Players Want Real Money from Virtual World

PHILADELPHIA (CN) - Linden Research, creator of the massive multiplayer "Second Life" Internet game, induced thousands of players to invest as much as $100 million in real money in "virtual" properties, then took the properties back without just compensation, four former players say in a federal class action.

Plaintiffs Carl Evans, Donald Spencer, Valerie Spencer and Cindy Carter say that throughout the early 2000s the company and its founder, Phillip Rosedale, promoted the concept of property ownership and commerce in Second Life through press releases and media interviews.

Linden Research and Rosedale claimed they would protect rights to virtual property and that the virtual real estate could be used to earn money for its owners.

But the plaintiffs say they were duped into increasing the value of the company in anticipation of an initial public offering or sale of the Internet platform to another entity.

They seek declaratory and injunctive relief, compensatory and punitive damages on claims of fraud, conversion, intentional interference with contractual relations, unjust enrichment, wrongful expulsion, and violations of California's Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law.

Developed by Linden Lab and launched in June 2003, Second Life enabled its users, called residents, to interact with each other though avatars traversing a three-dimensional virtual world.

Entry into the realm of Second Life is free, requiring users to download Linden Lab's software. A premium membership allows for a fuller experience, including participation in Second Life's "market economy."

Unlike other virtual or role-playing type games, such as Blizzard's World of Warcraft and Sony's Everquest, which retained rights to anything occurring within the games, Linden represented Second Life as a platform in which participants could secure actual property rights for "land" purchased from Linden, and retain intellectual property rights for any virtual items or content the participants created.

"Desperate for a participant base to generate profits, Linden made a calculated business decision to depart from the industry standard of denying that participants had any virtual items, land and/or goods," the plaintiffs say.

Linden Labs announced the policy in a November 2003 press release titled "Second Life Residents to Own Digital Creations."

"Until now, any context created by users for persistent state worlds, such as Everquest or Star Wars Galaxies, has essentially become the property of the company developing and hosting the world," Rosedale said in the statement. "We believe our new policy recognizes the fact that persistent world users are making significant contributions to building these worlds and should be able to both own the content they create and share in the value that is created. The preservations of users' property rights are a necessary step toward the emergence of genuinely real online worlds."

A subsequent press release was titled, "Now Selling: Real estate on the Digital Frontier."

In an interview with the London Guardian in 2005, Rosedale said, "We started selling land free and clear, and we sold the title, and we made it extremely clear that we were not the owner of the virtual property."

The plaintiffs compare Second Life to Disney World, where "shops selling merchandise exist and a variety of transactions occur."

Unlike Disney World, however, Linden was also in the business of selling the land inside the theme park. "Thus, Linden no longer owns the very world they created, instead choosing to sell the world/land to consumers," the plaintiffs said.

Under the arrangement, participants could not only "buy" virtual parcels, they could resell it, subdivide it, even rent or lease it.

But the class claims that the business model - and Linden's relationship with the players - began to change markedly in 2006, after another player filed a consumer lawsuit.

During that case Rosedale, admitted that representations of ownership were "in fact, false and misleading," according to the complaint.

Shortly thereafter, the plaintiffs say, Linden Labs began removing such representations from its Web site and began to deceptively and quietly strip ownership rights from players.

At no time did Linden Labs make any attempt to compensate what the plaintiffs estimate were as many as 50,000 participants who bought virtual land based upon the earlier promises.

The class action, the plaintiffs say, will put corporate entities that own virtual worlds on notice that "where large amounts of real money flow, legal consequences must follow."

The plaintiffs are represented by Jason A. Archinaco of Pribanic, Pribanic & Archinaco in Pittsburgh.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit