Virtual World Law Blog

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

Will 2012 be the year of virtual worlds?

What got me thinking about this was a blog post by Maria Korlova over at the HyperGrid Business Blog. In it, she maintains her firm conviction that businesses will soon come around to using these virtual worlds as business tools. Just as the nay-sayers were wrong about the Internet, Software as a Service, and Lady Gaga, we will eventually integrate this technology into how we work.

Courts, Sports And Videogames: What's In A Game?

Although one of the clearest legal thinkers, Louis Brandeis, conceived the modern right of publicity,[1] "unclear" would be an adjective all lawyers would apply to the current state of right of publicity law, regardless of which side of the issue they usually argue. Indeed, although the right of publicity concept was further developed by another very clear legal thinker, William Prosser,[2] he himself alluded to it as the concept "that launched a thousand lawsuits,"[3] few of which can be reconciled with one another.

Insurers Can't Join Coverage Suit Over Athlete Image Use

A Georgia federal judge said Wednesday that four insurers can't intervene in a coverage suit in California over underlying antitrust class actions concerning the use of college athletes' likenesses in video games.

What the Copycat Saw: Creative Theft in Mobile and Social Games

The distinction between theft and inspiration is often unclear in video games. Traditions are formed, broken down, and remade every few years. The most successful ideas are eagerly absorbed by others, from regenerative health in first person shooters to the subdivision of platformer levels into world and stage.

Virtual worlds training for federal cyber pros in the works

After finishing a successful year of training the federal cyber workforce, the government is taking another step toward cultivating better-prepared digital defenders.

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

Virtual Fairs Offer Real Jobs

As companies find themselves swarmed with applicants, struggling to match workers with the right skills to job openings, many are turning to virtual career fairs. Employers say these online forums--accessed by companies and job seekers from anywhere in the world--can save them time and money, as well as broaden the candidate pool.

Deal United's Facebook "Credits Rewards" Lets Clients Incentivize Signups and Purchases With Virtual Currency

German offer provider Deal United today announced it is entering the virtual currency incentives industry with the launch of "Credits Rewards". The new service allows brands to reward to users with Facebook Credits when they make purchases, registrations, signup for newsletters, enter contests, fill out surveys and more. Because virtual currency is so cheap to distribute and Facebook users may value Credits higher than their actual cost in dollars, they can be a cost effective way for businesses to reward users for following their call actions.

Children's book publisher heads into virtual world

Given that virtual worlds are driven by strong narratives, it comes as little surprise that more book publishers are eyeing opportunities in the space. The latest example comes from Finnish publisher DramaForum, which is transitioning its Petra's Planet book series into a virtual world through UK development studio Dubit.

Three ways virtual environments are changing how companies conduct business

One of the more popular attractions at major theme parks is the "motion ride." Through the use of visual, audio and other sensory cues (along with some pretty slick technology), visitors are given the opportunity to go places and do things they never could in the real world. Whether it's flying through the jaws of a dinosaur in Doc Brown's Delorean, visiting a galaxy far, far away, or taking a tour through the inner workings of the human body, these virtual environments engage visitors with a sensory experience that moves them in a way ordinary roller coasters can't.

Samsung Launches the Industry's First Gamified Corporate Website

Samsung Electronics America today announced the launch of Samsung Nation, its first social loyalty program. Available on the Samsung U.S. website, the program rewards consumers by enhancing their online experience with Samsung.

The Not-At-All-Distant Future of Green Gamification

Games are like ketchup: widely loved and diversely applied, with an appeal rooted in childhood. In fact, a new report reveals that over 90 percent of U.S. kids aged 2-17 are gaming today. Yet the gaming generation has been on the rise for three decades, leading to not only an army of young gamers, but also an influential adult segment. It is small wonder, then, that "gamification" is the most disruptive force to impact marketing since the arrival of social media.

Macy's Introduces Augmented Reality Experience in Stores across Country as Part of Its 2011 "Believe" Campaign

For the first time, customers mailing their letters at Believe Stations in Macy's stores will have an opportunity to take a photo with the campaign's animated stars Virginia and Ollie from the animated holiday special "Yes, Virginia." Using new augmented reality technology, customers with IOS and select Android smartphones can download the "Macy's Believe-o-Magic" application that allows them to unlock the magic to see and interact with Virginia, Ollie and their friends.

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

Bambuser Powers World's First 24-Hour Virtual Tour of New York City

Starting and finishing in Times Square on Tuesday, 1^st November at 9am EDT, Hans Eriksson - executive chairman of the live mobile streaming application Bambuser will spend 24 hours exploring New York, broadcasting all he encounters live onto the web from his iPhone - with his itinerary selected by his online audience.

