Legally Virtual in a Data Minefield
Legally Virtual in a Data Minefield
June 6, 2007: A legal minefield is erupting in a second world, where users sign away the storage and right to their intellectual property data, and the flow of cash paves the way for related criminal activities.
It’s hard not to be familiar with the happenings of Second Life. Most of us have heard of the property tycoon and her millions, the island purchased by the ABC, the Australian Open hosted by IBM and the intellectual property debates that have fired up as a result of the game.
But could it soon be lawyers having all the fun with the online world? Lawyer Przemek Kucharski from Allens Arthur Robinson has told the Society for Computers and the Law of the brave new world of virtual legalities. From virtual and intellectual property to criminal activities like tax evasion and money laundering, online worlds could well be opening themselves up to a whole new arena of law.
“At the moment online worlds are completely unregulated in the sense that there are no laws specific to them,” says Kucharski. “They are governed mainly by the Terms of Service that every subscriber has to agree to in order to access the online world and by such ‘real world’ law as may apply to the online world.”
It’s these ‘Terms of Service’ that could present problems for users and highlight the legal ramifications of IP rights and land ownership. Linden Lab, the organisation behind Second Life, requires users to sign off on the 12 page ‘Terms of Service’ before players take their first steps on the islands that make up the online world.
For those not so familiar with the ‘game,’ once signing the terms of service, users ‘play’ by creating an online alter ego or ‘avatar’ and then purchasing or spending their ‘Linden Dollars’ by doing all the stuff you do in real-life; buying, selling or creating goods and property, hanging out in public spaces, chatting with other residents or even exploring online news and entertainment.
Some might call it the virtual world’s answer to a working economy, a free market rewarding innovation, creativity and offering a space for users to trade and generate business online. According to Kucharski however, there is the slight problem that Linden Lab outlines in their service agreement the ‘right at any time for any reason or no reason to suspend or terminate your Account, terminate this Agreement, and/or refuse any and all current of future use of the Service without notice or liability to you.’
But even as Linden Lab reserves the right to effectively terminate a player’s account, they still state their limited responsibility over the content players actually create in Second Life. ‘Linden Lab has very limited control, if any, over the quality, safety, morality, legality, truthfulness or accuracy of various aspects of the service.’
There is also the point, again outlined by Linden Lab, that IP rights do not match up with the right to access the Service or even to access your own data, stored on Linden Lab servers. ‘You do not own the account you use to access the Service, nor do you own any data Linden Lab stores on Linden Lab servers,’ states the Terms of Service.
Although Linden Lab is a private company and therefore does not have its figures disclosed, Kucharski estimates the company is theoretically harbouring the work of 23,000 man hours a day, the equivalent of a 4,100 person software team. They’re accessing all this development work, all for free.
However with increased user investment and the media attention that follows those who’ve made their fortunes in the online world, Kucharski believes we could soon see the Law quickly catching up with the technology. “It is inevitable that laws and regulations will follow to protect this investment,” says Kucharski. “Just as the Internet has gone from being unregulated to highly regulated.”
Of course being an ‘online world’ offering a borderless regime, external laws are limited by the jurisdiction where they are made and will therefore be ineffective. The real hope for legal control in games like Second Life is through self-regulation, raising the possibility for policing online behaviour but inturn suggesting privacy concerns. “This may be more effective as, unlike in the real world, in online worlds the service provider can monitor everything that goes on and quickly detect suspicious activity,” says Kucharski.
In Second Life, over US$2 million changes hands everyday. For Anshe Chung, the game’s now famous property tycoon, that level of exchange made her the Game’s first self-proclaimed millionaire. With these sums of money floating around cyberspace, Kucharski throws the legal spotlight on the potential for tax and money laundering, product liability, insolvency, corporate governance and defamation.
Overall, the fast growing yet relatively small online community could present some interesting opportunities for lawyers, especially as questions are raised over things like income tax, GST, ABN registration and tax deductible expenses. “Among legal academics, the issue has given rise to considerable interest and many scholarly papers have been written and continue to be written on the subject,” says Kucharski. “Among most legal practitioners, however, this issue is only now slowly coming onto the radar.”
But just as the legal profession came to deal with the Internet through various anti-hacking laws and the Spam Act 2003, the Law looks set to soon catch up with online worlds. “In this respect, I think online worlds may be compared to the Internet as it was about 10 years ago,” says Kucharski. “There was much hype about the problems it may cause. As the law caught up with the technology attempts have been made to address many, though certainly not all, of these problems.”