Bragg vs. Linden Lab: Interview with Bragg Attorney Jason Archinaco

by Alphaville Herald on 06/12/06 at 11:41 pm

It is rare event when Uri steps aside and let’s Peter Ludlow report a story, but this case is very important and it is very important to me that all of you read this and consider it thoughtfully. This interview involves the Bragg vs. Linden Lab lawsuit in which Mr. Bragg alleges that Linden Lab seized around $4,000-$5,000 US of his virtual property in retaliation for an unrelated action (characterized by some as utilizing an exploit to acquire land on the cheap) — in effect his claim is that assets not related to the offense were seized under the ‘any reason or no reason’ clause of the Terms of Service (more on this below).

I understand that many Second Lifers think Bragg got what he deserved, but deserved or not, this is an issue that cuts to the very heart of whether the property we hold in SL is real, or whether it is just an illusion concocted for PR purposes by Linden Lab. Are we investing our time and money wisely or are the assets we acquire something that could all disappear in a single poof with Linden Lab as the judge, jury, and excecutioner. Bragg may not be the poster boy you wanted for a case like this, but here it is. Today we are getting Bragg’s side of the story. Hopefully soon we can get the Linden response. If Linden Lab’s lawyer is willing to talk to me I will be happy to interview him as well. Until then, I give you this interview with Jason Archinaco of White and Williams LLP in Pittsburgh.

Ludlow: In a paragraph or two, tell us what happened to Mr. Bragg.

Archinaco: Mr. Bragg was induced into providing his money to Linden with the representation and promise by Linden and Mr. Rosedale that if he purchased virtual land in Second Life, he owned that land. That promise was and remains unique in the MMORPG industry which is the very reason the representation is being made. Mr. Bragg bought numerous parcels of land from Linden in a series of land auction contracts. When a dispute arose with Mr. Bragg several months after his first contract with Linden, in a transaction where the company in essence called him an “exploiter”, the company first stated they were going to reverse the transaction and refund Mr. Bragg’s money on that single contract. When Mr. Bragg complained, Defendant Linden confiscated everything he owned, froze his account, resold his land at auction and kept the money for itself.

So, at the heart of this lawsuit is whether or not Linden and Rosedale’s representations about virtual land ownership are true, or whether they are simply lying to induce people into handing over their money.

Ludlow: Precisely what virtual property was seized and what was its fair market value?

Archinaco: All of Mr. Bragg’s virtual land was taken (as detailed in the exhibit to the Complaint) – as was $2000 in U.S. currency, which was frozen. In all, we estimate that Mr. Bragg is out of pocket somewhere between $4000-$5000 US.

Ludlow: Some questions have been raised in the forums and other blogs, so I think I should ask you about them since they will come up. What do you say about this post on Clickable Cuture by Prokofy Neva:

This fellow used a deliberate exploit, he took auction ID numbers for land inworld that wasn’t put up yet, taking advantage of the huge backlog of abandoned parcels that the Lindens manually process, and then plugged that number into his browser to artificially force up an auction bid out of the normal sequence that opened at a dollar instead of the normal $1000 or equivalent value depending on meters. It was essentially an HTML exploit, and just because you can find an exploit and use it doesn’t mean you have been harmed if the property is seized back from you– you’ve done the harming by essentially stealing property, hijacking it, and reselling it.

It’s like finding an electronics item in the store that was mistakenly priced at $1.00 instead of $1000, going and paying for it at the cash-register becaue the bar code seems to match, but then being stopped at the door by the guard who looks at the item, and the sales receipt, and says “hey, this doesn’t add up”. That’s exactly what it’s like. You wouldn’t be able to then sue Radio Shack if they caught you doing this and say “I wuz robbed” if you gained a sale immediately from your theft and your assets were seized or something in the lawsuit.

Archinaco: The logic falls apart for a simple reason. Even assuming arguendo that everything the “Prok” said was true (which it isn’t), would it be appropriate for the RadioShack employees who allegedly “undo” the transaction at the cash register then (even if they correctly “caught” such a customer), to also take the customer’s wallet before kicking him out of the store? How about then appearing at the customer’s house with a swat team and confiscate everything the customer purchased at RadioShack for the last year? How about topping that off with the swat team taking all the property owned by the customer back to RadioShack where they re-list it on the shelves, sell it to new customers and keep the proceeds for themselves. Does that all sound legal to you? Does it sound like that kind of behavior is actionable?

Should we be less offended by this conduct because the “confiscation” occurred electronically rather than with an actual swat team physically appearing at Mr. Bragg’s door? And, what absurd claim can be made that such conduct is permissible and not a violation of the law? The reality is that the only real difference between an electronic confiscation and the swat team confiscation is that the electronic version is easier to accomplish with less fanfare, which likely makes it all the more offensive.

Use the “Wal-Mart Smell Test” on this: If Wal-Mart was doing this, how would consumers and Congress react?

Ludlow: If Prok’s description of what happened is incorrect, can you provide a characterization of what Bragg did to secure the disputed property, and why you think that it was within the letter of the law/contract (assuming you think that).

Archinaco: I think it is best right now for purposes of this debate for everyone to assume that everything bad thing that could be said about Mr. Bragg is true: that a Linden sympathizer’s version of the “facts” are true; he exposed the steamier side of a “family friendly game”; he secretly runs a Chinese gold farm sweatshop; and that he does so from his prison cell on death row.

Assuming it is all true — and Mr. Bragg is a horrible, terrible person — does that mean that it would somehow be ok if Mr. Rosedale and Linden are not being honest when they tell people you own land you buy in Second Life? No. Would it mean that Linden could confiscate Mr. Bragg’s property, resell it to the highest bidder and keep the money for themselves? No. Not even the United States Goverment gets away with that.

As much as Linden would like to — and will try to — make this case about Mr. Bragg. It isn’t. It is about Linden and Mr. Rosedale — and what they are telling people to drive their business model.