Square Enix, DeNA Team Up For Japanese Final Fantasy Social Game

Square Enix and Japanese mobile social gaming company DeNA are teaming up to create the first social game based on the popular Final Fantasy series. Few details have been announced regarding the Mobage title, which is based around the theme of "fighting for teammates," but DeNA said it will be developing the game in-house using familair characters from Square Enix's Final Fantasy series.

Bunchball Wants to be the 'Motivation Engine for the Internet'

Who would have thought that a company located just above an Irish pub in San Jose would grow to be so successful? According to Bunchball's Founder and Chief Product Officer, Rajat Paharia, Bunchball originally had roots in "social gaming", a concept that he admits was a bit too early to market and proved very difficult as a pitching point.

Nirav Tolia launches Nextdoor, private social network for neighbors

"Even though social networks are completely ubiquitous, I didn't see a social network for one of the most important communities in our lives: the neighborhood," Tolia said in an interview this week. Tolia says neighbors have lost touch with each other. He points to a 2010 study from the Pew Research Center that found that 60% of Americans didn't know the people who lived near them.

Video games for sweepstakes argued before NC court

The state is seeking to preserve a law that attempts to rid North Carolina of sweepstakes that use video-style games to reveal winnings but that companies say infringes on free speech rights and should be thrown out.

The Top 10 Most Influential People in Facebook and Social Games

In an attempt at fairness, we took to AppData's developer leaderboard, but also peppered the list with industry transplants of note. We're certain we've glossed over some video game veterans, but did you really want a list of 30 people? So, feel free to give us your two cents in the comments. (We've put on our flame-retardant suits already.) Here are the top 10 most influential people in Facebook and social games...

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

Judge Says Warrant Required for Cell Phone Location Data

In recent years, the courts have struggled to decide whether the government needs a warrant to access historical records about a cell phone user's location. Some courts have found that when users turn on their cell phones, they "voluntarily" transmit their location to their cell phone providers and thereby waive any expectation of privacy.

Social Media Could Render Covert Policing 'Impossible'

Facebook has proven to be one of the biggest dangers in keeping undercover police officers safe due to applications such as facial recognition and photo tagging, according to a adjunct professor at ANU and Charles Sturt University.

Building With Someone Else's Blocks: Going Open Source With Games

Giving players access to source code has been a part of gaming's history for years, from the earliest MUDs to Tim Sweeney's ZZT. As console gaming's proprietary hardware and its closely guarded development tools slowly squeezed PC play from its central place in the industry the idea of open source play declined.

Wirklich? Germany Declares Facebook 'Like' Button Illegal

The German government on Friday declared the Facebook "Like" button, which appears on countless websites accessible all over the world, in violation of the country's strict privacy rights -- and thus illegal.

U.K. Pulls Back From Threat to Control Social Networks

The British government stepped back from threats to shut down social networks during future disturbances and instead is seeking to work with the networks on how best to use them to help. A high-profile political meeting today between the government, police and the networks was described as "honest and refreshing" after police admitted they struggled to understand social media.

Al Qaeda In Azeroth? Terrorism Recruiting and Training in Virtual Worlds

In their pursuit of terrorists, government intelligence agencies leave no digital rock unturned: telephone calls, emails, text messages, blogs, news sites - they monitor them all. Sometimes, as with social networks like Facebook, the companies behind these services gladly hand over data to governments to assist in this hunt. Yet there is still one place where terrorists can go, one place where they can talk to each other openly without fear of being detected: online video games.

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.

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

Is Online Poker Over?

This week, the FBI landed a crushing blow on all of the online poker sites that are advertised nightly in the United States. Individuals involved with internet gambling companies PokerStars, Full Tilt Poker and Absolute Poker were indicted for bank fraud, money laundering, and illegal gambling and sued in a companion civil suit that seeks at least $3 billion in forfeitures and penalties.

HP Rolls Out Virtual Banking With Avaya's Web.alive

Building on HP's Unified Communications and Collaboration Services portfolio for the enterprise, HP and Avaya today announced a strategic offering that provides banks with a customer-centric, humanizing element for assisted self-service.

What Effect Has the Internet Had On Religion?

The concept of religious ritual is so deeply embedded in our social fabric that it is natural for it to have made the leap to virtuality. And it hasn't just reared its head in worlds such as Second Life. Social networks, including Facebook, have active and close-knit communities of religious followers of all creeds, gathering in what science writer Margaret Wertheim described in her 1999 book, The Pearly Gates of Cyberspace, as "a new kind of realm for the mind".

