By: Emily Nash

Despite their increasing popularity, I’ve never understood the allure of virtual worlds, but my interest in the phenomenon was recently piqued by conversation amongst friends who are hooked on Second Life, the popular virtual world formed by Philip Rosedale under the name Linden Lab in 1999. Second Life provides an online forum for users to interact and share ideas as well as valuable intangible assets in a “virtual” universe fraught with the same intellectual property concerns as in the real world.

To further explore the perils and promise implicit in having a Second Life, I decided to create an account, which can be done for free by logging on to the Second Life website and downloading the required software. Not surprisingly, Linden Lab’s detailed Terms of Service Agreement (“Linden Lab TOSA”) includes a provision¹ regarding compliance with the Digital Millennium Copyright Act (“DMCA”). ² This Act provides a safe harbor for internet service providers (“ISPs”) who comply with the Act and its requirement that ISPs adequately respond to notices alleging copyright infringement by their users. The DMCA helps protect both ISPs and copyright owners, but what protections exist for trademark owners and to what extent are ISPs responsible for their users’ infringing use of marks?

Branding is a key element to the Second Life concept. One user who is an advertising executive in New York noted that the “real draw” of Second Life is the “creative driven process” of developing, marketing and selling one’s own brand in the virtual world. Second Life blogs abound and the site has even created its own version of Wikipedia, where users have lauded the site as “a new platform for creative and entrepreneurial expression” that might otherwise be unavailable due to real world spatial or financial constraints.⁵ Real world owners of valuable marks such as Reebok, Lacoste and BMW have also penetrated the Second Life market by setting up shop in the virtual world. One user described that the virtual stores where these goods are sold usually allow users to customize the established mark owner’s goods within the owner’s established parameters, the equivalent of mail ordering customized M&M candies. The site also provides incentives to create new designs as opposed to buying existing brands, since the creation of one’s own design costs more time than money. The principal financial investment comes in the form of acquiring retail space with virtual dollars to make the product available to other users in Second Life.

Despite the incentives for creativity as opposed to infringement, users frequently confuse the line between “real world inspired” creations and virtually infringing use. As one practitioner noted, “[infringement]…is easy to achieve on Second Life.”³ A quick perusal of Second Life blogs such as Fashion Planet shows that virtual designers are often drawn to the same pitfalls as real life designers who take looks they see on the runway and, after making small changes, market them as their own. One user on Fashion Life copied a dress worn by a contestant on American Idol, making one barely noticeable change and customizing the look with accessories purchased from other virtual merchants. The infringement may be done virtually, but it creates potentially harmful outcomes for real intellectual property owners.

Linden Lab is clearly cognizant of the value of trademarked material and, perhaps to attenuate itself from potentially infringing use, decided in 2003 to give users “copyright and other intellectual property rights with respect to the Content [they] create in Second Life,” as embodied in section 3.2 of the current Linden Lab TOSA. According to users on Fashion Life, the program features “allow creators to label work as their own, flag it with the level of copy permissions they want to assert over their work, e.g., all-rights reserved or freely modifiable and transferable,” enabling users to “start their virtual brand with confidence.” Apparently there is even a Patent and Trademark Office in Second Life⁴, enabling users to virtually secure and enforce trademark protection for their virtual creations without looking to real world laws and remedies.

But the grant comes with the proviso that Linden Lab has a perpetual non-exclusive and royalty-free license to use content created on the site and that users are responsible for “understanding all copyright, patent, trademark, trade secret and other intellectual property or other laws that may apply to [their] content.”⁵ By giving users greater control over the content they create in Second Life and making the responsibilities that come with that control explicit, Linden Lab may be less likely to be found contributorily or vicariously liable if named a defendant in a copyright or trademark infringement suit.

Bringing a trademark or copyright action for infringing use in the virtual world may seem unlikely, but in at least one case, the courts have entered judgment in favor of Second Life content creators. In January of 2008, a consent of judgment was entered in the Eastern District of New York, whereby defendant Thomas Simon (aka Avatar “Rase Kenzo”) paid $525 in damages “for profits made through unauthorized use of the plaintiffs’ intellectual property via ‘unauthorized copying and distribution of plaintiffs’ merchandise’” in Second Life. As Virtually Blind, a blog covering legal news, issues, and events impacting virtual worlds, reported, “[t]hough the judgment will not have as significant a precedential value as a contested decision on the merits would have had… the judgment [stands] as the first formal, if tentative, recognition of virtual property by a U.S. court.”

As litigation of trademark and copyright disputes involving more well known ISPs such as YouTube and EBay proliferate, it is worth keeping an eye on practices in the virtual community. Virtual IP infringement may be the new frontier in soft IP.

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¹ § 4.3 of the Linden Lab Terms of Service Agreement.
² 105 H.R. 2281 (Oct. 28, 1998)
³ Mark A. Armitage, Virtual Trademark Infringement in A Virtual World?, Vol. 1, No. 4 of LANDSLIDE (March/April 2009).
⁴ Id.
⁵ § 3.2 of the Linden Lab Terms of Service Agreement.