VWFE: The legal pitfalls of virtual worlds

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virtual-worlds-legal.gifOh my. I’m at the Virtual Worlds Forum Europe still, and it’s about to get hardcore in a legal eagly way. The next panel session is ‘Legal and regulatory issues relating to virtual worlds’. In other words, can you get your avatar arse sued or arrested for something you do in virtualand?

First up is David Naylor, partner in the technology law group at Field Fisher Waterhouse, which actually has a Second Life office. He says the legal issues range from what exactly an in-world asset is, and who actually owns it (you, or the company that runs the virtual world).

Things relating to commerce too – how do you apply contracts, consumer protection and e-commerce laws. Employment also comes into it, if an in-world business is hiring people – “Do the individuals they’re hiring have wrongful dismissal rights, and are they being paid below the minimum wage? What kind of obligations do you have as an employer?”

Tax also – governments are starting to wonder if they should be taxing profits within virtual worlds. Content liability too – can you defame someone in a virtual world? Privacy, and also the potential for all types of crime – money laundering through to fraud and even theft. For example, if a virtual world allows things to be stolen, does that then count as a crime? You could tie yourself up in knots with this stuff.

So, intellectual property infringement, which David says theres’ a lot of within Second Life and other worlds, with brands not sure what to do about it.

Hmm, he’s talking about a bank that went bust within Second Life, and left users $750,000 worse off (that’s real dollars, not Linden Dollars). Apparently there were queues of avatars trying to get their money out of in-world ATMs, like a virtual Northern Rock.

More generally: “There appears to be a common perception that laws don’t apply within virtual worlds,” says David. “They do.”

Now John Wagland, who’s a film and games examiner at the British Board of Film Classification (BBFC). He’s an ex actor and game developer, apparently, so is eminently qualified. The BBFC rates films and games – you might know them from their controversial ban of Manhunt 2 recently.

He’s talking about the difference between films and games. In the latter, “two gamers can take varying paths through a game, solving problems and reaching goals in different ways, so the playing experience can vary enormously.” So it’s a challenge for the BBFC, which can’t be sure that players will have the same experience it does when playing a game – whereas watching a film is the same.

“Nowhere is this more true than in online games,” he says. “Quite apart from the size of World of Warcraft, a lot of the content may not exist when we get to look at it.” So the BBFC gives World of Warcraft an age-rating, but new in-world content may launch later that would justify a different rating. “There’s no compulsion to have the game reclassified when the game is patched.”

User generated content is another issue for ratings bodies. “This kind of content is not included in the original rating,” he says. In America, the games ratings body has recognised this, so games carry a warning saying ‘game experience may change during online play’. John says this isn’t ideal, but may be the best solution at the moment.

“The alternative would be giving every online game the highest rating possible, which in the UK is 18, or to monitor every online game constantly to check that nothing is added by the users or company which is age-inappropriate. That’s a huge task.”

He says the BBFC’s research shows parents are worried about online games for this very reason – they’re not sure they can trust the age ratings. John’s not sure if the BBFC will get the legislative remit to regulate online games, but they’d be interested if they got the chance. Interesting stuff – basically, online games cause all manner of problems for traditional games ratings systems.

Now, Dominic Peachey, from the Financial Services Authority, who says we might be wondering why he’s here, and that he’s starting to wonder the same. It’s all about virtual money – “It seems to me we should start thinking about this,” he says.

The FSA regulates banking, insurance, stockbroking, investment and pensions, as well as electronic money. He reckons the latter is likely to be the first thing people will come across – if it’s entirely earned and used within the game, it probably won’t be regulated, but the minute users bring in real money and convert it to the in-game currency, it becomes worthy of regulation.

So, time for the Q&A bit. How do you establish jurisdiction – is it the UK, or somebody else who’s in charge of all this. David from Field Fisher Waterhouse: “There are no hard and fast rules about how it pans out. From a UK perspective, the willingness of the courts to take jurisdiction will be totally different depending on whether it’s crime, or a business contract, or another kind of civil wrong.”

We may plunge into legalese soon, I apologise if so, as I won’t be able to make head or tail of it. Just thought I should warn you.

Basically, “it’s complex”. You’re telling me.

David says there are some moves to create an in-world legal system for Second Life, which may be able to arbitrate in certain disputes without having to take them to a real-world court (one project is the Metaverse Republic, he says).

Ooh, a man from Sega in the audience is asking a question, because they’re running some kind of project involving “consumer dialogue”. Apparently they had problems with two people hurling very serious insults at each other (Celtic and Rangers fans and sectarian stuff – I wonder if this is to do with Football Manager Online, or the Football Manager forums).

Anyway, this sort of thing is covered by existing laws, such as inciting racial or religious hatred, which should also be covered by the policy users sign up to when they register for a world or site.

Finally, what about virtual worlds that blend virtuality, gaming and social networking? John says the BBFC has no powers to regulate these, so they have to be invited to participate. Moderator Tony Morris (he’s a lawyer too) says the laws will change to either extend bodies like the BBFC’s remit, or create new authorities to regulate virtual worlds.

John says pure games like World of Warcraft are easy to regulate, but things like Eve Online are less so, because players are creating the dynamics of the world – you’d need “undercover virtual police” roaming the world to see if stuff is going wrong, then passing information on it to, well, whoever has jurisdiction over that crime.

It’s been quite a hardcore session, but these are perhaps the most important issues for virtual worlds going forward, whether they’re games or social spaces. All I can say is that if I was running one, I’d have damn good lawyers to back me up if anything went wrong ;o)

Check out other stories from the Virtual Worlds Forum Europe in our Virtual Reality category.

Stuart Dredge