Eros LLC sues Linden Labs over Second Life Infringement

In an interesting move, Eros LLC, a maker of Second Life virtual sex products, has sued Linden Labs, the developer and publisher of Second Life, for a bevy of causes of action including trademark infringement, copyright infringement, DMCA violations, and tortious interference. Eros, who some readers may remember as the plaintiff in a previous sex bed case, is claiming that Linden is profiting immensely from the sale of illegally copied goods protected under Eros’ marks. The difference this time lies with the defendant; while Eros was previously going after the individual copiers, this time they’re going after Linden themselves. Stephen Wu, who will be presenting a discussion at Engage! Expo/Digital Law Conference entitled “Intellectual Property Megasuit: Could it Happen to You” suggests that Eros may be seeking to replicate Viacom’s successes against Youtube and Google. “It’s hard to judge, but perhaps you’ll see some better activity on behalf of Linden’s to reform their system, and maybe get a settlement in exchange.”

The broader issue, Wu warns, is what effect this may have on other virtual worlds and MMOG owners. Already faced with one landscape changing mega-litigation to watch (the NCSoft/Worlds.com patent suit), virtual worlds owners will now have to “get their houses in order” as far as IP and DRM are concerned, lest they become the next targets. “There is risk for other virtual world owners. If they don’t have their own protections for copyright and trademark owners, they may see themselves getting sued from this firm [KamberEdelson] or a similar plaintiff,” says Wu. KamberEdelson, according to Wu, is on the hunt for what they perceive to be unfair business practices — they were involved in the recent Amazon suit over the pulling of digital copies of Orwell’s 1984 from Kindle owners. In closing, Wu warns, “This is not a one-off event. This is going to be a prime form of litigation in the near future.”

For further analysis, Patent Arcade is tracking the suit as well. The complaint can be viewed in full here.

Popularity: 4% [?]

Don’t Tase Me, Linden Labs

Kotaku reported today that Taser International, Inc has sued Second Life parent company Linden Labs for damages in excess of $75,000.

The suit was filed in the United States District Court for the District of Arizona, and names not only Linden as a corporation but some Linden employees past and present. The Complaint makes several allegations involving trademark infringement under both federal and Arizona common law, unfair competition, design patent infringement, and, most puzzlingly, RICO violations.

Taser argues that the existence of Taser and Taser-related items in Second life is causing people to associate the device with “prurient content”, such as pornography. Apparently some Second Life users have developed Taser replicas in-game. None of these digital devices actually function as an electric takedown device. Other users have developed different Second Life props that use the name “TASER” but bear no resemblance or similar functionality to the original Taser device. Because these users have Tasers in Second Life, and because Second Life has available a copious amount of material that some individuals would find offensive, Taser is alleging that the appearance of “Tasers” in the game is tarnishing the sterling reputation of their otherwise unblemished product. Taser appears to draw most of their evidence for this from a group of role-players who do a heavy trade in e-Tasers under the group name The Crack Den. The Complaint draws little or no distinction between these users and Linden itself, however, which may be a bridge too far for a federal court.

Taser’s case has some structural issues, too, mainly pertaining to the proper naming of proper defendants. First, Linden no longer brokers item transactions between users. They recently acquired XStreet to do that for them. XStreet is not currently named as a Defendant in the case, but as they are a wholly-owned subsidiary of Linden, Linden would have to show a remarkable degree of corporate separation to divest themselves of responsibility in the matter. If Taser gets their act together and amends their Complaint, Linden could be open to some liability on this front.

Next, Taser that they don’t even seem to have named Linden properly. Taser has named both Linden Lab and Linden Research Inc., even though one is a DBA of the other. In addition, Taser, a Delaware corporation, states in their Complaint that Linden is “an entity of unknown origin”. Linden makes no secret that they, too are a Delaware corporation.

Taser is reaching here, and not just legally. They are claiming damages in excess of $75,000 to get over the federal minimum. In addition, under Arizona Revised Statutes Taser can be granted US$500 per infringing copy for every non-functional. Each Second Life Taser only “retails” for about $2 US. That’s a long way to go for a bunch of pixels.

Popularity: 16% [?]

Second Life lawsuit settles

Normally we wouldn’t write a big thing about a lawsuit over Second Life unless it presented a novel legal concern. However, this one features some interesting players in the litigants. Counsel for Sailor’s Cove (a Second Life sailing company) partner Patrick Levitt is Bob Brackman, of Brackman and Brackman. Counsel for the employees involved, is Ross Dannenberg, of Banner Witcoff. Ross, as readers of this site may know, is co-chair of the ABA IP Law Division’s Special Committee on Computer Gaming and Virtual Worlds, which I am also a member. Furthermore, Ross is a member of our panel that will be speaking at PAX 2008 on legal issues facing the gaming industry.

