Lawsuit Over 'Theft' Of Digital Items In Second Life Shows Up In First Life Court

from the what-happens-in-second-life,-doesn't-stay-in-second-life dept

Tue, Oct 30th 2007 8:21am — Mike Masnick

It's been almost exactly four years since Linden Lab announced that the digital goods anyone created within Second Life were owned by whoever created them -- effectively bringing the outside world's laws into the virtual world. While this move received cheers from those who thought it was better than the company that ran the game owning everything, we felt that it was only going to lead to some serious problems. Specifically, our concern was that this was effectively bringing existing problematic laws, such as copyright, into this new world -- or, rather, pulling those issues out of this world and throwing them onto the US justice system. It appears that's coming true.

A new lawsuit has been filed by a woman who uses Second Life, claiming that another member of Second Life was "stealing" the computer code used to build products that she sold in the virtual world. Of course, that's not all that surprising, as digital goods are easily copied -- and in the past we've even pointed out systems like copybot that made that process quite easy. In the end, it does come back to the same basic economics that we discuss around here all the time. If you're betting your livelihood on selling digital goods that are easily copied with zero marginal cost, you're going to have to deal with people copying your products sooner or later no matter what. It's just not a very good business to be in. While it may feel like "theft" to some, it's hard to justify that as being theft since no one is missing anything. In other words, the economics at play in the virtual world are entirely different than those in the real world -- and yet, we're now going to expect the real world laws to handle a lawsuit involving digital world economics. It doesn't make for a good combination.

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Filed Under: digital goods, second life, theft
Companies: linden labs

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Rick, 30 Oct 2007 @ 8:44am

Feelings
I'm glad you had feelings. Those are important. What really matters in the end is that some lady feels like she was robbed of her digital rights...

oh wait, she should have made it free.

Well my prophet fellas, here you are.
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Hulser, 30 Oct 2007 @ 8:58am

While it may feel like "theft" to some, it's hard to justify that as being theft since no one is missing anything.

First off, I would agree that illegally making a copy of a digital good -- Second Life code, mp3, movie, etc -- isn't stealing in the traditional sense. But I've always questioned the "no one is missing anything" logic. If you make an illegal copy of my song, I still have access to the song. I can play the song all that I want, so I'm not missing the song. OK, so far so good. But, through an illegal act, what I have is now worth less than what it was before the copy. From a legal standpoint, this may not be theft, but when an illegal action on another person's part decreases your total assets, you can see where the average person might call this theft.

For example, say you hire someone to work on your research project and make them sign a nondisclosure agreement. They work there for a while and then blab your trade secrets to your competitors. You still have all of the knowledge that makes up your trade secrets. They're just worth a whole lot less now that your competitors know them too.

Again, I would agree that decreasing the value of someone else'e property isn't theft. But given the lack of a common word to describe this scenario in combination with the fact that in both "theft" and "illegal copying" cases, you have less value than what you started with, you can see why there's some confusion for the average person.
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Buzz, 30 Oct 2007 @ 9:10am

LOL
After the initial creation process, the creator just rolls in the money without working at all. Then they throw a fit when someone comes along and starts leeching. People do not seem to understand the concept of "easy come, easy go". Sure, it is less than honest to go copy a competitor's design and rob them of business, but had the original creator focused more on innovating and continually improving his or her product, customers would have never abandoned it in the first place. The holy grail of digital economy is the idea that one can "create once and profit forever". That is fine and dandy if and only if customers continue to want that one product from that one provider. Otherwise, it is back to the drawing board for product #2.
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Buzz, 30 Oct 2007 @ 9:18am

Re:
I agree. That is the whole point, though. At worst, there occurs of "theft of value" (the pirate now has something of value; the owner now has something of lesser value due to a decrease in demand). However, the problem lies in how organizations like the RIAA translate one stolen file into $10,000 worth of irreparable damage. Last time I checked, that song was worth about 99 cents. The punishments are grossly disproportionate to the crimes.
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Hulser, 30 Oct 2007 @ 9:32am

Re: Re:
The punishments are grossly disproportionate to the crimes.

