Bragg v Linden Lab

Following on from my post about MDY v Blizzard, Bragg v Linden is another of the tough questions that will frame my thesis.

Screenshot from showing Linden advertising claim: "Own Virtual Land"

Second Life is a three-dimensional free-form virtual world constructed primarily by its participants. Unlike some other virtual worlds, Second Life is not a 'game' – it has no central narrative or defined goals. Participants have the relative freedom to own land, customise their avatars' appearance, build objects and create clothing, socialise and express themselves as they wish (within limits). Importantly, Second Life is backed by a fully integrated economy – participants can trade goods and services between themselves for virtual currency, and that virtual currency can be easily bought and sold for US dollars. Second Life is free to join, but extracts monthly subscription fees from participants who wish to own their own virtual land.

Because of the way that Second Life is structured, land is highly desirable to participants. Owning land allows participants a place of their own to build objects or buildings and design as they wish. Land also grows in importance as one's participation in Second Life increases, as the total number of objects that a participant can build is limited by the amount of land that she owns. So whilst ownership of land is not necessary to participate in Second Life, in a very real way, land ownership is closely linked to the economy, and land sales and taxes are the predominant income streams for Linden Lab.

The importance of land in Second Life has resulted in a substantial secondary market for land. Some real estate speculators purchase land at low values with the hope of selling it for a profit in the future. Others buy large blocks of land directly from Linden Lab and subdivide them, leasing them to participants who do not own their own land. Still more act as property developers, creating housing or commercial estates that they are able to sell or rent to others. A number of participants have received considerable success buying, selling, and renting virtual land in Second Life – including some self-proclaimed Second Life millionaires.

This convergence between real and virtual economies contributes significantly to Second Life's appeal. But it is also the cause of substantial tension within the community. The 'virtual' economy in Second Life is fluidly convertible to 'real' currencies, like the US dollar, and participants clearly feel a sense of entitlement to their virtual property and currency. Linden Lab clearly encourage this behaviour – their slogan is “Your world. Your imagination.”; their promotional material refers to the possibilities of 'owning' virtual land and generally stresses the fluidity of the market. The Terms of Service for Second Life, however, explicitly deny that participants have any right over the in-world currency and that it is in fact a currency at all. Instead, Linden Dollars are purported to be a 'limited licence right' granted by Linden Lab – and revocable at any time. Similarly, Linden Lab asserts that participants never 'own' 'land' – rather, they merely lease the right to use certain computing resources that generate the virtual environment. This contradiction between the internal norms of Second Life and the literal interpretation of the contract results in significant uncertainty and tension in the community.

The best example of this tension is the case of Bragg v Linden Lab. Marc Bragg was a US attorney who invested in Second Life, purchasing land for resale. Bragg discovered a loophole in Linden Lab's official land auction system that enabled him to purchase land that was not advertised for sale at significantly under market prices. When Linden Lab discovered this, they immediately suspended Bragg's account, preventing him from accessing Second Life and effectively confiscating what he claimed amounted to approximately USD$5000 of his in-world virtual property – not only the land at the centre of the dispute, but also the land that he had previously bought and any objects in his possession. Bragg complained, alleging that he had been wrongfully disconnected and that Linden had unlawfully confiscated his virtual property. Linden responded that it was acting within its power to enforce its rules – having caught Bragg cheating, they suspended his account and terminated his right to access and hold their property.

Bragg filed suit against Linden Lab, alleging that Linden had unlawfully confiscated his property and denied him access to Second Life. Linden responded with a motion to compel arbitration, as per their dispute resolution policies in the Second Life Terms of Service. The US District Court for the Eastern District of Pennsylvania held that the dispute resolution policies were procedurally and substantively unconscionable, and refused to grant the motion to compel arbitration. At this point, Linden Lab settled with Bragg on undisclosed terms. Bragg has now had his Second Life account restored and his virtual property returned.

This case, for the relatively short period in which it was active, generated significant interest both within Second Life and from external commentators. It promised to deliver a judicial opinion on whether participants in Second Life were entitled to own virtual property. As Robreno J held in dismissing Linden's application to compel arbitration,

This case is about virtual property maintained on a virtual world on the Internet. Plaintiff, March Bragg, Esq., claims an ownership interest in such virtual property. Bragg contends that Defendants, the operators of the virtual world, unlawfully confiscated his virtual property and denied him access to their virtual world. Ultimately at issue in this case are the novel questions of what rights and obligations grow out of the relationship between the owner and creator of a virtual world and its resident-customers. While the property and the world where it is found are “virtual,” the dispute is real.

