Competing Lockean claims to virtual property.

• Author: Horowitz, Steven J.

1. INTRODUCTION II. THE STATE OF VIRTUAL PROPERTY IN VIRTUAL WORLDS A. Property-Averse Worlds B. Second Life: Property-Promoting? III. DESERT IN OWNED WORLDS A. Desert and Operator Rights B. Desert and User Rights IV. CONCLUSION I. INTRODUCTION

   Fights over virtual world goods can have real world consequences. In 2005, for example, one Chinese gamer killed another over a stolen dragon saber. (1) Virtual world goods can also translate into real world profits--2006 saw the first millionaire of the popular virtual world Second Life, (2) Anshe Chung, who accumulated more than one million dollars in virtual world assets. (3) While the effects of virtual products are real, one wonders whether the property entitlements that might attach to them are secure. In particular, if the operator of a virtual world wanted to shut the world down, and by so doing destroy all of the products contained therein, would users have a right to stop it? This Note explores one normative justification that users might wish to use to assert claims to virtual property against operators of virtual worlds--Lockean labor-desert--and argues that the operators' initial labor-based rights to their virtual worlds severely limit the competing labor-based claims of users.

   Virtual worlds are persistent, dynamic computer-based environments in which interconnected users interact with each other and the virtual environment around them. (4) Most worlds allow for an in-world property model, whereby users accumulate virtual products. (5) As a descriptive matter, End User License Agreements ("EULAs") typically limit any claims a user might wish to assert against an operator, but the underlying normative issue of user rights persists. Indeed, if a user's claim to a virtual product were strong enough, courts might be justified in ignoring the terms of a EULA that limited virtual property rights.

   A virtual property right is a property right in a virtual product. (6) While both virtual and intellectual property rights protect interests in non-corporeal things, virtual property rights apply to rivalrous goods whereas intellectual property rights apply to nonrivalrous goods. (7) For example, a virtual property right can protect a domain name. (8) While anyone can own a copy of the Beatles' "White Album" without making others worse off, we cannot all own the same domain name--say, www.google.com--without destroying its usefulness. The content of a virtual property right is also different from that of an intellectual property right. Like real property rights, virtual property rights typically provide for the rights to use, to exclude others from using, and to alienate or transfer objects. Intellectual property rights, by contrast, prohibit copying or producing similar ideas, expressions, or products. (9)

   Whether users can assert property claims against operators may have both economic and legal implications. Trade in virtual products is extensive--a spokesperson for Sony Online Entertainment recently estimated that there is a $200 million market for the sale of virtual goods. (10) If users cannot protect their virtual property interests against operators, the value of such products and trade may diminish. But if users can assert virtual property rights against operators, such rights suggest myriad legal questions. Are operators required to maintain artificial scarcity in virtual products? If a server fails, destroying virtual products, what relief can users seek? Are operators required to sustain virtual worlds to protect virtual property rights, even to the point of bankruptcy? Though this Note will not address all of these questions, they help to convey the importance of the issue.

   Part II briefly explains how the EULAs of most virtual worlds currently limit users' claims against virtual world operators. Part III addresses the underlying normative conflict from a Lockean perspective by asking, as between users and operators, who has the greater labor-based claim to the products of virtual worlds? This Note argues that the operators' claim is the stronger. Part IV concludes that users may have stronger property rights in worlds designed to support such rights, such as open source worlds.

2. THE STATE OF VIRTUAL PROPERTY IN VIRTUAL WORLDS

   Virtual property rights in all of the most popular virtual worlds are delineated by EULAs. Although a vast market for virtual products has emerged, most virtual world EULAs prohibit the trade of virtual products and deny any property claims users might wish to assert against operators. As a practical matter, any legal dispute between users and operators over virtual property in such worlds would likely turn on these agreements. EULAs may shape user-operator disputes in worlds whose operators openly oppose virtual property rights ("property-averse worlds") differently than in worlds whose operators purport to accept and even foster users' property rights ("property-promoting worlds"), such as Second Life.