Ludlow: Clause 7.1 of Second Life’s Terms of Service gives Linden Lab the right to kick people out “for any reason” and, in case that doesn’t cover all the bases, “no reason”. Further down, the ToS says this in all caps:


People might think that this gives them the right to delete or seize any of Mr. Bragg’s property for any or no reason.

Archinaco: I certainly can’t wait to cross-examine Mr. Rosedale about his belief about the ToS and ask him whether the statements he has repeatedly being making to the public about land ownership are true or not. I think a lot of people would like to know Linden’s position, under oath, as opposed to statements in the media.

Ludlow: Some people have argued that the Linden Lab ToS is a contract of adhesion. Do you think so? Why or why not?

Archinaco: Of course it is. I don’t think there is a real debate about that. What will be interesting to see is the position Linden and Mr. Rosedale take with regard to the ToS and, whether, they are going to claim that the ToS is inconsistent with what they are telling the public about land ownership in Second Life.

Ludlow: When I was kicked out of The Sims Online by Electronic Arts, Jack Balkin among other legal scholars were sympathetic to the idea that had I gone to court, the case of Marsh vs. Alabama would have been relevant. Here is what Balkin said:

Virtual worlds are like company towns in that the game owner forms the community, controls all of the space inside the community and thus, controls all avenues of communication within the community. The free flow of ideas and the formation of community cannot occur within a virtual world unless the designer permits it. Alphaville was a virtual city controlled by The Sims Online through its design of code and its Terms of Service agreement. Although Electronic Arts does not take over “the full spectrum of municipal functions” in real space, it does exercise all of those functions in the virtual world. If any private entity could be regarded as a company town, it would be a virtual world. That is especially so because the whole point of the virtual world is to create community (or communities) and action in the virtual world occurs through the exchange of ideas.

Now your case isn’t a free speech case, but does a similar line of reasoning apply? Has Linden lab taken on the role of governmental authority to such a degree that it must be bound by basic constitutional principles of terrestrial governments?

Archinaco: I like the thought behind this reasoning and, as MMORPG and virtual worlds grow in importance, the issue of whether corporations providing such worlds should be considered state actors for purposes of constitutional analysis (and free speech) will likely be directly litigated. I do not think we will reach this issue directly in the Bragg case — other than in the context of the possible unconscionablity of the ToS “agreement”. Although “constitutionality” is not directly an issue in our case, attempts to waive constitutional protections or other oppressive terms can be used with regard to a substantive unconscionability analysis. If you want a good example of how far some companies are trying to go with oppressive terms, read paragraph 11.B. of the Eve Online End User License. The agreement claims that “You have no interest in the value of your time spent playing the Game . . . .” What does that ultimately mean? Is a player made a “slave” because he clicks the “accept” button (at least so long as he is playing the game)? The easiest argument is that such clauses are evidence of unconscionability and should not be enforced.

Ludlow: As you may now, many people in Second Life have much more in virtual assets – perhaps as much as a million dollars US equivalent of virtual real estate and assets in one case. What does this case mean to those people?

Archinaco: I would hope that the case is important to anyone who has invested their time or money in a virtual world, whether it be one cent or a million dollars. Given that our society is moving more and more towards digital transactions, what is the real difference between money you have deposited with Charles Schwab that is evidenced by an “ownership” certificate in a stock — as opposed to depositing money in Second Life in return for an “ownership” certificate in virtual land? Isn’t the Second Life world really a bank? So, I would hope that many people realize the importance of this case in the broader perspective of, at the very least, what could be next? I used a Walmart analogy before because I like to ask the “Walmart smell test”, i.e., if Walmart was doing “this”, what would the reaction from the public or Congress be?

Ludlow: This is a philosophical question. Some people think that our lives are more and more moving online – both our work lives and our virtual lives, and more and more of our social and virtual assets will be found in online worlds. Do you think that this case is an important case for the protection of our rights and property in the future?

Archinaco: I think I addressed this briefly in response to your last question but, if I haven’t, the answer is yes. A variety of science fiction writers have written about the rise of corporations in the future – and it seems to be a common premise that when corporations “rule the future” (like in the movie Alien), that is not necessarily a good thing. In response to your philosophical question, ask yourself this question: what if Microsoft made you click “I agree” every time you turned on your computer before it would boot Windows, i.e., make the computer function? Now, presume for just one minute that Microsoft slipped in the Eve Online term “You have no interest in the value of your time spent using this computer . . . .”

Ludlow: This is a crystal ball question. If the precedent set here determines whether our futures are those of free peoples with property rights or those of serfs to platform owners, which do you think we will see? Will we be free and propertied, or serfs to the platform owners.

Archinaco: I would certainly not like to think that we are serfs to a platform owner. While I am cautiously optimistic about this case from a legal standpoint, win or lose, I think this case is bringing to light issues like those you have raised in this interview. And, that is necessarily a good thing. We all have to look ahead at the future. Ultimately, it may be as simple as voting with our dollars and rejecting “virtual worlds” with terms the public does not like — but I raised the Microsoft OS example because, what about situations where there is no meaningful choice? What does that mean to a country that is founded on the concept that we are all free?

45 Responses to “Bragg vs. Linden Lab: Interview with Bragg Attorney Jason Archinaco”

  1. Prokofy Neva

    Dec 7th, 2006

    My version of the story isn’t “incorrect,” Uri, it’s what happened. Bragg used an exploit, and hot-wired a sim and sold it. He then screamed that the Lindens confiscated his ill-gotten gains.

    Then he began to say that in addition to those ill-gotten gains from the hot sim he hot-wired, he had separate revenue from legitimate business.

    But the Radio Shack analogy where his lawyer then claims that police take his home and his wallet is completely misapplied.