The dismissal of the motion to compel arbitration signaled that the US District Court was prepared to examine the terms of the Second Life terms of service and to rule on the complicated issue of property rights within the virtual world. There was palpable disappointment from commentators when the case settled before such a precedent could be handed down.

Despite the case settling, it still provides a very interesting factual scenario through which we can evaluate potential regulatory regimes. It poses an interesting question, and represents a legitimately hard case: if Linden was right, and Bragg cheated by exploiting a bug in the auction code, are there limits to how Linden can enforce the rules and impose sanctions on Bragg? On the other hand, if Bragg is to be believed and he did not break any rules, are Linden Lab obliged to maintain his access to Second Life and his interests in what he asserts is his property?

Article: On the (partially-)inalienable rights of participants in virtual communities

My most recent article has now been published. Unfortunately, MIA's policy is set to change to allow online access as of the next issue. For now, here's the post-print:

Nicolas Suzor, "On the (partially-)inalienable rights of participants in virtual communities" (2009) 130 Media International Australia.


As virtual communities become more central to the everyday activities of connected individuals, we face increasingly pressing questions about the proper allocation of power, rights, and responsibilities. This paper argues that our current legal discourse is ill-equipped to provide answers that will safeguard the legitimate interests of participants and simultaneously refrain from limiting the future innovative development of these spaces. From social networking sites like Facebook to virtual worlds like World of Warcraft and Second Life, participants who are banned from these communities stand to lose their virtual property, their connections to their friends and family, and their personal expression.

Because our legal system views the proprietor's interests as absolute private property rights, however, participants who are arbitrarily, capriciously, or maliciously ejected have little recourse under law. This paper argues that rather than assuming that a private property and freedom of contract model will provide the most desirable outcomes, a more critical approach is warranted. By rejecting the false dichotomy between 'public' and 'private' spaces and recognising some of the absolutist and necessitarian trends in the current property debate, we may be able to craft legal rules that respect the social bonds between participants whilst simultaneously protecting the interests of developers.

Many thanks to Sal Humphreys for putting together this special edition of MIA. I highly recommend the other articles in this issue.

Digital constitutionalism: the governance of virtual communities, part 1

I am finally beginning to write up my thesis. What follows is the first half of the argument I plan to present. This will hopefully provide the structure for identifying the problem and the context of the argument.

Comments welcome – what have I missed so far?

The internet provides the medium for a wealth of virtual communities, each with its distinct set of norms and values. Individuals all around the world participate in these networks to play, to socialise, to learn and teach, to express themselves, to do business, to communicate with friends and loved ones, to engage in political discourse and political process, and for innumerable other activities. These communities provide not only a 'space' for people to interact but also the promise that each individual will be able to find a community whose norms and values align with her own. Since the internet became popular in the 1990s, this libertarian idealism has proved extremely powerful. It argues that freed from physical scarcity and spatial barriers, individuals will finally be able to choose to associate with other, like-minded, individuals, and these communities will be able to determine the rules which best fit their society, rather than the clumsy approximations that often result from national democracies.

The main problem with the governance of virtual communities is that our legal system operates in such a way as to vest overwhelming power in the hands of those who create and maintain the platforms. These people, whom we call 'proprietors', for they own the code that defines the platform and servers upon which the code runs, exercise almost complete discretion as to who may access and who may continue to access 'their' community. The law, by giving primacy to these property rights, marginalises the interests of participants in these communities. Further, by casting any disputes or tensions which arise as belonging wholly in the 'private' sphere, we deligitimise any change to the current allocation of entitlements.

The result so far has been that the technologically deterministic claims of the cyber-libertarians have not held up, at least not in the largest virtual communities. The suggestion that individuals will vote with their feet (or their wallets) and choose to leave communities that do not reflect their own values breaks down as individual communities become more important. Network effects act to restrict both entry of competitors and exit of participants. As the value of many communities is proportional to the number of participants, new communities have trouble reaching a critical, sustaining, mass. Participants are less likely to leave an established community for a fledgling community, even if that smaller community has more appropriate norms or values. This means that proprietors do not have to be very responsive to the demands of participants in order to retain their custom.

There are, no doubt, limits on the behaviour of proprietors. A proprietor who is not responsive enough to the demands of the community will, eventually, begin to lose participants. In the various commercial models, this usually means a drop in subscriber revenue or in revenue derived from advertising. The relationship between participants and proprietors is accordingly seen to be market-based, and proprietors have an incentive to be just responsive enough not to lose too many participants. This model, in practice, is far removed from the idealism of the cyber-libertarians. Governance is essentially reduced to business decisions about the most profitable way to manage the virtual community.

