Intellectual Property in Virtual Worlds

Call them what you will, massively multiplayer online role playing games, virtual worlds or video games. Regardless of their label, these online environments in which users socialize or play games are now in the mainstream. With popularity and subscribership on the rise, virtual worlds, like World of Warcraft, EverQuest, There and Second Life,

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are big business. A growing audience and expanding revenue stream also mean that virtual worlds find themselves increasingly the subject of litigation. Indeed, some law firms have developed specialized practice groups to address this new and unique medium and the range of issues it presents. Alex Pham, "These Lawyers Got (Video) Game," Los Angeles Times, Dec. 3, 2008.

It is not surprising that copyright and trademark issues arise frequently in virtual worlds, given the fact that they are products of copyrightable software code and thus by their very nature implicate intellectual property analysis. Additionally, MMORPGs, such as Second Life and WoW, have developed marketplaces for the sale and barter of virtual goods for real money or virtual money that may later be converted to real money. As in any marketplace, there is also a need to identify the source of virtual goods, especially in virtual worlds such as Second Life, which allows its users to generate their own virtual content and retain intellectual property rights in the content they create. "Second Life Residents To Own Digital Creations," Nov. 14, 2003; Second Life Terms of Service §3.2. Some entrepreneurs in Second Life have applied to the U.S. Patent and Trademark Office for registration of their avatars (the user-created character representation of the virtual world participant in the virtual environment) and other marks for their virtual businesses.

Recently, the U.S. Patent and Trademark Office issued a registration for a Second Life avatar as a design mark. U.S. Trademark Registration No. 3531683 for the Aimee Weber avatar claims computer programming services, namely, content creation for virtual worlds and three dimensional platforms in International Class 42. This avatar has become identifiable with the virtual world content services provided by the real person and registrant Alyssa LaRoche. A related mark, Aimee Weber Studio (& design), Registration No. 3531682 for the same goods in International Class 42, was granted on the same day. These were the first U.S. trademark registrations to be issued for marks that identify services provided solely within a virtual world. These registrations establish that use of marks to identify source purely within an MMORPG creates enforceable trademark rights in the real world. It further indicates that the U.S. Patent and Trademark Office identifies use of a trademark in a virtual world as "use in commerce" that may be regulated by Congress, supporting trademark rights. It also suggests that infringements occurring wholly within a virtual world, such as Second Life, would be equally cognizable in a U.S. federal court.

TRADEMARK AND COPYRIGHT INFRINGEMENTS

Given the rising popularity of virtual worlds and the ability to generate real-world income from activities within the virtual realm, it is not surprising that the virtual marketplace is thriving and that trademark and copyright infringements occur on a regular basis. In Second Life, real world luxury brands, such as Porsche, Chanel, Rolex, Gucci and others, are in frequent, substantial and highly visible use despite the fact that their real world corporate owners do not have an official presence in Second Life. Benjamin Duranske, "Rampant Trademark Infringement in Second Life Costs Millions, Undermines Future Enforcement," Virtually Blind (May 4, 2007). Instances abound of sales of virtual iPods, preloaded with copyright protected songs. Id. Copyrights and trademarks are further infringed by the use of CopyBot and other software to make copies of virtual goods. Owners of trademarks and copyrights originating in the virtual world and the real world have experienced counterfeiting within this virtual realm. See Eros v. Leatherwood, Complaint, Docket No. 8:07-cv-01158 (M.D. Fla. 2008); Eros v. Simon, Judgment by Consent, Docket No. 1:07-cv-04447 (E.D.N.Y. 2008) (Plaintiffs alleged copyright infringement against defendant who exploited a software flaw to copy software and replicate plaintiffs' virtual products).

Instances of trademark and copyright infringements occurring in virtual worlds have been well-documented and analyzed in blogs and traditional publications. As the topic of virtual worlds is fairly new, there has been relatively little comment on intellectual property issues likely to arise in the context of MMORPGs. Interoperability may be an upcoming development that will raise such new issues.

