Court Rules Against Linden Lab Terms of Service

According to a court brief I’ve just been emailed, a Pennsylvania court has allowed a lawsuit filed against Philip Rosedale and Linden Lab, makers of the virtual world of Second Life, to move forward despite Rosedale’s motion to dismiss the suit or have it arbitrated. The decision is significant in that the court has judged the SL Terms of Service to be insufficient to the job of adjudicating this particular dispute, and the judge in the case went so far as to characterize the ToS as a contract of adhesion — a contract that isn’t necessarily enforceable because it has more or less been forced on a party with weaker bargaining powers (i.e., the SL user) on a “take it or leave it” basis. The brief itself is linked from this Web page. The decision could have important ramifications for the way in which many virtual worlds come to be governed, possibly giving more rights to their residents than they have enjoyed before.

Pennsylvania lawyer Marc Bragg first filed suit against LL more than a year ago. The dispute has been a bit muddied by the fact that at least some of the assets in question — some virtual real estate that was confiscated from Bragg by LL — may have been acquired via an exploit. The brief refers specifically to a plot of land called “Taessot” (is there a Taessot sim? I can’t check at the moment), which Bragg acquired for US$300, and which LL later confiscated. Regardless of whether Taessot is eventually ruled to have been improperly acquired in the first place, this interim ruling sets an important precedent in the area of how and what the Terms of Service govern.

Linden Lab CEO Philip Rosedale, who is named as a defendant in the suit, had moved that claims against him be dismissed and that the dispute be heard in arbitration, since the LL Terms of Service seems to give the company that option. The court denied the motion for dismissal based on what seem standard legal grounds (though of course IANAL). But it also denied the motion to have the case arbitrated, and the reasons it gave could have broad ramifications for not just Second Life but for other virtual worlds and massively multiplayer online games.

The court filing is plain: “The TOS are a contract of adhesion,” it reads. A lawyer should certainly weigh in here on just what that means, but as far as I know — and I’ve looked into this somewhat while Peter Ludlow and I were writing our forthcoming book about virtual worlds — it at least means that LL can’t just point to the Terms of Service and claim that all SL users are unequivocally subject to its whims.

The court decision essentially holds LL to a higher standard than any virtual world company has been held before, as far as I know. In part, the decision grows out of the fact that real money is at play in Second Life, and out of LL’s and Rosedale’s relentless promotion of SL as a place where money can be earned. (I’m not speculating on this; it’s made explicit in the filing.) Essentially, what the court is saying is, “If you’re going to bill your world as an earning opportunity, you have to toe a more rigorous line in governing it” — which is exactly the argument Peter and I make in our book. To me, this looks like an important decision that could start to bring governance of virtual worlds up to the standard it needs to be — something more akin to the standards by which we govern the real world. At the very least, it’s nice to see a court take these issues seriously.

8 comments

  1. Mark Barrett

    There’s a Taesot sim (with only one s). (Link is to the page it’s on, but this will change as more sims are added over time, we’re at 10,771 sims by the way, wow.)

  2. RobbyRacoon

    Obviously, I’m not a lawyer, because my understanding was that *all* contracts are “take it or leave it” types, by which I mean that it’s my understanding that it is generally the case that if you don’t agree to the contract you cannot use the service.

    So…. I look forward to hearing what any attorneys have to say on this matter, hopefully they can clear that up for me. I have previously been of the opinion that Bragg was an idiot without any leg to stand on in the legal sense, so I will be watching this play out with no small measure of fascination.

  3. Aleister Kronos

    I’ve been banging on about the draconian ToS for what seems like months now. I know LL only invoke their virtual God powers on rare occasions – but the fact that they exist does tilt the field too much in their direction.

    Hopefully, this will present an opportunity rather than a threat, since, if Rosedale’s vision of a 3D internet is to become reality, many of the “game like” aspects of the current ToS will need to be jettisoned in favour of a fairer, more rigorous set of standards.

  4. Mark Wallace

    @Robby: In fact, that’s not the case. Most contracts allow for negotiation. “My way or the highway” contracts are often found to be “contracts of adhesion” and are often given less weight by the courts.

  5. Darkscorp

    This Bragg guy is a scammer..and now is capitalizing on it thru Bad PR.

    Past news about this shows he got what he had thru an exploit yet still he ventures on with claims against LL.

    Now either he’s a really bad lawyer and couldn’t file a Civil lawsuit against a burnt post or he has way to much time on his hands and has nothing else better to do with his “talents”.

    So what are we going to see now? Ads on TV for BS lawyers willing to take cases to court based on VRWs?

    They are Scum imho and are all looking fo a fast buck.

    Hey Bragg! I stubbed my virtual toe on a virtual piece of wood on a virtual estate! I want to sue for Damages!!!

  6. Johann

    Well I hope more details will come soon, because this all seems rather messed up.

    And I’d need another viewpoint, because what was mentioned above about Philip saying the claims should be dropped makes him sound like he thinks he is above the law or something. But I honestly can’t imagine anyone that isn’t drunk or high thinking that.

    I never read the TOS. I barely do anything on there to worry about if it’s illegal or not. I expect the same rules as in real life. Don’t mess with other people’s stuff, don’t ‘take away their rights’ like the whole incedent with copybots.

    But I’d think the very name Terms of Service would mean take it or leave it. And what on the internet isn’t Take It Or Leave It? If you have to register on forums, for example, they have TOSs and other rules you have to follow and agree to. Or any other programs, including games and other virtual things? How’s this any different? I’m really asking.

  7. John Truempy

    This a bad day for the 3D worlds and the internet as a whole!

    The worlds of 3D sites, Forums and even Blogs like this are all governed by TOUs or TOSs. The day the courts in any location decide that are not legal grounds we all have a problem.

    Look at this full case Bragg found a flaw in the software and was able to buy land not really up for sale yet. (to me that is stealing and not just from LL but every member of SL) If a person finds the back door to the movie theater open do they have the right to watch free movies???? Do I the person that waited in line and paid for my seat now have to move because I entered the right way????

    This guy should not be suing LL he should be in jail for hacking!!!!!

    Now we have some judge (that if we are lucky at last has AOHell….. Saying that TOUs are one sided. Well darn right they are one sided as they should be! What ever happened to if you don’t like to play by the rules don’t play here?

    So are host here Mark Wallace writes one of the best blogs on SL and other 3D worlds. If he wants to make a rule that says “you must start every reply with the words Mark is great” isn’t that his right? I being an adult has the right to make 2 decisions do as Mark says or don’t post. I can live with that! Why can Bragg live with the fact that he got caught stealing and got banned and his land taken….. Heck what ever happened to “if you can’t do the time don’t do the crime”?

    The other thing that gets my panties in a bunch is my land fees and membership funds will now in part have to pay more lawyers to fight this even more….. funds that could have bought a lot more servers or bigger bandwith to make SL better.

    Hay Mark you can post this reply or Delete it that is up to you! My name is not Bragg and wont sue you if I don’t get my way…..

  8. Pete Mitchell

    I am delighted that the whole thing is going to court. Linden might finaly get what is coming to them.

    I think it is disgraceful the way this man has been cheated out of his money.

    Ok, the transaction was deemed by the SL team to be void, but it was at the point when they decided to withhold his money that they (Linden) commited what I can only see, as an act of theft.

    It’s like you go into a shop and the assistant takes your money for a product of the shelf, then the manager comes in and informs you that the product in question is NOT for sale. He then snatches it from your hands and refuses to give you your money back. How would you feel about that?