   1. Property-Averse Worlds

      The EULAs of property-averse worlds deny virtual property rights that could give rise to a user claim against an operator. World of Warcraft, the most popular virtual world in the United States, (11) is a good example. Blizzard Entertainment, which owns and operates World of Warcraft, includes the following in its EULA:

      You may not purchase, sell, gift or trade any Account, or offer to purchase, sell, gift or trade any Account, and any such attempt shall be null and void. Blizzard owns, has licensed, or otherwise has rights to all of the content that appears in the Program. You agree that you have no right or title in or to any such content, including the virtual goods or currency appearing or originating in the Game, or any other attributes associated with the Account or stored on the Service. Blizzard does not recognize any virtual property transfers executed outside of the Game or the purported sale, gift or trade in the "real world" of anything related to the Game. Accordingly, you may not sell items for "real" money or otherwise exchange items for value outside of the Game. (12) The message is clear: users do not have any right to virtual goods or even the accounts for which they pay. Users also have no right to buy, sell, gift, or trade any such goods--though this provision is regularly breached. (13) Elsewhere in the EULA, Blizzard asserts that it owns all objects in the game, and that it may terminate user accounts at any time, for any reason. (14)

      Blizzard is not alone. NCsoft, the operator of Lineage, (15) also strictly limits user rights. Its EULA includes the following: "[Y]ou agree that you do not own the account you use to access the service, the characters NC Interactive stores on NC Interactive servers, [or] the items stored on these servers...." (16) Unlike World of Warcraft, Lineage allows users to upload their own content into the virtual world. Nevertheless, the EULA limits a user's rights even as to his own content--he must agree to grant the operator a perpetual right to do essentially anything the operator wants with the user-created content. (17)

      These EULAs are representative of property-averse virtual worlds; their terms deny users any claims to virtual property. There are at least two objections to concluding that the EULAs alone deny such rights, but neither of these objections withstands careful scrutiny.

      First, one might argue that the EULAs are unenforceable. After all, users have no choice but to accept the terms of these complicated contracts if they do not want to be excluded from the virtual worlds altogether. In similar circumstances, some courts have refused to en force EULAs where users had no opportunity to bargain, and where the terms were unreasonable. (18) Whether the terms relating to ownership of virtual property are unreasonable speaks in part to normative issues addressed below--one might argue that users so deserve to earn property from their labor in virtual worlds that depriving them of virtual property rights without the opportunity to bargain is unreasonable. This is why a normative account is important. Without a positive theory of virtual property, it is hard to consider a world beyond the EULAs.

      That said, while no court has addressed the validity of virtual world EULAs, many courts have upheld "clickwrap" licenses in other contexts. (19) There is reason to think that virtual world EULAs are at least as likely to hold up in court. (20) Blizzard's EULA even invites users to call for a refund if they do not accept the terms of the EULA, doing so in bold, capital letters at the beginning of the EULA. (21) While this makes the EULA no less a contract of adhesion, it puts some power back in the users' hands, because they can escape from the agreement at negligible cost.

      A second argument in favor of virtual property rights is more pragmatic: if users are trading over $200 million in virtual property, they must be relying on property rights. (22) As a practical matter, users seem to have exclusive possession of the virtual products, and they have the ability to transfer those products to others. It would be ignorant or naive, according to this argument, to deny the existence of property rights under such circumstances. But the pragmatic argument fails as well. First, trade among users may suggest the existence of rights among users, but it does little to indicate the structure of rights between users and operators. Second, pragmatic concerns can lend force to the opposing argument as well--the very conditions that give rise to putative property rights are controlled by the virtual world operators, and despite appearances, operators possess the virtual products insofar as they possess the entire world. Operators can prohibit transfer by changing the code; they can destroy any value virtual products might have by providing identical goods to every...