TOS, EULA and Existing Law – Sufficient in the Virtual World?


It was not until the beginning of this class that I found out about the world of virtual existence and the realm of possibilities a person can experience through her or his avatar. I was amazed to find out that one can communicate and interact with others, create, own property, and involve in commercial activity with real currency. It seems that the lines between real life and “Second Life” are often blurred – for example, members of the legal profession are entering the virtual world to provide real life legal advice and we are sitting in a virtual classroom to obtain real life knowledge of the field and get real life school credits. As one submerges and begins to understand the virtual environment a little better, the burning legal question inevitably surfaces: Do we really need an entirely new legal scheme to guide the relationships in the virtual worlds or are the existing laws, coupled with the provider’s TOC and EULA sufficient? For the immersionists, virtual worlds are fundamentally different from the real world, and raise completely novel legal issues. For those of us who subscribe to the view that virtual worlds are simply a new paradigm for communication provided by the quick evolution of the Internet, the existing contract, criminal, intellectual property, and procedure laws are as just as adequate as they are for any real life situation.

Terms of Service

Enforceability and Adequacy

All Internet service providers require subscribers to agree to Terms of Service (“TOS”) and/or End User License Agreement (“EULA”). In the absence of virtual law, these agreements provide the legal framework for the relationships among subscribers and between each subscriber and the Internet service provider. For example, the Second Life TOS grants subscribers a “nonexclusive, limited, revocable license” to use the Second Life software unless the subscriber violates a provision of the TOS. If such violation occurs, Linden Labs may revoke the license without notice, refund of remaining funds, or liability. Second Life subscribers also agree not to “take any action … that would violate any right or duty under any law or under contractual or fiduciary relationship.” Prohibited types of conduct are: intolerance, harassment, assault, disclosure, indecency, and disturbing the peace. Linden Labs also reserves the right “at any time for any reason … to suspend or terminate your account” and to amend the terms “at any time in its sole discretion.” The court in Bragg v. Linden Research, Inc. found such provisions extremely one sided and both procedurally and substantively unconscionable. The court found particularly problematic that Linden Lab reserved the ability to unilaterally modify the provisions and that the arbitration procedure may potentially discourage subscriber claims. Admittedly, TOS agreements are not void of problems, especially since they are a product of the private interests of the Internet service providers; however, such problems can be resolved by pressure from the courts and the market forces. In response to the Bragg decision, Linden Labs has revised its dispute resolution provision and offered “optional arbitration.” Of course, to avoid future enforceability challenges and offer fair terms to subscribers, the company should do a lot more.  For example, Linden Labs should require new subscribers to view the entire TOS agreement prior to assenting. Linden Labs should also reconsider its termination rights and perhaps consider a  termination for cause that requires some type of notice to subscribers. For now, the company has at least demonstrated willingness to change and follow real life laws.

TOS and Criminal Law

Even if enforceability issues are overcome and the TOS offers a solid framework of community standards to ensure harmonious relationships, there might be a clash between the virtual worlds and real life criminal law. Judge Wu’s opinion articulates such problems very well as he reasoned whether “any conscious violation of an Internet website’s terms of service” surmounts to “intentionally accessing [My Space]…without authorization” and thus satisfies the first element of §1030(a)(2)(C) of CFAA. Even though he concluded that an intentional breach of the TOS can potentially constitute accessing My Space without authorization, he pointed out that such interpretation would not meet the “fair warning” requirement of our criminal statutes. Judge Wu discussed the first prong of “fair warning” – notice deficiencies and did not find that CFAA’s language has adequately “criminalized breaches of contract.” He added that the TOS terms were vague as to what type of violation would render the access unauthorized. Judge Wu also pointed out that internet service providers would then ultimately define what constitutes criminal conduct. He also expressed concerns regarding application of contract law in criminal prosecution and the possible uncertainty caused by jurisdictional differences in contract law. Judge Wu then moved to the second prong of “fair warning” – presence of minimal guidelines to govern law enforcement. Here, he once again emphasized the danger of finding any violation of the TOS as basis for unauthorized access and dismissed the government’s argument that the requirement for scienter eliminates that problem. I believe that most of Judge Wu’s concerns can be easily addressed by amending the wording of the statute, as well as the TOS agreement. The CFAA,  a statute that has the difficult task to keep up with the rapid progress of the Internet, should be amended again to adequately reflect the reality of TOSs – by specifically mentioning breaches of TOS as unauthorized access requiring a higher level of mens rea  (instead of “intentionally). The TOS agreement should also be updated to identify the specific instances of violations, which constitute unauthorized access. I agree with Judge Wu that a provision that defines all violations as breaches is overbroad – only wrongful intent that rises to criminal level should be relevant. This brings up his strongest argument – ultimately the website owner defines criminal conduct. Perhaps, this void can be satisfied by the existence of a strong regulatory agency in the field. It is also true that contract law brings indefiniteness in criminal prosecutions, but this issue can also be overcome by creating better a better TOS. The more real the virtual worlds get, the more likely TOS would have to contemplate criminal law regulation.

