Second Life Raises Novel IP Issues.Pdf

daily updates on www.nlj.com THE WEEKLY NEWSPAPER FOR THE LEGAL PROFESSION Monday, deceMber 3, 2007 in focus intellectual property Second Life raises novel IP issues Among them is whether use of a between avatars, or “residents” as they are can be acquired in-game. trademark exclusively in a virtual known in Second Life. The items are bought But the terms of service governing Second world can be ‘use in commerce.’ and sold using Linden Dollars—a virtual cur- Life are different. In the terms of service govern- rency that can be traded for “real world” cur- ing Second Life, Linden Research Inc., which By Benjamin R. Mulcahy rency through online exchanges. Eros sells the created and operates Second Life, allows its resi- special to the national law journal items on a “no-copy” basis, meaning that Sec- dents to retain any intellectual property rights the adult entertainment industry is responsi- ond Life residents can transfer them to other that attach to the digital content they create, ble for bringing many of the seminal cases that Second Life residents honoring a type of first- including avatar characters, clothing, scripts, have shaped intellectual property law on the In- sale doctrine, but Second Life residents are not ternet, from Playboy Enterprises Inc. giving rise permitted to make copies of the items. to the “initial interest confusion” test for trade- In an amended complaint filed at the end of Terms of service let mark infringement, to Perfect 10 shaping the October in the U.S. District Court for the Mid- contours of search engine liability. And now a dle District of Florida, Eros claims that the Second Life residents company named Eros LLC is named defendant (and un- seeking to join their ranks. named John Does) has been retain IP rights. Eros claims to be one of the internet making and selling numerous most successful merchants do- unauthorized copies of the ing business within the virtual world platform SexGen items to other Second Life residents in textures, objects and designs. As Linden pro- known as Second Life. Second Life is perhaps violation of Eros’ exclusive rights under copy- claims on the site itself, “This right is enforce- the most closely observed virtual world in the right. Eros LLC v. Leatherwood, No. 8:07-CV- able and applicable both in-world and offline, United States. Virtual worlds generally allow 01158 (M.D. Fla. filed Oct. 24, 2007). Com- both for non-profit and commercial ventures. online participants to create a persona (known pounding the alleged injury, and causing Eros to You create it, you own it—and it’s yours to do as an “avatar”) and interact with other avatars include a Lanham Act count in its complaint, with as you please.” within a persistent and shared virtual environ- Eros claims that the named defendant uses the ment hosted by the game developer. Avatars SexGen brand to misrepresent that his items Is it a ‘use in commerce’? generally have attributes (such as strength or have been authorized by Eros. That same intellectual property ownership aptitude and other customized player-crafted If this were the “real” world, the Eros lawsuit concept helps Eros support its Lanham Act characteristics), skills (such as the ability to fly) would be an uneventful case of software piracy claim, and earlier this year Eros filed an applica- and possessions (such as housing), all of which and reverse passing off. But this isn’t the “real” tion to obtain federal trademark registration for constitute “virtual assets” that players can cre- world; all of the activities giving rise to this law- “SexGen” with the U.S. Patent and Trademark ate, purchase, barter or otherwise accumulate suit occurred in Second Life. As such, its impli- Office. But the SexGen name has apparently and improve over time. cations are worth noting. not been used (by Eros or the named defendant, Eros sells adult-themed virtual assets in Sec- To support its copyright claim, Eros must at least) outside the confines of Second Life or ond Life, including the SexGen Platinum Base fundamentally show that it owns the copyright in connection with any real-world goods or ser- Unit and the SexGen Platinum+Diamond Base. in the items allegedly being infringed, and that vices. As a result, the court will need to deter- Both of these items are software code applica- the defendant has violated at least one of the mine whether Eros’ virtual assets constitute tions designed to facilitate sexual connections exclusive rights granted to Eros under 17 U.S.C. “goods” within the meaning of the Lanham 106. In many of the most popular virtual worlds, Act, and whether the use of the SexGen name Benjamin R. Mulcahy is a partner in the entertain- Eros would have a difficult time establishing the wholly within the confines of Second Life con- ment and media practice group in the New York and threshold