Virtual Legal Chickens Come Home To Roost In Real Courts

Netizens spend more and more time living their lives in online virtual worlds these days. Participants pursue their virtual lives through avatars, the visual representations of people in virtual worlds. While most virtual world interactions remain virtual, taking place entirely in fictitious realms, virtual disputes are increasingly landing in real courts right here on terra firma.

A specific case example drives this point home. Second Life probably is the best known virtual world. In Second Life, through interactive computer simulation, participants act through their avatars and can see, hear and work with simulated objects in a computer generated environment.

Linden Research, Inc. owns and operates Second Life. Second Life participants come from the United States and various foreign countries, and number in excess of 9 million people, according to Linden.

Second Life participants are governed by the Terms of Service for this virtual world. These Terms of Service specifically allow Second Life users to retain all intellectual property rights in the digital content they create or own in Second Life. While Second Life is a virtual world, participants conduct transactions in this space cumulatively involving more than $1 million per day.

Where dollars are at stake, disputes follow, and the law is called upon to resolve the disputes. This is becoming true with respect to virtual world transactions that involve real money, just as it is true for real world transactions.
This brings us to the case Eros, LLC v. Thomas Simon, recently filed in federal court in New York. The complaint was filed on behalf of several plaintiffs. Here, we will focus on the allegations of the lead plaintiff, Eros LLC.

Eros engages in the sale of a number of adult-themed virtual objects for use within Second Life. Eros alleges that through the marketing efforts of its CEO (referred to as "Stroker Serpentine"), Eros' products have become very well known in Second Life.

Indeed, Eros alleges that its products have built a reputation within Second Life for "performance, quality and value" (we won't go there in this piece), and consequently, are among the best selling adult-oriented virtual objects in Second Life.

Among the Eros products are the SexGen Platinum Base Unit v4.01 and the SexGen Platinum-Diamond Base v5.01. Eros alleges that it has used the SexGen trademark to sell these Eros items in Second Life and that the trademark has become famous and distinctive.

Eros also asserts that it has filed an application to obtain a federal trademark registration for the SexGen trademark and that it also has filed applications for copyright registrations for the Eros items.

So, what's the rub? According to Eros' complaint, along comes defendant Thomas Simon, who is known as Rase Kenzo in Second Life. Simon allegedly has made unauthorized copies of Eros' products and has used Eros' trademark without permission.

The complaint asserts that Simon has sold unauthorized copies of Eros' products while misrepresenting that these copies are authorized and legitimate copies of Eros' products. Accordingly, this has led to alleged consumer confusion as to the origin of the products.

Eros complains that Simon has traded off of the reputation and goodwill associated with Eros' products and trademark, unjustly profiting from this wrongful conduct. Eros further alleges that Simon has siphoned away its sales and profits.

Eros raises a number of causes of action in its complaint, and not only seeks an injunction barring Simon's conduct, but also requests triple damages, attorneys fees, and further statutory damages.The complaint is detailed and reads just like a complaint that address transactions and conduct in the real world.

Here, however, one must step back and realize that the true transactions and conduct have occurred in a virtual world created on the Internet.

Assuming the complaint stands up and the litigation proceeds, the unmistakable point is that even virtual interactions that do not take place in real life, can lead to real legal action in our brick and mortar courts when actual monetary interests are impacted. If the stakes were only virtual, then perhaps the disputes could be resolved by judge and jury avatars in a place like Second Life, but that might not be resolution enough when actual dollars are at issue.

Eric Sinrod is a partner in the San Francisco office of Duane Morris LLP where he focuses on litigation matters of various types, including information technology and intellectual property disputes.

His website is http://www.sinrodlaw.com and he can be reached at [email protected]. To receive a weekly email link to Mr. Sinrod's columns, please send an email to him with Subscribe in the Subject line.

This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.