    It’s more like Bragg is at the Black Jack table. He has a fist full of $2000 already from winning at roulette; he then uses an exploit to beat the house at Black Jack and wins another $2000. The house dicks catch him, but instead of just confiscating his $2000 from the illegal game, they take his other fistful from the legal game, too. Why? Because it’s their house, their game, and they don’t think he should keep his winnings, period.

    So that’s what it’s like, and the Lindens have their asses completely covered here. They say that in the event your break their rules, they can confiscate all your property…just because. The trick is to determine whether they put that in before or after Bragg’s theft of the sim.

    Bad cases make bad law. Prosecutors could argue that the capital Bragg raised to exploit the land auction and engage in a land-dealing business was all part of one criminal operation, and confiscating it is like taking a drug dealers’ assets. Oh, I’m sure the courts parse oh-so-carefully just what drug dealer property is legitimate, and what is not…

    Uri, it’s not just that Bragg isn’t a poster boy; it’s not just that the Lindens have covered their ass. It’s that people who deliberately and cynically steal sims through exploits forfeit their right to participate in the world. It’s harsh, but that’s how it was set up. Ultimately, you will have to ask this question: what’s more valuable, the integrity of the community and protection from theft of its assets (which include the well-being of Linden Lab, which upholds the community)? Or the narrowly-construed protection of one person’s assets? That’s what you’ll have to take on when you’re willing to take a literal and narrow construction on this case that rewards a community disrupter his land asset merely for the sake of rendering the land real, while renting a tear in the fabric of the world by letting a thief benefit, and disrupting the upholder of the world, LL.

  2. Nobody Fugazi

    Dec 7th, 2006

    Damned fine interview, especially the last 2 questions. It looks like the angle is if a contract is unconstitutional, the contract is invalid (which is a common FSF statement). This has some implications on the ToS… and may explain the recent addition in section 3.3:

    “Your intellectual property rights do not confer any rights of access to the Service or any rights to data stored by or on behalf of Linden Lab.”

    That speaks to the freezing of assets directly, which means there may have been a weak point in the wording somewhere. Intriguing.

    (oh – is the loss of the ‘d’ meant?)

  3. Bob the Tomato

    Dec 7th, 2006

    He cheated the system, got caught, got his ass whipped… case solved.

    Rather than whining about losing his ill-gotten gains, he should be grateful that he didn’t get a knock on the door from the FBI for hacking related crimes.

    Now if only people would just remember that this is a computer game, and stop taking it so damn seriously, things might be a little better.


  4. Thoughtful newbie

    Dec 7th, 2006

    Linden Labs markets SL as a virtual world but they keep on governing it upon the basis of pure despotism, where they hold the right to do as they please, even change the rules on the fly.
    It’s time that SL gets it’s own Magna Carta, even if it literally (and soo very historically correct) means that LL has to swallow the pill while being threatened (not by swords) but by an ill begotten lawsuit.

  5. Cardie Mahoney

    Dec 7th, 2006

    Hmm, so when Linden Lab’s “faults in the code” nuke an item for an INventory, do we get to walk over and claim it back from the person we bought it from? No, we have thope thy’re nice people. But when Linden Lab’s “faults in teh code” allow someone to take something from Linden’s inventory, they can walk over, take back the item, *and everything else.

    This comes back to the age old question of what do we actually own? It would make it a lot easier on Linden if we owned nothing, and it was a pure game, bt we don;t treat it like that, and neither do their PR department. If they answer that question clearly, then we can make decisions, but right now the muddled statements are going to make cases like this more and more attractive.

  6. Thoughtful newbie

    Dec 7th, 2006

    “It would make it a lot easier on Linden if we owned nothing, and it was a pure game”

    You mean like Eve Offline and World of Dumbcraft? Ewwww… I don’t see that as an option. I’d more welcome a complete rollover in the Linden Labs management with people who have a higher regard of ethics. Even ex-SCO personel would do.

  7. urizenus

    Dec 7th, 2006

    This all comes down to a very simple question: Are the assets that we hold in this online world really ours (as the PR and the advertising suggest) or does it belong exclusively to Linden Lab (as the ToS suggests).

    If it is ours, then Linden Lab has no right to take property that was not related to the exploit.

    Now I understand that Linden Lab thought the guy was a pain in the ass and that they wanted to bitch slap him good, but if it really was his property then even though they had the *power* to punish him by seizing his assets they had no *right* to do so. What they should have done is go to civil court and sue the guy for damages.

  8. Thoughtful newbie

    Dec 7th, 2006

    Uri that is the whole point, either we accept that LL has the complete authority to take away what they once declared as ours… at a whim, OR we demand justice, rightful jurisdiction and total transparency of the related processes.

  9. urizenus

    Dec 7th, 2006

    Prok’s example of a casino is interesting:

    “It’s more like Bragg is at the Black Jack table. He has a fist full of $2000 already from winning at roulette; he then uses an exploit to beat the house at Black Jack and wins another $2000. The house dicks catch him, but instead of just confiscating his $2000 from the illegal game, they take his other fistful from the legal game, too. Why? Because it’s their house, their game, and they don’t think he should keep his winnings, period.”

    But the house dicks will probably also take him into the back room and beat him senseless. So they rob his legitimately got money and they beat him senseless. Is that because it is their right to do so? No, it is because they operate outside the law.

    Do we really want to live in a world where some Linden house dick can point at you and say “he cheated at x” and then have the Lindens seize *all* our legitimately got property? Without trial? Without appeal? With the house dick’s boss as judge, jury and executioner? When we don’t even have a working definition of exploit or cheat? Is this really the future we want? Is it the future we were promised when we bought into the “your world, your imagination” meme?

  10. Jade Lily

    Dec 7th, 2006

    I don’t think your last argument sticks, Uri. You can’t assume that all casinos are operating outside the law. I like Prok’s analogy here, and it seems more reasonable to me than the one drawn by Archinaco.

