Virtual Worlds  

Along with the recent proliferation of social networking websites such as Facebook, MySpace and Twitter comes the growing popularity of “virtual worlds.” Generally, virtual worlds are online simulated environments designed to be populated by “avatars.” Avatars are visual representations of the virtual world users that interact with other virtual world users either through text or voice command. Virtual worlds are often either general interest or social in nature, such as Linden Lab’s Second Life or Electronic Arts Inc.’s (EA) The Sims Online, or are designed for multiplayer online gaming, such as Blizzard Entertainment’s World of Warcraft, EA’s Ultima Online or Sony Online Entertainment’s EverQuest II.

Some, but not all, virtual worlds share two additional characteristics that can raise interesting legal issues. First, many provide for persistence of user-created content. In other words, when a user creates a virtual item in the virtual world, that item will remain in the virtual world for others to interact with and experience even after the user logs off. For example, a Second Life user may create virtual clothing items that can be worn by avatars, which will remain in the virtual world for other avatars to interact with and use even after the user logs off Second Life.  

Ownership of such user-created content is determined by the content creators’ Terms of Service or End User License Agreement (EULA). For example, through its EULA Blizzard Entertainment retains “[a]ll title, ownership rights and intellectual property rights in and to the Game and all copies thereof.” In contrast, Linden Lab provides in its Terms of Service that users “retain any and all Intellectual Property Rights [the user] already hold[s] under applicable law in Content [the user] upload[s], publish[es], and submit[s] to or through the Servers, Websites, and other areas of the Service.” Thus, in the example above, the Second Life user would own the intellectual property rights in and to the virtual clothing items he or she originally created, to the extent such items are protected under various intellectual property laws.

Trademark owners are legally required to actively police against unauthorized or improper use of their marks – failure to do so might result in dilution of the mark and possibly a loss of trademark rights.

Second, many virtual worlds have their own economic environments in which real-life currency can be traded for virtual goods. For example, the “LindeX,” Second Life’s official currency exchange, allows residents to purchase “Linden Dollars” with US dollars (and vice-versa). Linden Dollars is the virtual currency used in Second Life to purchase virtual goods. Using the example above, users, through their avatars, could purchase the virtual clothing items created by the Second Life user with their Linden Dollars. The creator of the virtual clothing items could subsequently convert earned Linden Dollars back into US dollars via the LindeX.

Although relatively new, virtual worlds are gaining popularity not only for social or gaming purposes, but also for real-life business purposes. For example, US$31 million worth of Linden Dollars were exchanged on LindeX during the first quarter of 2010. Also in the first quarter of 2010, the sum of all Linden Dollar-denominated transactions between Second Life users equaled a total value of US$160 million, which was a 30 percent increase from the same period of time just one year ago.

Small businesses and even individual users may succeed in virtual worlds by selling or renting “virtual real estate,” selling user-created content or selling “in-world” services. In fact, in November 2006 one virtual world user announced that her avatar was the first to have a net worth of more than US$1 million made entirely within the virtual world, mainly through transactions in virtual real estate and other user-created content. Larger real world businesses may establish presences in virtual worlds to sell virtual versions of their products or simply to increase brand recognition among virtual world users.

Trademark Issues

As may be expected, the unique combination of persistence of user-created content and an economic environment involving real currency could lead to real world legal issues, particularly in the area of trademark law. Again using the above example, unique trademark issues are raised when the creator of the virtual clothing items reproduces, without permission, a registered trademark on the virtual items and trades on the goodwill of the real-life trademark owner to sell the virtual items for real currency. This practice is becoming increasingly rampant, due to user demand for realism in virtual worlds, the ease of creating virtual replicas and the relative lack of enforcement in virtual worlds. Indeed, an avatar strolling in a virtual shopping mall will likely encounter numerous virtual stores carrying knock-off virtual goods.

For various reasons, trademark owners should consider monitoring virtual worlds for unauthorized use of their trademarks by third parties. As suggested above, such use can lead to substantial sales of counterfeit goods – profits that could otherwise flow to the rightful trademark owner. Additionally, trademark owners are legally required to actively police against unauthorized or improper use of their marks – failure to do so might result in dilution of the mark and possibly a loss of trademark rights. Finally, trademark owners may have a tough time establishing a presence in a virtual world that is already saturated with knock-off replicas of their goods.

Solutions

Trademark owners wishing to enforce their rights in virtual worlds may find it difficult to identify an alleged infringer, other than by its avatar. Therefore, owners need to find creative ways to enforce their trademarks in this new media. For example, furniture designer Herman Miller offered any virtual user who had purchased a knock-off virtual “Herman Miller” chair a free copy of a licensed authentic virtual chair in exchange for a promise to destroy the knock-off item. Other trademark owners have established a presence in virtual worlds and approached the alleged infringers’ avatars with their own avatars and simply asked them to stop. Still other trademark owners have invited the infringers’ avatars to join their campaign and participate in a revenue-sharing program to sell the virtual goods officially.

Trademark owners may also wish to work with the content creators to stop the alleged infringers. For example, Linden Lab indicates on its website that it “responds to complaints that content infringes trademarked or celebrity material,” and provides an address for submitting a notification of infringement. Finally, trademark owners may feel it necessary to resort to the legal system to try to procure the identity of the alleged infringer, and send a cease and desist letter or institute an infringement lawsuit (although there is a lack of existing published case law on this precise issue which may otherwise set a precedent on which trademark owners could rely).

The introduction of new media, such as virtual worlds, presents new and unique legal challenges. The use of trademark is just one of the many legal issues that can arise when navigating virtual worlds. It is important that companies become familiar with these issues in order to ensure that they protect and enforce their valuable intellectual property rights.