As online game worlds continue to develop and evolve, so do the legal issues and liabilities affecting developers -- and in this session at the ION conference, Steve Augustino, a United States-based attorney, and Andreas Lober, a German attorney, discussed the differing approaches of the U.S. and the E.U to virtual world law.
The presentation focused on some (real) cases to illustrate legal liabilities in the U.S. and Europe: Bragg v. Linden Lab as an examination of enforceability of EULAs (End-User License Agreements); Blizzard v. Peons4hire as a case where the EULA was of no use; and Familles de France vs. Linden Lab as an example user generated content issues.
Enforceability of EULAs
Andreas Lober opened by explaining that European EULAs are more flexible with downloadable games as the games can be changed on the fly. Meanwhile, in the USA, Augustino revealed the situation was different, with enforceability of EULAs taken on a "case by case" approach: "We often have to wait years to test to see if what we wrote in the EULA is enforceable," he explained, before moving on to discuss the specific case at hand, Bragg v. Linden Lab.
Bragg sued Linden Lab for property theft after they froze his game account and resold his land (within Second Life) because they considered he had broken Second Life's EULA by working out how to enter URLs on the Second Life site to purchase the virtual land before it entered auction.
The case came down to enforceability of the arbitration clause in the EULA, and it was determined that it couldn't work. The court was concerned that the arbitration was too costly and was such a deterrent that nobody would challenge Linden Labs, and since the court refused to enforce that clause, it continued in court to a settlement.
As a result, Linden removed the binding arbitration provision, and made the EULA a little more flexible in general – but it would still be possible, in some cases, to go to court over it.
"The lesson is that you don't know if anything you write is enforceable," confirmed Augustino, "so what you draft should have some measure of balance -- in fact your agreement can be too good -- if it's too one-sided the court will just ignore it."
Recognize EULA Limits
The overwhelming message: "Recognize the limits of the EULA."
"Those who aren't actual subscribers aren't bound by the EULA," reminded Augustino, who moved on to look at Blizzard v. Peons4hire. "Blizzard had to go after peons4hire for spamming -- not breaking the EULA. because they provide services to subscribers but don't subscribe themselves."
"Companies in Europe seems to be reluctant to have their EULAs tested in court," said Lober. "They're enforcing it, but it just requires a nice letter sent to Blizzard and you'll get your account reinstated."
As a further example of EULA un-enforceability in the US, Augustino mentioned Douglas v. Talk America (2007), where Douglas sued Talk America, who had purchased the telephone services of AOL (his original provider) and changed the terms of service. Because Douglas hadn't received noticed that the terms of service had changed on the website, the court case went his way. "No notice means no enforcement," established Augustino.
"In Europe, terms of service can't always be changed when they need to because you have to tell the users up front in what situations you may change the the terms of service," said Lober. "It's hard to function in practicality -- how can you know all the situations that might come up in the future? You'd need a crystal ball!"
"In the US the kind of notice you have to give changes by state, and there are gambling laws to take into account sometimes. So you try to balance something that works in most of the states, and sometimes you can balance it based on where you know you'll be getting your customers from," said Augustino. "If you know most of your customers will be coming from California, you know you have to comply with California law. "
"You can't just use the strictest state's laws because you'll limit yourself too much," Augustino continued. "When adapting a European TOS to the US, you often find yourself saying 'you can do this, but you don't have to do it this way. We have some options.'"
It was important, however, to note the difference between business law and consumer law – which could have an effect on how you treat a subscriber. A Second Life user , for example, could begin as a consumer (exploring the world) but turn into a business (by owning and selling virtual items and property. "In Europe, everything is based on the circumstances when you signed up," said Lober.
Liability for User Actions/User Generated Content
The presentation moved on to discuss Familles de France v. Linden Lab. Familles de France complained in court that Second Life gave access to minors to inappropriate content. In the case, Linden Labs prevailed, "partly because the documents against them weren't very well prepared," explained Lober,"sometimes calling Second Life a website, for instance."
"This shouldn't be relied on [as freeing companies from liability for user generated content]," continued Lober. "The law states that essentially if this is a platform, the platform isn't responsible for the content until the platform becomes aware of the content. Then they have to take action. With MMOs for instance, they all seem able to be aware of the illegal activities of their users, but in practice it's hard to find."
"As a further example: Ebay doesn't have to pre-screen its content but must remove content that does break the law. Further they have to ;prevent the same kind of violation from happening again in the future' -- but there are no clear rules on how that is supposed to be done," said Augustino. "What are reasonable measures? Well, that's sort of up to the lower courts to figure out as more cases come up. "
Of course, in a game, it could be considered that through theme or design the developers are guiding the users in the way they create content.
"This didn't come up in the Marvel case against NCSoft [about users creating superheroes that infringed Marvel's copyright]," said Augustino, "but it will come up in cases in the future. So think about that as you do things to encourage user created content."