-The Wild West or a New World Order?-
By: Lawrence G. Walters
Weston, Garrou, DeWitt & Walters



  It seems as though people love to watch each other in their most desperate or elated emotional states, as evidenced with contemporary society’s obsession with reality entertainment.  While at any given point in time, one can flip through the television channels and help Flava Flav find true love or run an “Amazing Race,” online gamers have taken the obsession with reality to a new level.  MMORPG’s (Massively Multiplayer Online Role Playing Games) are currently the best-selling videogame genre, [1] allowing players to create a character or persona to play or compete with other players in a complete virtual online world.  Players immerse themselves in a vast, detailed, electronic world, sometimes spending more time in their alternate reality, than in their “real” lives.  A survey from 2001 showed that about one third of the adult players of Everquest spent more time in a typical week in their “virtual world,” than in their real-life paid employment. [2]   There are currently more people playing “World of Warcraft®” than had indoor plumbing 100 years ago. [3]   The addiction rate of MMORPG’s appears to be twice the rate of crack cocaine. [4]  


MMORPG’s allow players to exist in virtual environments, providing an opportunity to lead a more fulfilling, detailed life than that which they may experience in their everyday existence.  It comes as no surprise, then, that thousands of new players are attracted to the virtual realities that MMORPGs offer.   It’s estimated that 5.2 million players will subscribe to online games by 2008, bringing in an expected $556 million in revenue. [5]   Although some may consider MMORPG’s merely a game, in reality, they are part of an ever-expanding market that raises some serious real-world issues and legal implications.  For one, the rules that govern the world which we inhabit do not always translate readily to cyberspace.  In the virtual world, there is virtual land for sale along with virtual real estate deals, yet our real world property laws do not govern such transactions.  While there may be a clear separation between reality and fantasy in a tangible sense, is there a legal separation - complete with recognized laws - that governs the fantasy world?  Just as in the real world, the MMORPG world has its deviants who engage in criminal behavior from cyberstalking to harassment; thievery to rape.  This article will explore some of the issues that arise from this collision between the virtual and the real worlds, the legal implications that result, and the surrounding constitutional concerns.       


Virtual EconomieS – Money & Property

            MMORPG’s are constructed virtual communities where millions of players from across the globe gather for a wide variety of entertainment purposes.  Players are allowed to develop characters, or “avatars,” which are intended to progress to higher and higher levels within the game.  One’s avatar is created to reflect the player’s desired qualities and characteristics.   Avatars gain strength and power throughout the game in a variety of ways, and players who are more developed are highly valued.  Avatars form social networks and complex relationships throughout the community; they manipulate virtual objects and inhabit virtual places.  Characters are able to trade and barter game artifacts, such as guns, swords, etc., further attributing virtual values to intangible goods.  This attribution of value to virtual objects has created a unique cyber-economy.  In fact, Edward Castronova, a renowned writer in this field, once calculated that if Everquest’s game-world Norrath were a real country, then the real world trading of characters, artifacts and services would make its gross domestic product (GDP) 77th in the world, putting it somewhere between Russia and Bulgaria. [6]  


In the real world, people have carved avenues for real profit from these virtual worlds.  Some entrepreneurs have made a profitable living from selling game artifacts and characters on Internet auction sites, such as eBay.  A multitude of websites sell virtual money or “gold” for use in the game world – allowing players with limited time to advance quicker, and purchase useful items and training that would otherwise be unattainable.  In 2004, Bob Kiblinger estimated that the industry racked up roughly $500 million by selling virtual goods, a practice referred to by industry insiders as “farming.” [7] There are even reports of “virtual sweatshops,” where underpaid players are encouraged to build characters for the sole purpose of selling them for a profit to others. [8]   These technologically savvy entrepreneurs are making decent, and sometimes remarkable, salaries by pushing virtual, intangible objects  While workers’ 12 hour sessions bring home a measly $150 a month, the “farming” companies are making $60,000 and upwards each month. [9]   The game manufacturers often argue that this activity violates their game rules (and even their intellectual property rights), while sellers contend that they have the right to trade time for money.  There is certainly some validity to all these arguments, as the swords and armor in fantasy realms ‘exist’ in the same way as the songs and movies exist on bit torrent servers.  All have been created by an author who owns a copyright, and all are capable of being stolen by individuals devious enough to figure out how to do so. 


