[MUD-Dev] Reality check ...(long) [was Re: Black Snow Revisited]

Jeff Cole jeff.cole at mindspring.com
Wed Apr 3 12:19:22 New Zealand Daylight Time 2002

I am arguing with respect to contractual management of ingame
transactions that but for an extra-game activity would be permitted.
I am not arguing the extent to which players "own" their characters.

My concerns are largely that the gaming companies should be required
to internalize (bear) the cost of regulating game and economy
balance instead of imposing such costs on society.

After briefly proofing this post, I realize that, beyond flirting
with off-topic-ness, it embraces off-topic and gives it a wet kiss
full on the mouth.

My apologies and appreciation of your attention.

From: Koster, Raph

> I stated that should this occur, many large corporations would
> exit the market seeing it as too risky. Not that the genre would
> die, not that others wouldn't step up to the plate, not that pigs
> would fly. Yes, what I said echoes the arguments of the music and
> movie industries--the large corporations ARE in at least one case
> exactly that industry (and when they aren't one and the same, they
> certainly have similar mentalities), and will flip out and freak
> out in exactly the same ways as the music industry is now doing.

IMO, while your concerns are certainly valid, your conclusion is
overstated.  The situation being discussed is easily distinguishable
from the music/movie industries' situation.

Movie/music companies are concerned about unauthorized *copies* of
their intellectual property; somebody acquiring an unauthorized copy
has no need for an auhtorized copy.  The very "property" that is the
subject of the transaction (free or otherwise) violates Federal
copyright law.  The impact on such companies' income streams is

In games, players are dealing with items acquired within the rules
of the game.  Nothing is being copied.  The impact of in-game
transactions incoprporating extra-game financial activities on a
gaming company's income stream is moot rather than direct.  Further,
the degree to which such transactions do impact a company's income
stream are arguably largely within the control of the company.

At any rate, I don't think you have seen any large music/movie
companies exit the market because of IP or increased exposure to
liability concerns.  With respect to music (as I have extensive
experience in (retired from) the evil, corporate,
suck-the-marrow-of-the-artist label side of the industry), I think
you have seen huge investments by companies in their struggle to
grapple with technology.  Rather than an exodus, you have seen
further investment in the industry.

> My *personal* take on what is going on is that the concept of
> intellectual property has been gutshot, and just doesn't know it's
> going to die just yet.  It's going to take many long and painful
> years before the final demise, and it may yet be saved by
> ridiculous extraordinary measures, but the prognosis is currently
> grim.

> The law is a complete mess.

> <snipped>

> Let's be candid: in a legal sense, the word "property" as it
> pertains to content, is whatever the largest lobby gets lawmakers
> to say it is. That's how we got software patents, that's how
> copyright terms have been extended past all reason...

I respectfully disagree that the concept of intellectual property is
dying.  Quite the opposite, intellectual property law is necessary
in the information age.  What you interpret as the throes of death
are really the throes of evolution.

I agree it is a mess.

It is a mess because technology has forced intellectual property to
evolve more in the span of two decades than it has had to evolve
since its inception.

Property law (and contract law) are rooted in the "common law."
That is, general principles that have naturally evolved to govern
interactions between entities (people).  In general, property law is
formulated by the individual states through the courts (by deciding
cases) and the legislatures (by enacting statutes).  The federal
government has formulated very little property law.  So long as
state property law does not violate some Contitutional provision,
the states are free to manage their affairs as they see fit.

Of course, there is one aspect of property law specifcally reserved
to the federal government in Article I, Section 8, clause 8 of the

       [The Congress shall have Power] To promote the Progress of
       Science and useful Arts, by securing for limited Times to
       Authors and Inventors the exclusive Right to their respective
       Writings and Discoveries;

I think it is incredibly cool that the framers of our country,
though they could never have conceived of the current state of the
art, still recognized the universality and the necessary centralized
protection of itellectual property.  Consider the other legislative
powers enumerated in Article I, Section 8, and it is pretty amazing
the company that IP keeps.

It expressly acknowledges the dreamer.  It is elegant and beautiful.

I think it also speaks to the importance of IP and the absolute
necessity of IP protection in the information age.

> Rightly or wrongly, the position taken by companies who are saying
> to eBay, "take these items down" is very similar to the position
> taken by a movie company when it asks eBay to take down bootleg
> VCDs of its movies. It's an unauthorized sale of the company's
> material.

Perhaps, then, this is where we disagree.  I think an analogy
between a bootleg (a "thing" created in violation of a protected
copyright interest) and an in-game items acquired within the rules
of the game is not convincing.

All the posts expounding the detrimental effects of such
transactions on the gaming company have been merely conclusory
(completely begging the question).  Nobody has yet put forth a solid
argument as to how these transactions are detrimental to the gaming
companies.  There has been no substantive discussion as to the
extent which such transactions *do* impact a company's income
stream, how much of that impact is caused by imblalance in design
and is therefore directly manageable by the company.  No discussion
as to whether, then, the company should have to internalize the
costs of managing this impact or whether they should be able to
impose such costs on society.

That is the meat of the issue and the aspect of the issue that will
be played out and extended to other areas of IP law.  These are the
arguments that will play themselves out in the courts (state and
federal) as IP law evolves to address the information age.

It is not strictly a question of IP law adapting to technology.
Technology will likewise have to adapt to embrace IP law.

> We can argue all we want about whether the fact that the bits and
> bytes are moving within one database, between databases, or being
> transferred on a solid medium makes a difference; but the
> companies who own the content currently do NOT make such a
> distinction (cf software piracy).

Heh, I don't have a dog in that fight.  I think those distinctions
are semantic and provide no substantive insight into the issue.