There is a significant problem when the interests of participants are reduced to a market rhetoric. The activities of participants in virtual communities cannot be understood as the activities of mere consumers of entertainment product, and treating them as such leads to substantial injustices. For participants, there is much more at stake than access to a service – that access underpins their ability to communicate with friends and family, to express themselves, to carry out trade and commerce, and to participate in political discourse. Thus, for example, when a participant is threatened with expulsion from the strongly heteronormative World of Warcraft for advertising for a guild that is friendly to those with alternate gender or sexual identities, she risks losing not only access to a recreational pastime, but access to her rich social networks, her personal identification with her avatar, her virtual possessions, and the rest of the benefits that attach to participation in the community.1)

Similarly, when an individual is banned from a social networking site, she loses a significant ability to connect with her friends, family, and distant associates. The more effective the social networking platform is at changing the way that groups organise events and remain in contact, the more acutely she will feel this disconnection. The same disconnect occurs when an individual is denied access to cloud computing platforms and is no longer able to access her email contacts or stored documents.

In the corporeal world, these concerns are often seen as public concerns, and constitutional and administrative law principles have developed to restrain states from arbitrarily or capriciously taking away the ability of individuals to be secure in their property, their ability to communicate, and their freedom of association. In the privatised environment of the internet, however, there are very few guarantees. The limits of a proprietor's power are established by the bounds beyond which certain actions will become unprofitable. At its worst, this model approaches the worst failures of majoritarian or populist rule, where individuals and minority groups are often subject to harsh treatment and discrimination.

It follows that as the internet becomes more vital to the ways in which we communicate, do business, express ourselves, live, love, and learn, then the risk posed to individuals and groups dramatically increases. The law does not currently have the adequate vocabulary to deal with these risks. Constitutional action, particularly in Australia, provides limits on governmental action, but provides no individually assertable rights against private actors. This negative model assumes that, in the absence of governmental action, citizens will be free. To the extent that this model was ever accurate, it is certainly flawed in a context where access to crucial social networks and forums for self-expression requires access to another's 'property'.

In this context, the distinction between positive and negative restrictions becomes confusing. In the absence of particular government interference, we are left with the base rules of property and contract, which are nonetheless public constructs. A proprietor's right to exclude may come from the fact that they are in control of the software code which runs the platform, but that power is reinforced through the rules we choose to apply to protect that code and the servers upon which it runs and the interpretation we give to the contracts which condition access to the platform. At each of these stages we are embedding certain values in the legal system, and it is wrong to suggest that they form part of a natural state of affairs in which the government ought not interfere. There are clearly choices to be made.

Fundamentally, our legal system should develop to arrive at just results. This means that we must be careful to consider the interests of participants and refrain from marginalising those against the interests of the proprietors. This is a balancing exercise, however, because we must be careful not to destroy the vibrant and diverse nature of these spaces through over-regulation, and equally careful not to undermine the commercial viability of platforms which are provided through private sector investment.

This balancing process is the essence of digital constitutionalism. The rest of this thesis will consider how public values can be applied to the laws which govern virtual communities.

On Cyberproperty

Proprietors of virtual communities sometimes make absolutist claims to sovereignty over the platform and the community. These proprietors tend to resist any public regulation, as they see the platform as 'their' 'property'. Unlike public utilities, most platforms do not receive Government funding or enjoy legislated monopolies, and therefore, the proprietors assert, they ought not be under any special duties imposed by the state. On this view, participants are granted access to the proprietor's private property on certain conditions, and are not entitled to expect any non-contractual obligations from the proprietor.

This argument builds on a simple analogy from tangible property – that, in fact, a platform for a virtual community is no different to a private parcel of land, and, therefore, the proprietor may exercise absolute discretion as to who may enter and remain on (access) the property (system). The natural right to own and control property needs little or no justification, and it follows that the State ought not interfere with the operation of a virtual community.

Carrier and Lastowka forcefully remind us that the property analogy poses an inherent risk of driving us towards absolutist conceptions of access rights, for which no such justification can be found even within property theory.1) Private property rights are indeed granted over the servers which form the platform for a virtual community, and these servers will be protected from appropriation or trespass. Similarly, a property right is granted over the software which runs the virtual community in the form of copyright, which protects and rewards the investment required to create the platform. It does not necessarily follow, however, that the proprietor is granted a property interest in the entire community, such that he or she has a “whole and despotic dominion” over it. Clearly a proprietor has some form of control in determining whether and when to provide access to the service, and, ultimately, in flicking off the switch and disconnecting the service completely.2) To call this a property right over the community, however, serves only to confuse the issue.

