United States: Perspective: When Virtual Legal Chickens Come Home To Roost

Netizens are spending more and more of their time living their lives online in virtual worlds. But while many virtual world interactions are not real and take place in fictitious places, virtual disputes increasingly are landing in real courts back in terra firma.

Second Life is one of the best known virtual worlds. Through interactive computer simulation, participants act through their avatars and are able to see, hear, and work with simulated objects in a computer-generated environment.

Participants, who come from the United States as well as various other countries, number in excess of 9 million people, according to Linden Research, Second Life's owner and operator.

Second Life residents are governed by terms of service which specifically allow users to retain all intellectual property rights in the digital content they create or own in Second Life. Although we're talking about a virtual world, users conduct transactions that cumulatively involve more than $1 million per day.

But when dollars are at stake, disputes inevitably follow. And just as it is true for real world transactions, this is becoming true with respect to virtual world transactions that involve real money.

Even virtual interactions that do not take place in real life can lead to real legal action in our brick-and-mortar courts when actual monetary interests are affected.

This brings us to the case of Eros LLC v. Thomas Simon. The complaint was recently filed in federal court in New York on behalf of several plaintiffs. Let's focus on the allegations of the lead plaintiff, Eros.

Eros is engaged in the sale of a number of adult-themed virtual objects for use within Second Life. Eros alleges that through the marketing efforts of its CEO (referred to as "Stroker Serpentine"), Eros' products have become very well-known in Second Life.

Indeed, Eros alleges that its products have built a reputation within Second Life for "performance, quality and value" (we won't go there in this piece), and consequently, are among the best-selling adult-oriented virtual objects in Second Life.

Among the Eros products are the SexGen Platinum Base Unit v4.01 and the SexGen Platinum-Diamond Base v5.01. Eros alleges that it has used the SexGen trademark to sell these Eros items in Second Life and that the trademark has become famous and distinctive.

Eros also asserts that it has filed an application to obtain a federal trademark registration for the SexGen trademark and that it also has filed applications for copyright registrations for the Eros items.

What's the rub? According to Eros' complaint, along comes defendant Thomas Simon, who is known as Rase Kenzo in Second Life. Simon allegedly has been making unauthorized copies of Eros' products and has been using Eros' trademark without permission.

The complaint asserts that Simon has been selling unauthorized copies of Eros' products while misrepresenting that these copies are authorized and legitimate copies of Eros' products. Accordingly, this has led to alleged consumer confusion as to the origin of the products.

Eros complains that Simon has been trading off of the reputation and goodwill associated with Eros' products and trademark, unjustly profiting from this wrongful conduct. Eros contends that sales and profits have been siphoned away to Simon.

The Eros complaint raises a number of causes of action. It not only seeks an injunction barring Simon's conduct, but also requests triple damages, attorneys' fees, and further statutory damages.

The complaint is detailed and reads just like a complaint that addresses transactions and conduct in the real world. However, here, one must step back and realize that the true transactions and conduct have occurred in a virtual world created on the Internet.

Assuming the complaint stands up and the litigation proceeds, the unmistakable point is that even virtual interactions that do not take place in real life can lead to real legal action in our brick-and-mortar courts when actual monetary interests are affected. If the stakes only were virtual, then perhaps the disputes could be resolved by judge and jury avatars in a place like Second Life. But that might not be resolution enough when money's at stake.

Eric J. Sinrod is a partner in the San Francisco office of Duane Morris. His focus includes information technology and intellectual-property disputes. To receive his weekly columns, send an e-mail to ejsinrod@duanemorris.com with "Subscribe" in the subject line. This column is prepared and published for informational purposes only, and it should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.

This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.

Duane Morris LLP, one of the 100 largest law firms in the world, is a full-service firm of more than 600 lawyers. In addition to legal services, Duane Morris has independent affiliates employing approximately 100 professionals engaged in other disciplines. With offices in major markets in the United States and internationally, Duane Morris represents clients across the U.S. and around the world.