Whether you’re a major brand like Coca Cola or an avatar of only a few months, if you’re starting a business in Second Life, you’re getting into new legal issues. Kevin Alderman and Francis Taney, both affiliated with the current Eros lawsuit, Dave Young of Purple Stripe and Randall Crockett, shed light on their personal legal experiences and outline a groundwork for protection. “There are going to be a lot more lawsuits, unfortunately,” said Alderman. “We’re just going to have to suffer through it.”
IP Rights and the Law in Second LIfe
Tim Allen, Flipper PA
Francis X. Taney, Jr. (Buchanan, Ingersoll, & Rooney)
Kevin Alderman (Eros/Strokerz Toyz)
Randall Crockett
Dave Young, CEO Purple Stripe
Alderman: First of all, I’d like to thank everyone in Sl for the support we’ve gotten from the community. We have some pending litigation that affects all of us. I’ve had more than a hundred people come up to me and say tahnk you. That means a lot.
Taney: Over the last couple of years I’ve represented a fair number of merchants and content creators in SL. I can’t even keep up with the rate of growth. Hopefully I’ll be able to present some information about the various types of IP out there.
Alderman: Take advantage
Crockett: We came from the largest adult website credit card processing company. A lot of us have left that to come into SL. Our largest concern is in media. We have a number of media deployment technologies. We’re moving forward, and want to make sure we represent the interestes of the adult companies
Crockett: We work to bring companies in, so a lot of what we do is to make sure we’re protecting their rights.
Allen: Thanks. I guess we can quick it off with the most basic question. How do you know if you have IP you need to protect.
Taney: There are four basic categories. Copyright protects original works of authorship. Copyright in the US protects a number of different categories relevant to SL, visual, audio, literary works (including software), architectural works in the non-utilitarian aspects of design. The prerequisites for something being copyrightable is that it has to be original. Once you get past that originality requirement, the creativity requirement is not that hard of a hurdle to get over. Most of the content you see people creating is going to rise to that level. You typically can’t copyright short phrases or names.
Trademarks are different. They are words, phrases, graphics, or symbols used to denote the maker of a product or service. Copyright is to protect expression, not ideas. Trademark law is to help the public know what the product or service is. So it has to be distinctive. You can’t say I want to sell a pen and call it “Pen.” Marks that are arbitrary or fanciful are the easiest to get protection for. Greyhound Bus is a good example. The Greyhound mark is distinctive in that sense. There are marks that are a little more boring, but by virtue of the merchant’s hard work, they might acquire distinctiveness.
Patents include a process, composition of matter, a useful article of manufacture, it’s typically manmade. There are typically four basic categories. It has to be novel. It has to be nonobvious. If someone is reasonably skilled in the relevant art, they couldn’t have put it together. IT has to be useful, with some commercial or scientific benefit. If you propose something that doesn’t work, that’s part of the problem. You have to disclose the patent in your application. You have to write claims with enough detail that someone skilled in the art could reduce it to the mode that you need to do produce it. Patents are not available to protect the laws of nature. It’s been recognized that you can process business applications of methods. Software, that relies on algorithms, as long as it is used for a business result, it can be patentable.
These three things that you have to register publicy. Trade secrets are pieces of IP that are not known to the public.They give the owner advantage in what they do, but the owner takes reasonable effort to keep secret.
That’s the primer.
Allen: Now when you go onto blogs and forums, you can actually talk like an attorney. Let’s get to the update on the Eros lawsuit.
Taney: A month ago we served subpoenas on Linden Labs and PayPal that we thought would lead to the real-world identity of the defendant. We think it’s a guy in the US. We have an idea of geographically where he is. We’re going to go back to the court and seek leave to issue more subpoenas. That might be mumbo jumbo. This is different because we don’t know who we’re suing yet. Usually the defendant can show up and object to subpoenas. But this is seeking information about a lot of people that are using a service anonymously. We have to get leave from the court to seek information and show that the legitimate interest we have in prosecuting our claims outweighs the privacy interest. We will be doing that very soon. We are going to go for a second round and are confident that the second round will get us there. The plan then is to amend the complaint with the real life information.
Allen: Given your backgrounds how do you see IP protected as opposed to your background?
