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“Inline” intellectual property raises legal issues

A brave new world has emerged online where Internet users “play” their favorite characters in the digital world. A user can create a character, play the character, and interact with other players' characters. Branded items for these online personas to buy and “wear” or “carry” — for real money or perhaps points or credits — are popping up in many venues.

The users are so wrapped up in this virtual world that “inline” may be a better description of the phenomenon than “online!”

What goes on in these “inline” worlds? is one of the more famous of these virtual playgrounds. As reported on its website, “Second Life is a 3-D virtual world entirely built and owned by its residents. Since opening to the public in 2003, it has grown explosively and today is inhabited by a total of 3,289,433 people from around the globe.”

Inline market

The “marketplace” at Second Life “currently supports millions of U.S. dollars in monthly transactions. This commerce is handled with the in-world unit-of-trade, the Linden dollar, which can be converted to U.S. dollars at several thriving online Linden Dollar exchanges.”
Such a world poses many intellectual property issues. Who owns the characters? How are rights enforced? Is the virtual “stuff” for sale property that is protected by IP laws?

In an uncontrolled script situation, players have complete discretion in how the story unfolds and how the characters move through the game; they may even have control over how the character looks. Who owns this “inline” intellectual property?

To the extent that the users create character depictions or storylines, the users may have developed copyrights in those “works” and own the copyrights. In Second Life, the user owns anything that he or she creates, including avatar characters, clothing, scripts, textures, objects, and designs.” As the site further explains, “this right is enforceable and applicable both in-world and offline, both for non-profit and commercial ventures. You create it, you own it - and it's yours to do with as you please.”

But users beware: owners of other virtual worlds may have terms of use requiring that rights created by the users automatically transfer to the owner and are not owned by the users.

Another issue that arises is whether a user has an unfettered right to create an “inline” persona?

What goes inline, doesn't stay inline

At least one lawsuit dealt with the IP issues surrounding ownership of such characters. NCSoft operates a game called “City of Heroes” in which players can create the superhero character they wish to play in the online game. Creation is a step-by-step process in which the player chooses his hero's race, head (including hairstyle, masks, etc.), then torso and lower body (selecting costume elements and colors).

The player also selects the character's name. While the terms of use prohibited copyright and trademark infringement, it was technologically possible for a player to “create” well known comic book heroes — such as Marvel's The Incredible Hulk and Wolverine — and name them accordingly. The characters were not prescreened by NCSoft, though NCSoft did maintain a Block List for character names.

In bringing suit in 2004 against NCSoft, Marvel Enterprises alleged that players were creating and playing characters that infringed its copyrights and trademarks, based at least in part on Marvel's own ability to do so when its agents played the game.

NCSoft was unsuccessful in its motion to dismiss Marvel's claims of direct, contributory, and vicarious copyright infringement. The U.S. District Court for the Central District of California did, however, dismiss nearly all of Marvel's claims of trademark infringement on the grounds that there was no suggestion that the users who selected the names of their characters were using the names in commerce in connection with the advertising or sale of goods or services. The case settled in December 2005 on undisclosed terms, and there has been no apparent change to NCSoft's game offerings, except increased monitoring and enforcement of the terms of use.”

Bragg rights

As mentioned, users are buying “stuff” in these games. What happens to this stuff when a user is expelled from the game for violation of the terms of use? There are numerous and unresolved legal issues about whether and under what circumstances a user “acquires” property in this context and what the user's rights are surrounding termination of his account. These issues are exactly the focus of Bragg v. Linden Lab., a case which, as of the writing of this article, is pending in Pennsylvania.

This new “inline” world is an amazing development in many ways, bringing new entertainment, new business opportunities, and new legal questions to the fore. As these universes expand in popularity, users should be aware not only of the possibilities but also that their legal rights are not yet clear and that, at a minimum, the fine print of user agreements should be carefully read.

Previous articles by Deborah Wilcox

Deborah Wilcox: The press vs. Google: Copyright cases to watch

Deborah Wilcox: Is your business domain at risk?

Deborah Wilcox: Are consumers confused by search engine ads?

Deborah Wilcox: Keyword advertisers win some, lose some

Deborah Wilcox: Renew your domain name!

Deborah Wilcox: That’s my trademark®

Deborah A. Wilcox is a lawyer and co-chair of intellectual property litigation at Baker and Hostetler, LLP, in Cleveland. She is a graduate of the University of Wisconsin-Madison Law School and regularly handles copyright, trademark, and e-commerce litigation. She can be reached at

The author would like to thank Rosanne T. Yang of Baker Hostetler for her contributions to this article.

The opinions expressed herein or statements made in the above column are solely those of the author and do not necessarily reflect the views of Wisconsin Technology Network, LLC.

WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed here.

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