  11. ravic

    Dec 7th, 2006

    “Archinaco: ….Would it mean that Linden could confiscate Mr. Bragg’s property, resell it to the highest bidder and keep the money for themselves? No. Not even the United States Goverment gets away with that….”

    The US Government perhaps does not get away with that, but state governments certainly do:

    In the Forfeiture section of the above URL, Colorado’s public nuisance statute 16-13-303(1) is justifiably criticized for allowing state seizure of real property for alleged use in the commission of a felony. The seizure need not be approved by a court, can be based on probable cause — a low standard of evidence — and the property need not be returned even if the accused is acquitted in a court of law. I understand most states in the US to have similar statutes.

    Not to say this is right, or passes any governmental “smell test”, but Mr. Archinaco’s comparison of LL to a government, and his citation of what government can “get away with” is not an apt precedent.

    One hopes, for the sake of his client, that he will limit his courtroom arguments to the more obvious environment of a private person doing business with a private business.

    “Archinaco: ….whether, they are going to claim that the ToS is inconsistent with what they are telling the public about land ownership in Second Life. “

    Promotional statements are not a contract. They are a medium to draw a person into agreeing to a contract, presumably after having read it. In this instance, the ToS.

    The ads I see on TV normally paint a rosy picture for joining the Army for career opportunities, excitement, and post-service benefits. There are however, some arguably relevant things they don’t mention – the possibility of having your body perforated by bullets for example. One need read the enlistment contract to find that out. This doesn’t mean the enlistment contract “is inconsistent with what they are telling the public” about being in the service. It means the Army is presenting itself in its best light. Are we really so naïve that we expect promotional statements to be otherwise?

    I have no particular view of the rightfulness or not of either LL’s position or that of Mr. Archinaco’s client. I simply find Mr. Archinaco’s basic arguments rather thin. They certainly have great appeal for those SL residents with an activist streak; I’m less certain they would evoke equivalent response in a courtroom.

  12. Jade Lily

    Dec 7th, 2006

    I’m not a lawyer though. Assuming there’s no beating in the back room, would a casino be within their rights to confiscate all of said gambler’s winnings? Seems so.

  13. urizenus

    Dec 7th, 2006

    It’s very simple. Is it our property or is it not. If it is, they can’t take it, no matter how big a PITA Bragg is. If it isn’t then they have misrepresented our stake in this place.

    Will a court side with Bragg’s thesis that this is a contract of adhesion? I strongly recommend that people read the thread on Terra Nova. The views basically broke down like this: The game developers said that there was no case, and the cyberspace law guys (esp. Maslow) thought that there was a case. Not just, but Maslow adds this bit:

    “I also note that the new attorney representing the plaintiff is a partner in one of the best known commercial litigation boutiques in the Philadelphia area, a firm whose litigators have a long time national reputation as legal pitbulls. I see no reason to believe that Linden is going to be able to steamroll these guys. This could get real interesting.”

  14. Tad McConachie

    Dec 7th, 2006

    Uri – it’s not even that simple in the real world. People have been arguing over property rights forever. In the United States (and I think most other countries as well) you don’t have complete and total control over the land you own – you can’t sell your 20 acres next to a residential area for a dumping ground for nuclear waste and if the local city wants to demolish your house to build a new Super Wal-Mart they can.

    I think most politicians at least feel that the “public good” should trump absolute property ownership. That’s why I can’t build a house on top of a wetland and why I can’t open a porn boutique next to an elementary school. In the same way, maybe LL feels that people who they consider to be bad for the “public good” in SL should be removed regardless of their property rights.

    Ultimately whether something is your property or not depends on your ability to physically defend it. Regardless of any law, the government can take your land away from you because they can muster more violence to do so than you can to defend yourself. France became the property of Vichy France because the original government could not defend itself from the Nazis. Same thing in Afghanistan – what was once the Taliban’s property now belongs to the Afghan government. See also Native Americans…

    On the frontier, your ability to protect what you perceive of as your property defines whether it is in fact your property. Most of us have no such ability to defend our SL real estate and therefore, it is not property. It’s merely “property.” At some point, if we can create and host our own sims in some Open Sourced version of the Metaverse, then we may well be able to more properly own our property.


    Dec 7th, 2006

    Nah, it’s not a contract of adhesion. LL couldn’t afford to run linden unless they had this big stick.

    Any reasonable objective expectation would be that they should be allowed to do this, ie confiscate if you are found exploting the system.

    Sorry, Bragg, end of story.


    Dec 7th, 2006

    And, yeah, the casino analogy is great. Can a casino confiscate all of your chips? Even the ones you bought?

  17. urizenus

    Dec 7th, 2006

    >Ultimately whether something is your property or not depends on your ability to physically defend it.

    Just a bibliographical note: I believe this theory of property rights is due to Conan the Barbarian.

    Gotta run, I’m about to knock down some grannies to get their… no wait, *MY* cash from their little clasp purses. But before I go let me say you’re right about one thing. When I get my money from those grannies I’m investing in the open source metaverse next time!

  18. urizenus

    Dec 7th, 2006

    The casino argument is *horrible*.

    1) I don’t think we even know whether it is legal for a casino to confiscate all your legitimately acquired chips if you are caught cheating. So the casino may well be acting outside the law when it does this.

    2) Would it be legal for the casino to shake you down and confiscate property that you are holding — say cash — because you won it legitimately months before at the same casino? Would that be legal?

    3) Second Life is nothing like a casino, which is a one-off entertainment venue. Second life is a platform that is, among other things, a place where people conduct their real world business, where they place their real world investment capital, where they take university courses and learn in more informal groups, where they socialize with friends and family members, where they make personal connections of all forms, *and* it’s an entertainment venue — or contains many such, including casinos.