Hackers Go After Points, Credits, and Virtual Currency

Virtual thieves can sell stolen points in online forums or on eBay, or they can try to exchange points for rewards. However, most online retailers, social media, and gaming websites recognize the thieves' behavior patterns when cashing in stolen points. By analyzing the history of the device being used to access a website, the website's operator can prevent fraudulent transactions.

Social Gaming on Track to Become $5 Billion Industry by 2015

Parks Associates, an internationally recognized market research and consulting company specializing in emerging consumer technology products and services, forecasts revenues in the social gaming market will increase by five times from 2010 to 2015, due in large part to advertising revenues and sales of virtual items. These factors already pushed revenues over $1 billion in 2010.

FNB's eBucks Buy 19 Million KMs of Fuel

In December 2009, members of eBucks, First National Bank's rewards programme, were given the ability to pay for fuel with eBucks, FNB's virtual currency, at participating Engen service stations around South Africa. Since then, FNB has enabled eBucks' members to fill up on fuel to the value of over R13m at participating Engen service stations - which is enough fuel to drive almost 20 million kilometres or - more accurately - to make 25 trips to the moon driving an average family sedan.

IU Shares $297,929 NSF Grant to Study Use of 3D Virtual Worlds

The National Science Foundation has awarded $297,929 to a multi-disciplinary team from Indiana University and Arizona State University. The award supports on-going research concerned with the use of computer-generated 3D virtual environments by business and educational enterprises.

Virtual Currency Drawing in More Viewers

Virtual currency isn't just for gamers any longer. New data from Jun Group indicates that video viewers are also interested in virtual currency. According to their report on incentivized social video, virtual currency is pushing consumers to watch more video content in the social space.

A UK court entered  a guilty plea against Ashley Mitchell, an IT guy who hacked into Zynga's servers last year and stole 400 billion virtual poker chips. His efforts to resell them, which is against Zynga's terms of service, netted him $86,000 and a yet to be determined jail sentence.

To avoid issues with the gambling laws, Zynga sells poker chips to users for real money (and in some cases to reward user actions), but prohibits any cash out or resale of the chips.

Zynga's Terms of Service states:

"Zynga owns, has licensed, or otherwise has rights to use all of the content that appears in the Service or the Zynga games. Notwithstanding any provision to the contrary herein, you agree that you have no right or title in or to any content that appears in the Service, including without limitation the virtual goods or currency appearing or originating in any Zynga game, whether earned in a game or purchased from Zynga, or any other attributes associated with an Account or stored on the Service.

Zynga prohibits and does not recognize any purported transfers of virtual property effectuated outside of the Service, or the purported sale, gift or trade in the "real world" of anything that appears or originates in the Service, unless otherwise expressly authorized by Zynga in writing. Accordingly, you may not trade, sell or attempt to sell in-game items or currency for "real" money, or exchange those items or currency for value of any kind outside of a game, without Zynga's written permission. Any such transfer or attempted transfer is prohibited and void, and will subject your Account to termination."

With respect to chip "purchases", Zynga states:

"The purchase of Zynga Poker chips from a third party seller is a violation of Zynga's Terms of Service. We are  not responsible for any losses incurred and will not restore chips.

The only safe method of purchasing our chips is directly through the application, via the Buy Chips tab."

As virtual currencies proliferate, it is important for companies to ensure that they think through their business models, develop and enforce effective terms of service and consider up front how they can use technological measures to deal with people who inevitably will try to beat the system. This requires a careful integration of business, legal and technical strategy.

For more information on legal issues with virtual currency, see Pillsbury's Virtual Currencies Overview.

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.

In October, tech media sources, such as CNET, were reporting that Facebook had acquired part of Zenbe's intellectual property portfolio, in addition to hiring some of Zenbe's key engineers. While Zenbe will stay intact, Zenbe Mail has been shut down, and the associated intellectual property, has been acquired by Facebook.  

Zenbe is just one in a long list of recent acquisitions by the social networking giant that have focused primarily on the value of intellectual property assets. Some of those acquisitions include: Divvyshot, Hot Potato, NextStop, Drop.io and FriendFeed. This underscores to critical importance of a sound intellectual property strategy that helps protect your product development and is aligned with your overall business goals.

There has been much buzz about Zynga's attempt to patent virtual currency. As is often the case with patents, there is much hype, many misconceptions and little focus on the actual facts. Here are the facts.

1. Zynga does not have a patent on virtual currency. It has applied for a patent, the application has been published but has not yet been examined. It will be some time, if ever, before a patent will issue. The published application is 2010-0227675. Here is a copy of the Zynga Application.