            Although the idea of spending real money to obtain virtual objects may seem far-fetched to some, it is reality for millions of players.  Furthermore, as more and more players populate cyberspace, the virtual world will become more of a reality for everyone, like it or not.  Legal issues abound as to how to handle virtual objects and activities in a practical, real-world framework.  What claim of ownership rights may be asserted in the real world over virtual objects?  Should players have a legal claim to initiate disputes over virtual possessions?  Can virtual game currency be ‘stolen’ in a legal sense?  Should contracts made in cyberspace, by pretend characters, be enforced?  A prime example actually resulted in a lawsuit over a virtual land deal gone wrong.  The game Second Life allows players to legally own content that they create, giving rise to a real-world trade market over virtual land, objects and services. [10]   In this case, Marc Bragg, a Second Life player, found a way to purchase virtual land below the “market value,” and invested thousands of dollars in order to resell the land at a higher price.  However, after completion of the land purchase, Linden Research, Inc., makers of Second Life, terminated Bragg’s account and refused him a refund. Bragg filed a civil complaint, Bragg v. Linden Research, in West Chester, Pennsylvania, demanding $8,000 in restitution. [11]   To date, the case has not been heard in court and it is unclear whether or not this case will set legal precedent regarding virtual land. Regardless of the outcome of this particular case, there remains a large segment of society that is eager to see how these laws evolve with respect to virtual property ownership.  


            The United States is not the only country that lacks a legal precedent for deciding virtual property cases.  For example in China, a country with no laws concerning the ownership of virtual property, more and more online gamers are seeking out the courts’ interpretation on these issues. [12]     In 2005, a Chinese player killed another player for selling a cyber-sword used in the game, “Legend of Mir 3.” [13]   Qiu Chenwei has since been sentenced to life imprisonment for defending his virtual property.  Although to some, Chenwei’s cyber-sword consists of nothing more than computer code made up of 1’s and 0’s, but to Chenwei, it was something of such immense value that he was willing to risk his life to protect it.  In drafting the Constitution, America’s founding fathers recognized the importance of private property and the lengths that ordinary citizens will go to in order to protect that property.  At that time, the idea of virtual property would have seemed ridiculous.  However now, leaders from around the world must consider laws protecting virtual swords and raincoats from misuse and thievery, yielding even more questions to consider.  What if the cyber-sword thief had been from a different country than that of Chenwei?  Which country’s laws would govern how to judge such cases?  Are cyberspace laws universal?  No single country can claim jurisdiction over the Internet, and coming to an agreement on how to handle similar situations will be incredibly difficult, taking into account cultural differences.  Ultimately, only international tribunals will be in a position to govern these very real concerns regarding virtual property.  


            The legal principles applicable to resolving property disputes in the brick and mortar world are well-recognized, but what about virtual property disputes?   Take, the Statute of Frauds, for example.  This concept generally requires that any contract for the transfer of real property must be in writing, and signed by the parties. [14]   Does this principle apply in virtual gaming space?  Since most ‘talk’ takes the form of written chat logs, isn’t all communication in ‘writing’?  How does one (or one’s avatar) ‘sign’ a virtual contract, anyway?   Consider another example: the issue of  “consent.”  Generally, for a contract to be enforceable, in the ‘real’ world, the parties must voluntarily agree or consent to all the terms in the contract.  If one party is obviously intoxicated, or under duress, the agreement will not stand.  Virtual characters can consume intoxicating substances in MMORPG’s. Does this behavior affect the validity of agreements as it would in the real world?   Can one avatar put another under sufficient ‘duress’ so as to invalidate virtual agreements?  Consider the enforceability of contracts entered at the tip of a sword.  Must the duress transcend into the real world, or is game-oriented duress sufficient to impact contracts made between online characters? 


Virtual Gambling

              Second Life, along with most other MMORPG’s, allows players to gamble in online currency, but is dependent upon the use of credit card transactions for a variety of purposes.  In October, the U.S. Congress passed the Unlawful Internet Gambling Enforcement Act, essentially banning the exchange of American currency for purposes of online gambling. [15]   Luckily, in Second Life players exchange Sims, not dollars.  Yet, online transactions in real world dollars are required for the trade of virtual objects, so the current law may be found to affect the financial activities of MMORPG’s as well.  In fact, the creators of Second Life are concerned with the potential applicability of the new law to players’ gambling activity, and have issued some legal policy statements on the issue. [16] Although Congress was not directly addressing MMORPG’s by passing the Internet gambling law, it may not be long before gambling in virtual worlds is targeted.  


Deviant Behavior
              Beyond civil-suit complaints and vague notions of property ownership, there are also criminal elements that exist in cyberspace.  Important questions are now being asked about the potential impact of deviant sexual behavior in MMORPG’s. [17]    Can a virtual character be raped?  What level of underage sexual behavior can be explored before child pornography or pedophilia concerns arise?  


