Sunday, December 19, 2010

Law in Virtual Worlds and How it Intersects Reality

Another article in today's Boston Globe, in the Ideas section, "Virtual World Order," by Rachel Nolan, interviews law professor Greg Lastowka, of Rutgers, Camden, Law School's Institute for Information Policy and Law. Prof. Lastowka has written a book,Virtual Justice, the new laws of online worlds, published by Yale University Press. (On this bio page here, you can link to an audio file of and NPR interview about the book, as well as what is noted as a PDF version of the book. I am not sure he really means to give us the entire file! But maybe so.)

The Globe article is very entertaining and thought-provoking. For instance, Prof. Lastowka relates the terrible story of the Chinese man who called the police to report that his friend had stolen his sword that he had loaned his friend. But since the sword in question was a virtual sword from a video game, the police did not take it seriously. They should have. The complainant had to earn it through many hours of online play, and the sword was worth the equivalent of $871 when the faithless friend sold it online. The angry man stabbed his one-time friend to death and is now serving a life-sentence in prison. If only the police had intervened!

Other stories follow, most involving money as the factor where virtual worlds and the real world intersect and clash. There was a Ponzi scheme, with later investors funding the returns of earlier investors. An online banker set up an investment scheme offering amazing returns in the virtual coin of the game, funded, of course, by the next investor. These schemes work beautifully up until they collapse and then all those left holding the investment chits are ruined! It sounds harmless in virtual cash. But you buy that virtual cash with real-world dollars. People were impressed enough that they bought a good bit and began investing, and then cashing out. The scheme was working like a real bank. But when the scammer accumulated his "goal" amount of the equivalent of $100,000 in the game currency, he declared the scheme over and unveiled it, and himself as a fraud. Oddly enough, the rules of the game forbade Ponzi schemes, and yet, the game authorities did not crack down on this! The game owners simply declared that is did not violate the terms of service.

The interview in the Globe makes it clear that Prof. Lastowka is proposing new legislation to deal with the new problems raised by the virtual games.

LASTOWKA: We’re at a crossroads. I definitely think the current laws are inadequate. With regard to contract law and property law and copyright law, virtual worlds challenge the existing legal categories. Courts are grappling with the right way to apply existing laws to virtual worlds. The trend is toward turning virtual worlds into their own jurisdictions....The way that virtual worlds are structured is that the owners of the platforms have the ability to exclude and expel voices that they don’t agree with. They have almost complete control over these environments due to the way that the law is structured and due to their technological powers over the environment.

IDEAS: If the government starts taxing virtual goods, will these worlds just shut down?

LASTOWKA: The owners would have to engage in elaborate accounting procedures that they don’t want to do. They need some leeway to be able to run their own economies and provide users with virtual property interests that are not treated the same as traditional offline property interests. (snip) The best (historical) antecedent, which is also part of the question, is the Internet....There are special laws about identity theft. There are special laws about hacking. But we’ve developed most of this jurisprudence, common law, and doctrine just in the last 20 years. But we don’t have any of this that is specifically pertinent to virtual worlds, at least not in the US. In South Korea there are some laws, and we’re getting some cases developing here.
The image is of Prof. Lastowka, from the website at Rutgers, Camden, Institute for Information Policy and Law, which, frankly, is where the Boston Globe took their photo.

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