Copyright Law — FALL 2008

With considerable advances in technology and the consistent improvement of accessibility to, and speed of, the internet, a steadily growing number of individuals throughout the world are spending more and more of their time online socializing, gaming, conducting business, shopping, and so much more. The possibilities, these days, seem endless. Accessibility to content that infringes upon copyrights, trademarks, etc. has increased substantially as a result of the popularity of the internet. The enforcement and choice of intellectual property laws has become infinitely more problematic due to the internet and its worldwide use. Online jurisdictional issues as well as choice of law have recently been raised in cases such as Bragg v. Linden and Twentieth Century Fox Film Corp. v. iCraveTv, but these decisions have yet to be sufficiently applied to virtual worlds. Millions of people throughout the world enjoy the use of Massively-Multiplayer Online Role-Playing Games (MMORPGs) such as World of Warcraft, Second Life, Maple Story, EverQuest, and many more. These types of online role-playing games allow the players to create their own character, or avatar, which the player then guides through the virtual world in order to interact with other players within that realm.  In “open virtual worlds,” the developer confers certain powers and rights to the players within the virtual world (the primary example being Second Life). Individuals using the virtual world are able to create virtual property that they are able to sell for real world money (through the exchange rate of 265
Linden virtual dollars to $1US). Second Life has been met with great controversy as a result of its inherently unique principles that concede intellectual property rights (including copyright protection) to the Second Life users for the property (and code) that they produce within the virtual world.

Currently, the primary regulatory mechanism for virtual worlds such as Second Life are the End User Licensing Agreements (EULA) and Terms of Service (ToS) that an individual must sign and agree to prior to partaking in each virtual world experience. These licenses establish, among other things, the general rights of the developer as well as the rights and restrictions placed upon the user. Oftentimes, the licensing agreements contain considerable grey areas, leading users and real world governments to question how users may be taxed, punished, or even sued for their actions within the virtual world. The courts must first determine how best virtual activity should be regulated and whether or not they should step in, as opposed to leaving regulation solely to the developer and his or her EULA. Additional questions have been raised, including issues related to jurisdiction and choice of law, as oftentimes infringers of intellectual property rights within the virtual worlds are located outside of the
United States. It is becoming critical that these answers, and many more, are soon answered, especially in light of the rise in legal disputes that have come as the result of Linden Lab’s Second Life and its purported concession of intellectual property rights to users for their creations of virtual property.

As it stands now, virtual worlds most affected by copyright law, such as Second Life, are user-built worlds and generally self-governed republics, where the creator, Linden Lab, specifically disclaims regulation of content and interaction between avatars[1] and refuses to be an arbiter in conflicts beyond those that are clearly defined as harmful practices (such as spamming or dissemination of hateful data).[2] While service providers of virtual worlds are protected against copyright infringement claims, due to the safe harbors made available from the U.S. Digital Millennium Copyright Act, there is no similar legislative provision that protects virtual world users from copyright infringement.[3] Although Linden Lab explicitly states that its virtual world, Second Life, follows the procedures set out in the U.S. Digital Millennium Copyright Act, that does not necessarily mean that
United States law governs any copyright claims that may be raised by a foreign user. In fact,
United States courts have been extremely hesitant to step in and provide any regulation of virtual conduct, including infringement actions involving trademarks and copyrights.

One example of the problematic nature of real world governance of online intellectual property infringements was provided in two separate trademark cases brought against eBay. Tiffany and Co. filed a lawsuit in the Southern District of New York against eBay for direct and contributory trademark infringement, for providing a forum which allowed the sale of counterfeit Tiffany products.[4] In addition, LVMH Moët Hennessy Louis Vuitton SA, the maker of the Louis Vuitton Brand, filed suit raising the same causes of action in
Paris, France against eBay in 2006.[5] While the Tiffany and Co. lawsuit found eBay not liable to Tiffany, the

(two weeks prior) ruled that eBay was liable for the fake LVMH products sold through eBay’s website, and fined eBay the equivalent of over $60 million in damages.[6] The difference in outcome of the near-same fact pattern clearly delineates how problematic it is to govern online infringement conduct in the real world. If any other company were to sue eBay in the future, both inside and out of the
U.S., it is extremely possible that the outcomes of the previous eBay decisions could change entirely.[7]

According to Peter Starr, United States copyright laws do not have an extraterritorial effect and therefore, infringing actions that take place entirely outside the
United States are not actionable.[8] In fact, extraterritorial application of American law would be contrary to the spirit of the Berne Convention, as stated by Judge Nelson in Subafilms, Ltd. v. MGM-Pathe Communications Co.[9]Therefore, courts should look to the Berne Convention and similar international copyright treaties in order to determine which choice of law to apply to a particular copyright infringement case. Nevertheless, if a plaintiff can establish a predicate act of copyright infringement by a defendant that occurred within the United States, the plaintiff can state a claim against that defendant under the Copyright Act for damages occurring outside the
United States.[10] This has allowed United States citizens (and corporations) to sue foreign infringers for conduct such as distribution of infringing materials or targeting
U.S. customers on a website.[11] Similarly, personal jurisdiction of non-resident defendants have been found in cases where the defendants had continuous and systematic contacts with the
United States.[12] However, how would extraterritoriality be applied in copyright infringement cases where a Second Life user from Japan, who had absolutely no contacts with the United States and did not advertise or specifically distribute the copyrighted virtual property, was infringing on a
U.S. users’ copyright? Furthermore, what law would protect a virtual copyright in the case of a Second Life infringer located in
Taiwan, a country that is not a member or signatory of the Berne Convention, the UCC, or the WCT?

Although the application of real world law to virtual world conduct would be an improvement to the current, or continued, regime of anti-regulation (or placing all of the power in the EULAs), the real world framework as applied has many inherent flaws that should best be resolved by an in-world regulatory framework which utilizes real world regulatory principles. This alternate dispute resolution regime would ultimately utilize Second Life users hired by the governments of the respective countries to form one, single source of copyright enforcement in the virtual worlds. The member states of the Berne Convention and the UCC should work to create a Copyright Act that governs all virtual world conduct in relation to the protection of copyrightable virtual assets, including computer code, text, moving and still images, and even avatars in the virtual world (according to the decision made by Judge Learned Hand in Nichols v. Universal Pictures Corp.).[13] This suggested Virtual Copyright Act, following the same national principles of the Berne Convention, would apply only to virtual conduct and would have virtual punishment and repercussions for copyright infringement (ex: injunctions via freezing of user accounts, damages in the form of virtual dollars, etc.). Although it is likely that the creation of one, single governing force within the virtual world, would be difficult to enact, it seems to be the most viable option to efficiently and adequately protect virtual world copyright rights across the world- including those countries that are not necessarily signatories of the real world copyright treaties that have currently been enacted.

[1] § 1.2 of Terms of Service for
Linden Lab

[2] Max Vern, Second Life- A New Dimension for Trademark Infringement, Intellectual Property Today (May 2008)

[3]
Id.

[4] Henry M. Sneath, Internet IP Litigation: Can the Law Catch Up With Technology?, Intellectual Property Today (September 2008)

[5]
Id.

[6]
Id.

[7]
Id.

[8] Gorman & Ginsburg, pg. 1105

[9]
Id. at 1109

[10]
Id. at 1114

[11]
Id.

[12]
Id. at 1116.

[13] http://www.aippiboston.org/en/phpincludes/program/workshops/seven/pdfs/WS_VII_Handa.pdf

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