Agreed. If you're caught with a song that costs 99 cents, at most you've deprived the owner of the song 99 cents. However, there are punitive damages too. If you busted stealing a 99 cent candy bar from the shop, you don't just pay the shopkeeper a buck and go on your merry way. You're guilty of theft. So I can see where the punishment would be more than the cost, but I'm with you, I don't see how the current punishments make sense. (If anything "theft of value" should have a punishment less than actual theft.)
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TheDock22, 30 Oct 2007 @ 9:39am

I don't know....
A digital world is comprised of not only US citizens, but users from other countries to. If the legal system gets involved, we are basically forcing our laws on people from other countries. I think the courts should stay out of this one and let Linden Labs handle the problems in their digital world.
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Buzz, 30 Oct 2007 @ 9:50am

Indeed.
I have an unrefined theory about this. Here is my imagined scenario:

OK, so every song in the world is worth $1. The law decides any "theft of value" must be paid back 10-fold. So, Billy pirates eight of his favorite tunes. The law finds out and charges Billy $80. In the long run, everyone in the world starts pirating because getting caught is not that bad. Obviously, it would have been cheaper to just buy the song legitimately, but people seem willing to take that risk. The RIAA complains that the penalty is not strong enough to send the message, so in the name of "waking up the public", the penalty is raised to 100-fold. Even then, paying a $100 fine is quite tolerable. The RIAA continues to whine and complain that people still go along their marry way (despite the RIAA making a ridiculous profit) since "the pirates didn't learn their lesson". So, now the penalty is 10,000-fold.
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Mike (profile), 30 Oct 2007 @ 9:57am

Re: Indeed.
OK, so every song in the world is worth $1. The law decides any "theft of value" must be paid back 10-fold.

You're talking about an exceptionally dangerous slope here. As soon as you make "theft of value" a crime you've outlawed a ton of businesses. When Ford came out with the Model T, he made the horse-drawn carriage a lot "less valuable." When I open up a pizza shop next to a deli, I've made the sandwiches there "less valuable." Many people would call "theft of value" competition.
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4-80-sicks, 30 Oct 2007 @ 10:09am

re: #4
how organizations like the RIAA translate one stolen file into $10,000 worth of irreparable damage.
Easy: To get one song you used to have to buy the whole CD. Singles notwithstanding (let's pretend somebody doesn't want to pay $7 for one song, its extended version, two mediocre remixes, and a forgettable B side), the price of a CD is creeping towards $20 if it's not there already. So you have one person who has "stolen" $20. Then he "created a situation" in which 30 other people were "allowed" to download pieces of the album from his computer. We are now up to $600 in lost revenue. Those 30 people also allowed each other to download pieces from each other, so we better multiply by 30 again! Plus the other five people who downloaded the torrent halfway through the process; we're well over $18,000, so as you can see, the RIAAQ is actually quite generous!
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Paul, 30 Oct 2007 @ 10:20am

Re: re: #4
even if you use your argument, it stops after the initial downloads by the second tier. after that, the person who is being litigated against cannot be charged for the cost of the songs somebody downloaded from somebody who downloaded from them. under current laws, that would have to fall on the downloaders who downloaded from the one being litigated. otherwise, all you have to prove is that you didn't originally pirate the song and therefore they should go for the one who did so and charge them the total of all the pirated versions of that song (from that rip).

either way, its retarded though. leaving a window open should not be illegal. unless someone is ACTIVELY sharing (ie, telling people where to get music, advertising what songs they have, etc.), they should not be charged beyond the initial cost of downloading the song plus punitive damages similar to stealing 1 cd from a store.
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Hulser, 30 Oct 2007 @ 10:27am

Re: re: #4
OK, I know you're being sarcasic -- at least I hope you are -- but since that's their actual argument, let's analyze it. The RIAA say that it's OK to apply damages to the original seeder because of all the downstream "theft of value". What's ridiculous about this is that the seeder should only be responsible for the first iteration of copies. Sure, it's makes life easier for the RIAA if they can just charge one person instead of each downstream instance of "theft of value", but should justice be about what's easy for the prosecutor? If someone is responsible for a theft of value, then bring a case against that person. But you can't hold one person accountable for the crimes of another.
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Hellish Cookie Creature, 30 Oct 2007 @ 10:36am

MSM Doesn't Get It
The Washington Post was covering this story yesterday. According to their blogger Emil Steiner, who seems to think this is all pretty ridiculous, the best solution would be to have a SL court to handle such matters. Not a bad idea except how could you enforce it? What MSM doesn't seem to get is that this isn't stealing a car in GTA its stealing intellectual property like if we took code off the washington post site and used it to sell junk.
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dorpus, 30 Oct 2007 @ 11:00am

Does the price of technology really go down?
A good digital camera today, that is big enough to allow steady hands, still costs $300, just as it did 5 years ago.

