Virtual World Law Blog

Pinterest is one of the fastest growing social media sites. Pinterest enables users
to "pin" interesting things to a virtual pinboard to share with others. A pinboard is largely a collection of images organized by topic (home decorating, wedding planning, etc.).

A recent article calls into question the potential risks that users face by "pinning" third party content. As pointed out in the article:

Many people invest significant time, effort and in some cases real money to acquire virtual goods. There is great perceived value in these virtual goods. But there are a growing number of cases, where users have been the subject of hacking and other situations where they have had their virtual property stolen. See for example our prior blog entry on a massive theft of 400 billion poker chips from Zynga users.

Most game and virtual world operators try to shield themselves from claims of loss by their users through effective legal strategies embodied in their terms of service. In most cases, users are only granted a license to use the virtual goods, but they do not own them and the terms often make clear that there is no independent value to goods. Additional disclaimers and liability avoidance language may also be included. Yet, this has not stopped some users from suing for the loss of the perceived value of their virtual goods.

Given these potential claims, what else can companies do to protect themselves from such risks? Apparently, this risk may now be insurable - at least in China - thanks to a collaboration between Sunshine Insurance Group and Gamebar.  According to a report, by China Daily a Sunshine Insurance spokesperson said "The insurance will help to reduce operating risks for online games companies as the companies which purchase the insurance will be covered to compensate customers in the event of lost or stolen property."

It will be interesting to see if that catches on in the US and elsewhere, and if so, what will be covered and what will not. Check back for updates.

As we discussed here, the EU "Cookie Rule," which requires companies with European customers to get informed consent from visitors to their websites in order to use most cookies (other than those "strictly necessary" for the service requested by the consumer), went into effect on May 25. As an example of how they wanted websites to behave, the UK Information Commissioner's Office put the following banner on their website:

Thanks to a Freedom of Information request from Vicky Brock, we can see the effect of the opt-in cookie requirement on tracked traffic to the ICO website:

Vicky has also made the underlying data available in a Google Docs spreadsheet.

While this does seem to pose a challenge for marketers, there are a couple of things about this data to keep in mind:

1)         The UK ICO implemented the opt-in via a banner on the top of the page. People have grown so used to ignoring banners that they might not have even looked at the option being provided. Thus, another method for requesting consent might have a greater opt-in rate.  Guidance from the UK ICO states that consent can be obtained via the following methods:

•          Pop-ups. A website operator could ask a user directly if they agree to a website operator putting something on their computer and if they click "yes", this would constitute consent.

•          Terms and conditions. A website operator could alternatively make users aware of the use of cookies via the terms and conditions, asking a user to tick a box to indicate that they consent to the new terms.

•          Settings-led consent. Consent could also be gained as part of the process by which the user confirms what they want to do or how they want the website to work, e.g., some websites "remember" which language version of a website a user prefers. If this feature is enabled by the storage of a cookie, then the website operator could explain this to the user and that it will not ask the user every time they visit the website.

It is worth noting, however, that the guidance does not purport to be exhaustive. The ICO states that they will consider supplementing the advice with further examples of how to gain consent for particular types of cookies in the future. It goes on to say that the examples listed are not intended to be a prescriptive list on how to comply, rather, that a website operator is best placed to work out how to get information to users and what users will understand.  Each case will be facts-specific.

2)         Even for those who did see the banner, there isn't really any incentive to opting-in. If a website makes a case for the opt-in by pointing out additional functionality or other benefits to opting-in, that may increase the opt-in rate.

Another issue for websites is that it is not yet clear whether the Cookie Rule applies to non-cookie tracking technologies like web beacons. Technically, the Cookie Rule applies to "the storing of information, or the gaining of access to information already stored, in the terminal equipment of a subscriber or user." However, given the assertive position that many European Data Protection Authorities take towards the protection of personal information, it may be prudent to assume that anything that lets a website track users could require consent. In the case of web beacons, as well, since they could disclose a users IP address, which could be personally indentifying information, they might be subject to the general obligation to obtain user consent before collecting personal information, anyway.

As we previously posted, Viacom is appealing to the Second Circuit its summary judgment loss to YouTube (and its parent Google) of a billion-dollar copyright infringement suit.  Last June, the U.S. District Court for the Southern District of New York ruled that YouTube is entitled to safe harbor protection under the Digital Millennium Copyright Act ("DMCA") and granted YouTube's motion for summary judgment on the basis that it did not have sufficient notice of the specific infringements at issue.  

