Virtual property from the perspective of the Brazilian and Dutch legal frameworks
Master’s thesis June 2012
Tilburg University Law School Tilburg Institute for Law, Technology, and Society (TILT) Master Law & Technology
Author: Bernardo Barcelos Administration number: 514016 Supervisor: prof. dr. E.J. Koops Second reader: mr.ir. M.H.M. Schellekens
Table of Contents
1. INTRODUCTION ...... 02 1.1 Aim of this thesis ...... 03 1.2 Methodology . ……………………………………………………………………………………………………… 03 1.3 Research Questions ...... 04
2. SOCIAL VIRTUAL WORLDS AND ONLINE GAMES: OVERVIEW ...... 06 2.1 Concepts and features of virtual worlds ...... 07 2.2 The relation between the “Magic Circle” and the “real world ...... 12 2.3 Remarks ...... 15
3. END-USER LICENSE AGREEMENT (EULA), TERMS OF SERVICE AND USERS: A DIFFICULT RELATIONSHIP ...... 18 3.1 End-user License Agreement (EULA): Definition and characteristics .... 18 3.2 Consequences of the contract termination and ways for the settlement of disputes ...... 20 3.3 Enforceability ...... 23 3.4 Real Money Trading (RMT) Clause and real-world commodification: How EULA handles this issue ...... 25 3.5 Remarks ...... 27
4. VIRTUAL PROPERTY RIGHTS WITHIN THE CONTEXT OF THE CIVIL LAW TRADITION: THE DUTCH AND THE BRAZILIAN LEGAL PERSPECTIVES ...... 29 4.1Virtual property ...... 29 4.1.1 Definition and main features ...... 29 4.1.2 The code as an object of protection within virtual worlds ...... 32 4.1.3 The relationship between virtual property and intellectual property ...... 33 4.1.4 Ownership in virtual worlds ...... 34 4.1.5 Virtual property within the context of virtual worlds ...... 36 4.1.6 Industry’s criticisms towards virtual property rights ...... 37
4.1.7 Virtual property rights through Utilitarian, Lockean and Hegelian perspectives ...... 40 4.2 Aspects of property under the Law outlook ...... 42 4.3 Analyzing property under the Civil Law ...... 44 4.4 Analysis of the virtual goods from the perspective of the Brazilian Civil Code and Criminal Code ...... 45 4.5 Analysis of the virtual goods from the perspective of the Dutch Civil Code and Criminal Code ...... 51 4.6 Remarks ...... 61
5. CONCLUSION ...... 64
6. REFERENCES ...... 74
LIST OF ABBREVIATIONS
EU European Union
EULA End-user license agreement
FTC Federal Trade Commission
GVW Gaming Virtual World
IPR Intellectual Property Rights
MMO Massively Multiplayer Online Game
MMORPG Massively Multiplayer Online Role-Playing Game
MUD Multi-User Dungeon
OECD Organisation for Economic Co-operation and Development
RMT Real Money Trading
STJ Superior Tribunal de Justiça
STF Supremo Tribunal Federal
SVW Social Virtual World
VW Virtual World
TOS Terms of Service
UCC User Created Content
1. INTRODUCTION
The Technological development of the ICT sector brought us many innovations that not only aid to optimize ours tasks results, but also improves mankind’s ability to expand their social relations beyond borders in this globalized and interconnected world. With millions of players connected, persistent computer- mediated environments called virtual worlds 1 play an important role. If on one hand virtual worlds such as Runescape and World of Warcraft are used for entertainment purposes, on the other hand virtual worlds can be used as platforms for socialization, educational or training purposes like Second Life. In these virtual environments, the users are often symbolized by graphical representations called “avatars” that are not only used to interact with other users, but also to interact with virtual objects (such as virtual houses, virtual helmets, virtual clothes, etc.) which can be exchanged among users of the same virtual world.
In 2005, a Chinese online gamer has been given a suspended death sentence for killing a fellow gamer because the victim sold his virtual sword for £473 2; In 2011, a hacker was convicted in the UK for stealing $12 million in virtual currency chips from an online company 3 and The Dutch Supreme Court, in 2012, upheld the theft conviction of two youth who stole another boy's possessions in a popular online fantasy game 4. These cases might indicate that there is a type of computer code that shares similar characteristics of physical objects. This specific type of computer code that behaves like a real-world object is defined as virtual property. Among so many discussions, the issue regarding virtual property in virtual worlds still is a recurring theme. Some
1 Bartle, Richard A. "Virtual Worldliness." The State of Play: Law, Games, and Virtual Worlds. Ed. Jack M. Balkin and Beth Simone Noveck. New York: NYU Press, 2006. 31-54. Print., p. 31. 2 Chinese gamer sentenced to life. BBC News, 8 June 2005. Web. 20 June 2012.
countries are experiencing recent judicial answers regarding this topic which is bringing the virtual world much closer to the real one.
1.1 Aim of this thesis
The objective of this thesis is to analyze the law´s response of the Brazilian Civil and Penal Code, and Dutch Civil and Criminal Code in regard to main elements and attributes existing within the virtual property. I will also provide a comparison between the Brazilian and Dutch legal frameworks having as a main reference the recent Dutch Supreme Court ruling regarding the theft of virtual goods.
1.2 Methodology
This thesis will be based on literature review, law cases and the Dutch and Brazilian Civil and Criminal Codes. Since that virtual goods are a type of code that is designed to act like a physical object, I will analyze this issue as follows: Under the Brazilian legislation, my focus will be article 83, I, of the Brazilian Civil Code (related to the concept of chattels by legal means) and, article 155, § 3 of the Brazilian Penal Code (regarding to crime of theft of electricity and other economic valuable “energies”); Concerning the Dutch legislation, the emphasis will be on the definition of “things” by the article 3:2 of the Dutch Civil Code and the study of the article 310 of the Dutch Criminal Code (which is related to the crime of theft of “goods”). Moreover, the Runescape case (LJN no. BQ9251 of the Dutch Supreme Court) will be examined along with the aforementioned article 310 of the Dutch Criminal Code. It is important to point out that this novel jurisprudential positioning of the Dutch Supreme Court courts concerning the possibility of possessory right of a user over virtual items (which were considered as “goods” in the meaning of the article 310 of the Dutch Criminal Code) in Gaming Virtual Worlds is a paradigm shift in the relationship between companies and users within the magic circle 5. Considering that virtual worlds’
5 Magic Circle “can be considered a shield of sorts, protecting the fantasy world from the outside world”. Castronova, Edward. Synthetic Worlds: The Business and Culture of Online Games. Chicago: The University of Chicago Press, 2005. Print. p. 147. 3
users are growing worldwide, it is an excellent opportunity to compare and analyze the regulations of these two countries in relation to this matter.
The virtual worlds that will be discussed through are: World of Warcraft, Runescape and Second Life. These 3 virtual worlds are very popular worldwide and, in view of their characteristics, they can provide a good understanding of different virtual worlds. The World of Warcraft was developed by Blizzard and it is a type of fantasy virtual world commonly seeing as a MMORPG (Massively Multiplayer Online Role Playing Game). Second Life was developed by Linden Labs and it is a type of virtual world more focused on the socialization of its users. Furthermore, the users can participate in group activities, and create and exchange virtual property among them 6 . Runescape (published by Jagex Games Studio) is a fantasy MMORPG that is played through the internet browser 7. Apart from Second Life, the other 2 virtual (through their respectively End-user Licensing Agreement – EULAs or Terms of Services – TOS) worlds do not allow users to trade virtual items acquired in the game for real-world money (this activity occurs very often in Runescape and World of Warcraft). However, I must highlight that Second Life, among these mentioned virtual worlds, is the only one that grants intellectual property rights to the users´ creations. By using the contracts of these 3 virtual worlds, I will approach some contractual clauses related to virtual goods in relation to its users. I also will seek to demonstrate that the clauses are excessively onerous for users, therefore, a legal treatment regarding virtual goods shall be provided for them.
1.3 Research Questions
The main research question to be examined in this thesis will be divided in 2 parts as follows: 1) Are the Brazilian Civil Code and Penal Code able to recognize virtual property as if it were a physical object? 2) Are the Dutch Civil Code and Criminal Code able to recognize virtual property as if it were a physical object?
6 Economy of Second Life. Wikipedia, n.d. Web. 20 Feb. 2012.
The Netherlands, similarly to Brazil, is a country with a civil law tradition. Hence, it is codified, structured and highly systemized 8. Besides, this legal tradition relies on general principles without necessarily establish details. Additionally, it is not possible to create new property rights through court which makes the civil law system very strict even though the level of stringency differs among countries 9.
In order to answer this main question, the following sub-questions must be confronted:
What are virtual worlds and what are its main features?
It is imperative to point out the differences between Social Virtual Worlds (SVW) and Gaining Virtual Worlds (GVW). Furthermore, by analyzing the concept of “magic circle” it will be possible to comprehend how elements of virtual worlds interconnect with aspects of the real-world. These issues will be approached in chapter 2.
How does the End-user Licensing Agreement (or TOS) deal with virtual goods?
The relationship between platform owners and the users is regulated by EULAs (or TOS). I will discuss the consequences of the contract termination, enforceability and how EULAs addresses the issue of the Real Money Trading (RMT) in chapter 3.
What is virtual property and what are its main characteristics?
The concept of virtual property it is crucial to answer the main question. Focused on virtual worlds, I shall explain why the computer code is the object of protection within the mentioned concept. The relation between virtual property and intellectual property, along other important topics, will be discussed in chapter 4.
8 Lengeling, Dominik. "Common law and civil law." Consulegis. N.p., n.d. Web. 19 Jun 2012.
2. SOCIAL VIRTUAL WORLDS AND ONLINE GAMES: OVERVIEW
In 2011, one of the most popular subscription-based massively multiplayer online role-playing game (MMORPG) World of Warcraft registered 10 million players around the globe 10 . Interestingly enough, alongside this development, relationships are morphing as well. As an example, profiting from business inside the social virtual world of Second Life, Anshe Chung became a “real world” millionaire 11 . Moreover, private companies and public sectors are not only training people inside Second Life and other social virtual worlds, but also using these platforms for scientific and defense purposes 12 . These are just some examples of how virtual worlds are interacting with real life. This new reality is so closely linked to our lives in society that, in some cases, can trigger profound changes in people´s lifestyle 13 .
Considering the increased importance that virtual worlds have in our society, in this chapter I will provide an insight regarding virtual worlds and the differentiation between a Social Virtual World and a Gaming Virtual World with the scope of clarifying some concepts and features inherent to these virtual realms. Afterwards, the relationship between the real world and the virtual one will be discussed in the subsection concerning the “magic circle” and the “real world”.
10 Activision Blizzard Announces Record Fourth Quarter and Calendar Year 2011 Earnings. Activision and Blizzard, 9 Feb. 2012. Web. 30 Mar. 2012.
2.1 Concepts and features of virtual worlds
Over the past years, more people worldwide engaged into the so-called virtual worlds. Nowadays, these virtual environments are experiencing an incredible mark of 1.4 billion of cumulative registered accounts 14 . Transposed in terms of population, this means more than two times bigger than the European Union 15 . Beside this fact, it is necessary to highlight that part of these users are not only seeking entertainment, but also to profit real financial gain as well 16 .
Considering the revenues generated by means of virtual worlds 17 along with several legal debates regarding, for instance, intellectual property rights issues and, the enforceability of online agreements, these virtual environments are “becoming an important host of ordinary human affairs”18 . In view of this fact, it is important to point out some concepts of what virtual worlds (or synthetic worlds 19 ) are.
The online encyclopedia Wikipedia defines virtual world as “an online community that takes the form of a computer-based simulated environment through which users can interact with one another and use and create objects.
14 Q2 2011 VW cumulative registered accounts reaches 1.4 billion. Kzero Worldwide, 2011. Web. 26 Mar. 2012.
The term has become largely synonymous with interactive 3D virtual environments, where the users take the form of avatars visible to others. These avatars usually appear as textual, two-dimensional, or three-dimensional representations, although other forms are possible (auditory and touch sensations for example)" 20 .
Richard A. Bartle, in a similar definition, understands the virtual world as “computer-mediated environments in which a plurality of players can interact with the world and each other. From their humble beginnings, virtual worlds have evolved to become paramount hubs of entertainment, education, and community”21 . At the same time, it can be defined as an online environment which is both persistent and dynamic. It is persistent because it does not cease to exist when the user is not logged in and dynamic because it is continuously altering its virtual elements 22 .
The US Federal Trade Commission asserted “online virtual worlds blend three- dimensional or 3D gaming environments with elements of online social networking, allowing their users to interact in and shape their own online content. Through avatars, virtual world users socialize, network, play, and often conduct business in graphics-intensive landscapes using text or voice chat, sounds and gestures, and video” 23 .
The report of the Organisation for Economic Co-operation and Development (OECD) defined virtual world as “a persistent computer-simulated environment allowing a large number of users, who are represented by avatars, to interact in real-time with each other and the simulated environment” 24 .
20 Virtual World. Wikipedia, n.d. Web. 30 Mar. 2012.
Virtual worlds, as defined by Professor Edward Castronova, are “crafted places inside computers that are designed to accommodate large numbers of people” 25 . All virtual worlds are Internet-based simulated environments that feature animated objects and events through via code design 26 . Users are represented in virtual worlds by “avatars,” “digital alter egos that both embody and enable users within the simulated space 27 . Although nowadays there is high technology, money and staff involved in building up complete digital worlds, the early days of the first virtual environments were much simpler in terms of technological design and less costly in terms development and maintaining. In order to understand the process of evolution of these virtual platforms, it will be briefly described a background of the most relevant facts related to this evolution.