Property is one of the keystone concepts in our legal system. Deeply ingrained within our liberal tradition is the notion that government interference with private property rights should be severely limited. Some proponents of cyberproperty draw upon this natural argument for property rights to avoid the much more difficult tasks of justifying the entitlements they argue should be granted to platform owners and service operators. To call something private property is to make a strong normative claim that it ought not be regulated, but it tells us nothing about why we ought to allocate entitlements in this particular manner. The property label serves merely to obfuscate the underlying policy arguments for allocating certain powers to certain persons. The intellectual move is elegant in its own way – services on the 'net are 'property', and it therefore follows, that the entitlements that apply to owners of real property ought to be extended to the owners of cyberproperty. This is an expansionist move which implies a natural deterministic solution – exactly the type of argument that Bentham called “nonsense upon stilts”.

Carrier and Lastowka attempt to unravel the claims made by cyberproperty advocates by examining the traditional justifications for property. They conclude that cyberproperty is not supported by either the Lockean labour / desert theory,3) Hegelian personality theory,4) or utilitarian arguments.5) More importantly, however, they note that even if property rhetoric were appropriate for networked platforms and services, its use tends towards absolutist protection – a 'perfect' limitless 'caricature' of property.6) Inbuilt within our existing property system are numerous checks and balances, limits on the property owner's exercise of his or her rights.7) These limits provide safeguards for the interests of those who would use the property against the wishes of the proprietor. In cyberproperty, though, these limits are ignored as judges tend to grant absolute power to the proprietor, and the result is a grossly over-reaching rights regime which has pulled itself up from its own bootstraps – by calling virtual communities 'property', we effectively and without introspection grant more control over them to their proprietors than we would ever grant over physical property.

The use of property rhetoric is dangerous. If we, as a society, intend to grant certain rights to platform owners, we should do so as a result of rational reason, rather than as a response to perceived necessity.8) The deeply ingrained liberal ideals which surround conceptions of property in our society do nothing to help us determine whether it is appropriate that we impose limits on the ability of proprietors to exclude participants at will. It may provide an answer to that question, but it arrives at that answer from the circuitous and self-affirming route of false analogy.

Mozelle Thompson on Governance

Photo: Andrew Feinberg, CC BY 2.0.

Last week, I had the opportunity to talk to Mozelle Thompson at an event organised by QUT IPKCE and the IIA. Mozelle was a US Federal Trade Commissioner, and is now a legal adviser to Facebook.

Mozelle had some interesting things to say about Facebook's privacy policies, including that he had recently spoken to a convention of Australian police officers and reinforced Facebook's pledge to only cooperate with law enforcement if it's demands were backed by valid legal procedure (ie., warrants and judicial oversight).

”[Facebook is] not here to provide people who want to spy the process for a fishing expedition.”

Interestingly, he also mentioned that Facebook would not comply with authorities if it believed the local laws to be too onerous:

”[…] if we think that that legal process is overbroad or inappropriate we will not enforce it.”

Mozelle also had some statistics about Facebook's adoption and growth. Without going into the details, Facebook is becoming enormous, everywhere. This raises some interesting questions. It is slowly becoming difficult to organise and participate in events if you're not a member of Facebook. Indeed, a large proportion of the people at Mozelle's talk heard about it only through Facebook. Both social and professional networking appears to be migrating to Facebook and (perhaps to a lesser extent) similar platforms. Anecdotally, it appears that it is not uncommon for a friendship group to organise themselves almost exclusively through Facebook. This means that people are becoming increasingly reliant on Facebook and other proprietary platforms for the organisation of their social life, and, to my mind, this raises the question of what responsibilities do Facebook and such other platforms have to their users?

The first thing to point to is Facebook's Terms of Use, which could charitably be described as oppressive. Significantly, they contain a clause which allows unilateral termination:

The Company may terminate your membership, delete your profile and any content or information that you have posted on the Site or through any Platform Application and/or prohibit you from using or accessing the Service or the Site or any Platform Application (or any portion, aspect or feature of the Service or the Site or any Platform Application) for any reason, or no reason, at any time in its sole discretion, with or without notice[.]

