second-life-lawsuit A group of Second Life users is suing Second Life’s creator over a virtual land dispute. They say their contractual property ownership rights have been changed and that this alteration of the terms of service constitutes fraud and violates California consumer protection laws.

Before you scoff too much at this seemingly ludicrous lawsuit, remember that virtual worlds aren’t just “funny money” and avatars. They’re serious business, both for the owners and investors who profit from them and for the users who pump hundreds and even thousands of dollars each into creating characters and interacting online.

Second Life’s parent company, Linden Labs, was recently valued at $383 million. The virtual world’s economy was at an all-time high when Q1 transactional data was reported last month. And although the economy is virtual, remember these transactions have a basis in very real funds.


The lawsuit gives rise to the question: Who owns virtual goods, the creators of the goods or the people who have paid virtual currency for them?

The users are claiming that Linden Labs and Founder Philip Rosedale persuaded them to invest money and pay a sort of “property tax” with the promise of actual ownership of virtual land. Now, the users say, the terms of service have been changed without their prior knowledge or consent. They say the new terms “state that these land and property owners did not own what they had created, bought and paid for, and that these consumers had no choice but to click on a new terms of service agreement or they could not have access to their property.” Moreover, the group alleges that Linden Labs froze user accounts and deleted or converted non-virtual currency and virtual property without giving any explanation or avenues for recourse.

We’ve contacted Mr. Rosedale for comment and will update this post as new information becomes available.

What do you think: Is this a frivolous lawsuit over a virtual non-issue? Can anyone really “own” pixels? Did Linden Labs have the right to change the TOS for their own product, just as Facebook does on a regular basis? Or do these users have a justifiable complaint when they say that Linden Labs broke its promise to them?