Crockett: The MPAA did a survey on people’s integrity. Most people would not steal anything from anybody at any time with two exceptions. Music and movies. As soon as it’s online, people feel like they have the right to grab it. I had a filing where someone had taken my website and copied and pasted everything, including my name in our press releases. We contacted him, and the first words out of his mouth was “Yeah, well I got it on the INterenet.”
When digital content is created, it becomes the property of the creator immediately. You don’t have to go through the copyright office. Now we’re doing this through Second Life using their tools. If I create something for an employer, I don’t own it, they do. But it’s a grey area here. If I sell a video in SL, does the user then have the right to reuse it? Most people think they do. The easiest way to get around it is to read the backs of DVDs. You didn’t buy the DVD. You bought the right to use it.
Q: How does that extend to derivative works. There are only so many ways you can explain to someone how to walk down the street. If I put those instructions online, I own it. But everyone in the education room will want ti to.
A: We have a lot of issues like that in the adult industry. You have to have two disclaimers all the time, the 2257 disclaimer and the simple adult disclaimer. People will just copy it from Playboy, and that will end up in court. There are certain things you can’t protect, because it has to be original.
Q: Something about modifying existing design?
A: That’s a question that comes up to. IF I’m a DJ creating music by sampling from other artists and increasing the sales of the original song by creating a remix, am I hurting them? How much have I modified the content. There’s no real black and white.
Allen: If you find out someone is infringing on your rights on SL, what are your options?
Taney: I can address some of that. While it is true that the author of a copyright owns it at the point of creation, to sure in Federal court, you have to register. That’s an easy thing to do. If I was a merchant, there are levels of escalation. I would try to work it out with the person first. Maybe they didn’t understand that it wasn’t okay, and you can catch it before they invest a lot of money and effort.
There’s the Digital Millenium Copyright Act. The service provider, once made aware of infringement, has to take down the infringing material. It would be a tremendous burden on Linden if they were actually on the hook all the time.
Alderman: As many of you know, Linden Lab is pretty much overwhelmed with the growth of SL. They do have a knowledgeable legal department, and we are getting a lot of help, but they have an obligation under the DMCA to protect it.
My background is in engineering and construction. I didn’t have a lot of experience in copyright laws. When we found out someone was directly copying our work, I didn’t know what to do. I turned to Tim, and Tim turned me to Frank. It’s a simply process to go through the copyright office. It costs $45. You fill out the form online and get an interim registration number and a certificate in the mail. That gives you specific legal rights beyond the fact that you created the content. And it makes it much easier for an attorney to fight that battle. If you have a profitable business, I encourage you to do it.
If you’re making $1500 a month, spending $50000 to fight an infringement, it might not be worth it. Sometimes it’s easier to just go to a person and try to settle it ahead of time. Pick your battles and avoid confrontation wherever necessary. Only as a last resort did we consider litigation.
Crockett: The other big point is what remedy you’re looking for. If it’s retribution, that’s probably not very good.
Allen: How much IP infringement do you actually believe is going on? How many coke machines have you seen?
Young: Coke’s a great example. Their brand predated their entrance to SL, so we took that to them when we were working with them. All of SL is user created. One of the things that differentiates virtual worlds from business worlds is that the companies are stopping before rushing in to protect their rights. They’re taking a wait and see approach. Coke has actually been very supportive of people creating coke machines. IT gets the brand out there, and they don’t want to create an adversarial relationship.
That said, there are points they don’t want the brand. Say a coke bottle in certain darker, um…
Allen: Just say it, in Strokerz’ set.
Young: It’s hard. They’re always looking at how to balance brand awareness and openeness but controlling the identity.
Allen: The last question I have are what interesting IP issues are being created by the commercialization of Second Life?
Alderman: One thing is anonymity. We all value our anonymity. I no longer have it. I guess I’m paranoid. I get my mail and my neighbors look at me funny, and I’m thinking, “Do they know?” Our suit is an avatar vs an avatar, but it comes down to that if you’re breaking the law, that anonymity is not going to protect you. With Napster and p2p, they’ve proven that if you’re violating their rules, they’ll track you donw.
Q&A:
Q: A lot of us are content creators, but we also hire others to create content. We don’t see much protection for employers hiring others to create content.
Taney: The way the work for hire contract works is that the work an employee does belongs to the employer. If you’re dealing with an independent contractor, you need an explicit recognition that the work belongs to the employer. And that’s often an issue. Content creators want a lot of it. There’s a legitimate expectation of the buyer who is paying a lot of money and wants to own the product while the creator sees it as getting into their tools.