In 1979, the first social textual world was created: the Multi-User Dungeon (MUD). By that time, avatars could talk with others in the same “room” through simple text commands 28 . In the TinyMUD (in 1989), users spent a lot of time simply hanging out, chatting, and amusing each other with new virtual objects 29 . Habitat was released in 1985, and it is considered the first multi- user domain with a visual 2D interface 30 . In addition, users could select avatars (in cartoon format) and drive around the virtual world 31 . In 1996, Meridian 59 made its appearance. The novelty in this virtual world was an immersive 3D graphics and, because of that, it is considered the first virtual world per
25 Castronova, Edward. "The Changing Meaning of Play". Introduction. Synthetic Worlds: The Business and Culture of Online Games. Chicago: The University of Chicago Press, 2005, p. 04. 26 Lastowka, Greg. Virtual Justice: The New Laws of Online Worlds. London: Yale University Press, 2010, p. 09. 27 Ibid., p. 09. 28 Lastowka, F. Gregory, and Dan Hunter. "Virtual Worlds: A Primer." The State of Play: Law, Games, and Virtual Worlds. Ed. Jack M. Balkin and Beth Simone Noveck. New York: NYU Press, 2006. 13-30, p. 19. 29 Ibid., p. 20. 30 Yoonhyuk, Jung. "Users' Understandings of the Virtual Economy in Social Virtual Worlds: Consumption and Entrepreneurship of Virtual Good." Diss. PhD, 2010. Web. 29
se 32 . Currently, Second Life 33 along with World of Warcraft 34 and Runescape 35 are some of the most well-known virtual worlds.
Notwithstanding the different definitions and types of virtual worlds, it is possible to imply that these digital realities share some attributes. Virtual Worlds offer space where users, using an avatar, can explore and interact with other individuals 36 . In addition, changes in the virtual environment will occur even though the user is not connected 37 . Furthermore, all these changes will be accumulated through time and can be defined as Persistency 38 . Users can communicate and interact among themselves synchronously and this represents a real-time communication 39 feature. These characteristics play a vital role within these worlds in which interaction is one of the most noteworthy aspects (Network of people). Finally, facilitated by networked computers, the scale of these worlds expands beyond the horizons of imagination 40 .
Grasp the above mentioned concepts and features regarding virtual worlds are indeed quite relevant for the follow-on topics that will be discussed in this thesis. Additionally, aiming to establish a few significant differences in regard to the virtual worlds, a brief explanation about Social Virtual World (SWV) and Gaming Virtual World (GVW) is also provided below.
32 Castronova, Edward. "On Virtual Economies." CESifo Working Paper Series 752 (2002): 44. Social Science Research Network (SSRN). Web. 29 Mar. 2012.
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Social Virtual Worlds (SVW´s) are internet-based 3D environments where thousands or millions of users can interact among themselves through their avatars. Moreover, by not having pre-established narrative goals, this type of virtual world encourages social interactions among users similarly to networking websites and virtual communities 41 . Furthermore, some virtual worlds give the possibility to users to create and improve their own virtual goods and engage in economic activities involving real-world money (e.g., Second Life) 42 .
While sharing most of the attributes of the virtual worlds such as spatial metaphor, Persistency, real-time communication and networked computers, gaming virtual worlds (GVW)43 have a predefined theme and plot. In addition, this type of virtual world clarifies players’ performances (e.g., level-ups). Besides, most of these gaming virtual worlds also seek to provide an environment that encourages players to exchange, among other things, information, experiences and items 44 . In this category, games such as World of Warcraft and Runescape are well-known examples.
The peculiarities of the GVW are also highlighted by the Organization for Economic Co-operation and Development´s (OECD) report when it states: “[…] MMOG´s have a predefined back story with a set of predefined objectives and in most cases, the game universe is mainly created by the game designers, with limited possibilities for [User Created Content] UCC” 45 . Generally, the gears that motivate users within these environments are the “different combination of
41 Mäntymäki, Matti, and Salo, Jari. "Trust, Social Presence and Customer Loyalty in Social Virtual Worlds." Bled eConference eTrust: Implications for the Individual, Enterprises and Society 23 (2010): 49-64. Bled eCommerce Conference. Web. 2 June 2012.
the possible rewards. The result is that adventures, stories, and most importantly, meaningful interactions and relationships between users emerge”46 .
2.2 The relation between “Magic Circle” and the “real world”
Imagine a group of kids playing hide-and-seek, soccer, tag or any other child´s play. Each one of these games has their own rules that restrict or allow some of the children´s actions. Once the game is over, the “constrains” are removed, and they can come back to their own lives. Athletes in basketball, baseball or tennis games must comply with the rules whilst the game is still ongoing otherwise a punishment (that is mostly restricted to the scope of the game) may be applied. It is also possible that an in- game event has consequences that transcend the lines that surround some sports as, for instance, the situation of a young man that died during a football match in the US in 2005 47 . In this case, Criminal Law should be applied likewise? Some out-of-the-ordinary in-game situations can test the limits between games and real world rules. And over a few years, these limits are also being tested inside some social virtual worlds.
The growing number of users inside these social and gaming virtual worlds along with the increasing amount of transactions 48 between companies and users (or between users) raises some questions about the virtual worlds´ limits in relation to the “real one” and also the degree of interaction between these two realities. In view of this fact, it is important to shed light over this “blurred area” by grasping some features of these “realms´ intersection”.
46 Yee, Nick. "The Psychology of Massively Multi-User Online Role-Playing Games: Motivations, Emotional Investment, Relationships and Problematic Usage." Avatars at Work and Play: Collaboration and Interaction in Shared Virtual Environments. Ed. Ralph Schroeder and Ann- Sofie Axelsson. Vol. 34. Netherlands: Springer Netherlands, 2006. 187-207. p. 192 47 The Associated Press, ed. Lucas, 26, suffered apparent spinal cord injury. ESPN Arena, 11 Apr. 2005. Web. 29 Mar. 2012.
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The Dutch historian Johan Huizinga, studying the play element in culture, pointed out “The arena, the card table, the magic circle, the temple, the stage, the screen, the tennis court, the court of justice, etc., are all in form and function play grounds, i.e. forbidden spots, isolated, hedged round, hallowed, within which special rules obtain. All are temporary worlds within the ordinary world, dedicated to the performance of an act apart” 49 .
The essence of the idea argued by the Dutch historian can be seen in professor Edward Castronova´s teachings where he states that a virtual world has a “membrane” in which the virtual interactions and rules lie inside of it. This “thin” barrier that separates both realities is denominated “magic circle” 50 . This membrane “can be considered a shield of sorts, protecting the fantasy world from the outside world. The inner world needs defining and protecting because it is necessary that everyone who goes there adhere to the different set of rules. In the case of synthetic worlds, however, this membrane is actually quite porous. Indeed it cannot be sealed completely; people are crossing it all the time in both directions […]. As a result, the valuation of things in cyberspace becomes enmeshed in the valuation of things outside cyberspace” 51 . In these terms, it is possible to infer that some aspects of fantasy and reality are merging in such way that it is turning hard to establish a clear border between these two realms. Therefore, a close relationship between these realities cannot be denied. Moreover, it is becoming more common to see the real world attributing value to things that only exists in the virtual world. Castronova defines this as a process of social validation 52 .
Eva Nieuwdorp, in the same way, asserted that the magic circle should not be seen as an opaque sphere that isolates two different realities. Instead, she claims the idea of a mutating “organic entity” that constantly interacts with its
49 Huizinga, Johan. Homo ludens: a study of the play-element in culture. Boston: Beacon Press, 1971, p.10. 50 Castronova, Edward. Synthetic Worlds: The Business and Culture of Online Games. Chicago: The University of Chicago Press, 2005, p. 147. 51 Ibid., p. 147. 52 Ibid., p.148.
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surroundings 53 . For that reason, she also asseverates the importance of the cell-membrane notion in which some aspects of fantasy and the real world are crossing from both sides 54 .
Further on, Castronova states that the market, politics of fairness, and law are three areas that are blending with the virtual 55 . In other words, these fields are often crossing the aforementioned membrane that separates both worlds. Concerning the market, the author mentioned the auction website eBay that, previously, allowed the selling of virtual goods for real money 56 . Nevertheless, at the end of January 2007, eBay banned the auctions of “characters, currency, weapons, attire and accounts of online games such as World of Warcraft and others” 57 . Notwithstanding this statement, the virtual world of Second Life was not included in this list. Regardless this prohibition to trade virtual goods on eBay (in view of contractual issues between users and companies), nowadays some users venture themselves into trading virtual items or currency through gray markets 58 . In parallel, new markets emerged, and companies like Black Snow Interactive profited from unusual activities at the beginning of the twenty-first century 59 .
In the field of politics of fairness, Castronova states that there is a relationship of submission between the interests of users and decisions of a
53 Eva Nieuwdorp, Eva. "The Pervasive Interface: Tracing the Magic Circle." Digra (2005): n. pag. DiGRA Digital Library. Web. 29 Mar. 2012.
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coding authority (generally, game developers). For instance, the non-virtual forums where users discuss issues that happen within the “magic circle” “break down the distinction between virtual and real in a very radical way” 60 . In regard to the law, he asserts that “the notion of cyberspace as a unique legal jurisdiction is no longer novel 61 . And now synthetic worlds have themselves become subjects of an explicit legal analysis”. Regarding this matter, it is noteworthy to mention for instance: the contractual issues between companies and users concerning the End User Licensing Agreement (EULA) (or Terms of Service (TOS) – I’ll use the terms interchangeably) 62 ; privacy and data protection problems with users´ data 63 ; virtual objects having similar level of legal protection as chattels 64 and countries trying to regulate some aspects of social virtual worlds 65 are just some of the issues occurring within the virtual space.
2.3 Remarks
As shown previously, there is a lack of consensus in regard to the concept of Virtual World 66 among researchers. However, it is still possible to note that most of the ideas are similar at their cores. Spatial metaphor, persistency, real-time
60 Edward Castronova, Synthetic Worlds: The Business and Culture of Online Games (Chicago, The University of Chicago Press, 2005, p.153. 61 Johnson, David R., and David G. Post. "Law and Borders: The Rise of Law in Cyberspace." Crypto Anarchy, Cyberstates, and Pirate utopias. Ed. Peter Ludlow. London: The MIT Press, 2001. 145-98, p.156. 62 Irónknuckle. "Question about gold sellers and EULA." World of Warcraft Forum. Blizzard, 10 Apr. 2011. Web. 1 June 2012.
communication, network of people and computers are essential elements inside any virtual world. Thus, the definition presented by the OECD, data maxima venia another scholar´s definitions, provides a comprising synthesis of the main aspects of this new world.
Is everything just a game? It is worth mentioning that the classification regarding what is a Social Virtual World (SVW) or Gaming Virtual World (GVW) may vary according to the line of reasoning of the researcher. Moreover, considering that they share many elements, “the differentiation between them is not totally clear-cut, and these types of VWs are not mutually exclusive” 67 . In this chapter, I sought to portray this distinction. In my view, a virtual world can be considered the broad generalization in which SVW´s and GVW´s are mere branches.
Furthermore, the concept of “magic circle” was brought into the discussion. The idea itself is not new and is in constantly debate among virtual world´s scholars. The nature of the “magic circle” can be considered as a sort of membrane that separates the virtual from the real. The “porous” aspect of this thin barrier not only allows the exchange of ideas but, moreover, reveals that both worlds are intrinsically interconnected.
Given the outstanding number of 1.4 billion 68 users connected in different virtual worlds existing, we can easily observe that this is not hype. Our society is truly experiencing a shift of interaction with the VWs and likely there is no turning back. It is becoming easier to note that not only some virtual issues are being dealt with in the real world but, fields such as politics, market and law are also crossing the porous membrane that separates both realities. In addition, it seems clear that virtual worlds are not aiming only to entertain people, but also to establish different types of interactions among users and, between platform owners and players. Seeking to regulate the relationship between companies
67 Yoonhyuk, Jung. "Users' Understandings of the Virtual Economy in Social Virtual Worlds: Consumption and Entrepreneurship of Virtual Good." Diss. PhD, 2010. Web.
and users in VWs, the EULAs have a paramount importance in this academic work and it will be discussed in the following chapter.
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3. END-USER LICENSE AGREEMENT (EULA), TERMS OF SERVICE AND USERS: A DIFFICULT RELATIONSHIP
Social contract theory is “the view that persons’ moral and/or political obligations are dependent upon a contract or agreement among them to form the society in which they live”69 . Jean-Jacques Rousseau, Thomas Hobbes and John Locke are the most well-known contributors. It is conceivable to point out that such contract is an agreement among members of a society, by which they recognize, through a set of rules, the authority of a government over all 70 . On several aspects, virtual worlds mimic our real-world life which can go from a simple virtual transaction between users up to the establishment of rules of conduct and legal binding provisions seeking to maintain and control a bare minimum organization by the platform owners inside of these digital spaces.
After explanations about the functioning of the virtual world, differences and key features, this chapter will focus on the contract that every user, regardless the country, must agree before entering into a virtual world whether is a social or gaming virtual world: The End-User Licensing Agreement (EULA) or Terms of Service (TOS) 71 . In the first subsection of this chapter, definition and characteristics of this contractual instrument will be provided. On the following subsection, the limits of the agreement will be analyzed. In other words, until which extent is this contract enforceable? Further on, the remedies used by companies to deal with agreement´s infringement by users and, the consequences of the contract termination will be discussed. Next, the Real Money Trading (RMT) clause will be debated more in particular, along with the process of commodification. Last, some considerations will be raised.
3.1 End-user License Agreement (EULA): Definition and characteristics
In the real world, one noteworthy aspect of living in society is the submission to rules imposed by the State over its citizens in which generally establishes
69 Friend, Celeste. "Social Contract Theory." Home page. Internet Encyclopedia of Philosophy. Ed. James Fieser and Bradley Dowden. N.p., 15 Oct. 2004. Web. 30 Apr. 2012.
minimum standards for coexistence in a large group. In regard to virtual worlds, mutatis mutandis the EULA have a similar role within the virtual world and basically governs the relationship between two parties: users and platform owners. In view of that, the agreement is a critical element which gives identity to the virtual realm and shows how to interpret and solve different legal issues 72 .
Essentially, EULA are a type of shrink-wrap 73 , click-wrap 74 or browse-wrap 75 contract, which describes “rules about proper play, appropriate behavior, and decorum in the virtual space that the platform owner cannot easily impose through code” 76 . The peculiarities inherent to virtual worlds highlights the EULA´s importance to solve disputes between companies and users. In this sense, EULA acts as a contract which is mainly subject to Contract Law guidelines 77 . It is noteworthy to state that the “EULA acts like a system of laws for the virtual world, creating a closed world” 78 .
