The John Doe Lawsuit is nothing new to the Internet playing field. Plaintiffs have used them for years to pursue actions against otherwise anonymous Internet posters. Typically used to fight whistleblowers, trade secret violators, files sharing kiddies (and their Snoop Dogg loving grandmothers), John Doe Lawsuits have typically been used to pierce the anonymity of pseudonymous Internet users who are accused of committing some real world wrong.

Recently, however, we’ve seen the expansion of this type of action to wrongs that take place entirely in virtual worlds. In a recent development, Second Life purveyor Linden Labs and Internet transaction giant PayPal acceded to a subpoena requesting the identity of a patron of both companies. The issue? Plaintiff Eros LLC alleged that the John Doe defendant had violated its copyright by knocking off its virtual product.

Some Background: The Second Life virtual world allows users to create unique objects through a 3D modeling and animation programming interface. These objects can be shared or made available for sale in Second Life or other markets, using the currency of either (second life currency can be freely exchanged with US dollars). Second Life has implemented a system that allows the owner of a unique object to impose restrictions, or a lack thereof on the distribution of their creations. In other words, the Second Life world has in place a system that allows the creator of an object to reward his ingenuity and skill with a right to sell his designs, and to control the subsequent resale of those designs. Eros has accused a John Doe going by the in-world name of Volkov Cattaneo of hacking Second Life’s protection system to allow it to copy Eros LLCs product and offer it for sale for a third of the Eros asking price of USD 45. The product in question? Well that’s where it gets interesting. It’s a…uhhh…sex bed….

The prompt and voluntary compliance by Linden Labs with the subpoena’s request that the real identity of Cattaneo be revealed to the plaintiff has been the cause of some uneasy stirrings in the Second Life community. Posessed of the common (if somewhat whimsical) expectation of anonymity and a belief that what happens in Second Life stays in Second Life, a portion of the community has expressed the sense that Linden’s ready cooperation with the subpoena has struck a blow to one of the fundamental assumptions under which activity and commerce in Second Life take place. Many feel betrayed that Linden could so casually jettison what has long appeared to be one of the house rules. Some commentators have even expressed a desire to see real life rules of procedure altered to make the unmasking of Second Life personalities more difficult.

An expectation of anonymity in Internet dealings is not without precedent or good reason — but the context here is all wrong.

A relatively strong line of cases descending from Dendrite International, Inc. v. Doe No. 3, (775 A.2d 756) has held that the First Amendment interest in protecting online anonymity should bar erstwhile plaintiffs from unmasking anonymous posters with subpoenas in cases where the alleged wrong involves speech. It is the alleged wrong that is different here. Eros LLC’s action involves a claim of copyright violation. This is not some nuisance SLAPP suit, or complaint about the fact of the speech. This allegation involves a very real theft of intellectual property and Linden Labs was dead right to cooperate.

Why? Long story short: Second life intellectual property violations are real world intellectual property violations. Short story long: stay tuned for part 2.

Lots more to come…

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So Second Life creator Philip Rosedale says that virtual worlds will be bigger than the Internet in 10 years. Whatever. The fact is that they’re big…and getting bigger. But what will happen as these MUDs continue to mature into something more than late night nerd playgrounds? It’s already happening: Second Life is quickly becoming a remarkable proxy for our first world — home to cultural events, thriving businesses, in game and out of game services, and even its own Reuters Bureau. As more people rely on virtual characters, virtual real estate, virtual products, and virtual services to make real money, serious policy questions will come to bear — and serious policies will need to be formed. And we all know how good policy makers are at keeping up with technology and lifestyle developments…

The issue is too big to work through or even properly introduce in one post, but I’ll go ahead and try to put it in a nutshell. Property rights form the foundation of Anglo-American law. Our rights in property and the settled expectations that come with them form the basis of our lives, our economy, our system of laws, and our interactions and transactions others. The question, then, is what kind of rights do we have in this new property. The answer, it seems, is not much. Treatment of this new property, which is neither physical nor intellectual, has virtually no guidance from statutory or case law, and it seems that fitting analogies to existing property rights regimes may be of little use. For the time being, it appears that all rights in this type of property, to the extent that they exist at all, are derived from the contracts required for account set up (We’ll be looking at these later). This may or may not be a viable solution. Up until now, government has largely avoided dealing with the huge host of issues that activity and commerce in these worlds has brought up. This will no doubt change as the revenuers turn to these worlds for new ways to squeeze people…and the moralizers strike out at these realms of iniquity. Mostly this will change because if Rosedale’s bold vision of the future is to find any degree of fulfillment, there will be a dramatic increase in productive use of these worlds — read: commerce. This means increased exchange between virtual property and real world property, making virtual property portfolios every bit as real as traditional financial portfolios — and in-world reputations every bit as important and valuable as real world goodwill. Even if governmental forces don’t nose in and try to ruin it for everyone (which they will), those users engaged in commerce will demand a greater degree of protection for the reputations, and virtual currency and property that they accumulate in the worlds than can be provided by the arbitrary and ever shifting contracts offered by the purveyors of these services. A recent financial downturn in the world of Second Life shows that these concerns are very real. Virtual worlds are no longer just games–they are communities and markets and economies. I don’t think that there’s any need for a complex, top heavy, expensive scheme of government regulation…just a way to get to a settled understanding or rights to in-world property sufficient to allow these economic engines to develop.

Lots more to come…

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