Intellectual Property

Second Life grants intellectual property protection to all subject matter created “in world” by its subscribers. Under the law of United States and many other countries, such works are automatically protected by copyright law – only the owner may do anything that amounts to infringement except as authorized by law or by the express or implied consent of the owner. The existing copyright laws thus provide an adequate framework for protection in the virtual world and have already resolved some disputes. Second Life subscriber Kevin Alderman, who creates and sells virtual adult products won a copyright infringement suit against Thomas Simon, who sold unauthorized copies of Alderman’s creations. However, some problems did arise in a later copyright suit brought by Alderman, in which the identity of the alleged infringer could not be ascertained. A Florida court entered a default judgment against the defendant, who never answered the complaint. Alderman claims that he asked Linden Labs multiple times to take action and filed the necessary reports, but received no response. This raises an interesting issue, since Linden Labs is considered an Internet service provider and thus bound by the Digital Millennium Copyright Act (DMCA) and required to respond to Alderman’s claims. Perhaps, Linden Labs should revise its enforcement mechanisms and ensure that it can properly handle the administration of the enhanced copyright rights it offers. Other intellectual property issues arise in the area of trademark law – specifically many “in world” designers use real world brands or similar sounding alternatives for commercial profit. However, the real world corporations that do not have presence in Second Life are not parties of the TOS. A sound interpretation of trademark law should define such use “in commerce” and support a claim of infringement – after all, Second Life is all about commercialism. Additionally, Second Life has severely limited the patent rights of its subscribers by granting an automatic license to any patent to all other subscribers and a broad release of liability for any patent infringement claim. As a result, many companies are prohibited from entering the world because they would be giving up their right to an infringement claim. This limitation would probably be corrected by market forces as the world expands….


~ by eugeniafisher on September 8, 2009.

11 Responses to “TOS, EULA and Existing Law – Sufficient in the Virtual World?”

  1. Regarding your first section, and really first two sections, TOS’s and EULA’s are great in theory, but how many people actually read them? Did you read the EULA and TOS for Second Life before downloading? I know I don’t when I download games/programs; EULA screens are just additional screens to bypass to get to the meat of the program. One of the things that was mentioned in the Bragg Case was the fact that not only was the EULA itself subject to quick review, but the provisions with the highest impact were buried in obscure sections.

    You mentioned making people read EULAs and TOS mandatory, but how is that possible? I know some companies require you to be on the page of the EULA for x amount of time, or that to click you accept you actually have to scroll down to the bottom. Is willful blindness an excuse to violating some term of the EULA that no on reads?

  2. When I sign up to use a site or a software program, I am guilty of not scrolling through the TOS and just clicking the “I agree” box. Every time I do so, I hope I have not agreed to sign my life away. This behavior is shameful, one year away from becoming a lawyer (fingers crossed) but so many of us do exactly the same. This should not be allowed. If a person must agree to the TOS to participate, then each user should be required to scroll through the entire document before being granted the permission to proceed. This will not solve any problems though because the majority of the general public does not even understand what is in the TOS. Although it is “unfair” that some of these companies put unconscionable terms in the TOS, how else must we regulate activity of such programs and websites? Clearly the TOS are not working.

    In Bragg v. Linden Labs, the terms for Second Life were found unconscionable. In US v. Lori Drew, Drew’s motion to dismiss on the grounds of vagueness was granted although she clearly violated the TOS. Her actions cannot be blamed on the TOS being too “vague.”

