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Years from now, it may be that “Second Life” could be as prominent on bar exams as contract law. This isn’t a prediction of a New Age approach to torts. “Second Life” is an online role-playing game with dynamics that could draw U.S. law into virtual worlds. The game created a lot of buzz at the recent State of Play II: Reloaded conference, co-sponsored by New York Law School and Yale Law School. The game’s developer, San Francisco-based Linden Lab, rocked last year’s conference by granting players intellectual property rights to their virtual creations. Most game developers, such as Electronic Arts Inc. and NCsoft Corp., insist that all tools and characters created in digital worlds belong exclusively to the company. “Second Life” players, in contrast, do own the characters and objects they construct. Players can also use the game’s scripting language to write computer code that alters what their creations can do. The line between virtual worlds and reality is already hazy for online games, such as “Ultima Online” and “EverQuest.” Players trade $880 million worth of virtual goods each year using third-party Web sites or Internet cafes that match buyers and sellers, according to Stephen Salyer, the president of IGE Ltd., an online currency and property trading site. Participants use credit cards and the electronic payment system PayPal. Typically, the buyer requests a meeting time in the game’s virtual bazaar, notifying IGE of his character name. Similarly, eBay currently counts more than 10,000 virtual items for sale. Developers such as Sony Online Entertainment Inc., which owns “EverQuest,” ban trades using real money. General Counsel Andrew Zaffron cites concerns about spoiling the collaborative spirit among players, dealing with customer complaints when sales go awry, and disrupting Sony’s ability to fine-tune and refresh game content. But IGE’s Salyer says such arguments are mostly a “head-fake,” noting that many developers deny the real-dollar connection to avoid disputes if real-world property law ever applies to virtual goods. Linden Lab’s “Second Life,” in contrast, embraces a more fluid border. Linden founder and chief executive Philip Rosedale argues that a virtual world with property rights and real income opportunities stimulates sophisticated online communities. One player, for example, earns real money creating intricate virtual airplanes and selling planes, flight time and sky-diving lessons to other characters. Then again, that income might just bolster a real-life court claim in the unfortunate event of a digital heist. “Second Life” might further blur legal lines with its adoption of devices such as rents on virtual land. Once players buy parcels, they must pay Linden’s monthly land-use fees. Translatable into U.S. dollars, such fees could further weaken the idea that players build, buy and sell just for fun, says Alan Behr, counsel at Alston & Bird and head of the firm’s electronic entertainment task force. Cory Ondrejka, vice president of product development, acknowledges that the game’s property and economic policies could eventually support virtual property claims in real courts. But he argues that other gaming companies are in denial. Linden Lab also insulates itself from real-world liability over created property with a user license agreement that mimics those of Internet service providers, says Ondrejka. An entrepreneur who develops a new virtual car model, for example, might have a copyright claim against an automobile buyer who makes unauthorized virtual duplicates. But Linden would avoid liability as a hosting service protected under the Digital Millennium Copyright Act. U.S. case law to date doesn’t provide a good road map for potential litigation stemming from these disputes, says Behr. But some foreign courts have begun to accept the notion of virtual property. Last December a Beijing court ordered the restitution of one player’s stolen virtual weapons. Given that the United States takes a much stronger stance on the idea of property than the People’s Republic, it’s not hard to imagine such claims reaching American shores — and soon. Nice place. What are the taxes?

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