72 Bertilsson, Martina and Pontus Stenbeck. "Virtual Items and the Concept of Private Property" MS thesis. University of Gothenburg, 2008. Web.
The abovementioned agreement between the platform owner and user, due its characteristics, acts like an adhesion contract 79 because if an user wants to join in the virtual world, he or she, without any possibility to negotiate the terms of the contract, must fully agree with the TOS, by ticking the box 80 . In other words, as any other mass-contract, is just like take it or leave it. Taking into consideration that users does not participate in drafting the contract and cannot simply compel the company to change it, some researchers argue that often turns out to be a quite imbalanced type of contract 81 .
In the virtual world, EULAs generally aim to regulate the following aspects 82 : 1) defines both parties in the contract; 2) describes how the service will be provided; 3) duration of the agreement; 4) restrictions to the user; 5) contract termination; 6) payment; 7) rules of conduct; 8) intellectual property; 9) ownership of the account; 10) Real Money Trading (RMT); 11) privacy and data protection; 12) Liability Limitation and 13) dispute resolution. Considering the main goal of this thesis, this chapter will focus only on the contract termination and ways for the settlement of disputes; enforceability of these agreements; dispute resolution and, ultimately, the Real Money Trading (RMT) Clause and real-world commodification.
3.2 Consequences of the contract termination and ways for the settlement of disputes
As many consumer contractual relationships, the parties involved in the EULA have the right to decide whether or not continue with the agreement. The
79 “A standard form contract drafted by one party (usually a business with stronger bargaining power) and signed by the weaker party (usually a consumer in need of goods or services), who must adhere to the contract and therefore does not have the power to negotiate or modify the terms of the contract”. "Adhesion Contract (Contract of Adhesion)." Overview. Legal Information Institute. Cornell Law School, 19 Aug. 2010. Web. 29 Apr. 2012.
contract termination is regulated through EULA and can occur through three basic ways: 1) by the user, 2) at the discretion of the company or 3) due violation of the agreement.
After agreeing to the terms of the contract, it is important to clarify that the user can, at any time, unilaterally terminate the contract regardless the reason. The content of this clause is pretty standard and does not change that much among companies. An illustrative example is Second Life’s provision on termination:
“11. SUSPENSION AND TERMINATION OF YOUR ACCOUNT 11.1 You may terminate your Accounts at any time. You may terminate this Agreement by closing your Accounts at any time for any reason. In such event, Linden Lab shall have no further obligation or liability to you under this Agreement or otherwise, and you shall be entitled to no compensation or other payment, remedy, recourse or refund.” 83
Another way to terminate the agreement is at the sole discretion of the company which, without any reason, can terminate the user´s account. Under this scenario, even though no violation has been committed by the user, the company can shutdown or suspend the user´s account and terminate the agreement as noted in the TOS of the SVW of Second Life or in the GVW World of Warcraft:
“11.4 We may suspend or terminate your Account(s) to protect the best interests of Second Life and the Second Life community or if we believe you pose an unacceptable risk to the Second Life community.”84
“Account Suspension/Deletion. BLIZZARD MAY SUSPEND, TERMINATE, MODIFY, OR DELETE ANY BNET ACCOUNT OR WORLD OF WARCRAFT ACCOUNT AT ANY TIME FOR ANY REASON OR FOR NO REASON, WITH OR WITHOUT NOTICE TO YOU” 85
Due to the similarity of EULAs among companies, it is possible to verify that all of them often provide much more obligations rather than rights to users 86 . As a
83 Terms of Service | Second Life. Linden Research, Inc., n.d. Web. 30 Apr. 2012.
result, since it is a type of mass contract which is written unilaterally, contractual breach by companies is nearly inexistent. Furthermore, these agreements have penalties aimed only for users and, in case of violation of its terms, the consequences may vary from an account suspension up to the termination of the contract, as can be seen in the following agreements:
“Stopping your account If, acting reasonably, we consider that our Terms and Conditions have or may have been breached, or that there has been fraudulent, unlawful or abusive activity, or that it is necessary in order to prevent or stop any harm or damage to us, to any Jagex Product, to other players or the general public, we may Stop (as defined above) any or all accounts for Jagex Products which we think are connected with the offender subject to such right of appeal as is specified on our website and/or restrict access to any content-uploading or other feature of our service and/or restrict access to or delete virtual currency or anything acquired by means of virtual currency. Such actions may result in loss of membership credit and/or loss of real money paid as part of any item / account trading or other prohibited transaction.”87
“11. SUSPENSION AND TERMINATION OF YOUR ACCOUNT […] 11.3 We may suspend or terminate your Accounts for violation of this Agreement. Your rights to any compensation or recourse are limited to those provided herein. […] 11.4 We may suspend or terminate your Account(s) to protect the best interests of Second Life and the Second Life community or if we believe you pose an unacceptable risk to the Second Life community.” 88
As can be observed, the clauses related to the penalties within these contracts can be rather burdensome towards the users. Nonetheless, if the user does not agree with a measure taken by the company towards his or her account, a
a complicated give and take between designers and players is finally ratified, transformed from a murky power struggle into a legally binding rules of the game.” Balkin, Jack M. "Law and Liberty in Virtual Worlds." Dibbell, Julian. "Owned! Intellectual Property in the Age of eBayers, Gold Farmers, and Other Enemies of the Virtual State Or, How I Learned to Stop Worrying and Love the End-User License Agreement." The State of Play: Law, Games, and Virtual Worlds. Ed. Jack M. Balkin and Beth Simone Noveck. New York: NYU Press, 2006. 137-145. Print., p. 143. 87 Terms & Conditions. Jagex Limited, n.d. Web. June 2012.
dispute resolution can take place by two common means: the first method is via informal negotiation and, if not successful, through a binding arbitration.
“Dispute Resolution and Governing Law. A. Informal Negotiations. To expedite resolution and control the cost of any dispute, controversy or claim related to this Agreement (“Dispute”), you and Blizzard agree to first attempt to negotiate any Dispute (except those Disputes expressly provided below) informally for at least thirty (30) days before initiating any arbitration or court proceeding. B. Binding Arbitration. If you and Blizzard are unable to resolve a Dispute through informal negotiations, either you or Blizzard may elect to have the Dispute (except those Disputes expressly excluded below) finally and exclusively resolved by binding arbitration. Any election to arbitrate by one party shall be final and binding on the other.” 89 Despite the efforts of the platform owners to solve legal conflicts against users through EULA´s remedies and provisions, this type of agreement, in some circumstances, may not be fully enforceable.
3.3 Enforceability
Since that the EULA are contracts that regulate the relationship between an user and a company in regard to the use and access of a virtual world, it is common to think that conflicts that might emerge will be solved through the same agreement “signed” by the user. Nevertheless, such contract will always be enforceable?
Despite the apparent separation between the real and virtual worlds, it is worth mentioning that this contract is subject to the laws 90 of the real world and can be found unconscionable in some situations thus, it may not be fully enforceable. Although there are still matters surrounding the legality of the EULA, the main issues taken into court are related to terms which, under the law, are likely to be considered invalid. Besides the South Korean Supreme Court ruling against Lineage´s RMT Clause 91 , it is worth mention the Bragg v.
89 World of Warcraft Terms of Use Agreement. Blizzard Entertainment, n.d. Web. 5 May 2012.
Linden Research, Inc. case in which the arbitration clause existing in the TOS was considered unenforceable.
The case Bragg v. Linden Research was essentially a civil action filed in 2006 by Marc Bragg against the company Linden Research (owner of the Second Life) in United States 92 . In summary, Bragg, among other things, argued that Linden Research Inc. was in breach of contract by freezing his account and removing his name from the land that his had bought in an online auction within Second Life 93 . On the other hand, Linden Research claimed that Bragg had violated their TOS by using a non-authorized method to acquire a virtual land under the market price and also because the plaintiff should have to meet with an arbitration board before file the abovementioned lawsuit 94 . Regarding the enforceability of the arbitration clause, the judge Robreno issued an opinion that the contract was too one-sided and such provision should not be enforceable 95 . Moreover, the arbitration clause was considered unconscionable against public policy 96 . In 2007, before the trial, Linden Lab announced a confidential settlement with Marc Bragg 97 .
It is crucial to bear in mind that the EULA is an essential document to regulate the “life” in a virtual world, nonetheless, since that this contract is entirely written by the companies, and there is no possibility for users to bargain, it is likely to predict the State intervention is ultimately required to ensure a minimum contractual balance between both parties as occurred in both cases aforementioned.
confiscation of virtual goods, which was deemed unlawful, and bans/suspensions of accounts”. South Korea's Supreme Court Decriminalizes Real Money Transactions in Online Games. N.p., 18 Jan. 2010. Web. 28 Apr. 2012.
3.4 Real Money Trading (RMT) Clause and real-world commodification: how the EULA handles this issue
Among many restrictions that EULA imposes to the users, the Real Money Trading (RMT) Clause is one of the most controversial 98 . This type of clause can be seeing in several virtual worlds´ agreements, and basically states that the user cannot buy or sell virtual assets or currencies for real money. This clause limits in-game user-to-user transfers of items acquired within a virtual world, forbidding them from trading virtual objects and accounts against cash. Therefore, RMT differentiates a simple in-game transfer of items without cash compensation from another that requires real-world currency 99 . Under these circumstances, it is likely to observe policies in GVWs such as in the Runescape Terms of Service:
“Virtual Currencies Virtual currency does not have any inherent value and is not your own private property. You can only use them to acquire those Items which we decide in our discretion to offer in return for virtual currency. We do not provide any cash or refunds for virtual currency (except as required by law) and virtual currency does not have any real-world value. Virtual currency is for your personal use only. You must not sell or transfer it or make it available to anyone else or attempt to do so or encourage anyone else to do any of these things. Virtual currency and Items have no monetary value. Virtual currency and Items can never be redeemed for real world money, goods or any other item of monetary value” 100 .
Even though there is an increasing market surrounding the selling of virtual assets and currencies 101 , the main reason for including such type of clause still due possible intellectual property right issues that may arise between companies and users. However, through real-world commodification, there are
98 “The increasing commodification of virtual worlds will also lead to greater state regulation”. Balkin, Jack M. "Law and Liberty in Virtual Worlds." The State of Play: Law, Games, and Virtual Worlds. Ed. Jack M. Balkin and Beth Simone Noveck. New York: NYU Press, 2006. 86-120. Print., p. 94. 99 Yoon, Ung-gi. "Real Money Trading in MMORPG Items From a Legal and Policy Perspective." Journal of Korean Judicature 1 (2008): 418-77. Social Science Research Network (SSRN). Web. 30 Apr. 2012.
players that not only profit from secondary markets, but also players that use their virtual assets in virtual worlds as an investment similarly to an investor in regard to his stocks and bonds 102 . Concerning these types of players, participate in a VW is more than just entertainment, and EULAs obliging them to waive potential intellectual property rights seems rather unconscionable 103 .
Commodification is essentially when virtual currencies and items, in view of their values within the virtual world, can be traded and exchanged 104 . Nevertheless, it is important to emphasize the difference between in-world and real-world commodification. In-world commodification allows users to barter and negotiate virtual things for in-game currency and, moreover, such practice is encouraged by the platform owners which expressly authorize within their respective virtual worlds´ EULAs 105 . Intrinsically related to RMT clauses, real- world commodification crosses the magic circle and can be regarded as a transaction of virtual objects for real-world currency 106 . In fact, there is no problem when a virtual good or currency is bought from the company responsible for the virtual world, however, when such business occur between users, some virtual world agreements raise hurdles to prevent these negotiations 107 . Concerning the real-world commodification, Jack Balkin wisely point out that companies cannot, at the same time, stimulate the user to buy and sell virtual goods and then, via EULA, keep the property of all virtual items acquired by the user.
Ownership/Selling of the Account or Virtual Items. Blizzard does not recognize the transfer of World of Warcraft Accounts or BNET Accounts (each an “Account”). You may not purchase, sell, gift or trade any Account, or offer to purchase, sell, gift or trade any Account, and any such attempt shall be null and void. Blizzard owns, has licensed, or otherwise has rights to all of the content that appears in the Game. You agree
102 Reuveni, Erez. "On Virtual Worlds: Copyright and Contract Law at the Dawn of the Virtual Age." Indiana Law Journal 82.2 (2007): 261-308. Indiana Law School. Web. 29 Apr. 2012.
that you have no right or title in or to any such content, including without limitation the virtual goods or currency appearing or originating in the Game, or any other attributes associated with any Account. Blizzard does not recognize any purported transfers of virtual property executed outside of the Game, or the purported sale, gift or trade in the “real world” of anything that appears or originates in the Game. Accordingly, you may not sell in-game items or currency for “real” money, or exchange those items or currency for value outside of the Game.
Real-world commodification turns out to be a bridge that connects the virtual and the real-world economies through the trading of virtual goods for real money. Platform owners often encourage users to acquire and trade their virtual assets as if were their own property hence, although the agreement is used as a safeguard from legal regulation 108 , companies that do not allow this type of commodification between users, should not be astonished for the interesting of the State on this type of activity 109 .
3.5 REMARKS
Platform owners, mutatis mutandis , seeking to provide a bare minimum organization required to make the virtual world enjoyable, copycat some real- world societal structures such as behavioral and penalty norms. Rather than seems just like a private pact, EULAs ends up having some characteristics that resemble some ideas briefly discussed in the social contract theory and, additionally, it is used to separate virtual and real realities. To sum up, these agreements implicitly aim to legitimate the power of the companies over the users within and outside the lines of the virtual world.
In view of the large and increasing amount of subscribed users in many virtual worlds and, due to the user´s nearly inexistent bargain power, such online contracts can be deemed as a type of online adhesion contract. Furthermore, contracts of this kind make easier to companies to settle down conflicts in the most favorable way for them over the users.
108 Law and Liberty in Virtual Worlds, In The State Of Play, Law, Games, And Virtual Worlds, (Jack M. Balkin & Beth Simone Noveck Ed., New York University Press 2006). p. 95. 109 Ibid., p. 95. 27
Playing by the rules within virtual worlds go beyond to the mere compliance with the terms imposed on users. Fundamentally, regardless the type of contract, the agreement in which the user tick the box and accept the clauses turns out to be a legally binding contract which can have its provisions challenged in national courts. It is important to point out that the enforceability of the EULA, as a legally valid contract, normally is not challenged in court. Often, specific terms are debated in view of a likely one or more unconscionable clause which can violate legal rules.