At the crux of the court's decision was "whether the statutory phrases 'actual knowledge that the material or an activity using the material on the system or network is infringing,' and 'facts or circumstances from which infringing activity is apparent'" in 17 U.S.C. § 512(c)(1)(A)(i) and (ii) mean "a general awareness that there are infringements" as argued by Viacom, or instead mean "actual or constructive knowledge of specific and identifiable infringements of individual items," as argued by YouTube.  The court agreed with YouTube's interpretation, ruling it was supported by both the DMCA's legislative history and recent case law.

Both sides have submitted their appellate briefs, and the Second Circuit has received 28 briefs filed by amici curiae.  Oral argument will likely be scheduled between late August and late September.   

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Groupon Files for $750 Million IPO

Groupon has filed with the Securities and Exchange Commission to go public in a $750 million IPO underwritten by Morgan Stanley, Credit Suisse and Goldman Sachs.

Pandora Raises IPO Size as High as $141.6 Million

According to Thursday's amendment, Pandora is now looking to sell 15,736,600 shares at a maximum offering price of between $7 and $9 per share. That means its IPO could be as big as $141.6 million.

Why YouTube Adopting Creative Commons Is a Big Deal

Making legal YouTube mashups just got a whole lot easier. The site's video editor is now allowing its users to remix existing YouTube videos without violating anyone's copyright. This is made possible by YouTube adopting Creative Commons licenses, offering users the chance to publish any video under the liberal CC-BY license.

Tenn. Passes Web Entertainment Theft Bill

State lawmakers in country music's capital have passed a groundbreaking measure that would make it a crime to use a friend's login -- even with permission -- to listen to songs or watch movies from services such as Netflix or Rhapsody.

Virtual Worlds: Immersive Training, Collaboration and Meetings

Are virtual worlds really viable environments for work? According to a survey by Unisfair, a global provider of virtual events and business environments, usage of virtual environments is growing for marketing, training and collaboration. Surveying 550 marketers nationwide, the study revealed that 60 percent of respondents plan to increase spending on virtual events and environments this year.

Army Names Top Builders of Virtual Worlds

The U.S. Army is looking for a few good worlds -- virtual worlds, that is. The Army Research Laboratory Simulation & Training Technology Center announced winners for its annual Federal Virtual Worlds Challenge in which contestants from around the globe compete to produce the best virtual solutions for training and other applications.

Mobile Phones Transform Consumer Payments and Retailing Both On and Offline

The mobile phone is catalyzing virtual currency and payment development across the globe, says Geraldine Mitchely, business development manager for mimoney, virtual currency powered by Standard Bank, which resides on the mobile phone.

Many nonprofits are using social media to create awareness of their cause, raise funds, develop closer connections with existing constituents and engage with new ones.

On April 14, 2011, at The Kreeger Museum in Washington, DC, Jim Gatto delivered a compelling presentation on top social media legal issues targeted to nonprofits. His presentation explored examples of how nonprofits are using social media today, including a focus on virtual goods, virtual currencies and gamification and the associated legal issues. For a copy of his presentation, please click here.

Originally posted on the Gamification Blog.

Many people are aware that in 2009, the FTC implemented guidelines that addressed the use of endorsements and testimonials by bloggers. The main stream press highlighted just the part of these guidelines that require disclosure by bloggers of compensation received for recommending a product or service. However, the guidelines include some lesser known provisions which apply more broadly to consumer generated media and relate to gamification.

• The guidelines are not limited to bloggers, but cover any advertising message, including consumer-generated media, that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of the endorser. This includes consumer testimonials, such as reviews or recommendations endorsing a product or service on any social media site, not just blogs.

• When a connection exists between the endorser and the seller of an advertised product that might materially affect the weight or credibility of the endorsement, such connection must be fully disclosed. In one example, the FTC says that if a blogger gets a free video game to evaluate and review, he must clearly and conspicuously disclose that he received the game for free. In another example, it states that if someone receives redeemable points each time they tell friends about a product, this fact needs to be clearly and conspicuously disclosed.

• In these examples, the FTC also states that the company needs to advise the consumer giving the testimonial that this connection should be disclosed, and it should have procedures in place to try to monitor the consumer's postings for compliance.

• Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. Endorsers may also be liable.

• Whenever an advertisement represents, directly or by implication, that the endorser is an expert with respect to the endorsement message, then the endorser's qualifications must in fact give the endorser the expertise that he or she is represented as possessing with respect to the endorsement. This raises potential gamification issues with leader boards, badges and expert status to the extent that this implies an "expert" status that the user does not actually posses.

This is just one of many examples of little known laws that relate to gamification. For more information on legal issues with gamification contact james.gatto@pillsburylaw.com. Jim, who is the head of Pillsbury's Social Media, Entertainment and Technology group, delivered a presentation on Managing Legal Risk in Gamification at the 2011 Gamification Summit. A copy of that presentation can be found at here.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

UC Legend Sues NCAA Over Trading Cards

Oscar Robertson, former University of Cincinnati and National Basketball Association Hall of Fame inductee, has joined a class-action lawsuit against the NCAA for using his name and image without his consent.

CloudCrowd: An Assembly Line for Content

"We're doing to service industries what China did to manufacturing," CloudCrowd CEO Alex Edelstein tells me. CloudCrowd collects tasks from clients--currently translation and proofreading jobs--via its Serv.io site, and then distributes them to waiting workers via a Facebook app.

"CSI" Facebook Game Offers Bonuses for Watching the Show

Thursday night's episode of CSI will have something extra for fans of the show's Facebook game: clues to unlock in-game bonuses.

Hacker Steals $12M Worth of Zynga Poker Chips

29-year-old IT businessman Ashley Mitchell plead guilty to stealing $12 million worth of Zynga Poker chips in a British court yesterday, and is now facing a substantial jail term.

Internet, Social Media Make Their Mark in Egypt's Crisis

The political unrest exploding across the Middle East is just the latest illustration that social media is no longer just for teenagers to tweet about their lives, play Farmville, and post pictures from last weekend's party. Today, it has the potential to shake regimes and drive leaders from power.

Will Social Media Leaks Or Pokes Win Nobel Peace Prize?

Two years ago, the world wondered how a newly-elected president like Barack Obama could qualify and win the Nobel Peace Prize. Even the president questioned the honor. This year, that same president might also question why WikiLeaks is now a candidate for that same distinction.

Fire Up the Avatars - Educational Virtual World Curricula Launches

Today, WiloStar3D LLC announced a joint collaboration with Exeter Township School District- Reading PA, and Manhattan-Ogden USA, Kansas to pilot Avatar Storytellers, an Immersive Learning virtual world curricula for grades 5-7.

Despite supposedly having millions of users (to Facebook's 3/4 of a billion), social networking pioneer MySpace appears to be headed out to pasture. Last week, the company laid off 47 percent of its workforce, lopping off 500 employees from its nearly 1,100-person payroll. Rumors that MySpace's parent company News Corp. wants to sell are all over the tech and mainstream media. (see Link) This is despite a widely publicized "redesign" intended to focus the site on "social entertainment." (Link)

Assuming the redesign doesn't provide the boost News Corp. (or a potential buyer) would be looking for, what will happen to all of the material on users' MySpace pages if the service shuts down? A similar question faced users of Second Life's Teen Grid when Linden Labs announced that portion of the virtual world would be shut down. (See Link).

But closing down Teen Grid doesn't come close to the scale of shutting down MySpace. If done right (i.e., with plenty of notice and providing members a user-friendly option to export content), the passing of this early social media icon could be the model of the right way to wind things down.

The idea that a social media platform with millions of members (and millions more still joining), could "go gently into that good night" should serve as a warning to those investing time, energy and money into virtual assets - if you're on someone else's platform, and you're not big enough to get anything other than their standard user agreement, you need to plan for the day when your platform could turn off.

The Court of Appeals for the 9th Circuit ruled on the Blizzard v. MDY case, largely affirming the district court's finding that MDY's bot ("Glider") for playing World of Warcraft (WOW) violates the WOW Terms of Use and violates anti-circumvention provisions of the DMCA. However, the 9th Circuit found that the violation was breach of a contractual covenant not a breach of a condition of the license and applied a somewhat different analysis to the DMCA claims. The net result still largely favors Blizzard and a permanent injunction was affirmed.

We previously prepared an advisory on the District Court decision.