So, I asked Mozelle whether there were any applicable limits to Facebook's discretion in the way it treats its users. His answer was a very emphatic 'no'. Mozelle highlighted that it doesn't make good business sense to treat your customers poorly, and that the market provides essential safeguards for the interests of users. The problem with this argument is fairly simply stated: (a) there are few alternatives to facebook; (b) network effects inhibit exit and impose barriers to entry to new players; and © even if the market were efficient, it reduces important issues of rights and interests to a market rhetoric and provides little to no protection for the interests of minority groups.

When I pressed Mozelle about non-market limitations, he forcefully rejected the suggestion that Facebook's discretion could be limited. By differentiating Facebook from public utilities, Mozelle argued that the public (government) had no right to interfere in the way in which Facebook was run. Unlike public utilities, Facebook receives no public funding and operates in a competitive market. I asked for clarification on this point, because the market certainly doesn't seem competitive. Mozelle, who was a Federal antitrust lawyer, answered that you couldn't definte the market as narrowly as 'a market for social networking websites', and, accordingly, Facebook didn't have market power.

Competition law aside, there is a significant problem with the false dichotomy presented by Mozelle Thompson. It is simply not true that either an entity is a public utility, in which case it is regulated, or it is a private proprietary corporation, in which case it is not. We impose limits on the behaviour of private entities all the time. There is no reason that we cannot alter the boundaries of private property and the apportionment of liability and responsibility in any given case, and the proper location of these boundaries is exactly the discussion we need to be having.

I pointed Mozelle to the example of Sara Andrews, who was threatened with banning from World of Warcraft by Blizzard after she advertised for a LGBT-friendly guild. Mozelle distinguished World of Warcraft from Facebook based upon the subscription fee which WoW gamers pay. The gist of the argument was that by paying $15/mo, WoW subscribers had a right to complain to Blizzard about the way they are treated. Facebook users, on the other hand, pay nothing, and therefore have no such rights.

This is very dangerous thinking. Firstly, Facebook users, in aggregate, provide almost all of the value of the Facebook company. The technical platform represents some intiial investment, but it is the social network which provides the real driving force (and advertising revenue). If we focus only on subscription models, we are able to say that there is no consideration paid by Facebook users, and hence no contractual remedies. On the other hand, if we recognise the value that participants provide, this assumption may no longer hold.

More importantly, I believe that a valid contractual relationship is not the only source of liability that platforms like Facebook may be exposed to. There are any number of non-contractual arguments which could be raised, including, most significantly, negligence, estoppel, and unjust enrichment. It may be that Facebook owes its users a duty of care not to arbitrarily or maliciously remove them, for example. Alternatively, it may be that Facebook's oppressive Terms of Use are not adequately reflected in the internal community norms, and Facebook may be estopped from enforcing those terms as written in a particular case.

We need to stop talking in terms of clear dichotomies between private and public spaces. These private networks are providing functions which were public in nature when we drew the boundaries we know – which explains why there are constitutionally protected remedies against the State when it prevents you from associating with your social network in public. In no way does this fact preclude us from determining the appropriate level of responsibility that proprietors will owe to individuals in the future.

It may well be that we will decide not to impose liability on facebook for arbitrarily or maliciously ejecting its customers, but this result is by no means certain. By presenting these issues as a clear dichotomy between private and public, we are ignoring the malleability of legal rules and forestalling a proper debate on the rights and responsibilities of actors in our networked society. We are also ignoring the very real harms that individuals may suffer at the hands of platform owners like Facebook, and it is certainly time open up this debate. In this debate, the reification of property-based arguments will only slow us down.

Margaret Jane Radin’s theory of partial inalienability as a model for evaluating interests in …

I am in the process of selecting a theoretical model on which to base my normative analysis. Below, I explain my preliminary attraction to Radin's construction of partial inalienability and the pragmatic method of resolving tensions between conflicting interests. As always, comments are greatly appreciated.

Thesis: in choosing whether to apply any law in a virtual context, we ought sometimes to put aside a general law rule in favour of internal norms.

The project of this research is to provide a mechanism to assist in identifying conflicting and hidden interests in virtual communities, and to develop a framework for reconciling those interests in law. The first goal is to be achieved through a critical examination of the expectations of actors in virtual communities – the participants, the platform provider, the broader public, and the state. The second goal, building a normative framework, will depend upon a solid pragmatic reconstruction of the conflicting interests.