There was a fad of $100-$200 PC's earlier in the decade, but now the cheap models cost at least $300.
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joh6nn, 30 Oct 2007 @ 11:02am

Re:
you make some interesting assertiosn that you don't really back up. hope you don't mind, but i'm gonna poke at them a bit.

Disclaimer: IANAL, YMMV, WWJD, etc.

But, through an illegal act, what I have is now worth less than what it was before the copy.

that only really works if what's important is the scarcity of your property or information. that's not true at all for most** copyrighted works; they're usually contributions to culture, and as such, they have a tendency to gain value as they proliferate. that's why theres a separate set of laws for things that would otherwise be secret: patents.

in both "theft" and "illegal copying" cases, you have less value than what you started with

you seem to be implying that if persons A and B have legal copies of some copyrighted good, and person C has an illegal copy of it, that person C is devaluing person A's copy in some intangible way that person B is not. you're gonna have a tough time proving that one. in fact, i can think up a pre-emptive counter argument.

let's say the theoretical copyrighted good is some online video game. aside from the probability that pirates will be team-killing losers, having more people to play with/against is going to be considered a good thing, in nearly all cases.

finally,

you can see why there's some confusion for the average person.

considering the fact that a growing percentage of the population is actively infringing someone's copyright, and has been since the commercialization of the VCR, i'm inclined to think that the average person isn't confused at all. i'd say they just flat out don't agree with most corporations on whether or not infringement is theft.

**i try to avoid saying "all", "always", "every", etc., but in this case, i really wanted to.
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Anonymous Coward, 30 Oct 2007 @ 11:18am

Re: Does the price of technology really go down?
Yeah, it does. A 'good' digital camera today might cost $300, but you can pick up a camera equivalent to the one that was available for that price 5 years ago for less than $30. The same technology has gotten cheaper, it's just that people prefer the new tech, and are willing to pay accordingly.
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Overcast, 30 Oct 2007 @ 11:59am

While it may feel like "theft" to some, it's hard to justify that as being theft since no one is missing anything. In other words, the economics at play in the virtual world are entirely different than those in the real world -- and yet, we're now going to expect the real world laws to handle a lawsuit involving digital world economics. It doesn't make for a good combination.

Kinda like... Music...? :)

Interesting to see what happens in court. They can't decide against the copyright holder in this case, and decide for the copyright holders in music can they?

Well - without being Hypocritical?
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Killer_Tofu (profile), 30 Oct 2007 @ 12:01pm

Thank gawd
That second life is the only game who lets you own the property like this. Kind of makes the these laws WAY harder to bring into the other MMO's.
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Anonymous Coward, 30 Oct 2007 @ 12:01pm

I've said it before, and I'll say it again. These people need to stop living in a fantasy and try living in the real world. This whole Second Life thing is not healthy.
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Hulser, 30 Oct 2007 @ 12:29pm

Re: Re: Indeed.
You're talking about an exceptionally dangerous slope here. As soon as you make "theft of value" a crime you've outlawed a ton of businesses.

Mike, I think there's a critical distinction between an illegal act which decreases the value of someone else's property ("theft of value") and a legal act which does the same thing. Ford's innovation of the Model T was legal. Copying an artist's song is not.
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Anonymous Coward, 30 Oct 2007 @ 12:41pm

Re: Re: Re: Indeed.
So if I find a legal way to do something really horrible to people, and then do it, that's totally fine, because all that matters is the law?
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Anonymous Coward, 30 Oct 2007 @ 12:48pm

people need to get a life..
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4-80-sicks, 30 Oct 2007 @ 1:38pm

Re: #10 & #11
Tell it to the RIAA, of course I was being sarcastic. But that really is basically what they say: "Our property on the internet, and the album that song is on sold 10,000 less copies than another album, so this one guy that we found on BitTorrent is responsible for us losing [cost of full CD]x10,000."
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Matthew, 30 Oct 2007 @ 1:40pm

Re: Re: Re: Indeed.
"Mike, I think there's a critical distinction between an illegal act which decreases the value of someone else's property ("theft of value") and a legal act which does the same thing. Ford's innovation of the Model T was legal. Copying an artist's song is not."

