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Federal Court Cancels Arbitration Clause in 'Virtual World' Test Case

By Samuel Fineman
June 28, 2007
Not long ago, in a galaxy eerily close to this one, legal pundits predicted that the fanciful realm of online 'virtual world' gaming would come crashing into the harsh reality of earthly litigation. That day has finally arrived in the case of Bragg v. Linden Research, Inc., et al., 2007 U.S. Dist. LEXIS 39516 (E.D., Pa., May 30, 2007), serving up a lesson in civil procedure to an attorney with an avatar attempting to avoid arbitration over virtual property rights.

The facts of Bragg are straightforward. Plaintiff, Marc Bragg, an attorney based in West Chester, PA, is a 'virtual world' hobbyist whose game of choice was Second Life, created by the defendants, Linden Research, Inc. and its founder, Philip Rosedale.

For the uninitiated, Second Life is a multiplayer role-playing game set in a virtual world where participants create avatars to represent themselves. Second Life is populated by hundreds of thousands of avatars, whose interactions with one another are limited only by the human imagination. Many people are now living large portions of their lives, forming friendships with others, building and acquiring virtual property, forming contracts, substantial business relationships and forming social organizations in virtual worlds such as Second Life. (For more implications of virtual worlds, see, 'Asset Creation, Seclusion and Money Laundering in the Virtual World' in the July 2006 issue, and 'Virtual Worlds and Digital Rights' in the Sept. 2005 issue of Internet Law & Strategy.)

Second Life is significant in the pantheon of virtual gaming because it was the first to recognize participants' full intellectual property protection for the digital content they created or otherwise owned in the virtual world. As a result, Second Life avatars can purchase, own, and sell virtual goods and, more importantly, virtual land. According to the factual record developed by District Judge Eduardo Robreno, Defendant Linden's founder, Rosedale, took great pains to promote the benefits of virtual property ownership on a national scale, appearing in countless magazine articles and on the Web.

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