There is no simple mechanical way for states to make a decision about which interests should prevail in any particular circumstance. These decisions are always political decisions. The aim of this model, then, is to provide a framework to make these decisions in full awareness of their consequences. The normative basis that will be used for preferring one interest over any other will be the overriding presumption that we ought to choose the path which most promotes “our best current understanding of the concept of human flourishing.”1)

After we have identified the internal norms of a virtual community, the biggest question is whether to uphold those norms which conflict with general law principles. In determining this question, we must consider which of these principles are modifiable and which are not – which basic entitlements are alienable and which entitlements may not be transferred. This analysis, however, leads us to a false dichotomy – it is more appropriate to consider these principles along a spectrum of alienability, where some entitlements may be given away or sold in certain circumstances but not others. Margaret Jane Radin's theory of partial market-inalienability provides a model of this spectrum, and provides some justifications for preferring a degree of alienability or inalienability based upon the interests of personhood.

A market-based analysis is appropriate because it addresses the concerns which are now emerging with large-scale virtual communities that are created as commercial ventures but which enable many aspects of personal life – including, but not limited to, personal relationships, personal identification, personal property, speech and communication. A key concern in these cases is what impact the commodification of these interests has on the personhood of the participants. A framework of partial inalienability provides the means for evaluating these tensions and partially protecting some personality interests from commodification, while recognising that the market is currently best positioned to provide the virtual communities upon which those personality interests depend.

The spectrum of market-alienability ranges from complete market-inalienability to complete commodification. Some examples of market-inalienable interests include freedom, body parts, and children – one is not allowed to sell any of these in any circumstances, although they are not strictly inalienable in that they can each be given away. On the other hand, goods which are wholly commodified are, in the eyes of the law, completely substitutable for one another and for their monetary value. In between these two extremes, we place limits on the alienation of interests which are only partly inalienable. For instance, labour is only partially commodified, as we place limits on the minimum wage and the ability of employers to terminate employment contracts.2) In another sense, we place limits on the mechanics of transfers – imposing, for example, a requirement that transfers of real property be in writing.

In addition, there are interests which are fully inalienable – for example, the law will not uphold a person's right to consent to grievous bodily harm or murder, whether for a fee or not (although, in the context of euthanasia, this becomes a partial inalienability, where we can envisage scenarios where it may be permitted to consent to what would otherwise be an unlawful killing).

The crucial insight, for our purposes, is that a spectrum of alienability allows us to place limits on the manner in which certain entitlements may be given away or sold which are appropriate to the circumstances. We have certain limits built in to the law as it currently stands – conceptions of consent, consideration, acquiescence, waiver, reasonableness – which act to restrain the alienation of entitlements. A model with a spectrum of inalienability allows us to know when these limiting concepts should be interpreted strictly, and when we should deal with them more summarily. For example, this means that when we are considering whether a participant has consented to potential harassment or assault, we may hold a much higher standard of consent than when we are considering whether a person has consented to the 'theft' of a piece of virtual property within the rules of a game. This model shows that more value we place on the importance of insulating the interest from commodification, the greater the limits we can justifiably place upon the alienation of that interest. In accordance with this model, the riskier we determine a transfer is, the more caution we should exercise before finding that the transfer has, in fact, occurred.

The model also provides a scheme for identifying where the protections given by existing law do not suffice. Various concepts of consent can be used to provide adequate limits in many civil matters – disputes centred in contract, tort, and many statutory entitlements can be resolved by determining whether the interest has been transferred according to the norms of the virtual community. Greater difficulty arises where we determine that a certain interest should be protected, to some extent, from commodification, but there is no direct mechanism in the existing law to effect that protection. For example, we may agree on the partial inalienability of interests of free speech or due process, but while these rights may be protected to some extent against the state, they are not inalienable against private actors. If we determine that our conception of human flourishing requires some recognition of constitutional rights against private actors, the model we develop can be used to identify where these interests are not sufficiently protected from commodification. Once identified, a gap between our conception of inalienability and the protection we afford the interest will justify a change in the law.

This model does not aim provide a comprehensive empirical framework; the evaluation of the degree to which any given interest should be protected from commodification is not one which can be arrived at in isolation from a broader social discourse. Rather, the goal of this project is to provide the tools to enable this social discourse. The resolution of conflicting interests must be a continuing process, a pragmatic evaluation of what is possible and what is the best method to proceed given the current state of society. By exposing hidden interests and proposing a method of resolution which is dependent on our social goals, this project aims to provide a conceptualisation of how we can progress, rather than an imperative on how we must.

Radin, Market Inalienability, 1851
Radin, Market Inalienability, 1919

Liability rules and property rules as a framework to view virtual world RMT

Calabresi and Melamed proposed a three-way taxonomy of entitlements – inalienable entitlements, which cannot be traded between willing sellers and willing purchasers; property rules, which are enforceable by injunction to prevent non-consensual takings; and liability rules, where objectively measured damages are the only remedy, leaving open the possibility and expectation that the benefit will be taken non-consensually by a person who values it more than the objective measure.

