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Lawsuits, Lawsuits, Everywhere! (Bragg v. Linden Lab and the IGE Class Action)

June 1st, 2007

Apparently, May was the month that legal action almost outpaced Eve Online drama. As reported by Raph and Lum, the Bragg v. Linden Labs lawsuit that the Terra Nova crowd decried as the temper tantrum of an exploiter has survived its first set of motions. I have a longer piece of analysis forthcoming, so I’ll cover this one in brief: EULAs and TOS agreements are not any less strong than they were last week. What IS noteworthy from the opinion is that game attorneys need to be a bit more careful when drafting their contracts. Linden Lab filed two motions in the case — one to dismiss their CEO, Philip Rosedale, as a party to the case and one to force Bragg to enter into arbitration as required by the Second Life TOS. Linden Lab lost both motions, so Rosedale remains in the case, and Bragg does not have to go to arbitration — instead they’ll go forward to a trial.

More after the jump — drafting tips for attorneys/game developers and one of the silliest lawsuits involving RMT to surface in a long time.

First, those drafting tips. The lesson that any practitioner or game developer should learn from the Bragg v. Linden Labs lawsuit is that contract defenses like unconscionability are, in fact, still good arguments and not just the domain of law students and bar exam takers. When you draft a contract that is essentially a take-it-or-leave-it deal, you had better know how your state treats those contracts. First and foremost, CLEARLY LABEL YOUR CLAUSES. Sticking a ton of stuff into a paragraph marked “Miscelaneous” or “General Provisions” is lazy drafting. It may also cause you to accidentally hide an important clause (like your arbitration clause) that should really be made more visible. I am willing to bet that any test case against any MMO developer would have a similar result if planned properly.

The second tip is that giving yourself strong discretionary powers and the ability to unilaterally change the agreement at any time may be a nice out for the administration of your game, but those same powers may make your agreement patently unfair. In the wide world of contract law, we’re not big fans of things being unfair. Something that is borderline unconscionable can shift to the unconscionable end of the spectrum as fast as you can say, “disproportionate relationship of power.” Watch out for those D.R.O.P. situations….or you risk dropping the ball on behalf of your client or company. At any rate, this case is far from over, but it’ll be a fun one to watch as it progresses.

Moving on, we have another case reported by both Lum and Raph. In a move that I can only describe as “nutty” (which is a complex legal term), someone has filed a class action suit against IGE for devaluing World of Warcraft gold. The complaint itself is an interesting read, if you’re a masochist. Fortunately, as an attorney, that puts me pretty damn close to masochist, so I have taken one for the team.

A basic summary of the complaint is that by farming gold and resources, IGE has devalued WoW gold, made it nigh impossible for players to access resources, and given people who wish to engage in RMT an advantage in the game that “honest” players cannot gain. It alleges that IGE’s practices have violated the unfair and deceptive trade statutes of every state of the Union and Puerto Rico. It also alleges that by breaching the TOS with Blizzard, IGE has also tortiously interefered with the TOS agreements between Blizzard and every other player. Clearly, someone is getting the good drugs down in Florida.

I will admit that I haven’t referenced the Florida statutes listed in the complaint. If the Florida consumer protection laws are similar to the FTC Act, then I’m golden. What we’re looking at here is a strange bit of logic. On one hand, the lawsuit claims that the WoW Terms of Service indicate that RMT is verbotten. Ok, fine. But on the other, it claims that devaluing WoW gold FINANCIALLY HARMS WoW users. Now, some of this financial harm comes from game time wasted searching for resources that those nasty farmers keep harvesting. However, some of it comes from inflated Auction House prices and the fact that WoW gold has a cash value. Where are they finding this cash value? The prices on IGE’s website. The complaint specifically asks that IGE disgorge all of its WoW-related profits and pay them to the players.

WTG, Robin Horde.

As Raph noted, it’s like trying to have your cake and eat it too. On one hand, they’re saying that WoW gold shouldn’t have value and be farmed, etc. and on the other they’re assigning its value for purposes of damages based upon the price for which IGE sells the gold. Moreover, part of this case relies on Blizzard’s duty to enforce its TOS. This plaintiff class has no right to enforce a contract between Blizzard and a third party. It seems that they argue that every other player is an intended beneficiary of the TOS as it applies to the other players. That just doesn’t make sense.If I were IGE, I’d file a motion to add Blizzard as a co-defendant. Heck, those repeatable faction quests that pay out gold are a huge faucet. ZOMG, BLIZZ IS DEVALUING WOW GOLD! Not only that, but since Blizzard isn’t banning IGE farmers fast enough, clearly Blizzard is in breach of its contractual agreements with the players. This would be great logic if the WoW TOS wasn’t entirely one-sided — like every other TOS out there (see above). The only intended beneficiary of the WoW TOS is Blizzard. You have a revocable for any reason right to access the game. That’s it. Blizzard, on the other hand, can come bugger your cat if it decides to add that to the TOS without notifying you.
I'm also not exactly sure how IGE is engaged in a deceptive, unfair or unconscionable (there's that word again) business practice. They may be asshats, depending on your feelings about RMT, but they're really not doing anything deceptive or unfair. It may be "unfair" in game terms that someone who buys gold has their flying mount and you don't. It might be "unfair" that people who buy gold can afford to buy cool gear on the AH, thus driving the prices of AH items up. It might be "unfair" that as more money enters the economy, the existing money becomes less valuable. The real culprit here are the economists. Let's add them to the suit! I'm looking at YOU Mr. Greenspan.

We know now that time is money, because a sciencey guy has proven it. However, what this lawsuit boils down to is that the actions of a company that sells virtual gold for real money devalues that gold within the game. That gold also has a real world value. Extracting that value violates the TOS. Violating that TOS interferes with the TOS between the other players and Blizzard. Therefore, IGE should give all of its ill-gotten WoW gold money to the honest players who have never purchased gold from IGE. Something tells me that time spent playing WoW is actually time NOT spent earning money — unless you’re a gold farmer. I just don’t see how this thing has any legs. At all. Not even one leg.

So there’s your legal roundup! Good night and have a pleasant tomorrow.

Entry Filed under: Law