At some point, the contract between the user and company will have an end, and it was debated possible ways to terminate a EULA or TOS agreement and their respective outcomes. As demonstrated in the previous subsections, this agreement is far from being favorable for users (mainly for those who uses VWs to conduct business). In addition, the contract can be changed and terminated at the absolutely sole discretion of the platform owner. Consequently, considering the EULAs analyzed, virtual assets gathered by the user will be lost in a contract termination.
Ultimately, the Real Money Trading (RMT) clause was debated along with the process of real-world commodification. Due to the increasingly popularity of the virtual spaces, this form of commodification is likely inescapable in some virtual environments 110 . Moreover, since that the virtual items have monetary value outside of some virtual platforms, users find their ways to negotiate these items (even though companies seek to block this activity either through EULA or via code)111 . The process of social validation was intensified during the past few years and is possible to imply that the process of real-world commodification had an important role in that.
110 Balkin, Jack M. "Law and Liberty in Virtual Worlds." The State of Play: Law, Games, and Virtual Worlds. Ed. Jack M. Balkin and Beth Simone Noveck. New York: NYU Press, 2006. 86- 120. Print., p. 97. 111 Ibid., p. 98. 28
4. VIRTUAL PROPERTY RIGHTS WITHIN THE CONTEXT OF THE CIVIL LAW TRADITION: THE DUTCH AND THE BRAZILIAN LEGAL PERSPECTIVES
4.1 VIRTUAL PROPERTY
4.1.1 Definition and main features
Professor Joshua Fairfield argues that Virtual property can be understood as a type software code which is designed to behave like and have qualities of a physical real-world chattel or land 112 . Furthermore, some basic elements are required for the code to achieve this level of distinction.
Fairfield implies that the virtual property has three crucial features that are also shared by the real world property regime: rivalrousness, persistence, and interconnectivity 113 . The possibility, for instance, to make identical copies of mp3 files and videos, demonstrates the non-rivalrousness of the code which often gives rise to lawsuits between filesharing websites and the entertainment industry 114 . Nevertheless, not all codes are non-rivalrousness and, moreover, in some circumstances, it is possible to design a code in the cyberspace with the attribute that can only be possessed by one person (and exclude others from using the owned virtual object) 115 . The internet domain name 116 illustrates the rivalrousness of the virtual property in view of the fact that every address is unique and cannot be possessed by more than one person at the same time 117 . Both places and objects can be deemed as persistent. For instance, a car only be produced once. After that, it lasts for several years 118 . In the same manner,
112 Fairfield, Joshua. "Virtual Property." Indiana Legal Studies Research Paper No. 35 (2005): 1048-77. Social Science Research Network. Web. 19 May 2012.
virtual objects can also have this persistent character 119 . Basically, this character means that the code can be made in a way that does not fade after each use and also does not run on only one computer 120 . Even though a person, for instance, logs out from his email account, the emails related to this account will continue to exist on the server of his Internet Service Provider 121 . Two or more persons in the same room will experience the exactly same objects existing in that room 122 . Moreover, considering the laws of physics, real world objects can affect each other 123 . Likewise, a code can be made interconnected in a way that, although only one person may control it, other individuals can also experience 124 . Users who are buying and selling virtual goods in the SVW of Second Life is an example of that interconnectivity. These attributes – rivalrousness, persistence and interconnectivity - mimic real world properties, therefore, a user can invest in his property without worrying about another person taking it away (rivalrousness); the investment made by the user will last (persistence) and, due to network effects, the value of the property can increase (interconnectivity) 125 . According to Fairfield, email accounts along with internet domain names are examples of virtual property, but, perhaps, bank accounts are the most well-known examples of this type of property 126 . The account is connected to a network in which it is possible to perform transactions; the account owner is the only one that has the right to exclude others from access his data and the data regarding his balance remains undisturbed 127 . The concept behind virtual property made it possible to implement secure transactions 128 .
Seeking to identify protectable virtual property, Charles Blazer has elaborated a framework based on five indicia. Blazer borrows the first three indicia from Fairfield – rivalry, persistence and interconnectivity – and adds the “existence of
119 Fairfield, Joshua. "Virtual Property." Indiana Legal Studies Research Paper No. 35 (2005): 1048-77. Social Science Research Network. Web. 19 May 2012.
a secondary market” and “value added by users” 129 . Blazer states that the first three indicia illustrate the elements shared between traditional property and virtual property 130 . The indicia supplemented by Blazer are grounded on the significant economic interests and potential claims to natural rights that surround virtual property disputes 131 .
The “existence of a secondary market” is explained by Blazer as the development of secondary markets in which users trade access to control a code remotely hosted by a computer, regardless the platform owner´s sanctions towards this trade 132 . Blazer argues that some businesses have recognized the value of specific virtual properties and it created business models based on trading such type of properties 133 . However, the absence of the secondary market indicium should not be an obstacle to recognize something as virtual property 134 .
In the fifth indicium, “value added by users”, Blazer points out that multiple users may assume an ownership interest towards a specific virtual property by adding (rather than creating) value to a property to reflect their collective creative 135 . The legal justification for protecting users´ property arises from the notion of security, value, utility and ownership (expectations that users have since the beginning) that drives them to invest hundreds of hours in a virtual world, rather than simply considering the time and money spent by them online 136 .
It is important to bear in mind that the design of the code (whether or not supplemented by Blazer´s additional indicia) can either define if the virtual object can share the same property elements of a real world object or not. This tailored code design is often seen in virtual worlds and will be discussed in the following topic.
129 Blazer, Charles. "The Five Indicia of Virtual Property." Pierce Law Review, Vol. 5, p. 137, 2006 5 (2006): 137-61. Social Science Research Network. Web. 10 June 2012.
4.1.2 The code as an object of protection within virtual worlds
The internet is seen as a multi-layered design where the computers are interconnected along with transfer protocols to constitute some of the basic elements for the communication 137 . Moreover, the existing content in virtual worlds is achieved by using codes (which constitutes another layer) and the visual representations of these codes can be subject to intellectual property protection as was observed in the previous chapter 138 . Hence, since that internet has many layers, Professor Fairfield claims that the law should “act to limit anticommons in virtual property” in view of the many existing structures of the internet 139 . Ultimately, after distinguishing which rights in the code are vertical and horizontal in property 140 , Fairfield “purposes property-rights recognition at the level of code for virtual property” 141 .
Within the context of virtual property, Fairfield asserts that the important unit is the code itself; therefore, he proposes the recognition of virtual property at the level of code regardless on what computer or system the code runs 142 . For instance, by selling a virtual accessory the user does not have to sell his computer on which it resides and, in the same way, transferring an email account does not require an user to hand over his own computer 143 . Moreover, by attributing protection at the level of code, the user in a VW will possess a virtual object regardless the intellectual property existing within the underlying
137 Fairfield, Joshua. "Virtual Property." Indiana Legal Studies Research Paper No. 35 (2005): 1048-77. Social Science Research Network. Web. 19 May 2012.
code and regardless “the physical chattel used by other person to experience it” 144 .
4.1.3 The relation between virtual property and intellectual property
It is important to understand that intellectual property rights will not be eliminated by the recognition of virtual property rights 145 .Rather, the concepts can naturally coexist 146 .
The ownership of a music CD or a book does not imply that an individual owns the intellectual property of the content in these two media. For instance, if somebody buys a novel in a bookstore, the buyer owns a copy of the romance, nothing else. Therefore, the conceptions are independent from each other and, in addition, the object of protection is different between both 147 . The recognition of virtual property rights will not threat property interests held by the creator of the property 148 . However, unlike book or CD owners and due to the code control over the Virtual world by the companies, players acquire only the possession of the virtual good 149 .
As stated above, intellectual property rights can co-exist with virtual property interests. In fact, there is already a very successful doctrine that seeks balanced property rights and intellectual property rights interests: the first sale doctrine. In its core, the First sale doctrine establishes provisions under copyright law where, for instance, a buyer of a book is granted the right to subsequently loan, sell, or give that copy to someone else 150 . Therefore, intellectual property interests from platform owners cannot be an obstacle to the emergence of the virtual property rights.
144 Fairfield, Joshua. "Virtual Property." Indiana Legal Studies Research Paper No. 35 (2005): 1048-77. Social Science Research Network. Web. 19 May 2012.
4.1.4 Ownership in virtual worlds
The ownership of virtual objects in virtual worlds still is a controversial matter 151 . From one side, through their EULAs or TOS, developers strive to own all possible virtual property rights. In fact, among other things, the developers claim that they have the right to do any change within their VWs in view of the fact that they have private ownership of the computer equipment and significant investments in creating the virtual world 152 . On the other hand, players argue, inter alias , that they own their virtual goods by virtue of the hundreds of hours, effort and money they have invested in the virtual world 153 .
Asian countries such as South Korea and China are developing new laws and specific regulations aiming to deal with virtual property rights issues 154 . In 2001, Taiwan promulgated a regulation in which clearly stated that virtual objects are property. Moreover, such objects are alienable and transferable 155 . In The Netherlands, in a case related to the theft of virtual goods within the GVW of Runescape 156 , the Dutch Supreme Court concluded that stolen virtual items were “under the exclusive dominion of the victim” and the position of the publisher was deemed not relevant within the criminal context 157 .
Within the context of VWs, such as Second Life or World of Warcraft, it is quite common to see users buying and selling virtual goods (as if they were their private property) either for virtual or real money 158 . Virtual items have a very
151 Erlank, Wian. "Acquisition of Ownership inside Virtual Worlds." Journal of Contemporary Roman-Dutch Law (2010): 24. Social Science Research Network. Web. 18 June 2012.
significant value to users. However, a full-fledged property right in regard to virtual goods is not only unnecessary, but perhaps unfeasible 159 . Hence, aiming to better balance the interests of users and developers and, given the context in which the virtual items are, it might be a viable solution applying a limited property right in relation to the virtual goods. In that case an easement might a good alternative.
Essentially, easement is the “right to use the real property of another for a specific purpose. The easement is itself a real property interest, but legal title to the underlying land is retained by the original owner for all other purposes” 160 . Sidewalks, for example, are a type of easement in which the community is allowed to walk on land that is privately owned. Easements, such as power lines or access roads, are also forms of structuring the use of the land for common benefit rather than private exclusion 161 . In essence, having a “sole and despotic dominion” of the property is not an interest model 162 . Rather than having an atomized regime of single owners with unrestricted private rights, a web overlapping of legal interests is preferable 163 . Purchasers, sellers and users of virtual property are interested in a thing that depends on the platform owner’s systems and computer servers. Virtual world owners will be constrained in the free use of their computing equipment to the extent that virtual property rights exist 164 . Easements demonstrate that it is possible to constrain private rights in tangible property aiming to enforce someone else’s lesser interests in that property in a fair way. Furthermore, placing burdens and limitations on rights of private ownership can, in the end, promote public welfare.
4.1.5 Virtual property within the context of virtual worlds
Virtual environments similar to World of Warcraft or Second Life often encourage, through the building blocks available in their worlds, users to acquire and/or create virtual objects like animals, clothes or even a piece of land within their platform. Nonetheless, it is important to note that these virtual objects share the same existing attributes presented by real world objects (rivalrousness, persistence and interconnectivity) 165 .
I will provide a hypothetical scenario (which occurs regularly in several VWs) in order to apply to abovementioned attributes. Within the GWV of World of Warcraft, two players agree to perform a transaction using virtual currency (in- world commodification). Player “A” and player “B” both agree that the latter will pay 100.000 pieces of gold for a virtual pet , which was bought for $25 by Player “A” on Blizzard pet store (real-world commodification)166 . After the completion of the deal, the gold and the mentioned virtual pet are transferred between players and now, player “A” no longer has control over the pet and Player “B” has 100.000 pieces of gold less. Considering that the code design of World of Warcraft does not allows any user to copy the virtual pet (rivalrousness character of the code), player “B”, by now having the possession of the virtual pet, can exclude other users from using the virtual pet.
Based upon the same scenario described above, player “B” now possess the Virtual pet and, afterwards the transaction, he decides to logout from his account . After 20 days without accessing his account, he decides to login once again. The virtual pet will still be integrated into his avatar´s inventory regardless the time elapsed or computer used to login into his World of Warcraft´s account,. Essentially, the code used to represent the mentioned sword persists on the World of Warcraft´s server.
165 Fairfield, Joshua. "Virtual Property." Indiana Legal Studies Research Paper No. 35 (2005): 1048-77. Social Science Research Network. Web. 19 May 2012.
The transaction described above was possible basically because the World of Warcraft is a virtual environment in which not only player “A” and “B” are interconnected, but millions of other players are interacting among themselves simultaneously. Due to this interconnectivity, not only players can experience the exactly same pet but, the mentioned virtual pet has increased its value since that it becomes desirable (therefore, marketable) 167 among all players of the World of Warcraft.
It is important to point out that, in view of the existing features – rivalrousness, persistency and interconnectivity – in the virtual objects, these goods can be valued 168 not only in the virtual reality, but also in the real world. Consequently, a market of selling virtual goods for money has emerged169 .
4.1.6 Industry’s criticisms towards virtual property rights
The emergence of debates in the law field concerning virtual property rights within virtual worlds is being watched closely by platform owners. There are 3 basic criticisms from platform owners towards virtual property rights. Firstly, they argue that they must maintain control over the virtual environment and such control would be incompatible with private property interests; in second place, commodification in virtual worlds will decrease the value of the commodified object 170 and thirdly, the primarily purpose of virtual worlds is to entertain and virtual assets in-game are meant to provide status among players and escape from the real world 171 .
167 Fairfield, Joshua. "Virtual Property." Indiana Legal Studies Research Paper No. 35 (2005): 1048-77. Social Science Research Network. Web. 19 May 2012.
The platform owners argue that ownership interests in virtual property will limit their ability to control and manage the online resources 172 . However, this argument is unconvincing because the need for control does not require the prohibition of virtual property interests 173 . Based on the industry’s argument, “an ISP might assert that property rights interests in email accounts excessively constrain its ability to stop people from engaging in bad acts via ISP’s email services” 174 . Companies that are responsible for virtual worlds frequently state that virtual property interests must be locked in order to run the virtual world 175 .