    No one who manages such a place should be allowed to seize the property of someone without due process — especially when it is conceded by all parties involved that much of the property in question was acquired legitiately. This is *especially* true if the person managing the place has been beating a drum for years about how this is “your world”, you can make “real money”, “start businesses” etc. For crying out loud, in the interview with Adam Reuters Philip was even casting Ginko as a legitimate bank.

  19. Prokofy Neva

    Dec 7th, 2006

    Uri, you’ve confused the casino analogy by trying to then add in a beating in the backroom — which didn’t take place at all in our story here with Bragg — AND then seque magically from “the game of Second Life” which sure as hell is like a casino to “a world with a government”.

    No court in the land is going to pick up this “like a government with a world stuff”. Uh-uh.

    They will look at it like a service or a club or a game with a subscription fee — that’s all it is, legally speaking.

    A casino has rules that don’t play elsewhere in RL. Like, a bar on photography inside the casino, which as a private establishment they can get away with). Like an acceptance of a contract for chips that says the chips can equal money (they don’t intrinsically — I can’t trade them anywhere else for money except in the casino). Like: steak dinners for free if you buy a roll of chips.

    I’ve always used the analogy of the casino for SL: you buy the bus ticket to Atlantic city and you get the roll of chips, the coupon for the steak dinner for free, and maybe the lucky hat. And that’s your first land. You go twice, you get 2 steak dinners, or 2 first lands.

    If the casino owner doesn’t like your cheating in his house, he may bar you forever. I think it’s likely he might not cash out your chips. Is he obliged to cash out your chips if you are caught stealing? Find a court case that rules that whoever cheated at Black Jack got to cash out their chips from the roulette wheel before that.

    Value for our property is not going to come out of this. All that will happen is erosion of morality. If Bragg is found to have a legitimate case for retrieving his chips from the Linden casino operators, it will bolster millions more litigious cheaters to come in SL and try to take them down.

    My bet is on Ginsu — he will not let anybody take the house down.

  20. Prokofy Neva

    Dec 7th, 2006

    So your idea that we are sanitizing Linden thuggery merely in order to keep value to our land is merely substituted with sanitizing a players’ thuggery merely to keep value to our land. And either way, we don’t really have value to our land in that context. I won’t be surprised if a judge throws the entire thing out and says it is an entity with a TOS, too bad for you, they can do what they like.

  21. Walter Sobcek

    Dec 7th, 2006

    From the very first moment I ever heard of Second Life, I was absolutely convinced that either the whole thing was a scam, or at the least it is a playground for con-artists and scammers.

    In regard to property “ownership” in this virtual fantasy world, at best, the “residents” here are renting space or more accurately renting remote access to some software and hardware. Even this Anshe Chung chick owns zilch in reality. Every single person playing this game has been duped. You’ve been had. You’ve been taken.

    Actually, the casino references are quite interesting because I regard Second Life as a sort of “online casino” or “online gaming site” and I’d imagine that it’s going to be eventually considered as such by the U.S. govt. You ‘buy in’ to this game, and it’s sort of like playing monopoly with real money and fake property. It has real winners (those smart enough to cash out while ahead of the game) and many more real losers whose only purpose here is to create the “jackpot” that someone like Anshe Chung takes home to her real life. In the middle you have Linden Labs, the proverbial “house”, no different than Caesars Palace or Party Poker who set up the game and in return take a hefty cut of the jackpot pie.

    Linden Labs is going to come crashing down and when it does, there will be lots of fools crying because they were duped and lost real money.

  22. Walter Sobcek

    Dec 7th, 2006

    Here’s a question, if the real world company Linden Labs goes out of business tomorrow and turns off its computers (i.e. the Second Life world goes poof in the blink of a switch), what are people like Anshe Chung left with? Nothing, not even a legitimate case in a real world courtroom that might help you get your money back.

    While I am highly suspicious of Anshe’s claim of $9.95 rags to $1 million riches, if that “smoke and mirrors” fairy tale is true, she’d be a damn fool to not CASH OUT ASAP. It’d be like dropping $10 bucks in a vegas slot machine, hitting a $1 million dollar progressive jackpot, and considering the flashing lights on the machine to be what holds the value of a million real dollars. You make a hit like that, you cash that mother out and run for the casino cage before they shut down or turn off the power and wipe out your machine’s memory of your win. You don’t consider yourself now invested for $1 million bucks into a slot machine and keep on playing it all the way back to zero credits.

    If you’re in Second Life for some fun, goofing around and playing a game or chatting with people in 3D, that is all well and good. If you’re in this thing thinking you “own” anything, or thinking that you’re creating real wealth or going to make long term money on SL, then you are quite delusional. I know the Linden Kool-aid looks pretty and comes in many fruity flavors, but it’s all sugar, baby!

  23. urizenus

    Dec 7th, 2006

    Walter, the paradox here is that Linden Lab’s defense may well have to be just that: “It was all a big joke when we talked about your property and you earning money. We didn’t mean it, folks.”

    Now there are two questions.

    1) Do they really want to go there? Do they really want Philip to get on the stand and say it was all a big lie, except for that part in the TOS that says it isn’t real?

    2) If they go the “all a big lie” route, will the courts let them get away with it? I really have no idea, many prominent and knowledgeable lawyers working in this area have suggested that the denial of service clauses in these EULAs and TOSs would not stand up to legal scrutiny. Obviously we won’t know the answer until this is litigated.

    The whole thing is really incredible to me. Its almost like Bragg set a trap for Linden Lab and they stepped right into it.


  24. Walter Sobcek

    Dec 7th, 2006

    One more thing, and this is most important of all…

    The Linden Labs business model for the 3D internet or metaverse is critically flawed. It’s a nice R&D experiment, at best.

