Getting to Conscionable: Negotiating Virtual Worlds' End User License Agreements without Getting Externally Regulated

• Author: Brendan James Gilbert
• Position: bjg@brendanjamesgilbert.com University at Buffalo Law School
• Pages: 238-251

Currently, virtual world governance is the product of end user license agreements (EULAs), contracts which attempt to provide a complete legal and enforcement system to the virtual world.¹ This method of governance is flawed, however, and results in participant frustration. Alternative approaches that have been advanced so far include governmental regulation, which has begun in some countries. However, numerous pressures and precedent resist such an application in the United States.

The following argues against keeping just the license agreements as the body of law, and also against a shift to governmental regulation. Instead, a compromise-establishing a standards-setting body of developers, referred to here as a virtual world council-is an efficient solution. This is a daunting task; however, numerous examples exist for the developers of virtual worlds to follow and they are explained below. The proposed result is a two-tier system that retains EULAs, and supports a common law approach rooted in standardization for resolving what EULAs cannot.

Page 238

Introduction

Virtual worlds are "the next generation of the internet: three-dimensional social environments that combine top-ofthe-line videogame graphics with latest-generation social-networking technology."² They are interactive, persistent simulations of first-person physical environments.³ Millions of people participate in these virtual worlds for diverse reasons: for example, escapism, profiteering, or for a sense of belonging to a community. Developers create virtual worlds and make them immersive and debatably addictive.⁴ The developers charge fees for property within virtual worlds, or for access to the virtual world, and use these revenues to recover their development and operating expenditures. They also attempt to regulate these virtual worlds, with varying success. Here, I examine those attempts (with indebtedness to prior works) and then suggest a new method which is a compromise between the current methods of regulation.

Prior works on the regulation of virtual worlds have identified major defects with the two current methods of regulating virtual worlds. The primary method is the developer's End User License Agreement (EULA)-a contract between the developer and the participant that communicates the developer's expectations for the virtual world to the participant, and the participant's agreement communicates their intent to be bound by those expectations.⁵ This EULA usually gives the developer the power to adjudicate and punish participant behavior that is outside of those expectations, and power to set expectations. A real-world analogy is the developer controlling the legislative and judicial branches of government, and running the government as a for-profit enterprise. These EULAs set the laws of the land for the virtual world, trying to incorporate a bare minimum of real-world legal principles to keep their participants complacent.

Real-world citizenship is often a matter of where you were born. By contrast, "[p]eople joining virtual worlds have the power of choice. . . . they can choose the society in which they want to live, migrating their online activities from place to place with much greater ease than real-world immigrants can move their physical lives."⁶ Page 239 As a result, "[v]irtual world providers who operate within this market-dynamic measure their success in terms of the size of their user base, and they consequently pursue two goals: attracting people to join their virtual world, and retaining them over time."⁷ Because virtual-world citizens can pick their government and regulation, developers must make them appealing.

The other method of regulating virtual worlds has not yet been used in the United States, but is waiting in the wings: real-world governmental regulation. Virtual-world developers and participants regard this method with horror, recalling the file-sharing service Napster. Regulation fractured Napster's centralized peer-to-peer community into decentralized peer-to-peer communities that are too small to feasibly regulate.⁸

Real-world regulators want to avoid this outcome. Questions abound about the method of regulation. Should regulators regulate the virtual-world providers within the regulator's jurisdiction, or to coordinate inter- jurisdictionally?⁹ Should regulators limit participants' ability to switch worlds, or limit participants to virtual- world developers within their real-world jurisdiction?¹⁰ No clear answer exists for these, and persuading jurisdictions to agree and cooperate is difficult.

A compromise suggested is for developers of virtual worlds to form a virtual-world council. This council can promote standardization of EULAs between developers. Standardization will provide consistent virtual-world governance and consistent provisions for courts to look to. This council can also collectively draft model real- world regulation and create standards-setting bodies for virtual worlds to guide real-world regulators. Participants being participants, they will test the rules of their virtual world: they will find loopholes in the provisions of their developer's EULA. Real-world regulation "floating" above the EULA is needed to catch this. It protects participants from behaviors not prohibited by the EULA but deserving of punishment.

This compromise is efficient because developers are best equipped to find the shortcomings of their EULAs. User feedback, litigation, and research while drafting EULAs accomplish this. Additionally, each developer must draft a EULA and having the virtual world council help draft provisions is efficient. Developers also wield the power and political muscle to lobby for real-world regulations to control behavior in virtual worlds, particularly if they form a group and present a unified front. Standards will also lower the high precedential value of the first "lucky" jurisdiction to have virtual-world-based litigation go to trial.

Organizing this council is a difficult task. However, the credit card companies American Express, Discover Financial Services, JCB International, MasterCard Worldwide, and Visa, Inc. launched a similar effort in 2006. Called the PCI Security Standards Council, the Council's mission has been to develop a consistent "Data Security Standard" which has been implemented into each company's data security compliance program.¹¹ Retail merchants now know of a set of standards that apply to them if they are to be "PCI-compliant"-just as participants and courts considering a virtual world that is "virtual-world-council-compliant" will know what to expect from it.

This consists of four Parts. Part I introduces virtual worlds and their sources of regulation. Part II examines the reasons why EULAs alone have failed or will fail as the only source of regulation. Part III examines the reasons why external regulation alone will fail regardless of implementation, and how to prolong the life of any proposed regulation. Part IV will show the benefits of consistency that a virtual-world council could provide to a two-tier system of regulation, and why it is the most efficient solution.

1. Virtual Worlds and the Sources of Virtual-World Regulation

Modern virtual worlds' heritage runs to textual virtual worlds, which are given a variety of names to denote their purpose.¹² An example is LambdaMOO, which began a discussion on virtual world's "parallel alternative to existing legal systems, where new forms of social regulation can be explored."¹³ On LambdaMOO, "public and Page 240 comm[unal] property was [virtual property's] prototypical form of ownership."¹⁴ The virtual world's "[e]xperienced players also build their own rooms and spaces within the MOO, or, using an object-oriented programming language, create objects that they and other players can manipulate or expand."¹⁵ These "[p]articipants in the MOO are literally building their own universe room by room. At the same time, they are building their own social structure, as well as their own legal system."¹⁶

Eventually, real-world-property issues infected LambdaMOO: air-space rights over properties (for virtual aircraft), private versus public property, whether property could be bequeathed, and server-side-data quotas per participant.¹⁷ These required "making property an explicit part of the system and creating an official governance mechanism to recognize and allocate it." Property interests are tied to Western society such that asserting property rights is instinctual. Therefore, virtual worlds have come to require regulation to support participants' view that their virtual-world property is able to be protected just like their real-world property.

Virtual property here is closer to real property or chattels than intellectual property. A participant's virtual property has their ownership right recorded somewhere in a database that the virtual world relies on.¹⁸ The participant then expects the use and control of the property to be one of their rights.

On LambdaMOO and in many textual virtual worlds the communities are close-knit. Developers knew the...