The problem of speculation in virtual worlds is often claimed by the companies as a way of expressing their control argument 176 . Platform owners often make changes in virtual worlds by fixing bugs 177 , updating the VW and changing elements of virtual objects 178 . What happens if the developer, in some way, damages or devalues a virtual object in which a user holds a property interest? 179 A company could be liable if the rarity of a virtual object is drastically changed? By granting virtual property interests to the users, it will be possible for companies to shut off the whole system 180 ?
Those questions, comparing to similar real-world situations, are not new to the law, nor inevitably lead to liability to virtual world creators 181 . Land speculation, for example, can also be a bad investment because new developments in surrounding areas can devaluate prior investments 182 . Zoning laws can commonly either enhance or decrease the value of property without providing
172 Ibid., p. 15 173 Ibid., p. 15 174 Fairfield, Joshua. "Virtual Property." Indiana Legal Studies Research Paper No. 35 (2005): 1048-77. Social Science Research Network. Web. 19 May 2012.
any compensation or payment to the owner. Manufacturers, for example, can artificially limit or increase supply of goods at any time, knowing that the previous buyers will be, at some point, affected 183 .
Shutting off the entire virtual world definitely deprives its users of the value of their property. However, it is not that different from a bankruptcy scenario in which the value of the stocks in possession of the holders is severely decreased. Notwithstanding the severity of the scenario described, there is no reason to eradicate private property holdings in stocks 184 .
The Limitations imposed by the state over the private property can serve as a parameter for the establishment of restrictions in the right virtual property. It is important to keep in mind that private ownership has never meant absolute freedom 185 . Restrictions such as easement and covenants have always been available for managers of property plots that are divided among private users 186 .
The second criticism from the industry is related to the fact that commodification decreases the value of the commodified object. However, this argument is also not persuasive because the virtual items are already commodities 187 . Virtual worlds such as World of Warcraft encourages players not only to acquire virtual goods in-game, but also in their virtual store by using real-world money. Virtual property is packed already to be traded 188 .
The third argument related to the fact that virtual worlds are places for entertainment and virtual goods are not but a synonymous of in-game status is also not convincing. In second life, for instance, many users establish virtual businesses in which they can have real profit from virtual transactions. The GVW of World of Warcraft also goes beyond the magic circle. Additionally, it should be also pointed out that, by encouraging people to treat virtual items as
183 Ibid., p. 1098. 184 Fairfield, Joshua. "Virtual Property." Indiana Legal Studies Research Paper No. 35 (2005): 1048-77. Social Science Research Network. Web. 19 May 2012.
property and allowing the sale and purchase of these virtual objects as if they were private property, companies are inviting the law in 189 .
4.1.7 Virtual property rights through Utilitarian, Lockean and Hegelian perspectives
Gregory Lastowka and Dan Hunter discussed three important property theories related to virtual property. Through Bentham´s utilitarian perspective, Locke´s labor theory and Hegel´s personality theory, Lastowka and Hunter sought to debate whether a given transaction and/or activity can be deemed as property 190 . Furthermore, Lastowka and Hunter imply that all three theories are in favor to recognize specific virtual entities as property, although these theories differ in significant ways 191 .
The basic principle of the utilitarian theory is “the greatest good for the greatest number” 192 . Moreover, utilitarianism is also applied to provide warrant to private property stating that such property interests should be granted because, if doing so, it would not only increase overall utility, but it will also increase the production of such properties 193 . Millions of users invest not only hundreds of hours online, but they also invest money to create and acquire virtual objects. Based on this investment and considering that there is value on transactions between users, the utilitarian theory states that it should be granted property rights in regard to virtual property 194 . In that case, by granting property rights, the value of the virtual property will be enhanced and, simultaneously, the risks and transactions costs will be reduced (therefore, it would maximize the social wealth) 195 . Thus, the transactions performed into the so-called grey markets
189 Balkin, Jack M. "Law and Liberty in Virtual Worlds." The State of Play: Law, Games, and Virtual Worlds. Ed. Jack M. Balkin and Beth Simone Noveck. New York: NYU Press, 2006. 86- 120. Print., p. 95. 190 Lastowka, F. Gregory, and Dan Hunter. "The Laws of the Virtual Worlds." California Law Review 92.1 (2004): 1-73. Print., p. 43. 191 Ibid., p. 43. 192 Ibid., p. 44. 193 Ibid., p. 44. 194 Lastowka, F. Gregory, and Dan Hunter. "The Laws of the Virtual Worlds." California Law Review 92.1 (2004): 1-73. Print., p. 44. 195 Ibid., p. 45. 40
could be seen as legitimate since that the virtual objects will be freely tradable 196 .
The Lockean theory is the theory of desert-from-labor; this theory describes that the person who expends work, time and effort to render a “thing in nature” into something valuable, deserves to reap its value 197 . Lastowka and Hunter emphasize that users might have property claims over their virtual objects since these users have invested time and effort to acquire and/or create such objects 198 . Considering that, since a user spent several hours to improve his virtual character and obtain virtual weapons in the GVW of Runescape, for instance, such claim would be valid. Ultimately, Lastowka and Hunter explain that a user cannot claim property interests in relation to virtual world as a whole; but, concerning a smaller divisible entity of the virtual world in which there is user´s labor that adds the biggest part of the entity´s value (such as virtual swords or virtual houses), a user can legitimately claim such property interests 199 .
The Hegelian theory (also known as Hegel´s personality theory) basically understands the idea of property as an extension of personality 200 . Based on that premise, property rights are deemed to be related to human rights such as privacy and identity 201 . Hence, objects are extremely connected to one´s sense of self (such as a wedding ring or a house) rather than being considered to be just property interests 202 . Furthermore, aiming to secure a human need or, in order for the self to be realized, this theory would claim favorable in recognizing property rights 203 . Under these circumstances and since the user´s avatar and virtual goods constitute part of his virtual identity 204 , Lastowka and Hunter infer
196 Harris, J. W. Property and Justice. New York: Oxford University Press, 1996. Print., p. 289 and p. 293 197 Lastowka, F. Gregory, and Dan Hunter. "The Laws of the Virtual Worlds." California Law Review 92.1 (2004): 1-73. Print., p. 46. 198 Ibid., p. 46. 199 Ibid., p. 47. 200 Ibid., p. 48. 201 Ibid., p. 48. 202 Ibid., p. 48. 203 Lastowka, F. Gregory, and Dan Hunter. "The Laws of the Virtual Worlds." California Law Review 92.1 (2004): 1-73. Print., p. 48. 204 “It is, by now, well-documented that people feel extremely connected to their avatar, not as a thing but a projection of their self”. Ibid., p. 49. 41
that the personality theory might have considerable grounds for grating property rights in VWs 205 .
4.2 Aspects of property under the Law outlook
Generally speaking, one of the major goals of the law is, assuredly, meet the needs of a certain society in a particular location and period of time. In that sense, the progress of the legal idea of property illustrates quite well the level of pragmatism that the law can achieve 206 . Under these circumstances, fluidity can be deemed as one of the main characteristics that the property has and, moreover, the range of its rights demonstrates how dynamic it is throughout time and space within a specific socio-economic reality 207 .
In view of this mutant characteristic of the property, the fact that an object has no legal protection under the property rights at a given time does not mean that it cannot enjoy such protection in the future and vice-versa 208 . The slavery system 209 , which considered determined individuals as a kind of property, was abolished in many South American countries during the 19 th century that demonstrates the mutable characteristic of the idea of property over time 210 .
In some cases, rather than focus on whether determined objects may or may not be subject to property rights, certain discussions on the propertization of new objects involve a great effort to find a new regulatory solution”211 . For example, Body-snachting, which represents the previous thought, is essentially known as the act of steal freshly buried cadavers and, afterwards, sold to
205 Ibid., p. 49. 206 Purtova, Nadezhda Nickolayevna . "Property Rights in Personal Data: A European Perspective." Diss. Tilburg University, 2011. Web.
medical institutes for medical practice 212 . It is important to highlight that dead bodies acquired economic value since anatomy became a regular medical practice 213 . Considering that the corpse was not protected as a property under the common law, there could be no indictment of the offenders for the crime of theft 214 . For that reason, one alternative solution for this problem would be “to consider corpse as limited property” 215 .
Unlike the United States and most of the European countries, recent rulings in South Korea 216 and China 217 about virtual goods, demonstrate that the objects of property rights can vary not only across the time, but also through jurisdictions 218 .
Given the flexibility that the concept of property has through time, space and societies, it is likely to perceive the property rights´ sphere being shaped according to the jurisdiction needs 219 . That said, depending upon the legal framework of a country along with the jurisprudential understanding of the higher courts, it might not have hindrance in accepting virtual goods as objects of protection under property rights. Hence, in the following topic, it is essential to analyze the elements of property under the perspective of the Civil law.
212 “Stealing a corpse was only a misdemeanour at common law, not a felony, and was therefore only punishable with fine and imprisonment, rather than transportation or execution. The trade was a sufficiently lucrative business to run the risk of detection, particularly as the authorities tended to ignore what they considered a necessary evil”. Body snatching. Wikipedia, n.d. Web. 27 May 2012.
4.3 Analyzing property under the Civil Law
Derived from the Latin ius civile, the term civil law basically referred to the law applicable towards the Roman or citizens and, its origins go back to the period of the sixth century CE 220 . The civil law system of property dates from the European medieval feudalism Era, however, during the French Revolution, it suffered substantial changes 221 . Essentially, in view of the ideals of the French Revolution and considering the rupture in relation to the old system, there was a noteworthy change in relation to the civil property law system by returning to Roman Law basis of property in which resembled most of the EU member states systems applied nowadays 222 . In this scenario, the influence of Roman Law and the classical system of property were the pillars of the modern civil law jurisdictions 223 .
Aiming to, inter alia, disengage from the feudal logic, the classical model of property law, in a very clear way, separated laws related to property (rights in the thing itself) from the ones regarded to contract (rights between private parties) 224 . Within the contractual relationship, the parties have certain freedom to deliberate on the terms of the contract. Conversely, the real law has a limited scope not subject to negotiation between private parties 225 .
The numerus clausus doctrine in the Real law regime is characterized by limiting the number of property rights 226 . Besides that, the content of these rights “is restricted and it is laid down in mandatory rules how absolute rights can be created, transferred and extinguished” 227 . Along with the
220 "The Common Law and Civil Law Traditions." The Robbins Collection (2010): 1-11. University of California at Berkley. Web. 28 May 2012.
abovementioned doctrine, the unitary right of ownership is a remarkable characteristic in the property law 228 . Ownership is understood as the “right to enjoy complete mastery a thing” 229 and, in the same way, by the French Law, has the following prerogatives: a) usus is marked by the right to use (or not) the property as it suits better; b) fructus give the right to the owner to collect the fruits naturally or legally produced by the property and c) abusus is the prerogative of dispose the property 230 . Moreover, ownership is also exclusive, unlimited and perpetual 231 . It is exclusive because the owner has the right to forbid others from enjoying his property ( erga omnis effect) ; is unlimited because the rightholder can use its property as it suits as better as long it does not interfere in another´s person rights. Finally, it is perpetual because there is no limit of time to cease 232 .
The key elements that constitute the Real law, plus the impossibility to create new property rights through court, make this system very strict even though the level of stringency differ among countries 233 .
4.4 Analysis of the virtual goods from the perspective of the Brazilian Civil Code and Criminal Code
The real rights within the Brazilian legal system are based on the principle of numerus clausus in which only the law can input a new real right 234 . On the other hand, the same legislation establishes that personal rights are those that depend solely on the initiative or the will of the parties 235 . The Brazilian Civil
Netherlands Comparative Law Association. Web. 30 May 2012.
Code 236 , unlike the French and the Austrian codes, chose not to define the right of property (following the same path of the Swiss, German and Italian civil codes) 237 . Instead of defining the right of property, it indicates only the contents by mentioning the powers derived from the ownership 238 : jus utendi, jus fruendi and jus abutendi 239
“Article 1228. The owner has the right to use, enjoy and dispose the thing and the right to reclaim it from the power of anyone who owned or possessed unfairly.” 240
After briefly describe some elements of ownership and seeking to verify the possibility of legal protection for virtual goods in the context of national legislation, it is important to analyze the legal treatment given to other assets which are treated as chattels for legal purposes:
“Article 82. Chattels are the ones susceptible of own movement, or removal by external forces, without changing the substance or the socio-economic destination.
Article 83. Deemed to be movable for legal purposes: I - the energies that have economic value;” 241
Professor Carlos Rohrmann describes that extending the chattel concept also to "energies that have economic value" was a great innovation brought by the civil code 242 . Moreover, considering the abovementioned legal provision, he claims that the digital computer files, either on magnetic or optical medium, are "stored
236 Lei nº 10.406, de 10 de janeiro de 2002. Receita Federal do Brasil , Trans. Bernardo Barcelos. 11 Jan. 2002. Web. 29 May 2012.
energy" therefore, subject to this type of legal protection 243 . However, it is imperative to grasp what the courts understand by the term “energies”.
In a highly publicized Brazilian criminal case initiated in the Rio Grande do Sul State, an individual was charged for the crime of "theft of cable TV signal" of a particular company transmitting such signals. During the criminal process, the public prosecutor, along with the aforementioned company as prosecution’s assistant, argued that the "theft of cable TV signal" was possible in view of the fact that the defendants subtracted energy with economic value according to article 155, § 3 of the Brazilian Penal Code.
“Article 155 - Subtract for yourself or for others, chattel from another person: [...] § 3 - equates to chattel, electricity or any other that has economic value.” 244
In the decision of first instance, the judge sentenced the defendant based on art. 155 §3 described above (understanding that cable TV signal is equivalent to electricity). Further on, the defendant appealed and the State Court of Justice acquitted him. The Court stated that the acts committed by the defendants cannot be regarded as a crime. In addition, the court has made it clear that the cable television signal cannot be deemed as equivalent to electrical energy 245 .