    The final version of the metaverse won’t be owned by any one business or government entity. It will end up being run by a non-profit consortium similar to the World Wide Web. There will be a standard open source code, and client software able to read that code like browers do HTML, XML, Java scripts, etc. “Big Company A” will have it’s own servers hosting it’s own sections of the virtual world internet.

    If you want to build a 2D website today, you buy a server and hook it into the world’s data stream or you pay some “internet service provider” to rent space on their server for your site. In the 3D metaverse model, big companies will have there own servers maintained in-house, and smaller entities and individuals will rent space on the servers of ISP’s. All of these computers and all of the data (i.e. all of the 3D worlds) will be linked up together.

    There will be an infinite amount of virtual “land” and property available, so ownership of land in SL is essentially a hoax. At the worst, it’s a very bad investment. Linden Lab’s Second Life is trying to become the “AOL” of the early 3D internet, but that’s the best it can hope for, and it looks like it’s going to fail, even at that.

  25. humanoid

    Dec 7th, 2006

    Walter hit the nail on the head. It’s a bad idea to let users treat anything inside the game as if it is something real, with real monetary value. Things with real value eventually attract very real lawyers. LL might win this case, but more cases will pop up as time goes by. Eventually they will either be forced to run SL in such a way that no sane person will spend money beyond the subscription fee, or the lawyers will eat them for breakfast.

    And the mispriced $1/$1000 electronic device example doesn’t make sense to me. Store employees can’t do jack about mispriced items once the item has been paid for. They’d risk a lawsuit if they did anything to hinder my exit from the premises. That’s how it works in my region- maybe it is different elsewhere.

  26. Walter Sobcek

    Dec 7th, 2006

    Another random thought:

    Say a SL citizen were a share-cropper growing crops on company owned land in the real world. The farmer wants to grow tobacco or marijuana or poppies, but the company would rather have corn or soybeans grown on its property.

    If it is illegal to grow the marijuana and poppies under the laws of the local government, then the company has every right to tell the farmer not to grow it. In second life, that would correspond to things like the in-world casinos, ponzi schemes, solicitation for real life prostitutes, solicitation for real life statutory rape/molestations, transactions in child porn, illegal banking activities, real world money laundering (using Lindens as a medium), and/or solicitation for real world drug sales. Any or all of these things go on in Second Life (or will), and Linden Labs faces all kinds of legal liability because these things are taking place on their “property”. Due to in-world gambling sites, Linden Labs already runs afowl of existing U.S. laws. And worse for them, they don’t operate offshore in someplace like Sri Lanka or Madagascar, Linden Labs is located in SF and Mountain View, California, USA! That’s completely aside from the whole Second Life site being essentially an online gambling site.

    If, however, the farmer in this example wanted to grow the tobacco on the company’s land, that would be strictly between the company and the farmer. If the farmer owned the land himself, he could do and grow whatever the fark he pleased, subject to local laws. If he is growing crops on company land, he is subject to whatever enforceable terms he has agreed to with that company. If the company originally asks the farmer to grow tobacco, or at least allows it, and then one day decides it doesn’t want tobacco grown on its land, then the company can simply decide to change the terms of the agreement (unless the existing terms are written so as to be enforceable for a certain period of time without the ablility to change the terms at will). Most online TOS, are subject to change, without notice, at the whims of the company who owns the site. Make no mistake, Linden Labs is the sole owner and proprietor of Second Life and ALL of its content and assets, both physical and intellectual.

    Is that a good deal for the customers of Linden Labs who use the product/service called Second Life? That would be up to individual customers to decide, but at this point, it seems like Linden has more angry customers than happy ones.

  27. Walter Sobcek

    Dec 7th, 2006

    As for the question about the real world Radio Shack example, I think it would be handled (by USA authorities) in the following way:

    1. If Bragg enters the store, intentionally switches a $1 price tag onto a product with a $1000 value, and then checks out, the store can confiscate the item and report Bragg to local authorities. Their case would be made stronger with security camera evidence of Bragg switching the price tags on the merchandise in his effort to intentionally scam the system and steal $999 worth of value in property.

    2. If the store has accidentally mis-tagged the $1000 item with a $1 price tag, and Bragg merely thinks he has found a bargain, he has the right to take that item to the counter and check out for $1. It is the store’s fault. If the cashier catches the mistake and asks Bragg to pay the full $1000, the cashier has that right. It is their store, regardless of the tag, until a final sale is made, the price is up to the store to decide. If Bragg protests, drops a dollar bill on the counter, and runs out with the merchandise, he is in the wrong and subject to criminal prosecution for theft and he’ll have to give back the item.

    3. If the store marked the item as $1, as in example #2, but when Bragg brings the item to checkout the store clerk doesn’t notice the mistake and sells Bragg the item for $1, then it is a valid sale. Store’s mistake and it is their loss. It’s not Bragg’s fault since he made an honest transaction with the store. Once he has left the store with the item and a receipt, he is clear and the store cannot take back the item or make Bragg pay any more for it than he already paid.

    4. In any event, if Bragg had bought items at legitimate prices during previous transactions, the store has no recourse to (or reason to) take back those items. Even if the store did want to cancel previous sales, the store would have to refund Bragg’s money for those previous sales. Otherwise, the store is stealing from Bragg!

    Of course, it’s a lot easier to pull off scam number 4 if what the company has sold to Bragg was essentially “thin air” to begin with. In the Linden vs. Bragg case, there is no real property involved, so the Radio Shack model doesn’t correspond 100% anyway. In Linden vs. Bragg, it would seem that he was renting acess to a website, or to specific sections thereof, and he was making down payments on the membership dues or service fees. He WAS NOT purchasing real property. He did not purchase a memory card inside of a Linden server computer, much less did he purchase one of their servers. He paid for access to the data on the machines. (It might be healthy for all SL members to realize that this is what all of you are paying for, and nothing more!!!)