I think you just made his point for him. Ford's innovation of the Model T was legal, as was that of Ford's competetors through the years, so we now have our shiny new Mercedes-Benzes to drive around. The world is a better place because it was perfectly legal to lower the value of another product. Restricting innovation only hurts society. It helps some people get rich, though.

Don't get me wrong, I believe people should be payed for their work. I do not, however, believe that people should be prevented from improving the world because someone else has already executed their idea poorly.

Finally, in the examples you gave above, you mentioned things like an employee giving information to competetors. You should note that there is nothing illegal about that. He can be sued for breach of contract because he signed a non-compete agreement, but those rarely hold up in court because of issues with consideration and other requirements to have a binding contract.
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Anonymous Coward, 30 Oct 2007 @ 1:41pm

While your economic argument is correct, your ethical/legal reasoning is quite flawed.

"...it's hard to justify that as being theft since no one is missing anything."

By that logic, I should be able to go into the long term parking lot at the airport and take any car in the lot for the day as long as I replace the gas I use. The owner is out of town. They won't miss it.

The fundamental idea of property is about being able to control it.

Selling easily reproduced digital goods [b]is[/b] a lousy business to be in and it's only going to get worse. However, the ease with which they can be reproduced doesn't negate the fact that stealing them is wrong.
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James, 30 Oct 2007 @ 1:42pm

2nd life court?
Shouldn't she have to sue in 2nd life court? Maybe some 2nd-life RIAA 'ambulance chasing lawyers' can chase after the person who copied her non-product product with supeonas?
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Anonymous Coward, 30 Oct 2007 @ 1:58pm

Re:
1) just because the owner is out of town, for the duration that you take the car, it is missing and not available for usage (by anybody else, including the owner, regardless of whether he is out of town or not). With digital goods, at no point is the "source" not available

2) even if you take the car for one day, one hour,... there is wear and tear, you have slightly decreased the remaining life-expectancy of the car. With digital goods, you do not.

3) the argument was used with regard to copying something, not taking the original...it's very hard to believe you conveniently failed to realize that...one would think the level of debility required for that would prevent you from writing any comprehensible sentences
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Mike (profile), 30 Oct 2007 @ 2:35pm

Re:

By that logic, I should be able to go into the long term parking lot at the airport and take any car in the lot for the day as long as I replace the gas I use. The owner is out of town. They won't miss it.

Not so. The car itself is missing, plus wear and tear, plus the chance for an accident... It's a tangible good getting used up, not a copy.

The fundamental idea of property is about being able to control it.

Indeed. But we're not talking about "property" here. We're talking about ones and zeroes. And no one is saying you can't control it. What's happening here is that people are trying to stop others from *copying* that property. That's not theft of property at all.
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Matthew, 30 Oct 2007 @ 2:49pm

Re: Re: Re: Re: Indeed.
Already done. It's called Haliburton.
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Max Powers at http://ConsumerFight.com, 30 Oct 2007 @ 4:00pm

Play the game all the way
Isn't there a Second Life Court to sue in with Second Life Judges? What about Second Life jails and prisons? I say they should make Second Life like real life.

Keep everything involved in the Second Life World inside that World. Now that would be interesting. You know what would be really cool is Second Life Executions where your digital life is permanently deleted.
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will, 23 Nov 2007 @ 1:27pm

theft and rights
ok lets say a fan of doctor who makes a tardis (for those who dont know use USS Enterprise NCC-1701) and sells it on second life. is he in violation of copy right issues if he sells it? do rights to likenesses extend into the vertual world where it is extreamly common for people to take on likness and objects from cult classics (dr who startrek starwars battlestar galactica) Would creating a copy any work of work that is owned in the real world copy right enfringment? If i come up to a guy and say "this is a stickup & give me your money" I cant actual inflict real harm nor do they actualy have to give me anything. Also i have seen people get player killed and lose items which could be sold for real value... if i get player killed can i sue for damages? THIS IS NUTS if money is involved then it should not be a game or game like in fashion unless its gambling or explisitly termed as a vidio game.
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