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Real trouble in virtual worlds

Posted on 11 Mar 2008 at 16:43

At the end of 2006, Linden Lab responded with a ban to complaints from its members after an avatar called Prim Revolution started selling a program called CopyBot, which enabled anyone to copy an object in the game without paying the purchase price. It's all well and good the Second Life terms of service stating that "You retain copyright and other IP rights with respect to content you create in Second Life", but if your property is so vulnerable to theft from clever coders, one has to ask why anyone would bother building a business selling it? However, because the creator "owns" the IP for the property, an explicit right of ownership granted by Linden Lab, the fact that it's a virtual object of use only to avatars in a virtual world should be of little legal consequence.

Where the boundaries between virtual and real world are most definitely not blurred is when the taxman gets involved. If you're selling virtual property within a virtual world and making a virtual profit, all kept entirely within the realm of that world, there's nothing to declare as far as HM Revenue & Custom is concerned. As soon as any virtual profit is exchanged for actual money, however, everything changes. Alistair Kelman was one of the early generation of computer lawyers, defending the first people charged with hacking offences in the UK, a case that led directly to the introduction of the Computer Misuse Act. These days, Kelman is head of content at the Epoq Group producing legal technology products for high-street banks. "I am told the Second Life economy is growing by 10 to 15% a month. The taxman is going to take a piece of that," he says. "If you buy or sell virtual property using real money you generate income."

If you make any real money online, it must be declared like any other income stream, although there's no evidence to suggest tax inspectors disguised as Orcs are roaming the WoW or Second Life maps just yet. However, with growing concern over money laundering to aid international terrorism, the virtual black market that such systems can represent won't escape both attention and legislation for long.

I am the law

Most people appreciate the legal dangers of libelling someone in an online forum, and the same goes when it comes to copyright law online, obscenity and sexual harassment. Yet hardly anyone, not least the legislature, can grasp the need to apply the law of the land within the virtual realm. At the moment, we're only just beginning to understand the need to protect our virtual assets, including our identities.

Some argue that the mere fact Second Life and WoW have grown to the size they have, with few legal scrapes, proves that self-regulation and policing work fine. Others have compared it to the evolution of mercantile law in Venice during the Renaissance where commercial practice eventually became law. The danger, of course, is that as governments and the corporate world start to recognise the commercial value of virtual life, so there will be a rush to legislate to protect a potentially lucrative revenue stream.

However, as Kelman warns, make the laws too quickly and "they will not correctly map the virtual reality". The corporate world is perhaps not best placed to be drafting legislation that will govern acceptable behaviour within what are largely socially interactive domains. But when the likes of Coca-Cola, Dell, IBM and Reebok all have a Second Life presence, when MTV has created an entire virtual platform based on There.com technology, when US presidential candidates use virtual worlds as a campaign platform, there's a certain air of inevitability that something will be done.