EULAs and Online Gaming – Simply a Better Fit Than Property Law?

Recently, whilst doing some research on the concept of ownership and licensing in the video game industry, I came across a very interesting paper by Christopher J Cifrino entitled “Virtual Property, Virtual Rights: Why Contract Law, Not Property Law, Must Be the Governing Paradigm in the Law of Virtual Worlds“.[1] In this paper, Cifrino argues (unsurprisingly if you read the title) that contract law might actually be the best and fairest way to continue dealing with the legal relationship between the gamer/consumer and the developer and/or publisher. (For ease of writing, the term “developer” will be used here to represent the party dictating the license terms, acknowledging that, at times, that can in fact be the publisher or even a third party distribution platform). But of course contract law means EULAs – End User License Agreements – the dreaded, consumer-unfriendly, developer-dictated, click-wrap licenses that are presented to you “take it or leave it” style before you install a game. Although Cifrino was writing about virtual worlds and virtual property, thus only really concerning the likes of MMOs, in particular MMORPGs, I was intrigued by his proposition.

He starts off by explaining how online virtual worlds such as World of Warcraft, Eve Online and Second Life have seen a massive leap in popularity in recent years and, as such, have now become a subject legal scholars cannot simply ignore (I would add DayZ and many other online games with focuses on perma-death to this list of games, in which the destruction of in game property or even the killing of an in game avatar can have serious consequences for the player). Indeed, Cifrino shows a refreshingly wide knowledge of the games in this area and their relevant individual legal quirks, as well as their history of legal disputes – something not often found in the majority of abstract legal writing on these subjects. He argues that, although many gamers and jurists are unhappy with the position of the consumer in EULA-style relationships, the alternatives often called for – some acknowledgement of the existence of property law in these virtual worlds – might possibly work for certain specific cases, but could have a disastrous effect if applied across the board to other virtual worlds.

Many commentators, however, criticize EULAs as being too one-sided and argue for courts to acknowledge traditional common law property rights in virtual property. These arguments invoke three theoretical justifications for virtual property rights: Lockean labor theory, personhood theory, and utilitarianism.

Whilst discussing the philosophical and legal difficulties of applying any of the three major justifications (lockean labor theory, personhood theory, and utilitarianism) for property rights to virtual worlds, Cifrino goes on to deal with many examples of the impracticality of imposing such rights. One of the most interesting points he brings up against the application of property law protection to virtual goods is that many virtual worlds are set up precisely because the participants want an escape from the rules of real life.

Whilst some games encourage or even force some level of cooperation, such as not allowing destruction or property or attacking other players outside of dedicated PvP (Player versus Player) areas – other games, such as Eve Online, work of the very premise that (almost) nothing is forbidden. (Eve Online has frequently been compared to the “Old West” in its rule systems). You can lie, cheat, steal, and even destroy masses of in game property, which in many cases can even have a significant corresponding real world value. This is most potently true in games which have their own complex economies, which are allowed spill over into the real world by allowing characters, items, ships, or other in game property be sold to others for real world money. To stick with the Eve Online examples, in the recent biggest battle of all time (so big the developers are adding a “spaceship graveyard” to commemorate the site of the battle), the equivalent of over $330,000 real-world currency worth of virtual property was destroyed. Ships which cost the players actual money in many cases to build, which could easily have been sold for real-world currency.

[C]ontract law should remain the dominant paradigm. There is demand for virtual worlds with a wide variety of user rights, and, unlike generally applicable property law, a EULA-based contractual scheme allows the developers of virtual worlds the flexibility to efficiently respond to such demand.

If such games were forced to acknowledge actual property rights in the virtual property bought, sold and/or created by their users, this could cause havoc. For one, these virtual worlds would have a hell of a hard time deciding to call it a day. If the developer decides to move on and cease supporting an online virtual world, or simply cannot afford to maintain the servers anymore, they could face the difficult challenge of ultimately having to be exposed to the risk of tremendous liability,[2] buying our their customers, negotiating a deal with them or even evicting them;

They could simply pull the plug and risk lawsuits. Or, they could separately settle with each user who holds virtual property of value within their world, negotiating to buy the property or otherwise gain permission to end the virtual world. Developers could very well be induced to “constructively evict” their users by not further supporting their virtual worlds and hoping the users are driven elsewhere.

Similar to the problem of shutting down an online world are the serious possible liability implications for the developers as they continue to implement bug fixes and new features to these virtual worlds. These worlds tend to be, by nature, dynamic, huge and difficult to fully predict how and where the underlying code might clash with these updates, leading to deletion of items, progress or sometimes even requiring a full scale reboot of the world to a previously stable state.[3] If developers could be held liable for each of these incidents, it could seriously discourage anyone from attempting to build and support such a world in the first place. It could even result in the undesirable case of developers creating a virtual world, leaving it as is and refusing to add new context or fix existing bugs for fear of legal repercussions.

On the other hand, it is important to remember that even if it was acknowledged that users had some limited property rights to their in game property, progress and avatars, defining “liability” could still be mitigated by analysis whether or not the fixes and updates were necessary and whether they were done negligently or not – developers could still maintain that they were not liable for damage which was not reasonably forseeable. Nonetheless, it is likely that even allowing for the possibility of developer liability in these cases would open them up to such a number lawsuits, that even if they were found almost always to not have been negligent, the very burden of having to deal with the number of cases would be too much to make running such a virtual world a worthwhile undertaking.

Cifrino’s paper deals with a host of other difficulties, such as the position of courts on arbitrating virtual world disputes, the weaknesses of each of the three major justifications for property law in this area and the fact that, from a utilitarian point of view, the good done in strengthening property protection for consumers of virtual worlds, would ultimately be outweighed by the fact that this would so stifle and possibly destroy the industry that it would benefit neither developers nor consumers.

He finishes by stating that the flexible approach of licensing and EULAs is a better fit for such diverse worlds, as well as that any perceived bargaining disparity between consumers and developers will be addressed by economic pressures which will ensure that virtual world developers grant the appropriate rights to users. This may be a bit too “free-market” for my tastes, in that consumers have demonstrably not always been well treated by this concept that competition will breed fairness.  Ultimately though, I have to agree with Cifrino, at least for the realm of online gaming and virtual worlds, that;

The contract rights forged by End User License Agreements (“EULAs”) offer virtual-world developers the opportunity to tailor user rights to an optimal level. Some virtual worlds may call for little or no protection for users’ virtual property; others may necessitate extensive protections that go beyond even traditional property rights. A one-size-fits-all property rights regime, lacking the precision of a EULA-based approach, would negatively affect virtual worlds—harming developers and users alike.

I’m not entirely sure this has changed my mind about the weaknesses of the EULA system and pure contract in consumer contracts with standard offline games, but in was interesting to consider how, in certain circumstances, licensing agreements may in fact be the best course of action for both consumer and developer.

~ Shane

[1] Christopher J Cifrino, “Virtual Property, Virtual Rights: Why Contract Law, Not Property Law, Must Be the Governing Paradigm in the Law of Virtual Worlds“, Boston College Law Review Vol. LIV No. 2 (January 2014), 235-264.

[2] Dan E. Lawrence, Note, “It Really Is Just a Game: The Impracticability of Common Law Property Rights in Virtual Property”, 47 WASHBURN L.J. 505, 508 (2008) at 520-521.

[3] John William Nelson, “Fiber Optic Foxes: Virtual Objects and Virtual Worlds Through the Lens of Pierson v. Post and the Law of Capture“, 14 J. TECH. L. & POL’Y 5, 20 (2009), at 16.

Photo credit: Jemimus via photopin cc


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