Unsuccessful in the second instance, the public prosecutor appealed to the Superior Court of Justice (STJ) 246 . The STJ applied a reasoning similar to the one used on the theft of electricity 247 . Basically, the court assumed that the
243 Ibid. p. 195. 244 Decreto-Lei N. 2.848. Presidência da República Casa Civil , Trans. Bernardo Barcelos. 7 Dec. 1940. Web. 29 May 2012.
television signal propagates through the wave, thus, fitting in the technical definition of radiant energy and, under these circumstances, should be deemed as a form of energy associated with electromagnetic radiation. Therefore, the STJ held that the defendant was guilty of theft of cable TV signal in accordance with art. 155, § 3 of the Penal Code. It seems that the STJ performed an adaptive interpretation of the article 155, § 3, of the Brazilian Penal Code, aiming to contemplate the use of new technologies 248 .
Given the decision of the STJ, and considering that the right of freedom of both defendants was threatened, the defendant filed a habeas corpus action in the Brazilian Supreme Court (STF) aiming at reverting the decision of the STJ. Unlike the Superior Court of Justice, the Supreme Court, concerning the same criminal proceedings, decided that such signal is not energy, therefore, cannot be object of a crime according to the article 155, §3º, of the Brazilian Penal Code 249 . Among other arguments, the minister 250 rapporteur stated that the cable tv signal cannot be considered as a source capable to generate or provide power to certain types of equipment, or transform into other forms of energy 251 . The discrepancy between the decisions of the STJ and The Supreme Court (STF) raised debates among Brazilian jurists as can be seen in the following paragraph.
Concerning the case above, Cezar Bitencourt stated that the cable TV signal cannot be equated with electrical energy according to the aforementioned art. 155, § 3 of the Brazilian Penal Code. Bitencourt argues that the expression "any other" contained in § 3 refers to "energy", which is implicit in the legal text. Additionally, he asserts that energy can be consumed (and may even run out), while the "television signal" does not diminish 252 . Bitencourt concludes that
248 Ibid., p. 03. 249 Aliatti V. State. HC 97261 RS. Supreme Court. 30 JANUARY 2008. Trans. Bernardo Barcelos. WEB. 21 MAY 2012.
subtracting is not only the simple removal of the thing from the place where it was; it is necessary, a posteriori, that the thing becomes under the power of an agent 253 . In the case law in discussion, the misuse of "television signal" does not have the subjective element "take possession" 254 . In this sense, João Grimaldi da Fonseca explains that the company´s asset did not decrease due to the defendant´s misuse of the cable TV signal rebroadcasted by the enterprise. In fact, the company would only be entitled to receive the amount corresponding to time that the TV signal was used by the defendants 255 . Fernando Capez, just like Bitencourt, asserts that the term "any other" contained in § 3 should be understood as "other types of energy" such as nuclear, thermal, solar, etc.., Given that these other types of energy also have economic value 256 .
In regard to electrical energy, by equating electricity as a chattel, the legislator has prevented further discussions, as in the past, about the possibility of theft of this type of energy 257 . Until the inclusion of the mentioned Article 83, section I, of the Brazilian Civil Code, it was not possible to classify electricity within the concept of chattel in view of its legal nature (considered as an intangible good susceptible to be marketable) 258 . Furthermore, the absence of corporeal form, heated debates denying the possibility of theft of electricity 259 . However, the Brazilian Civil Code, in its article 83, section I, has considered it as chattel, for legal purposes, "energies that have economic value".
(2012): 1. Jus Navegandi Revista. Web. 10 June 2012.
The TV cable signal, as well as the electrical energy is intangible and has economic value, however, it is not considered as a form of "energy" (attribute, as explained above, essential for the characterization of such a signal as chattel). It seems clear that the intent of the law (in both mentioned articles of the civil and penal codes) is to protect new forms of energy that may arise as a result of technological development.
As stated at the beginning of this chapter, virtual property can be deemed as a software code which is designed to have the qualities of a physical real-world chattel or piece of realty 260 . In a Civil Law regime like Brazil, given the intangible nature of the virtual property, as electricity or cable TV signal for instance, it will only be possible to recognize such a type of property if a new statutory provision equating virtual goods as chattels is created.
Analyzing jointly the electrical energy, the cable TV signal and the virtual property, it seems to me that the relevant economic nature presented by the three is an important factor to target legal protection as chattel.
Notwithstanding the Brazilian debate about whether or not it is possible to equate cable TV signal as a chattel, it is important to highlight that a commission of legal experts appointed by the chairman of the Senate is drafting a bill for a new Brazilian Penal Code. The draft of the new code has been prepared since October 2011 and shall be delivered to the Senate this year for examination and vote 261 . Interestingly, regarding the crime of theft, the commission proposes the addition of “water, gas, cable TV signal and internet or any other goods that has economic expression” 262 . If such changes are approved by the Senate as proposed by the commission of jurists, it may open a concrete opportunity for a discussion of the issue of virtual property.
260 Lawrence, Dan E. "It Really is Just a Game: The Impracticability of Common Law Property Rights in Virtual Property." Washburn Law Journal 47.2 (2008): 505-49. Washburn Law. Web. 10 June 2012.
4.5 Analysis of the virtual goods from the perspective of the Dutch Civil Code and Criminal Code
The Netherlands, similarly to Brazil, is a country with a civil law tradition, therefore, is codified, structured and highly systemized. Besides, such legal tradition relies on general principles without necessarily establish details 263 . Concerning the ownership within the property rights context, the Book 5, article 5:1 (1) (2) of the Dutch Civil Code states:
“Article 5:1 Definition 'right of ownership' - 1. Ownership is the most comprehensive property right that a person, the ‘owner’, can have to (in) a thing. - 2. The owner is free to use the thing to the exclusion of everyone else, provided that he respects the rights and entitlements of others to the thing and observes the restrictions based on rules of written and unwritten law.” 264
The right of ownership is basically the most important property right within Dutch civil law. However, it must be attached to a thing (regardless if it is movable or immovable) 265 . A thing, which is an important matter within the virtual property debate, is deemed as a tangible object by the Book 3, articles 1 and 2 of the Dutch civil code as seen below:
“Article 3:1 Definition of ‘property’ as a legal object ‘Property’ (or ‘assets’) comprises of all things and all other property rights.
Article 3:2 Definition ‘things’ ‘Things’ are tangible objects that can be controlled by humans.” 266
In this case, considering the abovementioned articles 3:1 and 3:2, could the virtual property (which it is not yet clearly recognized by the Dutch Civil Code as physical object) be regarded as property under the Dutch civil code? Can the computer code, which is considered a symbolic arrangement of data or
263 Lengeling, Dominik. "Common law and civil law." Consulegis. N.p., n.d. Web. 19 Jun 2012.
instructions in a computer program or the set of such instructions 267 , be considered a thing? The article 3:2 has two fundamental requirements for something to be considered a thing : firstly, it must be a physical object and secondly, the object must be susceptible to human control 268 . I don´t believe that the latter can raise many concerns, however, the critical point is the “physical object” requirement.
Briefly, by applying science reasoning, P. Kleve understands that electronic data may be qualified as a “thing” within the positive law framework 269 . Among other points, Kleve argues that, in view of the fact that electronic data needs electricity (which is considered a good under the Dutch Law) to be transported, recorded, etc., such data could be deemed as a “thing” 270 . On the other hand, there are others who assert that the materiality should not be defined by the science but, by the law. Furthermore, a concept originated from one branch of science could not be directly taken over by a concept of another branch 271 . Ultimately, AC Lagemaat, ML Boonk, and M Briet wisely point out that the materiality requirement might be explained from another science branch, however, the definition of materiality should be given based on arguments within the law itself 272 .
The intangible nature of a virtual good is unmistakable. Therefore, in accordance with Article 3:2 of the Civil Code, it is not possible to obtain protection for a virtual object as if it were a physical object. However, given the economic aspect that these virtual goods may present in the real-word, it is interesting to briefly analyze how the Dutch Civil Code would address this matter through the article 3:6:
“Article 3:6 ‘Property rights’ ‘Property rights’ are rights which, either separately or together with another right, are transferrable, or which intend to give its
267 computer code." WordNet 3.0. Princeton University. 15 Jun. 2012.
proprietor material benefit or which are obtained in exchange for supplied or the prospect of still to supply material benefit” 273 .
Considering, in terms of article 3:6 of the Dutch Civil Code, that there is intellectual work embedded in the virtual world (not only in some elements of virtual world but in the virtual environment as a whole) which can give material benefit to its proprietor, it is conceivable to seek legal protection under intellectual property rights 274 . More precisely, the virtual objects existing in virtual worlds may be subject to the Dutch Copyright Act275 . In order to acquire copyright protection, it is important to analyze if whether or not a virtual object can be considered as a “work” and, at the same time, “original” in the meaning of the aforementioned Copyright Act 276 . The Dutch Copyright Act qualifies the computer program as a work within the terms of the article 10, 1, 12º.
“Article 10 1. For the purposes of this Act, literary, scientific or artistic works include: […] 12º computer programs and the preparatory material;”277
A computer program is written by its creator in a programming language consisting of specific symbols which is usually called “source code” 278 . In order to be used in a machine, this “source code” must be transformed into a set of instructions that can be understood by the processing unit of a computer 279 . Those instructions consist of two different elements represented by “0” and “1” “which have the effect that the flow of electricity current is either barred or
273 Goossens, Hendrik, ed. Dutch Civil Code: Book 3 Property law in general. Brecht, n.d. Web. 10 June 2012.
permitted 280 . It might be questionable whether or not the combination of “zeros” and “ones” it is eligible to be deemed as “work” in the meaning of the aforementioned Dutch Copyright Act 281 . However, the interpretation of the combination of “ones” and “zeros” (which represents the graphical image of a virtual object) could be understood as a “work” therefore, protected by the article 10, 1, 12º of the Dutch Copyright Act 282 . The originality, which is also a sine qua non criterion to a work being protected under the Dutch Copyright Act, is comprised of two elements: the “original character” of the work and “the personal stamp of the author” 283 . The latter element means that the creation shall be the result of creative choices and human labor (often created be programmers) 284 . A virtual object (regardless of being modeled in 3D or 2D) is undoubtedly a result of a creative process (the design and shape of a virtual hammer, for example) and personal choices (such as a combination of colors of a virtual helmet) of its creator hence, likely of being considered “original” 285 . Under these circumstances, since that a virtual object is part of a computer program and also the product of a creative work generally performed by programmers, it is possible, for instance, to safeguard a virtual sword in the World of Warcraft under the Dutch Copyright Act 286 . Further on, an analysis of virtual objects under the Dutch Criminal Code will be made.
In 2007, in The Netherlands, two boys (by the time one boy was 15 years old and the other was 14 years old), through physical and psychological violence, coerced another child (who was 13 years old) to surrender all the virtual goods existing within his Runescape account 287 . The defendant and his co-accused brought the victim to an apartment and started to beat and strangle the 13- years-old boy seeking to force him to log into his account and transfer a virtual
280 Ibid., p. 583. 281 Kuhlmann, J.P. "Virtuele Objecten: Echt Voor Het Recht? Bescherming van Virtuele Objecten Technisch en Privaatrechtelijk Beschouwd." MA thesis. Trans Bernardo Barcelos. Universiteit Utrecht, 2010. Web.
amulet and virtual mask 288 . The victim resisted the outrages until the moment that one of the offenders threatened to kill him with a big butcher´s knife. After this threat, the victim logged into his account and, at the same time, the offenders, from another computer, logged into another Runescape account 289 . The offenders killed the victim´s avatar and acquired the mentioned virtual items.
In 2008, the trial occurred in the Court of Leeuwarden; it ruled that the offenders were guilty of theft based upon the argument that the objective of the article 310 of the Dutch Penal Code is to protect capital (resources, assets, money) 290 . In order to verify whether or not these virtual items can be deemed as goods in the terms of the mentioned article 310, the Court stated: 1) virtual goods acquired considerable importance for a large number of users not only in Runescape but in several online games 291 . “The more goods a player possesses, the stronger a player is” 292 . Furthermore, virtual items are constantly bought and sold among users 293 . 2) Concerning the intangibility, the Court asserted that intangible items can also be considered as goods as in terms of theft. It was mentioned that the Dutch Supreme Court ruled that electricity and electronic money can be object of theft 294 and 3) for the occurrence of the crime of theft, it is a requirement that the offender gets the power over the object and the victim loses his powers over the same object 295 . Since that the victim lost his power over the virtual amulet and the virtual mask, this requirement was met 296 .
In the Court of Appeal the defendants challenged the previous ruling by arguing that the virtual mask and amulet are not goods in view of the fact that such items are neither tangible nor have any economic value 297 . Moreover, the
288 Ibid., p. 87. 289 Lodder, Arno R. "Conflict resolution in Virtual worlds: General characteristics and the 2009 Dutch convictions on virtual theft." Virtual worlds and criminality. Ed. K. Cornelius and D. Hermann. Berlin: Springer, 2011. 79-93. Print., p. 87. 290 Ibid., p. 87. 291 Ibid., p. 88. 292 Ibid., p. 88. 293 Ibid., p. 88. 294 Ibid., p. 88. 295 Ibid., p. 88. 296 “Therefore, the court decided that the suspects were guilty of theft. The 15-years-old boy was sentenced to 200 hours service, and 14-years-old to 160 hours”. Ibid., p. 89. 297 Ibid., p. 89. 55
defense claimed that the items were not in possession of the victim since that the latter had only a right to use the items. In summary, the Court upheld the conviction stating that the criterion of tangibility has been left since the Electricity case occurred in 1921. Additionally, the Court of Appeal stressed that the concept of economic value has been changed over the years for the possessor of the item 298 . In this case, the stolen virtual items were valuable not only for the victim, but for both criminals 299 . Lastly, concerning the ownership of the virtual items, the Court concluded that the victim had the “factual and exclusive power over the items in possession” since that he was the only one that could log into his account and use the virtual items. The fact that Jagex Ltd. was the owner of the GVW of Runescape was considered irrelevant in this law case 300 . The court, in an analogous way, stated that even the passport (which is the property of the state) can be stolen from a citizen to whom this passport belongs 301 . As seen in the Chapter 3, the EULA (or TOS) is a contractual document in which, inter alias, the user agrees that all the virtual items existing within the game belong to the platform owner. By the court´s reasoning, under the criminal law perspective, it is possible to infer that, even though the company claims intellectual and virtual property over the whole virtual world, the user´s “exclusive dominion” over specific in-game items should be secured 302 .