Q: I live in France. What does that change for me when I sell stuff in SL?
A: The French DMC is like the US.
Q: The people who will infringe on my propertry probably live in the US and Australia.
A: Crockett: you do have a slight problem there. In Vietnam, the piracy rate is 100%. The government is using pirated property. You can’t go after them, you just have to create protection. Second Life’s DRM is just about it. You can’t reach into China with the law and go after them.
Q:What can SL do is someone rips off my shop and content?
Taney: The cheapest option is the DMCA route. You put Linden on notice that the content has been taken. If they ignore you, they have potential liability as a copyright infringement contributor. It sounds like you’re seeing derivative works, and if they’re displaying them, that’s a serious problem.
Q: I have some questions about the SL TOS. All the artist and creator come in with the promise that you won your copyright. There are two aspects to this property. IN sections 3.2 and 3.2 of the TOS, in 3.2 Linden Labs has the perpetual free right to your license and the right to sublicense it. Where we own our copyright, we’ve licensed it to them and to sublicense it. There are not limits. As long as Philip’s running it and we trust him, that’s one thing. If it’s sold to Google, that’s another. Can it be limited to certain circumstances?
Crockett: The TOS has basically been thrown out at this point. That’s also a pretty standard clause. As a digitial media provider, whenever Universal sends us content, we have the right to distribute it and alter it. I need to reencode it and redistributing it. It’s an inherent piece of the business model. They have to put it in there.
Taney: The license you’re granting is to use the work to advertise the service, SL. If you create something cute or striking, they can run a print or Web ad. They can’t go farther than that. They can’t run limited edition prints.
Q: Have they modified it? It used to be included, but not limited.
Taney: As I read this, they would not have commercial use rights. They have fair use, they want to work with data and see if it’s causing something to crash, and they want to use it to market the service. That’s a limited use, that wouldn’t necessarily be fair use, but you still own the copyright.
Q:We had a horse that we sold and it was successful. A guy came in and made a knockoff. WE talked to him and said it looked exactly like our horse. You could tell it was a poor copy of it, but it was prim for prim pretty close. He justified it and said we were a monopoly. We thought about the DCMA. He can go to his lawyer then and request that it be put back up, and we could have been liable for his lawyer costs. So we said, is it worth it?
Taney: No court is going to reward anyone carte blanche. Second, the way you prove infringement, and if he wants to hire a lwayer, he probably believes he’s right, but the way you prove copying, you say, number 1, did he have access to the work. And he did. Then you look at the horse and say is it substantially similar in the eyes of the average person and community. If you can do that, unless he has some sort of defense, you win.
There are lots of hoops to be jumped through. But that thing about the lawyer’s fees is that if in copyright law, the prevailing party can have access to lawyer’s fee.s It doesn’t sound like he has a leg to stand on.
Q:I’ve had a few instance where I’ve hired someone to do a job for us. We paid them.Then they came bck and said we didn’t have time to do it. They gave us the money back. And then two weeks later, they came out with a product.
Young: Before you have them do anything, you have to have an NDA and a non-compete. They’re going to be privy to your business plans and your secrets. You need to protect those. And as a developer, it’s your responsibility to do due diligence.
Crockett: Don’t hire an anonymous person. If you pay out over $600, you need to file a W9.
Young: the virtual world is great, but before we do work with anyone, we do have a real-world conversation so that we have their information. And in the US, we have the issue of tax identification.
Q: For Kevin, a lot of us were avatars before getting into business. You said you had a positive response from Linden, as an avatar and for your personal privacy, do you think the balance is good?
Alderman: I really do. Obviously there are legal implications for them not complying with the DMCA. But I think they’ve really done a good job of balancing anonymity and legality. There are going to be a lot more lawsuits, unfortunately, we’re just going to have to suffer through it. But I think Linden Lab has been very positive about it.
Joey Seiler
www.VirtualWorldsNews.com
joey (at) showinitiative.com
(512) 535-8650
skype: joey.seiler.vwnews
Finally, they answered to the international issues of copyright (and seemed to need a dental chair to do it). Thanks for posting this.
Posted by: Nobody Fugazi | August 25, 2007 at 02:43 PM