A battle over virtual property in the online community Second Life has resulted in a lawsuit.
Four virtual property owners filed a lawsuit on April 15 of this year, alleging that developer Linden Lab gave players a false impression that they actually owned their online holdings, reports CNN.
The suit (PDF), which seeks at least $5 million in damages, alleges that:
… Defendants falsely advertised to the public as a whole that all right, title and interest to the virtual land and all associated ownership rights would pass to buyers and that Plaintiffs and Main Class members would retain their intellectual property rights in and to virtual items.
The four plaintiffs are Carl Evans from Pennsylvania, Donald and Valerie Spencer of Florida and Cindy Carter of Wisconsin. Evans claimed that items were taken from him in Second Life around March of 2008, while Carter and the Spencer’s indicated that Second Life property was taken from them in or around April-May 2006.
The plaintiffs admitted to investing “thousands in U.S. dollars” into Second Life under the belief that they would retain “all right, title, interest, copyright and intellectual property rights to the land, objects and virtual property.”
The lawsuit was filed in the U.S. District Court for the Eastern District of Pennsylvania.
The complaint says that the role of Linden Lab’s Chairman Philip Rosedale was to “bait the hook” for customers to make more interactive content for the online world. He was also described as a “hawker sitting outside Second Life’s circus tent, singing the marvels of what was contained inside to entice customers to enter.”
The plaintiff’s also tried to use Rosedale’s own words against him, claiming that Rosedale stated in July of 2006 that “… you can’t for example just take someone else’s property in Second Life.”
Comments
Re: Real Lawsuit over Virtual Property
As much as I hate Second Life, I honestly hope these idiots don't win this suit, primarily because of the major precedent that it would set, saying that virtual goods - either bought or earned in-game - have real-life value, and, as such, would constitute income. This would make online gaming subject to actual taxation.
As an avid Guild Wars and Star Trek: Online player, and someone not-so-patiently awaiting the release of Guild Wars 2, it would make me very sad to have to stop playing these games because some idiot filed a lawsuit, and now my earning of items in-game is subject to real-life taxes.
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With the first link, the chain is forged.
Re: Real Lawsuit over Virtual Property
If people are willing to buy them for real cash then they do have value.
Besides if they require money skill and/or effort to obtain then they must have some value.
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Re: Real Lawsuit over Virtual Property
They may have a value, but according to the publisher of the games you are playing, you do not actually "own" anything. All virtual items - characters, equipment, housing, gold, etc - are the sole property, trademark and copyright of the company in question. If you leave the game, you can't take your character or the gear/gold with you. If the company deletes the character, that is their right, as long as they have followed the TOS of the game.
Thoughts and dreams have value, but are not taxed. People are willing to pay vast amounts of money for books. But, if I loan you a book and charge you each month to possess that book - perhaps updating the book with additional content, you aren't generally taxed for the book (or rented DVD or whatever), as it is not you that owns the book. I am the one that owns the book and the one gaining revenue from it. Now, if you photocopy portions of the book and sell it to others, and we had a contract stating that you wouldn't do that, then you *might* get taxed for those sales - but more likely you would just get sued for breach of contract.
Re: Real Lawsuit over Virtual Property
Actually, this lawsuit will have no real impact on the current taxation laws with regard to MMO virtual goods. In the US, goods may only be taxed if they can be legally converted to real-world cash. Now, most MMOs state in their TOS that the virtual goods in their games are the property of the game in question and may not be sold for cash (like on e-bay or to a goldseller or whatever). Thus, since it is against the TOS for you to do so, it makes such items exempt from the tax code. (Game Politics had a good write-up on this a while back).
Now, having said that, do you really think that the taxation of virtual goods is that far off? With all of the virtual money and property hanging around out there, and with the government strapped for revenue, at some point some law will be passed to tax those items. How it will be done is in question however. I suspect that instead of taxing the player, they will just put a tax on virtual games in general - a "sin tax" if you will. But we will see.
Re: Real Lawsuit over Virtual Property
Actually, those games tend to put very clearly in the disclaimers that you do NOT own your character and the items it has. Compared to Second Life, that talks about you actually having property and developing things you can sell to others, and then I actually mean DEVELOPE, there's a big difference. It's not a matter of all virtual goodies being worth money, it's more an issue of Second Life, which actually focuses on real money flowing by selling virtual stuff and apparently acts as if you actually own it, breaking the rules.