The decision given by the Dutch Supreme Court on 31 st of January 2012 concerning the theft of virtual goods within the online game of Runescape is certainly a landmark case in relation to the issue of virtual property in Europe 303 . Based on the defense’s claims, the Supreme Court, in its decision, focused on 4
298 Lodder, Arno R. "Conflict resolution in Virtual worlds: General characteristics and the 2009 Dutch convictions on virtual theft." Virtual worlds and criminality. Ed. K. Cornelius and D. Hermann. Berlin: Springer, 2011. 79-93. Print., p. 89. 299 “The victim indicated that he was rich in the game and almost unbeatable. Because of his power he was afraid of being hacked and changed his password every three days. The Court also states that the value originates during play, after spending both time and effort. Ibid., 89. 300 Ibid., 90. 301 Ibid., 90. 302 RuneScape Theft – Dutch Supreme Court Decision. The Virtual Policy network, 1 Feb. 2012. Web. 15 June 2012.
mains issues: 1) whether or not the virtual amulet and virtual mask can be considered as goods in the meaning of the article 310 of the Dutch Criminal Code 304 ; 2) whether or not virtual objects can be considered goods in view of the fact that they consist of “bits and bytes”. 3) if the virtual goods can be defined as “data” as referred in article 80 of the Criminal code and 4) taking away virtual property from other players is one of the goals of Runescape.
In relation to the matter concerning the possibility to consider the virtual mask and virtual amulet as goods by the Dutch Criminal Code, the Supreme Court understood that the mentioned virtual items can be deemed as goods in terms of the article 310 of the Criminal code as follows:
“Article 310. Any person who removes any good belonging wholly or partially to any other person with the intention of unlawfully appropriating it is guilty of theft and liable to a term of imprisonment not exceeding four years or a fourth category fine.” 305
The Supreme Court reasoned that “by laying down various criminal provisions, the legislator intended to protect rightholders' control over any goods owned by them. Under article 310 of the Criminal Code, it is a criminal offence to deliberately take de facto control of any good belonging to another person with the intention of unlawfully appropriating it. The term 'any good' has an autonomous definition under the criminal law. An intangible object may be considered a good, as long as it is an object that by its nature can be removed from the de facto control of another person” 306 . The criminal law sphere, as civil law, is an autonomous branch of the law which has its own concepts and principles 307 , hence, it is likely that the interpretation of “good” may not be same as existing in the Dutch Civil Code. Essentially, the Supreme Court used the Electricity case (1921), the Electronic money case (1982) and the PIN code
304 Extract from the judgment LJN no. BQ9251. De Rechtspraak - Hoge Raad, 31 Jan. 2012. Web. 16 June 2012.
case (1995) as paradigms to define whether or not such intangible objects could be deemed as good 308 .
On 23 rd May 1921, The Supreme Court decided that the electrical energy can be deemed as a good in the terms of the article 310 309 of the Criminal Code 310 .The most important elements applied by the Court for considering electricity as a good were the following: the first element was the acknowledgement of “certain independent existence” of the electricity; the second element was the fact that it can be generated and controlled by persons; the third element was due to its economic value and, lastly, the possibility of appropriation 311 . Concerning the third element, the Supreme Court emphasized that there are costs and effort in obtaining electricity. Moreover, it also must be taken into account that such energy may be used for one´s benefit or sold to others 312 . The second element is not different from the nature of the virtual goods in view of the fact that such goods are the result of human labor besides, they can be easily controlled. In this third element, it seems that the Supreme Court applied a similar reasoning preconized by the Lockean theory explained elsewhere in this chapter. Since that the user expends time and effort to create and/or acquire virtual objects, he deserves to reap its value. Furthermore, the virtual amulet and mask, as electrical energy, are not only exchangeable among players but, they are also recognized as commercially valuable goods among the Runescape users.
In another Supreme Court’s judgment related to intangible good dated back on 11 May 1982, the Court ruled that electronic money could be object of
308 Extract from the judgment LJN no. BQ9251. De Rechtspraak - Hoge Raad, 31 Jan. 2012. Web. 16 June 2012.
appropriation (article 321 of the Criminal Code) 313 . In this case the Court found reasonable considering electronic money as a good in view of the function that the electronic money has within the society context 314 . Since that millions of players are buying and selling virtual goods worldwide, these items are becoming socially valuable for many people. The murder in China because of a virtual sword 315 and the Dutch case involving a virtual mask and amulet might indicate a necessity of the State to protect this type of asset.
In the PIN code case, the Supreme Court on 13th June 1995, decided that memorized knowledge of a payment card’s PIN code cannot be deemed as a good in terms of the article 317 of the (old) Criminal Code 316 . Besides, it is not considered surrendering a good the mere fact of divulging one’s PIN code because there is no loss of the possession of the PIN code by giving it to another individual 317 . In the Runescape case, in view of the singular nature of these virtual goods, the victim lost control over his possessions, nonetheless, I will discuss more about this singular nature of the virtual good along with the issue of possession hereafter.
Returning to the Runescape case, the defense´s appeal in the Dutch Supreme Court claimed that the virtual objects cannot be considered goods because they consist of “bits and bytes”. On this matter, the appeal did not succeed 318 . The Supreme Court made it clear that the virtual nature of the stolen items is not an obstacle to consider them as good in terms of article 310 of the Criminal Code 319 . In fact, the Court highlighted that the victim´s possessions in the game
313 Ibid. 314 Extract from the judgment LJN no. BQ9251. De Rechtspraak - Hoge Raad, 31 Jan. 2012. Web. 16 June 2012.
held “genuine value” essentially because such items were acquired through the victim´s time and effort and, they could be accumulated over the course of the game 320 . Moreover, the Court stated that the victim had “exclusive de facto control” over the virtual mask and virtual amulet within the game and lost his control over such objects because of the acts of the defendant and the co- accused 321 . The Supreme Court´s decision acknowledges that the nature of the virtual goods is singular for 2 reasons: firstly, because the virtual items gathered within the game demanded time and effort from the victim (once again the Lockean theory of desert-from-labor is implicit in the Court´s decision, consequently, legitimizing, at least, the victim´s virtual property possession). Secondly, since that the virtual items were deemed as goods in the sense of article 310 of the Criminal Code, the Court, in my opinion, acknowledged the rivalrousness attribute of those items. In other words, since that the Runescape´s code design was made in a way that prevents any user from copy virtual objects, the virtual mask and amulet could only be under the “exclusive de facto control” of the victim, thus, only the victim could prevent other users from using the owned objects. The persistence attribute is also present. Since that virtual items can be “accumulated over the course of the game”, they will continue to exist in the victim´s account even though he is not logged in. Given the fact that the virtual mask and amulet can be used by any Runescape player, the interconnectivity attribute is also present. I want to stress that, since that the virtual items can be experienced by the Runescape players, they become desirable and, thus, marketable to users 322 .
Concerning the matter about virtual goods being considered data as referred in article 80 of the Criminal code, The Supreme Court held that the stolen virtual items cannot be defined as mere data. In that sense, the mentioned article states 323 :
320 Extract from the judgment LJN no. BQ9251. De Rechtspraak - Hoge Raad, 31 Jan. 2012. Web. 16 June 2012. “Article 80. Data shall mean any representation of the facts, ideas or instructions, in an agreed manner, which are suitable for transfer, interpretation or processing by persons or automated equipment.” 324 The Court ruled that the mere fact that the stolen virtual items share the same features with data as specified in the article 80 of the Criminal Code does not mean that the virtual mask and amulet cannot be deemed as goods in the sense of article 310 of the Criminal Code 325 . The Court also accentuated that it is feasible that certain intangible objects have attributes from data and good simultaneously 326 . The qualification of particular types of data as good will be based upon the circumstances involved and how they will be evaluated by a specific court327 . The Court, by comparing the stolen virtual goods with article 80 of the Criminal Code, consolidates the understanding, in the Netherlands, that the nature of the virtual items is different from the nature of other regular data such as music files, documents or videos available online. 4.6 Remarks This final chapter is the core of this academic work. Therefore, I sought to discuss important topics related to the virtual property. In the first section, I aimed to provide a definition and explain the main characteristics related to virtual property. The concept used in this thesis to define virtual property was basically the one that states that it is the “software code designed to behave like and have the qualities of a physical, real-world chattel or piece of realty” 328 . The main attributes mentioned by Fairfield - rivalrousness, persistence and interconnectivity – make it possible to identify whether or not a certain type of computer code can be deemed as a virtual good. It was also mentioned the court/Summaries-of-some-important-rulings-of-the-Supreme-Court/Pages/Extractfromthejudgme nt.aspx>. 324 Extract from the judgment LJN no. BQ9251. De Rechtspraak - Hoge Raad, 31 Jan. 2012. Web. 16 June 2012. Blazer´s additional indicia – “existence of a secondary market” and “value added by users” 329 – which supplemented Fairfield´s mentioned criteria to verify whether or not determined a computer code shares similar elements as traditional property 330 . Further on, based on Fairfield´s reasoning, it was explained that the object of protection within the context of virtual property is the computer code itself. The idea behind the protection of the code is, in essence, the possibility to protect the virtual property regardless the intellectual property embedded within the underlying code and, regardless on what computer or system the code is running 331 . Following, I applied the virtual property requirements – rivalrousness, persistence and interconnectivity – stated by Fairfield in a hypothetical in-game transaction between two players within the GVW of World of Warcraft. Considering the code constrains designed by the platform owner, I sought to explain that, after the transaction, the virtual money and virtual sword are swapped between both players just like a real world transaction. Virtual goods acquired by users can coexist with intellectual property rights of the platform owners. The recognition of virtual property rights will not threat property interests held by the creator of the property. In fact, similarly to an owner of a book, an owner of a specific virtual property will have the same rights over his virtual object. Moving forward, three important theories (favorable to recognize specific virtual entities as property) were brought into the discussion: Bentham´s utilitarian perspective, Locke´s labor theory and Hegel´s personality theory. Briefly, the Utilitarian point of view understands that grant property rights over virtual goods will not only increase overall utility, but will also increase the production of such 329 Blazer, Charles. "The Five Indicia of Virtual Property." Pierce Law Review, Vol. 5, p. 137, 2006 5 (2006): 137-61. Social Science Research Network. Web. 10 June 2012. properties 332 . The Lockean theory (theory of desert-from-labor) implies that the person who expends work, time and effort to render a “thing in nature” into something valuable, deserves to reap its value 333 . Lastly, the Hegelian theory basically understands the idea of property as an extension of personality. Moreover, this theory is favorable in recognizing property rights in virtual goods because, essentially, the user´s avatar and virtual goods constitute part of his virtual identity 334 . Later on, along with some historical facts and important elements concerning the Civil Law in a broad view, some important elements were approached in regard to the property under the law perspective. In this section I aimed to demonstrate that the numerus clausus doctrine in the Real law regime limits the content and the number of property rights under the law. Moreover, the property has a mutant character which means that the fact that an object has no legal protection under the property rights at a given time and place does not mean that it cannot enjoy such protection in the future 335 and vice-versa. Finally, it was analyzed the possibility of applying the concept of virtual property within the Brazilian and Dutch Legal Framework. More precisely, both Civil and Penal code of both countries. On the conclusion, more details shall be provided. 332 Lastowka, F. Gregory, and Dan Hunter. "The Laws of the Virtual Worlds." California Law Review 92.1 (2004): 1-73. Print., p. 66 333 Ibid. p. 61-62. 334 Ibid. p. 62. 335 Purtova, Nadezhda Nickolayevna. "Property Rights in Personal Data: A European Perspective." Diss. Tilburg University, 2011. Web. 5. Conclusion The main research question posed in this thesis is divided in 2 parts as follows: 1) Are the Brazilian Civil Code and Penal Code able to recognize virtual property as if it were a physical object? 2) Are the Dutch Civil Code and Criminal Code able to recognize virtual property as if were a physical object? Before answering the main research question, I will first answer the sub- questions. By referring back to the matching chapters, I want to point out that I intend to provide short answers to these questions. What are virtual worlds and what are its main features? (Chapter 2) The definition of virtual worlds vary across scholars however, the definition provided by the report of the Organisation for Economic Co-operation and Development (OECD) provides an embracing synthesis of the main features of this new world. Virtual worlds are persistent computer-simulated environments that allow a large number of users (through avatars) to interact in real time among themselves via interconnected computers. Virtual worlds can be classified in two main types: Social Virtual World (SVW) and Gaming Virtual World (GVW). SVWs do not have pre-established narrative objectives and often encourage social interactions among users. Additionally, some SVWs, such as Second Life, allow users to create and develop their own virtual items and also engage in economic activities involving real-world currency. On the other hand, GVWs like World of Warcraft and Runescape have a predetermined plot and theme and also clarify players´ performances These virtual environments share some important attributes. They are persistent (changes will be accumulated through time); they allow users to communicate synchronously among themselves in real-time; users are represented through avatars within virtual worlds; the network of people is a characteristic in which users can interact with themselves and all these features are embedded in a context where the computers are all interconnected. 