in Second Life have opened everything from dance clubs to casinos and even virtual strip clubs. Who would pay to see a computerized avatar strip off its clothing? Second Life’s 2.5 million registered users ensure there will be a market for almost anything—and they will happily pay using the game’s own currency, called Linden dollars. In turn, Linden dollars can be swapped for real-world U.S. dollars on a currency exchange operated by Linden Labs. At the time of writing, 278 Lindens would buy a buck.
    No one can develop businesses in Second Life without purchasing land first. Linden Labs creates both the land and the Linden dollars used to purchase it. "We are a central bank and we dictate monetary policy that suggests when we should or shouldn’t ‘print’ money depending on the inflationary trends and whether the GDP is healthy," Fleck said. The company monitors supply and demand and conjures up virtual cash and land accordingly. "We watch those economic indicators. We could print Linden dollars all day long but ultimately that would collapse the economy."
    But there are other ways to disrupt an economy. Bragg discovered a loophole in the online auction system that Linden Labs uses to sell land when it is created. Land parcels can be purchased using Linden dollars or real dollars. Land often fetches up to US$1,000 at auction, but by changing a parameter in the Web site address used to auction the land, he was able to start bidding on land that had not yet officially entered auction. This generated an auction that fewer residents knew about, and slashed the value of a winning bid by around 70 per cent. Suddenly, he was able to buy land for around US$300.
    Bragg said Linden executives contacted him to tell him that he had discovered a glitch in the system, and that they would take his land back and refund his money. He protested by e-mail, after which, he said, the company froze his account.
    "I had a million Linden dollars in my account and they wouldn’t let me convert that to U.S. dollars. They wouldn’t let me take out the US$2,000 in my account either," said Bragg, who added that with virtual and real currency combined, he was out thousands of dollars.
    "When it came to the land in my name, they erased everything I had built on the land. They took the land away from me, reauctioned it and got paid twice for the same land," he said. 
    Linden Labs refuses to discuss the Bragg case, but its terms and conditions clearly state that it can revoke a person’s licence to use the system at any time. However, it also states that a person owns the intellectual property to anything he/she creates in the game world.

The terms and conditions within virtual games are rarely democratic, said Jeremy Chase, who runs his own unique business in Second Life. The rules designate the operators of the game as judge and jury, even though the interactions and property issues in the games are arguably becoming involved enough to warrant a more complex and egalitarian process of arbitration. "There should be an appeal process. That’s something that no game has. By the time you dispute it, it’s over," Chase said. "Linden Labs likes having one police corps for an entire state. There needs to be an internal court system."
    No wonder some take the law into their own hands. Going by the name Marcellus Wallace, Chase operates the Sim Mafia, a group providing in-game muscle to resolve disputes between players that Linden Labs refuses to arbitrate. "A player came to us, owed 6,200 Lindens [by another player]. He said, ‘I can’t get this to be dealt with by Linden’, so we collected the debt for a percentage. He gets his money, we get some, and everyone is happy," said Chase, who in real life works for a debt collection firm. How does he get them to pay? His team used to harass players, "shooting" them so often in the game that it became unplayable until they complied. Now though, he usually just messages the target and explains the situation, hoping that his reputation will do the trick.
    But even Chase’s Soprano-like antics aren’t outside Linden Labs’ own arbitrary laws. That’s why Bragg wants to step outside the game and make use of laws from the physical world. He had originally filed a small claims case against Linden to retrieve his funds, but pulled the case in June and plans to file again, in county court. This would enable him to create case law to provide some future clarity around the legalities of virtual gaming.
    By all accounts, legal precedent may be a good idea. "This is like so much other stuff in the electronic world. You hope to deal with it using the laws that apply to the bricks and mortar world, and in a lot of cases you can," Bennett said. "It’s just that it hasn’t been done before and it’s a bit uncertain."
    That’s why some countries have started creating specific laws around virtual property. Korea and Taiwan, where online gaming is huge, have done so. Canada and the U.S. have failed to draw a distinction, leaving them to rely on copyright law, which could create confusion, Bennett said. "What about if I’m playing World of Warcraft and my character buys a sword? I haven’t created anything, so do I have property rights to that sword?" And if you defame someone in the game, are you defaming them or their avatar, and how is a civil litigator to tell? 
    But perhaps the most intriguing legal question surrounds the casinos in Second Life. Internet gambling is illegal in the U.S., where Second Life’s servers are located. And yet betting in one of Second Life’s many casinos using Linden dollars seems little different to betting in a bricks and mortar casino using chips.
    "Linden Labs is arguably facilitating it. There is a provision in criminal law for aiding and abetting a crime. So are they aiding and abetting these people?" Bennett asked. Linden Labs’ stance is that it merely provides a play space, and that residents are responsible for their own actions. As with many virtual legal issues, it remains to be seen how that would fly in a U.S. court, but Bragg hopes to raise it there.
    Virtual Mafiosi, sour deals over land that exists only on a hard drive and the as-yet untested gambling issue raise interesting questions, and leave only one certainty: in the world of virtual gaming, the law is still very much in development.

Eve Online www.eve-online.com
IGE www.ige.com
Second Life www.secondlife.com
Star Wars Galaxies http://starwarsgalaxies.station.sony.com
World of Warcraft www.worldofwarcraft.com