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Second Lifers file suit over virtual land

Lawsuit seeks compensation for consumers who were 'duped into buying virtual land and items under the false promise of ownership.'

By Karen Datko Apr 26, 2010 11:42AM

This post comes from Jon Hood at partner site


A group of gamers has filed a class-action lawsuit against the creator of Second Life, accusing the company of taking away the plaintiffs' ownership rights to virtual “land” without just compensation.


The suit, filed in federal court in Pennsylvania, says Linden Labs repeatedly told potential Second Life players that the game would allow them to hold an indefinite ownership interest in virtual property. The suit quotes Linden chief executive Philip Rosedale as stating: “What you have in Second Life is real and it's yours. It doesn't belong to us. We have no claim to it.”


According to the complaint, Linden tried to distinguish Second Life, which struggled at its inception, from other so-called “multiplayer role-playing games” by giving users an ownership stake in the property they bought.

According to the complaint, “Linden made a calculated business decision to depart from the industry standard of denying that participants had any rights to virtual items, land and/or goods” by representing to users that “their ownership rights and intellectual property rights to the virtual items, land and goods held in the participants' accounts would be preserved and recognized.” Under this system, if a gamer bought a house, he actually owned the property and could keep or resell it as he saw fit. The same rules applied to intellectual property; gamers could even secure copyrights for certain items.


CEO pushed property rights

The complaint is full of quotes from Rosedale, who is painted as a key proponent of the decision to give property rights to users. The plaintiffs quote Rosedale as saying that “the preservation of users' property rights is a necessary step toward the emergence of genuinely real online worlds” and that the company “made it extremely clear that we were not the owner of the virtual property.”

Linden's strategy paid off -- for the company, at least. The complaint says that “by mid-2004, Linden's and Rosedale's representations had caused significant dollars to not only be invested in Second Life, through the purchase of virtual land, but also a significant revenue stream generated from the taxation of that virtual land.” The company was doing so well that, in September 2005, it did away with subscription fees, instead requiring new users to pay a one-time flat fee.


At some point, however, Linden “began to unilaterally attempt to remove the ownership rights that had previously been conveyed,” according to the suit. Most notably, the company began quietly changing language on its website; for example, a question on the FAQ page that had read “Why would I want to own land?” turned into “Why would I want to have land?”


The plaintiffs were never notified of the apparent change in policy, the suit says, and are demanding compensation for the “hundreds of thousands of consumers that were duped into buying virtual land and items under the false promise of ownership.” The complaint estimates that Linden has made between $50 million and $100 million for land sold in Second Life, and that further untold amounts have been paid for other “virtual items.”


Second Life is unique in that users spend actual money on their virtual property. Actual money is converted into “Linden dollars,” which can then be deposited into virtual accounts and spent on property. The system has produced some interesting results: In 2006, a real-life language teacher became a Second Life real estate agent and made more than $1 million.


The suit is being brought on behalf of any Second Life participants who bought, sold or owned land or other property between Nov. 14, 2003, and the date that the class is certified. A second group of plaintiffs consists of anyone whose assets “have been deliberately and intentionally converted, taken, 'frozen,' or otherwise rendered unusable” by Linden.


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