One interesting angle on this issue is the difficulty posed to recognizing rights in virtual property that arises due to the ephemeral nature of video-game worlds. Evolving technology, capricious consumers, the game-makers’ efforts to keep their products fresh, and ultimately the success of the game over time all ensure that no virtual world is likely to last forever, and this becomes problematic to the case for recognizing virtual property rights, EULA’s aside.
We discussed briefly in an earlier class whether game-makers could be obligated to maintain a game or server because a user has virtual property in the game that would otherwise cease to exist, which Tyler Dennis touched on in a post last semester: http://videogame.law.ubc.ca/2013/01/25/buying-selling-and-stealing-virtual-property-does-the-current-law-protect-or-disrespect-by-michela-fiorido/
From one point of view, the answer to this is that by the time games are wound up, the property may no longer have “market value” – if people aren’t playing the game, then no one is likely to pay for digital assets in the game. However, the fact that something has little or no market value doesn’t usually relieve an owner of their property rights in that thing, although it may limit the remedy they are entitled to if the thing is converted.
From another point of view an analogy could be drawn between virtual property and shares in a company that become worthless when a company declares bankruptcy. While directors might make the decision to declare bankruptcy (or wind up an unprofitable game), in the absence of gross negligence they are not liable for the devaluation of the shares; it is a result of business decisions, which courts usually don’t second guess, and market forces.
On the other hand, game-makers are certainly responsible for property devaluation that they incur by making changes to the game, such as making items more available or introducing more difficult enemies. Here the game-makers’ right to make changes to improve the game for all players seems like it would trump the rights of individual virtual property owners. EULA’s seem to effectively address this issue for the time being.
It is possible to envision situations where EULA’s might fall short, however: for example, a creator’s moral rights in an in-game product of their own creation if the product was found to be copyrightable. It’s sounding like moral rights will come up again later in the course, but as I understand it, an author’s moral rights in copyright are inalienable, unlike their commercial rights, and include the author’s right to not have the work destroyed or disfigured in a way that is prejudicial to the author’s reputation. The game-maker might own the commercial rights to the virtual property based on the EULA, but be prohibited from destroying it based on the author’s moral rights. This would again pose an issue upon the “winding up” of a game, even if the property is valueless at that point, if the author can argue that their reputation would be prejudiced.
And all of this concerns the gamer’s rights in virtual property as against the game-maker/service provider. Rights in virtual property as against other players is a whole different scenario.
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Great post! This is right along the lines of my paper topic and it’s great to hear discussion on some of the issues that are related. I agree with the concept that these items do have value and thus ‘owners’ should have recourse or at least some semblance of a right to have their interests protected. That said, it hasn’t necessarily been the case with most developers and it certainly depends who the party is pulling the strings and ‘governing’ the virtual economies.
NCSoft, a Korean developer, who employed one of our speakers from earlier this semester, has been quite aware of the property implications with their virtual ‘goods’. It seems that Asian jurisdictions are more willing to accept the realities of virtual economies, whereas American (and certainly Canadian) courts are either slower or unwilling to react. This has just been my general impression, so my apologies if I’m off base.
One interesting case that highlights the lack of recourse of users/liability of developers is Blizzard’s Diablo III economy. [http://www.gamespot.com/articles/blizzard-disables-diablo-iii-auction-house-after-gold-glitch-pays-out-trillions/1100-6408077/] Their market system uses parallel currencies, both in-game gold and ‘real money’ i.e. fiat money (used in the so-called ‘Real Money Auction House’, a.k.a. ‘RMAH’). Due to the very clear exchange of dollars and cents for items and gold, it is and would have been very clear at any time to determine a specific exchange rate to set a value on the items in one’s possession. People were making a lot of money, relatively speaking, and I am aware of items that sold for thousands of dollars on the official Blizzard market (apparently much more on other 3rd parties — which run counter to the ToS/EULA — such as d2jsp).
The reason I bring these ones up is because Blizzard screwed up and the economy was destroyed. During a scheduled patch, a very minor, but critical, change was made to the auction systems that was quickly exploited by savvy gamers, leading to the ‘duping’ of TRILLIONS of in-game gold. I played the game briefly, at a point in time when traded at a higher exchange rate, but we’re talking about millions of gold being worth in the neighbourhood of a few dollars, billions potentially trading for 10s or 100s… so trillions of gold flooding the economy was catastrophic. One streamer recorded his experience, duplicating as much gold as he could, while livestreaming, and buying the entire auction house’s supply of legendary items (which would otherwise be worth 10s of thousands of dollars) [http://themittani.com/news/diablo-3-economy-obliterated-gold-dupe-exploit].
Blizzard responded not by rolling back the entire game (as this bug was spotted very quickly when widespread exploitation occurred), but by sifting through dubious accounts and transactions and banning accounts/deleting items/gold. Apparently, this may have been due to the real money action house, as an individual may have spent real dollars on an item that was purchased through ‘duping’ and then a rollback would have deprived him of the item, while the money had already been transferred to the alleged violator.
So, overnight, a relatively stable and predictable economy that contained thousands of gamers with ‘net worths’ of significant value, who even relied on this game in some way as a source of income, now had their worthless items on hand… the hyperinflation was never repaired fully and the economy has never recovered.
With that long-winded example in mind, I wonder whether Blizzard SHOULD have or COULD have been responsible in some way. I’m guessing by black letter law and the terms of the clickwrap agreements, probably not… but would it be such an impossible stretch to apply concepts of securities law or some sort of economic loss? Seems to me that Blizzard dropped the ball and their role is quite clear…
Ryan,
I agree with what you mentioned about the business judgment rule. I can’t imagine a scenario where, if the winding up a game was reasonable (e.g. the game not being profitable anymore) and the EULA was similar to those that exist currently, the company could be liable to a player. Similarly, where game-makers make reasonable changes to a game, I think most people would roll their eyes at the suggestion that liability could result.
If there is any room for asserting virtual rights, I would look at situations where a player is treated unreasonably and unfairly by the game-maker. For example, in the situation mentioned by Matt, Blizzard reacted to the Diablo currency exploit by suspending or banning players who used the exploit, and donating the real money generated by the exploiters to charity. If a player who did NOT use the exploit was banned in the process, I would be interested to see whether they could have some kind of action against Blizzard.
On the subject of moral rights, it looks like moral rights can be waived, in whole or in part, by the original creator of the work. Linden Labs (Second Life) has a contribution agreement that includes such a waiver: “You hereby assign to Linden Lab joint ownership in all worldwide, common law and statutory rights associated with the copyrights, copyright applications and copyright registrations in Your Contribution, and to the extent allowable under applicable moral laws and copyright conventions, You agree never to assert against Linden Lab or its licensees or transferees any moral rights therein” (Source: http://wiki.secondlife.com/wiki/Linden_Lab_Official:Contribution_Agreement).
It is possible that this clause does not truly constitute a waiver, as it is buried in a stack of other terms in the agreement. I am not well versed in copyright law, so I’m not sure to what extent a waiver or moral rights for creations in a virtual world would need to be unequivocal–it would be interesting to see a case on this.
You’re correct that moral rights can be waived. I’m taking IP right now and I realized that shortly after making the post. The provision on waivers of moral rights is very short: “moral rights may not be assigned but may be waived in whole or in part – s. 14.1(2)” and I would assume ordinary contract rules would apply. It’s true that there might be an unconscionability argument with respect to the EULA, etc, but no more so than for other virtual property rights in my opinion. So the moral rights argument might be a dead-end, as far as regarding it as a novel way to circumvent EULAs is concerned.