64 Some situations in virtual worlds (such as trading virtual objects for real-world money) transcend the barrier between the virtual and the real. In that sense, the magic circle, which is a very important concept within virtual worlds, was explained as a porous membrane that separates the virtual realm from the real- world life. This thin barrier does not only allow the exchange of ideas but, moreover, reveals that both worlds are intrinsically interconnected. How does the End-user Licensing Agreement (or TOS) deal with virtual goods? (Chapter 3) Platform owners aiming to provide a bare minimum organization required to make the virtual world enjoyable, mimic some real-world societal structures such as behavioral and penalty norms. Rather than just a private pact, EULAs end up having some characteristics that resemble some ideas existing in the social contract theory and, additionally, it is used to separate virtual and real realities. To sum up, these agreements implicitly aim to legitimate the power of the companies over the users within and outside the lines of the virtual world. Fundamentally, the agreement in which the user ticks the box and accepts the clauses turns out to be a legally binding contract that can have its provisions challenged in national courts. It is important to point out that the enforceability of the EULA (which I see as a type of online adhesion contract) is not usually challenged in court. Often, specific terms are debated in view of likely one or more unconscionable clauses that can be deemed as excessively burdensome. Possible ways to terminate a EULA or TOS agreement and their respective outcomes were debated. This agreement is far from being favorable for users (mainly for those who use VWs to conduct business). In addition, the contract can be changed and terminated at the absolutely sole discretion of the platform owner. Consequently, considering the EULAs analyzed, virtual items gathered by the user will be lost in a contract termination. The Real Money Trading (RMT) clause was debated along with the process of real-world commodification. Due to the increasingly popularity of the virtual spaces, this form of commodification is likely inescapable in some virtual environments. Moreover, since that the virtual items have monetary value 65 outside of some virtual platforms, users find their ways to negotiate these items (even though companies like Blizzard or Jagex seek to curb this activity either through EULA or via code). The process of social validation was intensified during the past few years and it is possible to imply that the process of real- world commodification had an important role in that. What is virtual property and what are its main characteristics? (Chapter 4) Virtual property can be defined as a type of software code created to act like and have qualities of a physical real-world chattel or land. Moreover, the object of protection in the context of virtual property is the code. Regardless of the system or chattel that the code is running, the code right is what should be safeguarded. In order to a code be deemed as a virtual property, the following attributes are required: rivalrousness, persistence, and interconnectivity. Existence of secondary market and value added by users are supplementary elements that support define whether or not a specific computer code can be considered as virtual property. It is noteworthy to point out that intellectual property rights will not be eliminated by the recognition of virtual property rights. Rather, the concepts can naturally coexist. Aiming to better balancing the interests of users and developers and, given the context in which the virtual items are, I suggested easement as a viable legal solution. Further on, based upon a hypothetical virtual transaction, I demonstrated how the attributes relating to virtual property - rivalrousness, persistency and interconnectivity - are found in existing virtual items in VWs. Moreover, I provided some solutions for some criticisms from the industry towards the concept of virtual property. Finally, it was advocated that the utilitarian perspective, Locke´s labor theory and Hegel´s personality theory are important property theories in favor to recognize specific virtual entities as property, although these theories differ in significant ways. 66 The main research question to be examined in this thesis will be divided in 2 parts as follows: 1) Are the Brazilian Civil Code and Penal Code able to recognize virtual property as if it were a physical object? 2) Are the Dutch Civil Code and Criminal Code able to recognize virtual property as if it were a physical object? (Chapter 4) 1) Virtual property under the Brazilian Civil Code and Penal Code standpoints Considering that the concept of virtual good is a software code designed to behave like and have qualities of a physical, real-world chattel or land, could the Brazilian Civil Code and Penal Code provide protection for this kind of software code as if it were a physical good? I shall analyze this issue under 2 point of views. Firstly, under the civil code perspective and latter, under the criminal outlook. The Brazilian Civil Code define chattels as “the ones susceptible of own movement, or removal by external forces, without changing the substance or the socio-economic destination” (article 82). Additionally, the same code deemed as movable for legal purposes “energies that have economic value” (article 83, I). The lawmaker, by adding this last article, wanted to extent the concept of chattel which, by the time, was essentially restricted to physical goods. Although it is not a dominant position, professor Carlos Rohmann argues that the digital computer files are "stored energy" therefore, subject to this type of legal protection. The essential element existing in virtual property is the code (which is considered intangible just like electricity). Through a jointly interpretation of both articles and in view of the fact that, in the Brazilian legal system, new property rights can only arise from the law, I understand that it is not possible to equate virtual goods as if they were chattels (in the same way that the lawmaker did with electricity). In regard to the point of view of the Brazilian penal Code, my understanding is that the theft of a virtual good (as a physical object) it is not possible. According the article 155 of the Brazilian Penal Code, theft is “subtract for yourself or for others, chattel from another person”. The § 3 of the article 155 (similarly to the aforementioned article 83, I of the Brazilian Civil Code) adds that “equates to chattel, electricity or any other that has economic value”. Given the vagueness 67 of the final part of the mentioned § 3 “any other that has economic value”, virtual goods could, perhaps, find protection under the penal code. However, I believe that such protection cannot be provided in view of a recent ruling given by the Brazilian Supreme Court concerning a case related to the "theft of cable TV signal". In this decision, the Supreme Court interpreted the final part of the § 3 of the article 155 of the Penal Code. In its ruling, the Supreme Court stated that such signal is not energy, therefore, cannot be object of theft according to the article 155, §3º, of the Brazilian Penal Code. As a core argument, the court stated that the cable TV signal cannot be considered as a source capable to generate or provide power to certain types of equipment, or transform into other forms of energy. Brazilian legal experts, such as Cezar Bitencourt and Fernando Capez, agreed with the arguments of the Supreme Court’s decision. Bitencourt argued that the expression "any other" contained in § 3 refers to "energy", which is implicit in the legal text. Additionally, he asserts that energy can be consumed (and may even run out), while the "television signal" does not diminish. In the same direction, Fernando Capez asserts that the term "any other" contained in § 3 should be understood as "other types of energy" such as, nuclear, thermal, solar, etc.., given that these other types of energy also have economic value. Although virtual goods are intangible and have economic value just like electricity, extend the meaning of "any other that has economic value" for virtual goods would be an incongruent interpretation, in my view, given the recent decision of the Supreme Court regarding the "theft of cable TV signal". It seems clear that the intent of the law (in the mentioned articles of the civil and penal codes) is to protect new forms of energy that may arise as a result of technological development. 2) Virtual property under the Dutch Civil Code and Criminal Code perspectives Can the Dutch Civil Code and the Dutch Criminal Code provide legal protection to a "virtual good" as if it were a tangible good? Likewise it was made in the Brazilian analysis, I will address this issue as followed: first, an analysis from the perspective of the Dutch Civil Code and later, I will analyze from the point of view of the Dutch Criminal Code. 68 Within Dutch civil law, the right of ownership is basically the most important property right. However, it must be attached to a thing (regardless if it is movable or immovable) 336 . A thing, which is an important matter within the virtual property debate, is deemed as a tangible object by the Book 3, article 3:2 of the Dutch civil code: “‘Things’ are tangible objects that can be controlled by humans”. In this case, considering the abovementioned article 3:2, could the virtual property (which it is not yet clearly recognized by the Dutch Civil Code as physical object) be regarded as property under the Dutch civil code? Can the computer code, which is considered a symbolic arrangement of data or instructions in a computer program or the set of such instructions, be considered a thing? The article 3:2 has two fundamental requirements for something to be considered a thing : firstly, it must be a physical object and secondly, the object must be susceptible to human control. The latter, I don´t believe can raise much concerns, however, the key point is the “physical object” requirement. Briefly, by applying science reasoning, P. Kleve understands that electronic data may be qualified as a “thing” within the positive law framework 337 . Among other points, Kleve argues that, in view of the fact that electronic data needs electricity (which is considered a good under the Dutch Law) to be transported, recorded, etc., such data could be deemed as a “thing” 338 . On the other hand, there are others who assert that the materiality should not be defined by the science but, by the law (which I consider more appropriate to avoid legal uncertainties). Furthermore, a concept originated from one branch of science could not be directly taken over by a concept of another branch 339 . Ultimately, AC Lagemaat, ML Boonk, and M Briet point out that the materiality requirement might be explained from another science branch, however, the definition of materiality should be given based on arguments within the law itself 340 . Under the civil law standpoint, the Book 3, article 3:2 of the Dutch Civil code is quite explicit in its content which, in my opinion, makes it unfeasible to provide property rights over the virtual goods. 336 Goossens, Hendrik, ed. Dutch Civil Law: Right of ownership. Brecht, n.d. Web. 15 June 2012. Can the Dutch Criminal Code provide legal protection to a "virtual good" as if it were a tangible good? This question will be answered based on the landmark decision given by the Dutch Supreme Court concerning the theft of virtual goods within the online game of Runescape. The main topics decided by the Supreme Court were: 1) whether or not the virtual amulet and virtual mask can be considered as goods in the meaning of the article 310 of the Dutch Criminal Code; 2) whether or not virtual objects consists only in “bits and bytes” and 3) whether or not virtual goods can be defined as “data” as referred in article 80 of the Criminal Code. Regarding whether or not the virtual amulet and virtual mask can be considered as goods in the meaning of the article 310 of the Dutch Criminal Code, the Dutch Supreme Court decided favorable to consider the virtual goods as “goods” in meaning of the article 310 of the Criminal Code. “Article 310. Any person who removes any good belonging wholly or partially to any other person with the intention of unlawfully appropriating it is guilty of theft […]”. The intangible nature of the stolen virtual goods was a crucial issue to be approached by the court. In that sense, the paradigm cases applied by the Supreme Court regarding this topic were the Electricity case, Electronic money case and the PIN code case. In the electricity case, since that electricity has an independent existence; it is transferability by human intervention; has economic value and is subject to appropriation, it was considered as a good in the sense of the aforesaid article 310. Moreover, The court stated that article 310 is intended to protect property of others and taking away of good is penalized without specify in a clear way what falls under the definition of “goods” 341 (unlike the Dutch Civil Code which clearly states what can be deemed as a “thing”). In the Electronic money case, the function of the electronic money in society was an important element to consider such type of money (which is also in an intangible form) as a good in the meaning of article 321 of the Criminal Code. In the PIN code case, by understanding that a good is surrendered only when a person loses possession of it by giving it to another person, the Supreme Court 341 Lodder, Arno R. "Conflict resolution in Virtual worlds: General characteristics and the 2009 Dutch convictions on virtual theft." Virtual worlds and criminality. Ed. K. Cornelius and D. Hermann. Berlin: Springer, 2011. 79-93. Print., p. 86. 70 decided that memorized knowledge of payment’s card’s PIN code cannot be considered as a good in the meaning of the article 317 of the old Criminal Code. The computer code applied in the design of virtual goods is, undoubtedly, the result of human work; additionally, virtual goods – due to the attribute of interconnectivity presented by these goods – are perfectly transferable among players of the same VW (that is why both defendants were interested in having the virtual items in possession of the victim). The economic value of the virtual goods is also highlighted because, not only it cost time and effort of the victim in obtaining the virtual goods but, within GVW such as Runescape, acquiring virtual items is an indication of power (concerning the time and effort of the victim in obtaining the virtual goods, it seems that the court applied a reasoning quite similar to the Lockean theory of desert-from-labor). It is important to note that the defendant and the co-accused also recognized the virtual amulet and mask as valuable virtual goods. I must point out that the court considered the victim as the only one who had “exclusive de facto” control over the virtual amulet and mask. Besides, the Court also stated that the acts performed by the defendant and the co-accused violated the victim’s enjoyment of exclusive control over these objects. In relation to this “exclusive de facto” control by the victim over the virtual goods it seems that the court is, at least, acknowledging the possibility of possession of the virtual goods by the victim (even though the EULA makes clear that all virtual items existing within the GVW of Runescape are owned by the company). In other words, the court did not take the contractual relationship between the victim and the company into account to decide this case; moreover, the court understood that the requirement “[…] belonging wholly or partially to any other person […]” of the article 310 of the Criminal Code was fulfilled by the victim having “exclusive de facto” control over his Runescape account and virtual mask and amulet. Follow on to the second main topic, are the stolen virtual objects only “bits and bytes” therefore, not goods? The Supreme Court stated that these virtual items are deemed goods – in the meaning of the referred article 310 of the Dutch Criminal Code – even though these items are intangible (the nature of the virtual items does not preclude them goods). The items obtained in-game not 71 only held genuine value but can also be accumulated over the course of the game (characterizing the persistent element of the virtual goods). The last main topic approached by the Supreme Court was the analysis of the virtual items under the definition of “data” as referred in the article 80 of the Criminal code. The fact that the virtual items share attributes of data (as defined by the mentioned article 80 of the Dutch Criminal Code) was not considered as an obstacle to consider such items as goods in the meaning of article 310 of the Criminal Code. In addition, the Court asserted that these certain objects have traits of both good and data. In my view, comparing the definition and attributes (rivalrousness, persistency and interconnectivity) of virtual property described by professor Fairfield, the Dutch Supreme, in its decision, is not only recognizing the existence of a different kind of data but also stating that the user has a certain level of control over his virtual items, regardless the EULA stating otherwise. Ultimately, based on data provided in this academic work, it is possible to imply that virtual worlds are growing not only in number of users but also in terms of legal issues and economic aspects. Real-world crimes involving virtual goods along with the increasing amount of transactions using real-world currency between players and platform owners (and between players as well), brings more and more elements of the virtual environment, such as virtual property, to be dealt in our real world life. The magic circle that separates the virtual and the real it is becoming even more porous. The concept of virtual property is not new. The electronic money existing in bank accounts (that has been used for several years) is one example that is possible to equate an intangible good as if it were a physical object. Through a specific type of computer code design, virtual objects existing in virtual worlds can acquire similar characteristics of a ‘thing’ (as a real-world chattel or land). However, considering the Brazilian civil law tradition and the legal constrains of both Civil and Penal Code, the protection a virtual sword similarly to a physical object seems (yet) unfeasible. Moreover, even though virtual items may present economic value, there is no civil or criminal case regarding virtual property within the Brazilian Jurisdiction until now. Similarly to the protection of 72 electricity (which was equated to a chattel by legal means) within the Brazilian Civil and Penal Code, the virtual objects may obtain akin legal shelter if the lawmakers understand that such protection is required. The Dutch Civil Code, in my view, is very clear and straightforward in defining the requirements for an object to be regarded as 'thing'. Therefore, in view of the intangible nature of a virtual object, seems implausible to provide legal protection under property rights within the Dutch Civil Code. In order to safeguard virtual objects through the Dutch Civil Code, modifications may be required in the definition of ‘thing’ seeking to accommodate this specific type of intangible object. On the other hand, in view of the recent interpretation given by the Dutch Supreme Court in regard to the article 310 of the Dutch Criminal Code (in the so-called Runescape case), protection of virtual goods against the crime of theft is possible. This decision, Inter alia , demonstrated that not only a specific type of computer code can have similar attributes of a physical ‘good’ but also concluded that a user has a certain level of control over the virtual goods (regardless of the agreement between the user and the company stating otherwise). It is likely that the impact of the Dutch Supreme Court decision in the Runescape case may have wide-reaching ramifications (such as issues surrounding the ownership of virtual goods between users and platform owners). 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