Digital Property Law [was RE: [MUD-Dev] Selling training]

[Joe Andrieu]

Steve (Bloo) Daniels wrote:
> Joe Andrieu wrote:

>> Sure, but contract law is not property law.  The issue I raised is
>> about when/if a judge decides that the property aspects of a given
>> case outweigh the contract aspects.

> Which courts hate to do. Contracts are easy.

Well, not being a lawyer, I must yield on most of the points you've
raised. But comments follow...

>> Speaking from a Law & Economics perspective, contracts are not the
>> efficient means for dealing with all the various aspects > of
>> property law, so its likely that not all the terms required to deal
>> with property rights are going to be put into a contract. So, if
>> one attempts to create a contract that treats digital > property
>> like real property, it wouldn't surprise me for a judge to imply >
>> terms to the contract which the service did not intend.

> And my opinion is that a contract that tries to treat digital
> property as property won't be enforced by courts on property right
> principles.

> Who sues who in the first place?  Digital victim sues service
> provider/game company?  Then it's a simple matter of whether the
> provider followed the enforceable provisions of the contract; the
> 'property' issues can be entirely circumvented.  Digital victim sues
> digital perp?  How?  Assuming you could prove identity and establish
> a prima facie case of digital evidence, if both were playing within
> the guidelines of the provider contract and rules of conduct, there
> is no issue.

>> And your suggestion "What you could do" is effectively the same
>> thing as the court requiring certain features in a game
>> world. Whether its a direct court order or a pre-emptive action
>> taken to avoid the courts, both have similar effects in > terms of
>> the courts driving design issues.

> I didn't mean what a court could do.  I meant what a game designer
> who wanted to have a legal property system *within* a game could do.

Right. I think that's what I said.  The issue of dispute is whether
that's something that courts would "force" either directly or
indirectly.

>> Rather, I argue that trends in digital property (1) could lead to
>> such implied terms and (2) will lead eventually to > digital
>> property being handled as a variation of real property in the
>> real-world courts.

> And I strenously argue that the digital "property" you describe (I
> keep it in quotes because I don't accept the premise) cannot, will
> not, and could not be handled like that.

So, your premise is that digital property will only be handled by
contract law?  That assumes that the courts will always agree that the
TOS suitably protect all the proper rights of the two parties.
Despite what contract I sign, there are rights I cannot give away--my
liberty for example as I believe courts will not recognize a contract
even for voluntary slavery.  I still hold that there *is* a non-zero
portion of property rights which could be enforced, above and beyond
any TOS, which ends up being contrary to the intent of the service.

>> Some of what is happening today in virtual worlds is > moving
>> towards de facto property rights, despite TOS agreements attempting
>> the contrary.  First, because there's a lot to cover about property
>> rights that is probably not in a TOS. And I believe that since any
>> written contract is only a memorandum of the actual > agreement,
>> other aspects of the agreement could be asserted based on the
>> actual practices of the service.

> You don't believe in integration clauses or the statute of frauds?
> Interesting.

Actually, I'm not sure what you mean by that.  I do think that the
semantic interpretation of a written contract could vary significantly
based on how the service is actually delivered, as such delivery could
imply definitions in alternative ways.

>> So there may be implied terms even though the TOS tries to avoid
>> them.  Second, a TOS is fair game for an argument of cohesion,
>> because every user is pretty much required to sign it and has no
>> practical opportunity for negotiation.  I'm not sure what the
>> current case law is in this area, but if cohesion is a viable
>> argument, this case certainly seems to be the place for it.

> I believe you mean "adhesion".  For the non-legally inclined on the
> list, an "adhesion contract" is a "my way or the highway" kind of
> contract.  In the area of entertainment for the consumer, adhesion
> contracts do not raise the spectre of disproportionate bargaining
> power present in other areas because games are not 'necessities' and
> are not significant consumer expenditures.

Yes, I meant adhesion. And I must say your are probably right here.
However, it seems that if the service is charging $1000 for the Mofo
Sword From Hell, then it is a significant consumer expenditure.  If it
isn't then whatever the $$ value that makes it a significant
expenditure will eventually be reached. It may be twenty years before
$100,000 is paid for a digital estate in a virtual world, but I
virtually guarantee it will happen eventually.

>> Secondly, I would argue that creating property rights in MUDs is a
>> Good Thing(tm) for the same reason that property rights are a good
>> thing in the real world.

> So I can put up a fence and keep you out?

> As the classic parody of Woody Guthrie goes:

>   "This land is my land, this land ain't your land,
>   I got a shotgun, and you ain't got one,
>   If you don't get off, I'll blow your head off.
>   This land belongs to me and not you."

If your point is that property law is a Bad Thing in the real world,
then we'll just have to agree to disagree. If you own a virtual
estate, then YES! You should be able to put up a fence or buy a lock
or a watchgriffin or whatever to keep me out.  And I think that
putting a fence or a lock on your real-world real-estate is a good
thing. Despite the well-intended anti-establishment Guthrie lyrics,
the world without law is a brutish ugly place.  What we give up to law
enforcement (including what Rodney King, et al. give up in situations
of extreme abuse) is much less costly than living in a world without
the rule of law. Just try building your life in Somalia or the
Republic of Congo.  (Gee, there seems to be some similarity between
lawless third-world "countries" and EverQuest... hmmm... maybe a
stable government and the rule of law could return it to a nice
third-world tourist destination)

>> You point about duplicability is true, but doesn't address the
>> nature of this new scenario.  If an virtual object is stolen from
>> me, I don't get it back.  If I do, as in Achaea, then there is an
>> implied commitment on Achaea's part to do so.

> Nope.  And court's don't go looking for opportunities to imply terms
> either.

Well, I'll have to yield on this point.

