Virtual world’s like Second Life brewing lawsuits and disputes

With virtual world’s forming into the next big thing on the horizon, the real world is starting to play catch up. Traffic stats are increasing and the money pouring into virtual worlds is starting to translate into real world money that cannot be ignored. Just recently a report was released by Screencast.com, a business research and intelligence gathering company, that listed subscription sales for online virtual worlds rising to $526,000,000 in the US market in 2006 alone.

With all this money pouring into the virtual worlds and attention being given to these markets, entrepreneurs and business minds come alive. Just as if it were in the 1800’s and dreamers were running into the California gold rush, people are now running to virtual worlds for entertainment and business.

With business savvy and genius creations comes the bad side of the virtual world progression of litigation, scams and regulations. Lawsuits and discussions are rising in the area of virtual worlds and if real world laws and government regulations apply to these new worlds.

Probably just due to the fact of the mention of sex, the lawsuit coming out of the virtual world Second Life is setting boundaries. Second Life is one of the leading virtual worlds in self ownership. Second Life allows users to own land, collect rent, invent and sell and products and basically participate in a replica of real life, hence the name, Second Life.

The opportunity at Second Life has inspired entrepreneurs like Kevin Alderman to create virtual products for the virtual world. Alderman has created many products but one of his most successful products involved in a lawsuit is called SexGen Platinum. The SexGen program allows virtual world participants in Second Life to add a little bit of sexual flair to their Avatars (or characters they use in the game).

Business was going great for Alderman and his company Eros. However, just like in the real world there are thieves and copycats and people that try to sell products as their own. An online persona naming himself, “Volkov Catteneo” started copying the program Alderman wrote for Second Life and selling to others at discounted prices. This issue is not about pennies here, the full program goes for a retail price of $45 US dollars. When Alderman contacted the person illegally selling his program the guy just mocked him and said, “What are you going to do? Sue me?” With that attitude, Alderman filed a civil lawsuit in the U.S. District Court in Tampa, Florida.

This specific lawsuit is very important to the virtual world industry as it will set standards in defining how much freedom people do have in virtual worlds and whether they have to obey every real world law. It isn’t often when avatars from the games start throwing around lawsuits but other litigation in the virtual world industry is not new.

Lawsuits are happening frequently that target the companies actually running the virtual worlds. In regards to Linden Labs, the makers of Second Life they run into lawsuits when they punish users for making bad deals or making the virtual world less fun for others. One recent case that was brought against Second Life was from a man named Marc Bragg, an attorney that used Second Life. The story is well covered in this Wired Magazine story here. Basically Marc Bragg was able to aquire cheap virtual land through underhanded methods and Second Life shut down his account. Since virtual land and products have a real world value, Mr. Bragg’s decided he would sue for the real world value of these products.

Some people question whether these virtual items really have any value at all. The real answer is they do in fact have a value when converted to real world dollars. For instance, in Second Life you can exchange your Linden dollars for U.S. dollars. The exchange rate has ranged anywhere from 200 - 350 Lindens to each U.S. dollar. This exchange rate almost rivals some of the world’s currencies in exchange value. Since people spend the virtual dollars on everything from real estate to avatar enhancements, they are spending money on items that do have a real value. The money making prospects has sent people into full time careers making money off of these virtual worlds.

What now remains to be seen is what standards and laws get passed on over to the virtual world from the real world. As lawsuits get settled people will learn the limits their avatars have and can quit making silly statements like, “What are you going to do, sue me?” Until these disputes are taken to the courts most people fight over who is right and wrong through companies that facilitate the transactions. PayPal has had a growing number of disputes due to virtual world disagreements. Until the values reach epic proportions most financial virtual world disputes will probably be settled by companies like PayPal and Second Life internally.

Do you think the courts should stay away from setting laws and regulations for virtual worlds or should the same laws and regulations apply to virtual worlds?

If you’re a Second Life, World of Warcraft or other popular virtual world user and you have opinions on this issue we’d like to hear from you. Are you making a living in a virtual world or have you had some major dispute that is unsettled with another avatar lurking out there? If so we want to hear about it.

.