So, does any of this help us frame disputes about entitlements in virtual worlds?

slot machine - cobalt123

Image by cobalt123, CC NC-BY-SA

Imagine we have to determine what we should do about virtual property. Calabresi and Melamed tell us that there are five ways we can allocate the entitlement. Leaving aside an outright prohibition on the transfer of virtual property, we could grant a property right to the publisher, which would mean that the participant only acquires any interest in virtual property through a negotiated agreement with the publisher – i.e., the ToS. This is certainly how publishers currently see themselves (or would like to be seen). While it may be appropriate for Bartle-World, this model ceases to be appropriate where the interests of the player base are not so homogenous and the actions of the publisher give rise to expectations of legitimate participant interests in virtual property (see Bragg v Linden).

Alternatively, we could grant a property entitlement to the participant, which would prevent publishers from confiscating or devaluing virtual property. This is unlikely to be a workable system, because the publisher will not be able to make any changes to the platform without obtaining consent from each and every participant – although consent could be given in the EULA, which, assuming low transaction costs, would give us much the same situation as that above – in either scenario, participants or platform owners would pay for the rights to deal with the property as they want to. The problem here really becomes one of achieving this bargain with the entire population in advance, and then not being able to modify the bargain without the consent of all involved – a process which is vulnerable to large negotiation costs and strategic behaviour.

The third method would be to grant a liability entitlement to virtual property to the participant. The participant would be entitled to deal with their property as they see fit, but the publisher would be able to make changes to the platform as required, provided they compensate the participants for their loss. For example, this seems like a workable solution to the problem of 'property' and 'currency' in Second Life – where participants certainly feel that they are entitled to the value of the money they convert to Linden Dollars, and the items they then buy, but Linden Labs needs the ability to modify its rules (eg banning casinos) or enforce its rules (eg Bragg). In this situation, such a change to the value of a participant's virtual holdings may be compensable but not prohibited.

Alternatively, we could grant an entitlement to virtual property to the publisher, but support this only with a liability rule. This would mean, for example, that the publisher would not be able to prevent RMT – the participant could deal with the property he or she possesses at will, but would be under an obligation to compensate the publisher at an objectively determined rate. Would this be an attractive solution? In an appropriate situation it may be desirable to allow a participant to commodify their virtual property, to sell it on the open market, and then compensate the publisher for its loss. This approach prevents the platform owner from unilaterally prohibiting RMT, but also prevents the participant from appropriating the whole value of the virtual property by transferring it and retaining the proceeds. This may be useful in recognising that the value of virtual property is not created or determined by either party alone. In this scenario, the obligation to pay a share of the value to the platform owner without being prevented from dealing with the property may be attractive enough to all parties.

Are these models helpful? I think they provide an interesting framework for examining the allocation of entitlements and the protection those entitlements are given. In reality, the entitlements above need to be much more atomic, and the models much more complicated and mixed than the brief blurb I have provided. For example, in any one platform, the right to sell virtual property to a third party for real world cash may be a liability rule which belongs to the platform owner, the right not to have one's account terminated and virtual property confiscated may be a property entitlement of the participant, and the right not to have one's property interfered with by rule or design changes may be a liability entitlement of the participant. Our choice as to whom entitlements are initially allocated and how those entitlements will be protected still depends on our policy goals.

On inalienable rights and virtual worlds

picture of the Jefferson Memorial and extract from the US Declaration of Independence

Image: Jefferson Memorial by kjd (CC BY-NC-ND).

While the discussion of liability rules and property rules (below) may be adequate for fungible interests, it may not be appropriate in cases of interests which more closely touch the personality of the participant. For these latter interests, inalienability, or partial inalienability may be the best method for protecting the personhood of the participant.

In a 1987 article (Radin, Market Inalienability (1987) 100 Harv. L. Rev. 1849), Margaret Jane Radin suggested that there are three main arguments to justify market-inalienability based on personality interests. Lets take the example of the term in the contract which states that a participant can be removed at any time for any or no reason, and consider the arguments for inalienability of the corresponding entitlement not to be removed from a virtual environment without due process. The analogous real-world right, as against the government, is (increasingly, somewhat) inalienable. Against private actors, it is a property entitlement held by the owner of the land. Absent strong arguments to the contrary, the presumption in a virtual environment will be that participants remain in the environment by the consent of the owners of the environment which, while subject to agreement, is revocable.