The Court found that the use of Glider violated the Terms of Use prohibition on bots. However, unlike the district court, the 9th Circuit ruled that this was a breach of a contractual covenant not a breach of a condition of the license. One significance of this is the different remedies available for breach of contract and copyright infringement.
 
The DMCA claims related to whether Glider violates DMCA sections 1201(a)(2) and (b)(1) by circumventing WOW's Warden, which is intended to detect bots. The Court ruled in Blizzard's favor with respect to "dynamic non-literal elements" of WOW.
 
In reaching its decision, the Court refused to follow a Federal Circuit decision (in the Chamberlain case) interpreting the DMCA. The 9th Circuit ruled that Section 1201 (a) creates a new anti-circumvention right distinct from copyright infringement while section (b) strengthens the traditional prohibition against copyright infringement.  In contrast, the Federal Circuit in Chamberlain found that the DMCA coverage is limited to a copyright owner's rights under Section 106 of the Copyright Act, and required a "nexus" to infringement. The 9th Circuit refused to adopt any requirement for an infringement nexus. The tension between these appeals courts may set up a show down in the Supreme Court.

The Court went on to find that MDY did violate Section 1202 (a)(2) of the DMCA with respect to the dynamic non-literal elements of WOW.  But the Court found that Glider does not violate DMCA Section 1201(a)(2) with respect to WOW's literal and individual non-literal elements, because Warden does not effectively control access to these WOW elements.

The Court also found that the tortious interference with contract claims were not preempted by the Copyright Act, but that factual issues prevented a proper summary judgment finding. As a result, it vacated the district court's summary judgment ruling on this issue and remanded the issue of personal liability for MDY's CEO.

Perhaps serendipitously, the decision was handed down just days after Blizzard's release of Cataclysm the third expansion of WOW. More than 3.3 million copies as of Cataclysm were sold in the first 24 hours of release, which according to Blizzard, makes it the fastest-selling PC game of all time.

Here is a copy of the 9th Circuit decision.


 

In a very significant decision, the 9th circuit Court of Appeals ruled that software developers can legally prevent customers from owning the copies of software that they pay for. Instead, if the software license agreement is properly drafted, the software developer retains ownership in the copies they distribute and the customers merely have a license to use the software.

This is significant for many reasons. The first is that this means the "first sale doctrine" does not apply. Under this doctrine a copyright owners rights are extinguished in a particular copy of the software after an authorized first sale. As a result, the customer can rightfully sell the software if they no longer need/want it. In contrast, with a license that restricts transfer this is not permissible.

This ruling by analogy may be applicable to virtual goods as well. Many terms of service specify that virtual goods are merely licensed and not owned by customers.

Vernor 

In the real world (at least in the US), the 5th Amendment to the Constitution states, "No person shall ... be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." A host of jurisprudence has determined what the government is, and is not, allowed to do affecting property owned by private citizens. With an announcement from Linden Labs that the Teen Grid in Second Life will be shutting down on Dec. 31, a number of users are discovering that there's no such protection in a privately owned virtual world.

According to this article, those who have invested in developing content and educational tools for use in Second Life Teen are faced with the question of whether to transfer to another platform or give up using the tools they've developed. The situation illustrates the catch-22 facing those who want to invest significant time, energy and resources into developing virtual world real estate when the owner of the platform has the right to take away that real estate without compensating the members of the community for "taking" their property rights in the virtual world away.

As discussed further in this post, Linden Research Inc. and its CEO Philip Rosedale have already been named as defendants in a class action lawsuit relating to the ownership status of virtual property in Second Life. Interestingly, the home page for Teen Second Life still includes, "Click here for a FREE Lifetime Basic account." It isn't clear what Linden plans to do with all of its teen members, since Second Life includes more adult interactions and content and currently requires users to be over 18. The Teen Second Life page also still advertises the monthly rental pricing for virtual land on the Teen Second Life grid.

A California Court ruled last week in favor of Blizzard, finding that Scapegaming (a.k.a. Alyson Reeves) ran an unauthorized secondary market that handled microtransactions in violation of the World of Warcraft terms of service. Blizzard sued Scapegaming last October for copyright infringement. The court awarded about $88 million dollars, including about $64,000 in attorney's fees and over $85 million in statutory damages.