What’s great to see about this case is the settlement. According to the press release from Banner Witcoff, and statements from Mr. Brackman, the settlement and the negotiations were cordial and non-hostile, something that anyone who has worked in trial law for some time can attest to as a pleasant surprise.

According to the Banner Witcoff press release:

The land in dispute is Sailor’s Cove, a collection of twenty-one regions (private islands) within
the virtual world of Second Life. Sailor’s Cove was developed by three parties and designed as a
waterfront community that allows avatars to purchase land, participate in virtual yachting and
sailing events, and become active in the community of residents of Sailor’s Cove.

The property and ownership dispute was between Patrick Leavitt, owner of record of Sailor’s
Cove with Linden Research, Inc., and Izabella Bentham and Tasha Kostolany. While not owners
of record with Linden Research, Inc., Bentham and Kostolany were each publicly acknowledged
within Sailor’s Cove as “Owner and Sailor’s Cove Partner,” and were instrumental in the
development and success of Sailor’s Cove. Patrick Leavitt had subsequently asserted sole
ownership of Sailor’s Cove.

Of note is that the Virtually Blind interview with Mr. Brackman notes that both parties agreed to venue in California. It’s good to see that venue/jurisdictional issues were resolved amicably between the parties as well, as in virtual world cases these can potentially be fearsomely litigious issues (though we don’t actually know too much about the dispute, it may well be that all parties were California residents conducting business in California, making it a non-issue).

In any event, congratulations to both Mr. Dannenberg and Mr. Brackman on the successful settlement of their dispute.

Popularity: unranked [?]

Study: MMORPG subscriptions out of favor

New, from the “telling us what we already know” department: MMORPGs that make players pay a monthly subscription are disfavored by players, who prefer free-to-play models. So says a recent study by the Parks Associates research firm, which surveyed around 2000 online game players and found that only the hardest hardcore gamers preferred the subscription based model, and of those who did not already play an MMORPG only 2% would consider a non-free model.

Of course, hardcore players are also opposed to microtransactions, and they figure a subscription gives them the most bang for their buck, since they’ll always have access to the best gear (since they are the hardcore high-end raiding players) while paying the same amount as other players. They oppose microtransactions because it allows players with more money to gain a significant advantage over them, and cite play balancing issues when all players don’t have the same items.

The irony of this final statement is that all players usually don’t have access to the same items. High end raiding loot is unaccessible to nearly all players except those in the most elite guilds. In essence, this is a traditional situation where “those in power wish to remain in power at the expense of the greater good” social problem found in nearly every political science handbook. According to the study, aside from WoW most MMO games are using the free to play model anyway. We’ve always known that WoW’s unrealistically high subscription numbers, and atypical hardcore fanbase can seriously skew statistics in the MMO tracking field. But as more and more games go to a free to play, or pay once to play model, either supported by microtransactions or not, I predict we’re going to see a serious drop in the statistical power and strength of WoW. Not their subscriber numbers, because Blizzard has always been an influence-driven market player. But because of their highly atypical status, and the overwhelming acknowledgement by other MMO companies that “we’re not even trying to compete with WoW”, eventually WoW will (d)?evolve into a field of its own, the last bastion of the subscription based, high box price, costly expansion pack style MMOs; while the rest of the market focuses on free-to-download-low-subscription games, pay-once-for-the-box-and-no-subscription-fee games, Steam/Impulse style distribution systems that lower the cost for the consumer while improving the margins for the developer and publisher, and completely free games supported by advertising and microtransactions.

It’s basic economics, which interestingly enough, a white paper submitted by Terra Nova titled “Project Arden” suggests apply readily to the online world. Consumers will choose, among equals, the product that costs less. Smart consumers will weigh rationally the monthly subscription cost into the total price of the game, making a $50 WoW suddenly $170 to play for a year. They’ll compare that to a completely free Battlefield Heroes (even throwing in $30 for microtransactions), or a $20 Guild Wars, with no subscription, and the significantly lower price point weighs strongly for them. The fact that Blizzard has managed to keep so many subscribers is in large part due to the incredibly high perceived quality of the game (it pains me to say that, as I disagree with the perception), but that is also tethered to the Blizzard brand name, and is something that other publishers simply cannot hope to capitalize on. If they attempt to charge the same high monthly rates along with an initial outlay for the box and disc, they will lose in the end unless their game is perfect — something we all know NEVER happens in the MMO arena on your first few tries.

Popularity: unranked [?]