>> And they are effectively implementing a rule of law about >
>> ownership of items purchased with real-world dollars.  So, Achaea >
>> is actually doing exactly as my argument suggests, they are
>> implementing their own system of property rights, precluding the
>> courts from really getting involved by minimizing the "error
>> costs", to use an Law & Economics term (the costs of filing a suit
>> are clearly > greater than the value of one hour's lost value).

> Is that they're motivation?  To preclude court intervention?!  Don't
> get me wrong, preclude legal intervention is usually a good thing
> for a business to do, but there is no good reason to be worried
> about it in the first place.  To get in that position, they have to
> guarantee that they'll return property and such in the first place,
> and I doubt the contract says anything like that.  And no such term
> is likely to be implied.  Look in the TOS for a clause that runs
> along the lines of "Failure enforce any of these rules on the
> Service Provider's part is not a waiver of the Service Provider's
> right to do so and does not imply anything."  That's the
> "Get-out-of-ludicrous-implied-terms" card.

Ok, that may get rid of the implied terms in my example, but I'm not
convinced it will set contract law above all other law in all
situations.  You seem to be claiming that just because other law
doesn't override contract law most of the time, that it won't as the
courts start making decisions in cyberspace.  To restate an earlier
proposition I questioned: do you really think that because cyberspace
is an electronic media that Contract Law is now the overriding rule of
the virtual land?  Will disclaimers really hold water when the
"victim" gets ripped off for $1000? $10,000?

Matt still dislikes the courts directing design.  Whether that is
indirect or direct is irrelevant.  I hold that real-world rights
*will* impact game design.  Just as rights impact the design of the
rides at Disney land.  And the means by which people seek redress for
violations of their rights is through the courts.

>> My argument basically comes down to a basic Law & Economics
>> argument:

> Which is a pity.  I tend to stay out philosophy arguments because
> there is rarely any useful resolution.  For the non-legally
> inclined, "Law & Economics" is a legal philosophy, of which there
> are several such as "Natural Law", etc.  I forget all the
> permutations because I find them less useful in the real world than
> they were in law school.

Fair enough. I've never argued a case nor been to law school. Even if
you're not a litigator, I'm sure you have a much better understanding
of what courts are actually deciding in day-to-day cases.  I just
studied L&E a bit and find it quite compelling.

That said, we are talking about an area of law where there is neither
direct legal precedent, nor statutory law. Therefore, some philosophy
will be applied, even if its just whatever philosophy the judge holds
implicitly, e.g., cyberspace is no different that realspace or
cyberspace is a contractual fiction.  My understanding is that law and
economics is the leading ascendant philosophy and in particular I
think that one of its leading advocates, Richard Posner, served as the
mediator in the Microsoft antitrust trial.  Which makes me think that
L&E principles are being applied by the courts to attempt to figure
out modern day digital-era issues.

>> Would you agree that the current laws don't deal with digital
>> property and digital "worlds"?

> Yes, but only because I don't accept your premise of digital
> "property".  In the real world, property exists.  The land is there.
> Intellectual property is created by an author (copyright), inventor
> (patent) or merchant (trademark).  Where does digital "property"
> come from?  How is it "property" like other forms of property?
> These might be interesting questions if you believe that the digital
> "property" you describe can exist.  I don't.

I argue that if it doesn't already exist, then it will.  Property
rights allow people to engage in transaction that they otherwise
wouldn't.  Why pay $1000 for the Mofo Sword if I'm just going to get
PK'd and lose it as soon as I leave the store?  I won't.  But give me
property rights enforced in some way by the system and I will. As in
Achaea, give me an item that I'll get back even if I'm PK'd and I will
buy it.  And now I argue that if those rights are poorly enforced,
i.e., the claim of property rights was essentially a fraudulent claim
on behalf of the online service, then I think that is actionable in a
real-world court. They convinced me this object was something I'd have
a right to, I paid $1000 and they did nothing to enforce what they
claimed.

Recall that I'm not just making these scenarios up out of the blue.
Lots of services are using, experimenting, or thinking of offering
some sort of digital property to boost revenue.  Doing so will require
some sort of protection against lawless theft or consumers aren't
going to pay as much money.  Therefore, digital property rights WILL
emerge of their own accord because consumers want it and MUDs want
more money.

>> But courts regularly overturn contracts based on factors from
>> criminal, tort, property, and constitutional law. US courts, for
>> example, regularly overrule liquidated damages in contracts.

> Well, I wouldn't say "regularly".  In the less than 10% of cases
> that actual go to a judge or jury, liquidated damage clauses that
> are found unfair, unreasonable, etc., are ignored.  That simply
> means they aren't immune to judicial scrutiny.

10% is pretty regular to me.  I didn't say always.  If I had a 10%
chance of losing $1 million, then I'm going to spend at least $100,000
if it will remove the risk.  My point was that liquidated damages are
fully in the realm of Contract Law--which you seem to claim is the
only reasonable forum for disputes of the type we are discussing--and
yet, 10% of the time, they are overturned. That's not very reliable in
my book.  And if you think $1 million is a bit much for a digital
property suit, just wait until some files a class action.

So, I yield on your points regarding current court practices. However,
I stand firm that digital property rights will emerge because online
services will want to provide them. And once they do, the courts could
enforce them in ways that imply terms the services didn't realize.
Which is to echo things said earlier on this list: the business model
built on selling digital objects has a lot of tricky problems that
aren't well solved yet.

-j

p.s.  I do agree that digital property is an ambiguous term,
especially for a lawyer. That's precisely because the courts haven't
made any decisions about it. You claim they won't. I believe it's just
a matter of time.

p.s.  I will however agree that perhaps the right TOS could avoid most
of these issues. MOST. Probably not all. But how many startup MUDs can
really afford a good lawyer anyway?

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