    I do not think there needs to be a whole new legal system to deal with the issues occurring “in world” because the issues are not wholly different from those going on in the real world. Not everything is the same however. I agree that there should exist the presence of a “strong regulatory agency in the field.” There should also exist a “general” TOS because most of these websites and programs do not differ drastically from each other. Of course, there would need to be specific provisions for individual companies such as age requirements for use etc. If TOS were more standardized and regulated by this regulatory agency, then there could be less confusion and less room for unconscionability. Most of these companies want to avoid the same problems anyhow, and much of the problematic conduct is the same on all sites and with all programs.

    Either way, I do not blame this problem solely on the companies and their TOS. Aside from not making users at least scroll through the TOS which should be easy to read and pop up automatically on the screen, the companies are not completely at fault. Users do not pay enough attention to the TOS and agree to TOS without even reading them. It is a two way street. That being said, unless you have your lawyer sitting next to you every time you sign up to use a new program, there is a slim chance you will understand everything you are agreeing to. Law needs to catch up with the real world and the virtual world. Users and companies need more protection, and there is not enough regulation in place.

  3. Having been made aware of the dangers of blindly accepting the TOS of websites and programs through my experiences in various law school classes, I read through the terms before I initially completed the registration process for my account. Since I read them over a month ago, I found it necessary to go back to the account creation page on Second Life and review how Linden Labs presented their Terms of Services Agreement. I wasn’t particularly shocked to see that the TOS Agreement was only viewable via a hyperlink, but I was surprised that there was no box to check or other affirmative action (other than moving forward in the account creation process) to serve as evidence of a user’s acceptance of the TOS. From a contractual standpoint, that seems to make enforceability of the TOS even less likely.

    I thought your analysis on the interplay between contractual law and criminal law, and a legitimate reluctance to allow violation of contract (particularly the vague, one-sided language of most TOS Agreements) to stand as grounds for a criminal cause of action was very interesting.

    Your comment that Linden Labs might find it necessary to administer the enhanced copyright rights it offers intrigued me. Like you mentioned at the start of your post, I still identify myself as someone fascinated by what virtual worlds can offer merely as an enhancement to “real” life. I suspect that, first, the status of virtual worlds will need to be legally established. If virtual worlds are merely extensions of the “real” world, an existing body of law can be applied and modified as needed to apply in any particular context. However, if virtual worlds will be treated independent of the “real” world, might that cause any copyrights that exist in the “real” world to be reset and vice-versa? Although I suspect the former would be the position taken by the American legal system, it might be difficult to expect Linden Labs to actively enforce rights whose legitimacy is in question. I wonder if their “hands-off” attitude stems partly from this uncertainty.

  4. The prosecution of contractual agreements solely because they take place in the virtual world and not in the real world is a preposterous idea. The fact that criminal sanctions have been considered for violating an end user license agreement is not only contrary to traditional notions of justice, but also to well established law governing contracts. The absolute absurdity of the notion is clear when analogized to a real world license agreement that allows access to a private venue. Anyone who has ever purchased a movie ticket knows its taboo to bring a soda from home into the theatre. However, suggesting that the action is criminal is literally laughable. Unfortunately, that is precisely what our government tried to say in United States v. Drew. In Drew, the violation of the MSTOS was cited as the factual predicate to criminal sanctions pursuant to 18 U.S.C. §1030.

    At is core, how does the prosecution of someone for violating an EULA really differ from moviegoer with a coke? There is no doubt that this activity is proper for the proprietor of a private establishment to monitor and to enforce their policies. Banning a patron from the premises (or a web site) is an appropriate response for the violation of a license contract. After being banned expressly, if the patron comes back, then of course trespass laws would be enforced. However, until the license is expressly revoked, the patron would not be trespassing.

    Certain proscribed activities, such as creating bootleg copies of a movie with a video camera, or “camming”, both violates the theatre’s policies and is against the law. As such, the proprietor of the movie theatre could kick the patron out, and the government can prosecute the patron for the expressly proscribed behavior. The important distinction though is that the patron is not being arrested for violating the contract with the movie theatre, but for violating a clear and express law of the United States.