    So, urizenus is probably correct in his opinion that this case puts Linden Labs in a Catch-22 position. Either they are forced to very publicly admit that SL customers “own” nothing and merely pay exhorbitant access fees into an online gambling site or virtual real-estate ponzi scheme, or they must give up the right to take for “any or no reason” the virtual/intellectual property and virtual cash holdings of its customers.

    For Linden, the best bet is the latter option, but I would guess that the aim of the lawsuit and the court’s position will be the former. That’s if this thing goes to trial.

  28. urizenus

    Dec 8th, 2006

    Tateru Nino has observed ( that Archinaco has an interesting paper on an earlier virtual world propery confiscation case:

  29. LindenBallLicker

    Dec 10th, 2006

    I think the radio shack analogy fits perfect for this situation. I work in retail and i can tell you that if a customer comes up to a cash register with an item that was priced wrong on the shelf or even the item itself you HAVE to give that item to this customer for that amount. It is then the STORES RESPONSIBILITY to correct their pricing error on the shelf/item so that it cannot happen again. The customer does not get stopped at the door and told to hand it back and give me all you ever bought here as well, doesnt happen. Linden Lab basically fucked up the auction, it should of been their responsibility to fix it the first time they discovered the exploit.

    I also agree that LL is falsely advertising this “game”. They bring you in believing what you make/own/earn is all yours but in “reality” it is theirs. That one clause in the TOS is their cover for any fuck ups they make, it gives them a justification for any problems they cannot solve. I know of one person in game that had a billing issue with LL which resulted in a perm ban of their account, once the issue was resolved this person was allowed back in game, a week went by with no problems and then all of a sudden the account was banned again, when this person contacted LL to find out why again, they claimed it was cuz their was a TOS violation over the original billing issue, with that said if that was the case why then did they even allow this person back in the game for a week? their response was the above clause in the TOS where basically allows them to do as they please with you and your “stuff”.

    Wake up people LL owns you and your virtual ass the sooner you realize that the better off you will be.

  30. Mktgemail

    Dec 11th, 2006

    Virtual Worlds Collide With Real Laws

    Legal experts and game players closely eye lawsuit against Second Life, which asks courts to clarify the legal status of virtual property

    By Thomas Claburn

    Dec 7, 2006 03:00 PM

    Virtual real estate entrepreneur Ailin Graef recently announced that her Second Life avatar Anshe Chung had become the first online personality with a net worth of over $1 million, but she may be living in a fantasy world.

    Linden Lab, the company that created Second Life, explicitly states that Second Life residents do not own their accounts or any data on Second Life servers.

    “Linden Lab retains ownership of the account and related data, regardless of intellectual property rights you may have in content you create or otherwise own,” the company states in its Terms of Service agreement.

  31. Mktgemail

    Dec 11th, 2006

    Yet the company sells the idea of ownership on its site: “Become a part of history by purchasing land and developing your own piece of Second Life,” the site says. “The Pricing and Fees are simple; you pay $9.95 a month plus a Land Use Fee proportional to the amount of land you own.”

    “[T]he land itself and the space and everything is owned, controlled and built by the people [in Second Life],” Linden Lab CEO Philip Rosedale said in a July interview for the AfterTV podcast.

  32. Urizenus

    Dec 11th, 2006

    ouch. I can’t believe that Linden Lab won’t try and settle in the face of the mountain of claims of that form that they have made.

  33. Just a thought

    Dec 16th, 2006

    after reading all of this, and a few entries in other places I have to wonder how anyone that claims to be a sentient being could possibly think there is a case to be made here – at least in terms of legality.

    LL owns the servers (even the private islands, all you own is the right to use them), they own the system that allows you to connect to the grind, they own all the virtual land (in much the same way as a bank owns your house and the city owns your land) – in fact the only thing they do not own are your ideas.

    considering the ToS at the time this occured, they are well within their right to close down the account, confiscate all the holdings, and refuse to turn over anything that was tied to that account.

    Is this moral or just? No – it isn’t. it is however a harsh fact. if you do nto want to run the risk of all your assets being confiscated …. don’t agree to the terms of service, don’t use second Life, and stay as far away from LL as possible.

    I hope LL wins this case – if only to prove a point: Hacking the system (and it is hacking to access a page to which you would normally not have access) will result in all your assets being confiscated.

    were it not illegal to do so I’d have suggested that LL freeze the account, confiscate the assets, and counter the hack by destroying the offending computer (HD Nuke). a pity that the last really is illegal no matter what.

  34. Urizenus

    Dec 16th, 2006

    If that is true then LL should stop their dishonest advertising and PR campaign.

    In any case a conclusion like that is premature; every person working in cyberspace law that I have seen comment on this thinks this case has merit. The only people calling it bogus are the people with no background in the area.

  35. Prokofy Neva

    Dec 16th, 2006

    Uri, I hardly think a couple of Terra Nova professors who are your drinking buddies on the game conference party circuit, who aren’t RL litigators but just commenting on this from the generally snarky position of intensely disliking SL, constitutes “everybody”.

    In fact, the RL law journal article covering this case doesn’t imply that there is any case whatsoever.

    I’m all for having virtual assets be declared more real — after all, unlike most people having this discussion, I have the same kind of “real estate” assets that Mark Bragg once had.

    But with the TOS, the EULA, etc. and the careful language that makes out all the assets to be merely things you are licensed to use while logged into the game (i.e. you are given a license to use the thing called “currency” without any oligation on LL’s part to

    Linda, this statement, “I work in retail and i can tell you that if a customer comes up to a cash register with an item that was priced wrong on the shelf or even the item itself you HAVE to give that item to this customer for that amount. It is then the STORES RESPONSIBILITY to correct their pricing error on the shelf.”