>> Again, consider two transactions:

>>   Transaction #1: Player A gives Player B item X in exchange for
>>   item(s) Y (where item(s) Y are either game currency; some
>>   assortment of other game items; or, nothing).

>>   Transaction #2: Player A gives Player B item X in exchange for
>>   item(s) Y (where item(s) Y are either game currency; some
>>   assortment of other game items; or, nothing) *AND* some
>>   real-world, extra-game transaction for money, barter or
>>   service.

>> I do not see how transaction #2 would necessarilly degrade a
>> company's IP interest any more than transaction #1.

> As it happens, that is EXACTLY how ASCAP, BMI, SESAC, and the rest
> of the performance rights organizations collect license money on
> public performances of works owned by members. You can play it for
> free. But if you choose to charge for it, you suddenly owe money
> to the organization (ASCAP is literally a union; they track
> performances and collect money and distribute it to the membership
> as equitably as they can. Disclaimer: I'm a member).

By far and away, the best analogy/argument I have seen onlist.

I would distinguish it, though, in a couple of ways.

First, under copyright law (very broadly), the copyright owner has
the right to control the public distribution of the copyrighted
work.  Establishments pay ASCAP/BMI/SESAC to license (for public
distribution, i.e. jukebox, band, or other "airing") those works for
which the individual copyright owners have contracted with the
organizations to administer such interests.  Consider your analogy
in the following way (different than the one immediately following

      Example 1: Public establishment A plays copyrighted work B for
      patrons.  No cover charge. (I am assuming that is what you
      would consider the "extra-game transaction" equivalent)

      Example 1: Public establishment A plays copyrighted work B for
      patrons.  $10 cover charge.  (Amount is irrelevant)

Per copyright law, it is the fact that it is a public distribution
that triggers the liability to the copyright owner/administrator of
work B.  Not the cover charge.  Therefore, in both situations,
establishment A would incur liability to the copyright
owner/administrator of work B.

Second, in your analogy, you are dealing with a protected copyright
interest whereas in my example transactions one is not dealing with
a copyright interest.

Now, let's consider:

> Transaction #1: performer A gives audience member B a performance
> of someone else's IP in exchange for say, a song swap or maybe
> nothing.

> Transaction #1: oops, they charged money.

> The questions are more like, "is the virtual sword analogous to
> performance of a song?"

Depends on the circumstances.  I think to the extent that one tries
to invoke a copyright argument with respect to the sword in
transactions we are considering, they are not analogous.

Let me be clear, I am not arguing that a game company *does not*
have a copyright interest in the sword.  I am arguing that we never
get to the issue of copyright protection (within the scope of the
hypothetical transactions) because such transactions do not violate
a game company's copyright interest in the sword.

> "Does the venue in which the "give" happens matter?" (It does in
> the case of musical performance, btw). And we can't even define
> what the venue *is* under the law--there's significant differences
> between singing over the telephone, over TV, and recording the
> song.

The law wisely doesn't get involved beyond protecting 2 things: (1)
the copyright holder's exclusive control of her copyright; and, (2)
the copyright holder's right to contract with respect to such
exculsive rights.  All of variables you mention are subject to
contract, whether with a performing rights society, union, label,
etc., or some combo of the preceding.

> Um, as of right now, nobody knows if all the pieces of software
> EULAs can hold up in court. That's a whole OTHER ball of wax
> that's been interesting to follow. Most recently, a judge ruled
> that you can unbundle software and resell it if you haven't
> installed it, on the grounds that if the transaction has the form
> of a sale, it is a sale. (cf
> http://www.linuxjournal.com/article.php?sid=5628).

Clickwrap/shrinkwrap license agreements are indeed still in flux.

But it is really because contract law is largely handled by state
common law.  What statutes are on the books (say, the UCC) are still
largely just explicit adaptations of generally accepted common law.
Check out http://www.2bguide.com.

> The fact is that online worlds, by virtue of persistence,
> broadcast, multiuser capabilities, digital reproduction, extensive
> user tracking, and a host of other factors, do not fit into any of
> the current pigeonholes in the law.

Heh, I would argue that it is the law that does not yet fit into the
pigeonhole created by online worlds.

For a little insight, consider O.W. Holmes, Jr.'s pragmatic,
predictive theory of the law: "law" exists as a prediction of what
judges will do in a particular case.  That is to say that, the law
serves to tell people what they can reasonably expect in and from
their interactions with other entities.  Whether you subscribe to
the particular point of view, it is valuable to consider it.

> The idea that nerfing a character class might make MSNBC is
> alternately thrilling and terrifying. The moment that someone's
> standing in an online setting has significant value is more
> so. Let's take the examples in Korea of professional gamers. Do
> you think that if NCSoft, say, accidentally lost the character
> record for the top ranked guy in the game and as a result he lost
> significant revenue from endorsements, that he might not sue?

I do not doubt that such a player would sue (I am not at all sure
they should not be entitled ot recover damages).  But such claims
would fall under tort law (civil liability for one's actions
[i.e. trespass, assault and battery (non-criminal), negligence,
invasion of privacy]).  Such actions would be wholly unrelated to
any "ownership" argument.  It is possible, that were this player to
establish that the data was lost because of NCSoft's negligence,
(s)he might well have an action against NCSoft though an injury
(i.e. not pure economic loss) is usually required to recover under a
negligence theory.

> I think that the range of activities in online worlds is only
> going to increase, not decrease. And therefore we will run into
> more of these problems as time goes on. I think the real "reality
> check" is that we're in for interesting times. Simply put, the law
> is already showing major cracks and at some point will burst
> asunder.

Indeed, we are in for interesting times.  I vehemently disagree that
the law will burst asunder, rather, I think it will meet the task;
that it must meet the task.

Yrs Afftcy.,
Jeff Cole

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