We recently reported on the Facebook v. Power Ventures case, in which Facebook alleged, among other things, that Power.com using automated tools to populate a portal that aggregates a user's social networking profiles violates its terms of service and the Computer Fraud and Abuse Act and an analogous provision of the California Penal Code. On July 20, 2010, the court said it was unclear whether Power.com was a "user" for purposes of the terms of service, but even if it was, feared that finding all user violations of a terms of service as access "without permission," would create constitutional problems with the statute. The Court added that terms of service are not well equipped to inform users of what activities might subject them to criminal penalties. The court, in part, relied on the fact that site operators can unilaterally change the terms of service at anytime.

The court did find that Facebook has a potential claim under the California law based on Power.com accessing Facebook's site by circumventing technical or code-based measures. That claim will go forward.

The court rejected Power.com's argument that Facebook did not even have standing to bring the suit because it did not incur any damage or loss. The court found that because Facebook took steps to prevent access, even "a few clicks of a mouse" was sufficient to satisfy the requisite damage or loss for it to have standing, noting that the statute authorizes claims if there is "any amount of damage or loss."

This decision could have significant ramifications for social media platform providers. It highlights the need for a comprehensive strategy, including both legal and technical measures to prevent unwanted activity on their sites.

Here is a copy of the Facebook Decision



 

Many people routinely click on the Agree button without reading the terms of service. Doing so can be perilous for many reasons. A pending case highlights another potential reason to read and abide by the terms of service - potential criminal liability. Granted, there are some unique facts here as discussed below, but it is to everyone's benefits to read and understand terms of service. For example, for users of a social media site, it is crazy to not understand what personal data is being collected and how it is being used and make an informed decision whether to use that site. For businesses (and investors in businesses) that interact with social media sites, it is critical that you understand and abide by the terms of service to assess whether your business model is "legal" and in compliance with the relevant terms of service. If not, your business (or investment) may be in peril, and in a worst case scenario you may face personal liability. Such was the case for the CEO of MDY when it created a tool that engaged in unauthorized access to Blizzard's World of Warcraft client software in violation of the relevant terms of service and EULA. In addition to the company being found to infringe, the CEO was held personally liable for $6 million in damages.

In a pending case, Facebook v. Power Ventures dba/Power.com, Facebook is relying on its terms of service and the Computer Fraud and Abuse Act and an analogous provision of the California Penal Code to prevent Power.com from using automated tools to populate a portal that aggregates a user's social networking profiles. This is deemed beneficial by many users, but not by Facebook. In its complaint, Facebook alleges that it grants a limited license to create applications that interact with Facebook's proprietary network subject to various terms of use agreements which prohibit, among other things, requesting, soliciting, or otherwise obtaining access to user names, passwords or other authentication credentials.

Facebook alleges that Power.com induces visitors to surrender their Facebook user names and passwords in order to "integrate" their Facebook account into the Power.com website, in violation of the Facebook's terms of service.

After notification from Facebook. Power.com allegedly initially agreed to cease the activity and purge the "ill-gotten data," but apparently later changed its mind and continued its practices. In response, Facebook claims to have implemented technical measures to block access to the site by Power.com but Power.com then allegedly circumvented the technological security measures without authorization in violation of the Computer Fraud and Abuse Act. Facebook also alleged violation of CALIFORNIA PENAL CODE 502(c), the "COMPREHENSIVE COMPUTER DATA ACCESS AND FRAUD ACT" (including Sections 1-4 and 7) and the anti-circumvention provisions of the DMCA, among other claims.

Additionally, Facebook alleges that Power.com used the names to send unsolicited email messages to Facebook users that contained false header information in violation of the CAN-SPAM (CONTROLLING THE ASSAULT OF NON-SOLICITED PORNOGRAPHY AND MARKETING) Act.

Even though this is a civil action the penalties that can flow from a finding of violation of the Computer Fraud and Abuse Act include: (A) a fine or imprisonment for not more than ten years, or both (for a first conviction) and (B) a fine under or imprisonment for not more than twenty years, or both, in the case of a repeat offender. Violation of the relevant sections of the California Penal Code can result in fines and imprisonment up to three years.

The Electronic Frontier Foundation filed an amicus brief in support of Power Ventures; arguing:

Facebook argues that by offering these enhanced services to users, Power violated California's computer crime law. It grounds its claim in the fact that Facebook's terms of service prohibit a user from having automated access to a user's own information and that Power continued to offer the service to Facebook users even after Facebook sent Power a cease and desist letter demanding that it stop. Yet merely providing a technology to assist a user in accessing his or her own data in a novel manner cannot and should not form the basis for criminal liability.