    Linda, don’t be silly. The kind of situation you’re dealing with is one CD priced at $16.99 vs. another priced wrongly at $11.99 But I think you have probably not ever tried to walk out of Comp USA on Fifth Avenue in New York City with a $4000 laptop and only a receipt for a $40 adapter lol. Trust me, your ass will be stopped — in fact security routinely stands at the door and checks receipts against items in your bag for precisely this reason. If they find the scam, trust me, the computer will be removed from your larcenous little hands.

    If the store security also grabs back the adaptor, too, you’re going to be in a very awkward position: make a fuss about your lost $40 and your adapter to people who are now heavily motivated to press serious charges of robbery against you, or cut your losses and back off.

  36. Urizenus

    Dec 16th, 2006

    “Uri, I hardly think a couple of Terra Nova professors who are your drinking buddies on the game conference party circuit, who aren’t RL litigators but just commenting on this from the generally snarky position of intensely disliking SL, constitutes “everybody”.”

    I didn’t say ‘everybody’, I said ‘every cyberspace lawyer that I have seen comment on this’. Do you have a pointer to an exception?

    Also, I don’t party with lawyers at gaming conferences. As the photos from the Herald paparazzi show, I party with the *Lindens*, but I listen to the lawyers:

  37. Cocoanut Koala

    Dec 16th, 2006

    Terms of Service are going to have to ultimately change, I figure.

    Somehow the game companies have this thing going where they can take your money and deny you service and keep the things you paid them money for, and the money you legitimately earned on the game, and that’s okay just because you had to sign that click-through thing.

    I think the law is going to change all that, eventually.


  38. Just a thought

    Dec 16th, 2006

    Only if the government steps in to control it coco – and frankly I’d rather deal with a private company that could take it all away from me than the government.

  39. Ordinal Malaprop

    Dec 16th, 2006

    I think your “cyberspace lawyers” (perilously close to “internet lawyers”) may be being overcome by their fantasies about being a test case that will go down in the history of the Multiverse and validate the existence of virtual property etc etc. I can’t see many judges being interested in that, however, or juries; even within SL, the reactions I’ve seen are either “this guy’s a crook” (the majority) or “well, okay, he’s a crook but LL deserve to get shafted because I hate them” (people with a long-running grudge).

    When even Mr Neva, who is not noted for his irrational Linden Lab cheerleading, thinks this whole thing is a nonsense, one has to wonder. This idea that LL are being deceptive in using the word “own” when really, it should be “rent according to certain conditions” is not something I believe would ever stand up. And that’s all he has. And even that has to be considered in the face of the clear fact that he’s been attempting to defraud them.

  40. Cocoanut Koala

    Dec 16th, 2006

    At the base of all law is generally some guiding principle.

    The simplified principle of tax law, for instance, is if you make money, the government gets part of it.

    The simplified base of commerce law is if you sell someone something, you must provide that something.

    And if you take the thing back, you may be forced to refund the money.

    And certainly if you take the thing back, you shouldn’t not only keep the thing, but take other money or goods the person has, as well.

    I’m not saying this is true in this particular case.

    I’m saying that the idea that you can set up a game or a platform -

    . such that the customer pays for a product but doesn’t get it

    . or such that the company takes and keeps money but renigs on the service and provides no refund

    . or is allowed to do anything it wants to, including keeping your money but providing no service, for any reason or for NO REASON AT ALL

    - is, I think, an idea that has lived past its time, and in fact should never existed.

    This set-up not legal for other companies, and I don’t think gaming companies (or “platforms”) are going to get away with it forever, either.


  41. Wildcat

    Jan 10th, 2007

    Linden Labs provide a service. If you breach the terms of service, Linden labs reserve the right to withdraw that service in their ToS. I would liken that to the state ability to seize assets gained by fraudulent methods.

    This, to me, drops into the category. He obtained this virtual property by deception; it was therefore forfeit. With regards to any property he gained legally, he knew he was jeapardising that when he tried to cheat the system. He knew the risks. Breach of ToS equals banning with no compensation.

    This comes down to culpability. It’s got nothing to do with what Linden Labs can and can’t do, want to do and don’t want to do. This was one person who purposefully set out to break the rules, IN THE KNOWLEDGE that if he got caught, Linden Labs would ban him. At the end of the day, that’s the issue at the back of this – whether or not he should take responsibility for deliberately breaking the rules and the consequences involved in getting caught.

    The fact remains, if he hadn’t deliberately tried to cheat the system, there would have been nothing for him to be caught doing and nothing that Linden Labs would have banned him over. I do agree that if Linden Labs just close your account with no explanation and seize your assests you’d have cause to bring case against them, but everyone seems to be of agreement that this person DID CHEAT.

    If you’re honest, you don’t risk anything. This person wasn’t, and he got unlucky and got caught. He paid the price. He can’t expect the judiciary to come to his rescue because he committed fraud in the first place. Sorry, but I don’t have ANY sympathy for him, and neither do I believe that he has a case.

  42. 2d Rpgs

    Mar 1st, 2007

    2d Rpgs

    Wir programmieren nur mit C , genau wie Microsoft. Wir sind eine Firma, die

  43. Bob Perry

    May 31st, 2007

    The fact is, you are told by LL in their TOS that everything in SL can be taken away for no reason. THAT IS THE FACT. LL will win the case and the TOS will remain the same.

    Bragg is complaining because he got caught scamming SL. Suck it up!!!

  44. urizenus

    May 31st, 2007

    Did you even read the court decision that just came down? It specifically addresses that clause in the ToS, and the court found the ToS to be an “unconsionable” contract of adhesion.

  45. Shame On You

    Feb 11th, 2010

    Linden Labs just like alot of these so called gaming comapnies for some reason think that writing some sort of TOS they are not accountable for violating peoples rights and they are above the law.

    Many organised crime organisations are seeing this a great means of laundering money all int he name of gaming and if you look deep enough you will see just how corrupt Linden Labs really is… all in the name of gaming

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