element of its claim because the terms stitutes a “use in commerce” sufficient to sup- Century City, Calif., offices of Los Angeles-based of service that govern and control most virtual port a Lanham Act claim. See, e.g., 1-800 Con- Sheppard Mullin Richter & Hampton. He is also worlds either reserve all intellectual property tacts Inc. v. WhenU.Com Inc., 414 F.3d 400 (2d co-chairman of the firm’s advertising industry and rights to the game operator or do not specifically Cir. 2005) (explaining that “use” must be de- sports industry teams. discuss who owns the virtual assets that cided as a threshold matter because no amount THE National Law JOURNAL Monday, DECEMBER 3, 2007 of consumer confusion is actionable under the lisher or speaker of any information provided by (9th Cir. 2007), quoting § 230(e)(2) of the Lanham Act absent the “use” of a trademark). another information content provider.” 47 U. CDA. Although it would be reasonable to con- If Eros is able to persuade the court that sell- S.C. 230(c)(e)(3). The touchstone of § 230(c) strue this language as simply clarifying that the ing virtual assets for Linden Dollars in Second is that interactive computer services are CDA did not create a new intellectual property Life constitutes a “use in commerce,” the same immune from liability for content created by right or limit any intellectual property rights reasoning could provoke manufacturers to ab- third parties. that were already recognized under existing law, breviate the time and energy involved in bring- the courts that have addressed the issue thus far ing a trademarked product to market by intro- have viewed this language as substantive, as op- ducing and testing their trademarked products Court held immunity posed to merely clarifying. As a result, the CDA in Second Life first, before they are introduced does not clothe service providers in immunity into the real world. It could also prompt addi- applied only against from claims under “any law pertaining to intel- tional suits, not only against the various John lectual property.” The 9th U.S. Circuit Court of Doe avatars who are passing their virtual assets state law IP claims. Appeals interpreted what this means at the off as someone else’s, but also against Linden end of May in the closely-followed case of Per- Research itself as trademark owners are forced fect 10 v. CCBill. to reasonably enforce their rights in Second Life Illustrating the broad scope of immunity of- In that case, a content publisher (Perfect 10) or risk losing them in the real world. fered by § 230, a federal district court held earlier brought claims against a Web- hosting and pay- Linden has already been sued at least once, this year that neither notice nor delay in remov- ment service provider (CCBill), claiming that though that was for its own actions, not those of ing content will bar a Web site operator from the defendant had violated copyright, trade- its Second Life residents. See Bragg v. Linden raising a CDA immunity defense. Eckert v. Mi- mark and state right of publicity laws. At issue Research Inc., 487 F. Supp. 2d 593 (E.D. Pa. crosoft Corp., No. 06-11888, 2007 WL 496692, at was the scope of the intellectual property excep- 2007) (holding that a Second Life resident *3 (E.D. Mich. Feb. 13, 2007). The statements at tion to CDA immunity. The court held that the could proceed on his claims that Linden Re- issue in that case were personal attacks on an in- CDA offered immunity only against state law search expropriated his property by freezing his dividual’s moral character. In granting a defen- “intellectual property” claims (which includes account). If Linden were sued for the conduct of dant’s motion to dismiss, the U.S. District Court publicity claims), but not federal intellectual its Second Life residents, such a suit would like- for the Eastern District of Michigan held that the property claims. Perfect 10 has filed a petition ly resemble or be closely analogous to the sev- mere fact that a Web site operator had received for a writ of certiorari to the U.S. Supreme eral high-profile lawsuits that have been brought notice that defamatory statements were on its Court, but unless and until the Supreme Court against social networking sites and other Web servers was not enough to strip that defendant of decides differently, the takeaway in the 9th Cir- site operators whose users have posted allegedly its §230 immunity defense. The district court cuit is that the CDA offers immunity against infringing user-generated content (UGC), with also held that the defendant was entitled to an state law intellectual property claims, but feder- avatars and other virtual assets constituting the immunity defense under the CDA despite a delay al copyright and trademark infringement claims UGC in the context of Second Life.

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