Many commenters have pointed out that taken to an extreme, any online service provider can create ridiculous terms of service and allege that there is a violation. While this may theoretically be true, in reality a court could strike down a frivolous clause if that were the case. However, when a company has a legitimate business interest to protect, and the terms of service relate to that business interest, an argument can be made that such terms should be upheld. Here Facebook appears to be alleging that it has a legitimate right to prevent third party application developers from requesting, soliciting, or otherwise obtaining access to user names, passwords or other authentication credentials. Perhaps this case will shed some light on this issue. Check back as we will provide updates on this case as it progresses.

Facebook Complaint

Linden Research Inc. and its CE Philip Rosedale have been named as defendants in a class action lawsuit relating to the ownership status of virtual property in Second Life, the popular virtual world in which users can realize significant gains from buying and selling virtual real estate (land and buildings), virtual clothing, and other virtual goods. In Second Life, transactions are implemented using virtual currency provided by Linden called Linden Dollars. These dollars can be earned and bought and sold, including via the LindeX, the official Second Life Linden Dollar exchange.

A significant issue in this case is the status of ownership of virtual goods and virtual currency and the conditions, if any, upon which a user may be denied access to them for violations of the terms of service agreement.

Continue reading "Second Life Gets Action...Class Action That Is" »

On April 8, 2010, Zynga sued Playerauctions.com for operating a website that provides an unauthorized "Secondary Market" for enabling Zynga game users to post and sell "Virtual Currency" and "Virtual Goods" allegedly in violation of Zynga's Terms of Service. According to Zynga, its Terms of Service prohibits users from selling "Virtual Currency" or "Virtual Goods" for real-world money or anything of value outside of its games.

A recent version of the Zynga Terms of Service states:

The Service may include a virtual, in-game currency ("Virtual Currency") including, but not limited to coins, cash, or points, that may be purchased from Zynga for "real world" money if you are a legal adult in your country of residence. The Service may also include virtual, in-game digital items ("Virtual Goods") that may be purchased from Zynga for "real world" money or for Virtual Currency. Regardless of the terminology used, Virtual Currency and Virtual Goods may never be redeemed for "real world" money, goods or other items of monetary value from Zynga or any other party.

It further states:

Transfers of Virtual Currencies and Virtual Goods are strictly prohibited except where explicitly authorized within the Service. Outside of the game, you may not buy or sell any Virtual Currency or Virtual Goods for "real world" money or otherwise exchange items for value. Any attempt to do so is in violation of these Terms and may result in a lifetime ban from Zynga Service and possible legal action.

Zynga alleges that the Playerauctions.com has committed copyright and trademark infringement (along with false designation of origin, unfair competition and other claims) by displaying and/reproducing images and code from the games and using various Zynga trademarks with authorization.

The Complaint identifies unlawful sales in connection with Zynga's Poker, Mafia Wars and FarmVille games. A recent review of the Playerauctions.com site showed over 750 Mafia Wars related items alone available for sale ranging in unit price from 25 cents to $900 and 84 entire "accounts" for sale ranging in asking price from $30 to $5,000 with one listed at a whopping $492,000!

Interestingly, Zynga does not specifically allege impropriety with or seek to prevent the outright sale of accounts.

In what turned out to be an April Fool's prank, Gamestation modified its Terms of Service to include a provision that required users to sell their soul to Gamestation before they could make any online purchase. Pretty amazing prank! What's more amazing is that nearly 90% of the users agreed! One can only speculate as to whether these user's didn't care about their souls or didn't read the Terms of Service. But it is likely a safe bet that many didn't bother to read the terms.

Gamestation of course announced the prank and stated that it does not intend to enforce the so called "immortal soul" provision. So these users got off easy. But such may not be the case if there was a real dispute. As Blizzard demonstrated when it successfully sued MDY (for use of a bot that helped users level up in World of Warcraft without actually playing, the Terms of Service can be outcome determinative in the event of a real legal dispute.

All pranks aside, it is critical for Virtual World and Online game companies to protect themselves and users through effective Terms of Service. It is also important for users, and businesses operating in these online spaces to understand the terms.