    There is no reason that an identical scheme would not be effective in the virtual environment. The violation of a license contract among individual citizens should never be grounds for criminal sanctions without more. If the government wants to make an action illegal, then Congress should act specifically.

  5. It makes sense that Linden Labs shouldn’t hide key provisions in the middle of dense paragraphs, and that they should require users to read the entire TOS before agreeing, but even those measures don’t ensure that users will actually read the contract. Is it fair to assign that kind of responsibility to a party that has little to no control over the matter? In other areas, the law allows notice to take place by mere publication, and does not put an added burden of *enforcement* of notice on the party that is obligated to provide the notice. And that’s because requiring a party to force people to “become notified” would be impractical. There has to be some level of personal responsibility on the user’s end, too.

  6. ToS and Criminal Law –
    While I agree with you that the CFAA has the difficult task of keeping up with the rapid progress of the Internet, I do not think that legislators should amend the statute to allow 18 USC 1030 to criminally punish any internet user for simply intentionally violating some service provider’s ToS. ToS define the scope of a contract between a user and service provider and, as such, any violation should be met with an equitable remedy or a remedy set forth in the contract itself and not a criminal punishment, except in the most egregious cases. ToS are for the most part unilateral in nature and users have to leave them or, reluctantly, take them, but this level of adhesion is necessary when dealing with gargantuan multi-state and in most cases multi-national companies. The problem in a case like Lori Drew’s has nothing to do with MySpace’s lopsided ToS, but with the state of the law in general. The fact that the prosecutors in this case even had to try such a backdoor approach to levy a criminal charge against Mrs. Drew illustrates that the laws of the real world are not equipped to handle the myriad of ways people can communicate and profoundly affect each other through a digital medium these days, and the laws governing the real world and the virtual world need to be swiftly amended to cover situations such as the tragic one presented in this case.

  7. The internet is part of everyday life. Honestly, I never take a time to read the TOS for any websites, because it is too boring, it takes too much time, and it seems so complex. However, these agreements are binding contracts. It is imperative to know what it means when I “check the box”, that says YES, agree here. Internet companies pay expensive attorney fees to draft complicated contracts that many people never read, let alone understand. These agreements are binding on users, and give users no other option. We agree to all types of terms that are unconscious, unfortunately users have no bargaining power. It is fundamentally unjust to allow companies to make people agree to terms that they cannot understand and for which they have no bargaining power. In Bragg v. Linden Lab, the majority agreed that Linden Lab’s TOS was unconscious and unfair. This contract was based on a “take-it-or-leave-it-basis.” The contract also gave Second Chance users no opportunity to negotiate. I completely agree with the courts reasoning, law must regulate the contracts that are created for virtual users. Many other websites have similar terms of agreement, yet the public has no protection against the “BIG GUYS.” The virtual world is a sector of life that our legal system has not yet regulated. Law has not changed to aid virtual users, therefore injustices in the virtual world continue.

  8. Ever since the internet entered mainstream usage in the early 90’s, there has been no debate as large or heated as what constitutes “stealing” of intellectual property on the internet. Now may not me the time to get into such a debate, but an important point is alluded to above that is an important component of the problem: anonymity on the internet. Thanks to an almost total anonymity while users surf the net, there is very little that can be done to protect copyright infringement on the internet. Moreover, as time has passed, and companies have tried harder and harder to crack down on copyright infringement, technology has made it even more difficult to track down these offenders.

    In the early days of the internet, anonymity on the internet was as total as one can imagine. Internet connections were slow, so the days of downloading music and movies were not yet realized. Still, there was much downloading of computer games over the internet. Software companies opted to place copy-protection schemes in their software rather than attempt to track down users over the internet, which would have been impossible without the assistance of individual ISP’s. It was not until later, when mass downloading of music and movies became a threat to the respective industries, that these forces attempted to track down those that violated their copyright laws.

    While the music and movies industries have been able to track down many users, and have even successfully sued quite a few individuals in court, they have absolutely NOT been successful in stopping people from downloading their intellectual properties.