2. Zynga is seeking protection for various aspects of virtual currency, particularly in the context of "gambling" games. The following is an example of one of the claims:

A method, comprising:receiving, at a server, a purchase order for virtual currency from a player, wherein the purchase order was made with legal currency, and wherein the virtual currency is usable within the context of a computer-implemented game;crediting an account of the player with virtual currency, wherein the virtual currency is not redeemable for legal currency;receiving a second purchase order for a virtual object within the context of the computer-implemented game from the player, wherein the second purchase order was made with virtual currency; and debiting the account of the player based on the second purchase order.

3. This claim appears to be seeking protection using real money to buy virtual currency, precluding redemption of the virtual currency for real money but enabling it to be used to buy virtual objects in the game.

4. The patent application was filed 03-03-2010 and claims priority to a provisional application 61/158,246 filed March 6, 2009.

5. We will monitor the status of this application as it is examined and any rejections are made.

While many believe that this patent application will be rejected due to prior art, the most important take aways are these:

• MANY ASPECTS OF SOCIAL GAMES ARE POTENTIALLY PATENTABLE
  
• ZYNGA (AND OTHERS) ARE PURSUING MORE PATENTS IN THIS SPACE
• IT IS WELL KNOWN THAT THERE IS A LOT OF "BORROWING" OF IDEAS FROM COMPETITORS IN THE SOCIAL GAME SPACE
• THIS HAS BEEN FACILITATED BY LACK OF ATTENTION TO IP PROTECTION
  
• IT IS CRITICAL FOR ANYONE OPERATING IN THE SOCIAL GAMING SPACE TO DEVELOP A COMPREHENSIVE IP PROTECTION STRATEGY,  INCLUDING PATENTS, COPYRIGHTS AND TRADEMARKS

E-mail us for a free guide on patent and other IP strategies in the social game space.

Three Wire Systems, LLC recently announced its VetAdvisor Virtual Room (VVR) won the U.S. Army Simulation & Training Technology Center's Federal Virtual Worlds Challenge for best collaboration in a virtual world by a government contractor. The award was presented on the final day of the Defense GameTech Users' Conference in Orlando on March 31.

Three Wire's VetAdvisor Virtual Room is an expansion of the successful VetAdvisor Support Program with the U.S. Department of Veteran Affairs, which offers telehealth and virtual health delivery platforms for veteran mental health care. The program is designed to provide support when and where the veteran chooses, thus supporting the Veteran Centered Medical Home Care Model.

Providing a secure meeting place for veterans and Care Coaches (licensed behavior health professionals) to interact, the VetAdvisor Virtual Room features avatars representing both the veterans and Care Coaches.

This tool is just one of a growing list of virtual world technologies used by government agencies.

Pillsbury's Virtual Worlds team is proud to assist Three Wire on this and other projects.

Earlier this year, Jim Gatto, leader of Pillsbury's Virtual Worlds and Video Games multi-disciplinary team, presented at The Cyberlaw Student Association at George Washington University. The presentation focused on the explosive growth of user-generated content, social networking, social games, virtual goods and virtual worlds. The presentation also touched on some of the uses of virtual worlds (education, simulation, historical preservation). Jim concluded the presentation with an in-depth look at some of the emerging legal issues associated with these developing social networking, training and branding tools.

The Cyberlaw Student Association is a student group at the George Washington University Law School dedicated to promoting interest in cyberlaw issues and helping students practice cyberlaw after graduation.

The presentation can be viewed here: final -- Presentation to GW Cyberlaw Student Association.pdf

This article from Slate.com provides an interesting discussion regarding the applicability of virtual worlds and MMORPGs to economics research. One of the things the article points out is that research in the real world must handle inevitable data loss - making calculations like GDP the result of estimates and approximations - while every transaction in a virtual world is tracked without error. Although some researchers are skeptical about the ability of virtual world economies to mirror the real world, the point of the article is that research tools like rat mazes and petri dishes don't model the real world, either. What those tools provide are environments where basic principles of a given activity can be examined, so those general principles can be extrapolated and applied to the real world. Virtual worlds have an additional advantage for researchers and policymakers - the "laws" in the form of the terms of service and the general rules of the world, are both more simplistic than the real world and more malleable - making them a research tool for the intersection of law and economics, as well.

On August 4, 2009, Linden Lab, the owner of the popular virtual world Second Life, announced upcoming changes to its approach to intellectual property content management in the Second Life® virtual world. Although Linden Lab did not announce a specific time frame for implementa­tion, these changes will impact both mainstream, real-world companies and virtual world content creators who use the platform to run businesses. The changes include a streamlined Digital Millennium Copyright Act submis­sion process, new features for content licensing, and a content seller program offering official certification of content creators who provide identity and payment information to Linden Lab. In addition, Linden Lab is advocating that creators of content-copying tools voluntarily adopt industry standards to prevent abuse.

For more information about this change see our recent client advisory on Linden Lab's IP Policy Change