The first ground canvassed by Radin is a prophylactic argument – where the risk of harm to personhood of giving up the interest is so great that we are willing to constrain the choices available to those who would willingly give it up. In this case, we would be saying that we are willing to presume that all instances where a person gives up the right to due process to be coerced (see Radin at 1909 using slavery as an example). I am reminded here of Bartle's warning that there are any number of reasons that a person may wish to play a game with entirely arbitrary rules. The assumption that all such agreements are coerced simply cannot stand, and the question of consent must accordingly be reduced to a question of fact. However, if we remove the Bartle-world case, we begin to get an idea of the risk faced by participants – this is not simply an issue of losing access to a gaming platform, but of being cut off from one's social network, of having one's property forcibly removed, and of losing touch with the avatar – in the most extreme cases, of being forcibly alienated from a part of oneself. The danger posed can be evaluated quite strongly, and, particularly as the purported agreement is made before access is granted and before any attachment has formed, it may be fair to say that in all but the borderline Bartle-world cases, we are prepared to presume that the decision was coerced or otherwise not freely made.

A second justification given by Radin is that of prohibiting the commodified version of the 'good'. In this case, we may be able to say that there is a moral requirement that participation in the environment should not be commodified. The argument here is that allowing market forces to dictate whether we can associate with our friends and family or our avatars “creates and encourages an inferior conception of human flourishing”.1) In a world which encourages rich and diverse social relationships, to have those relationships subject to arbitrary severance by the platform owner may be damaging in itself. The counter argument is that we often allow rich and diverse human relationships to be governed by markets – although, in an idealised form, we may prefer that they were not. Radin's pragmatism deals with the non-ideal scenarios, and accepts that there can be a continuum of degrees of commodification, and that partial market-inalienability may “sometimes substitute for a complete noncommodification that might accord with our ideals but cause too much harm in our nonideal world”.2)

The third justification Radin gives is a domino theory; where commodification changes the nature of the 'good', such that non-commodified and commodified versions cannot co-exist, and there is a moral requirement that the non-commodified version is available, then a prohibition on the commodified version can be desirable. Radin explains that this “can be conceived of as the opposite of a prohibition: there is assumed to exist some moral requirement that a certain “good” be socially available”.3) In this instance, an argument may be that if we allow platform owners the ability to commodify and sever social relationships and avatar connections at will, we are unlikely to see the emergence of non-commodified systems. This suggestion is borne out, to a degree, by Andrew Jankowich's study showing that three quarters of virtual world agreements surveyed “allowed the proprietor to delete a player account at the proprietor's discretion.”4) If we believe that non-commodifiable versions of social relationships in virtual worlds *should* exist, and we also believe that while we allow commodifiable versions they will not emerge satisfactorily, then we may prefer a prohibition on the commodified version.

While there are many flaws in my under-developed reasoning, a model of partial market-inalienability may sometimes be suitable. While it would be folly to suggest that participants have an inalienable right not to be ejected from a private space, it may make sense to suggest that participants have an inalienable right not to be removed from a private space which very closely mimics public space without due process. This qualified market-inalienability may also be sufficient to allay the concerns raised by Bartle, in that participants and proprietors of virtual worlds which do not closely resemble public spaces will not be unduly burdened in their liberty to choose arbitrary rules. Similar to the way in which labour is partially commodified, where we allow the overall sale of one's productive force but impose limits in the form of minimum wages and unfair dismissal rules, we can envisage that participant rights in virtual worlds can be productively made partially market-inalienable. The difficulty, as always, will lie in establishing the boundaries.

Overall, I think that Radin's theory provides a fascinating way of approaching the topic of 'avatar rights' which could be very useful in determining which interests can be modified by Terms of Service, by code, and by internal norms in virtual worlds.

Comments, thoughts, or suggestions?

Jankowich, EULAw: The Complex Web of Corporate Rule-Making in Virtual Worlds (2006) 8 Tulane Journal of Technology and Intellectual Property 1, 44.

Linden settles Bragg suit

Image: FredoAlvarez (CC BY-ND)

Linden labs has settled the Bragg lawsuit, on undisclosed terms.

This is very much to be expected. The only surprising thing here is that it didn't happen much sooner. You simply can't encourage people to invest and 'own' virtual land, run around telling them that they can make lots of money, and then act as if they have no interest in it whatsoever.

Linden almost certainly doesn't want an adverse precedent here – an opinion that they can't kick people out and confiscate their 'property' without process or compensation. It is not, however, a principle that they are going to be able to avoid for very long…