    The reason the music and movie industries have not been successful is made obvious in the Alderman case; it is close to impossible to track down many users on the internet. In order for anybody to successfully ascertain an anonymous user on the internet, one must have the specific IP address belonging to that user. In the case of an average user, getting this IP address may be as simple as convincing Linden Labs to voluntarily give it up. In the case of a more advanced user that realizes he is committing a crime, getting the IP address may not be possible. Without much difficulty, a user can set up a proxy to mask their true IP address, and thus, their identity. In the Alderman case, it is very possible that even if Linden Labs had voluntarily given up the user’s IP address, that we would be no closer to ascertaining the true identity of the violator of the copyright.
    Without a user’s identity, it is impossible to effectively sue the user, as has been made obvious by the Alderman case.

    The anonymity that the internet provides is part of its allure. At the same time anonymity makes it very difficult to enforce many of this country’s laws. Whether this kind anonymity exists into the future is unknown, but for the time being, it is definite hurdle that virtual worlds must jump over if they are to be considered legitimate venues for commerce.

  9. I certainly agree with Judge Wu’s classification of the TOS in Bragg. Maleable, one-sided terms have been shot down by the courts in comparable real-life settings. (Computer software agreements come to mind, and I vaguely recall a contract in a logging case from first year.) Nonetheless, I do believe that Linden should maintain the right to regulate Second Life with TOS that may seem unreasonable within another context. Second Life is a new venture with the potential to raise unforeseen conflicts, both in world and out. Without some degree of flexibility and unilateral contractual leverage, Linden may not be able to address (or at least temporarily remove the catalyst for) those conflicts.

    The difficulty is obviously in balancing the freedom of users with the commercial interests of the company. It was important, at least for me, to remember not to go on auto-pilot and tap into a liberty analysis. These are commercial ventures and the bottom line is profit. Users have the option of accepting the TOS or not. Perhaps the best way to protect both the interests of the company and the consumer is to allow the company a little bit of leeway with the TOS as new technologies develop. The question of unconscionability might be best considered in retrospect by the courts, with review of the subjective application of the TOS. (Was this a reasonable exercise of the rights reserved for the company in the TOS?) This would protect the companies interest in that it would not be forced to outline all potential TOS violations in advance, and also allow users a remedy if they feel their accounts have been suspended unfairly. An obvious downside is the legal cost to the end consumer.

    As for criminal laws, I believe that existing laws are insufficient to handle criminal behavior in the virtual context. It appears that real life prosecutors do not take second life crime seriously. Whether Congress adds additional provisions to existing laws, so as to specify their application to virtual life, or whether new laws or drafted, action must be taken before virtual crimes reach a tipping point. Hopefully this will also happen in a reasoned, well-researched manner. These changes should not be put on hold until the friend of a congressperson becomes the victim of a virtual crime. (Recent changes to the sentencing guidelines demonstrate that hotbutton decisions as to criminal violations results in absurdities in prosecution and sentencing.) Violations of TOS should NOT be criminalized. As discussed already by my classmates, this would be contrary to established contract doctrine, which does not allow for the prosecution of breaches in contract. If a TOS violation happens to also violate criminal law, than prosecution may be considered.

  10. About over breadth in TOS/EULAs; most sites starting out scrap something together as they neither have the funds or experience to craft very well made TOS/EULAs. Then, once a site becomes as big as Second Life, there’s been a pattern of changing the TOS/EULA but these changes rarely actually improve it (this brings to mind Facebook’s TOS debacle a while ago). I think this is usually the product of the speed of developments in software and of user participation in contrast to the slow, deliberate movement of the law. Overly general TOS are usually a sign of a site owner wary of the increasingly novel ways users will find to do bad acts on the site, but who is nevertheless unwilling or incapable of putting in the effort to specifically mention where the line is drawn. I don’t know if it’s even possible to create a non-general TOS without it being impractically long for the short attention spans of everyday users.

  11. Isn’t one of the key elements of a copyright or trademark the ability to determine if and to whom the IP is licensed? By asserting such a level of control over this right of ownership, isn’t Linden Labs NOT granting intellectual property protection to the IP’s creator? It seems more as though Linden is treating the IP as its own property and granting the creator a license with limited ownership privileges – wouldn’t this fly in the face of commonly accepted copyright practices offline?

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