Virtual worlds now are self-contained and discrete. There is presently no way to move from one MMORPG to another without creating a new account, a new avatar, and a new virtual existence. Interoperability is not yet a virtual reality, but it may be soon, if the experimental stage goes well. In July 2008, Linden Lab, creator and publisher of Second Life, and IBM, in a joint project, were able to teleport an avatar from Linden Lab's Second Life Preview Grid into a different virtual world running on an OpenSim server. This experiment was the first time that an avatar moved from one virtual world to another. The goal of such experimentation is to allow avatars to seamlessly transport between and among virtual worlds, such as Second Life, There, WoW, EverQuest II and many more. When full interoperability is achieved, publishers and intellectual property holders may face some new challenges.

TOUs, TOSs AND EULAs

Virtual worlds are at their essence computer programs created by copyrightable software code. As with other software and most Internet Web sites, virtual worlds are governed by their respective terms of use, terms of service and/or end user license agreements. These TOUs, TOSs and EULAs are contracts that provide the rules users must abide by in order to access and participate in each virtual world. Although there may be some commonality, each virtual world has different rules for its users. When interoperability is achieved, these differences will need to be reconciled, perhaps in a master TOU or TOS. Otherwise, significant problems will likely arise upon full interoperability between virtual worlds.

For instance, Second Life is not as highly regulated as other virtual worlds. Second Life is unique among virtual worlds because it allows users to create their own content within its world and grants users intellectual property rights in their creations. "Second Life Residents To Own Digital Creations," Nov. 14, 2003; Second Life Terms of Service §3.2. ("Linden Lab acknowledges and agrees that, subject to the terms and conditions of this Agreement, you will retain any and all applicable copyright and other intellectual property rights with respect to any Content you create using the Service, to the extent you have such rights under applicable law.") In contrast, WoW is highly regulated, does not allow for user-generated content and claims all rights in all intellectual property arising from interaction within WoW. See World of Warcraft Terms of Use Agreement §4; World of Warcraft End User License Agreement §4(a). An argument may be made that a user transporting an avatar from Second Life to WoW will, by virtue of teleportation into WoW and engaging in game play, impliedly accept the WoW TOS and EULA and also grant a license or ownership right in his or her user-generated content to WoW's publisher, Blizzard Entertainment, Inc. Similarly, any content created by Second Life creator and publisher, Linden Labs, could be licensed by implication to Blizzard (under its TOS).

Transporting from a restrictive virtual world to one that is less restrictive may also cause problems. WoW avatars are solely the property of Blizzard, and users may not change the appearance of WoW avatars beyond those user-selected characteristics and configurations allowed by Blizzard. Users could circumvent this restriction by transferring their avatars to Second Life and altering those avatars in Second Life. This would also give rise to a claim by Blizzard that such users created unauthorized derivative works, in violation of Blizzard's copyrights -- copyright infringement.

NEW INFRINGING ACTIVITIES

Interoperability also raises the possibility of new infringing activities. The transportation of avatars between virtual worlds could allow or later lead to the transportation of virtual goods between MMORPGs. This could result in virtual gray-market goods -- the importation of trademarked and copyrighted goods designated for one virtual market to another. Interoperability could allow virtual goods designated for one virtual world to be imported to another, where that good is not available, available in limited quantities or is available at a higher price. Much like their real world equivalent, the importation of gray-market virtual goods will implicate U.S. trademark and copyright laws, along with contract law, based upon TOUs, TOSs and EULAs.

CONCLUSION

The intellectual property issues raised by virtual worlds are truly intriguing and may be analyzed from a variety of perspectives. As these virtual worlds continue to expand and evolve, so will the intellectual property issues they engender.

Jess M. Collen and Matthew C. Wagner are partners and Oren Gelber is an associate at Collen IP, a firm specializing in all aspects of intellectual property. They may be reached at 914-941-5668 or though the firm's Web site http://www.collenip.com/.

By Jess M. Collen, Matthew C. Wagner and Oren Gelber
Source: http://www.law.com/