Avatars are extensions of humans and thus are able to take similar actions as humans, while not inherently subject to the same laws.  Deviant behavior exists in cyberspace in the same way it does in the real world – perhaps to a greater extent.  Some of the issues resulting from deviant behavior are managed within the online community and social networks between players, yet sometimes players may prefer to involve law enforcement in solving criminal problems.  Misconduct and aggression in the form of cyberstalking and harassment take place within virtual worlds, perhaps causing real life harm.  


Watchdog groups, mostly those dedicated to eradicating child pornography and online predators, have sometimes taken aim at MMORPG’s demanding censorship.  In one instance, these watchdog groups called upon the actual game distributors to intervene.  Mystere, an online persona in the game Everquest, was banned by Sony On-line Entertainment after posting a piece on a fan-fiction message board making references to rape. [18] Mystere was posting fiction stories on a website not affiliated with Sony, with the intention of further developing his own online character.  The story was fiction and was written from the virtual persona of an elf.  Although completely unaffiliated with Sony, the posting was still well within the boundaries of online role play.  SOE removed the piece and banned the player without delivering any notices, asserting that these acts were within its “exclusive right to permit or disallow the outside use of our intellectual property.” [19]   At what point is it acceptable to censor literature written from a virtual persona?  Furthermore, is the real-world person behind the avatar entitled to rights provided by the First Amendment, namely freedom of speech and expression?  Should a person’s Constitutional rights be denied for actions taken from a virtual personality’s perspective?                


            Cyberstalking has been recognized as a viable complaint when the communications are directed at a real person via a computer. [20]   In order for the harassment to rise to the level of cyberstalking, it must cause a reasonable person to suffer emotional distress. [21]   Query whether the behavior must be directed at the individual behind the keyboard, or their avatar.  As each avatar develops its own online reputation, wealth and ‘cyber-presence’, an argument can be made that harassing behavior directed at the avatar is as relevant, if not more so, as behavior directed at the individual.  As some players spend more time in their virtual worlds than in their personal lives, an argument can be made that their online presence is more important, to them, than their personal reputation.  Gamers take seriously, insults and allegations directed at their avatars.  Can such statement ever rise to the level of defamation – in the legal sense?  In order for a person to be able to assert a cause of action for libel or slander, that person must suffer damage to their reputation as a result of untrue statements of fact made by another, and published to third parties.   Interesting questions of law arise regarding whether untrue statements made about a person’s ‘character’ in a virtual game could rise to the level of actionable defamation.  Even more esoteric issues arise when attempting to divine what is ‘true’ or false in a world that is, by its very nature, pretend. 



              Lawyers in the not-to-distant future will likely be wrestling with issues like these, as the courts decide what level of credibility will be assigned to claims arising out of virtual game play.  One author predicts that a separate branch of government will be necessary to rule the virtual world. [22] Even if legal principles were established to govern virtual game behavior, significant questions will be raised as to which country’s laws apply.  Can the game publisher mandate that certain laws apply to behavior occurring on their servers?   What are the implications of allowing private companies to decide for millions of players, the laws that will apply to their activities? 


            All these questions implicate fundamental questions regarding human existence.  Who are we?  If our personality is made up of the ways we portray ourselves to the outside world, can an avatar not be part of our basic personal makeup?  As computers become more integrated into human existence, shouldn’t the decisions made in the online world be afforded as much importance as, say, the clothes we decide to wear on a given day?  Technophobes and others who fear the future will undoubtedly resist any integration of our human existence and cyberspace.  But to do so may constitute a simple denial of increasingly important aspects of our fundamental existence.  We are who we say we are.  It should be of little consequence whether our ‘character-istics’ are displayed in the physical world, or in the realm of cyberspace – where many individuals choose to spend more of their daily lives. 


Lawrence G. Walters, Esq., is a partner in the national law firm of Weston Garrou, DeWitt & Walters,  He has been practicing for over 18 years, and represents clients involved in all aspects involved in the video gaming industry.  He recently launched to serve as a clearinghouse for information relating to videogame censorship efforts.  Nothing contained in this article constitutes legal advice.  Please consult with your personal attorney regarding specific legal matters.  Mr. Walters can be reached at, or via AOL Screen Name: “Webattorney.” 


[1] Dimitri Williams, “Trouble in River City: The Social Life of Videogames,” page 154.

[2] Edward Castronova, “On Virtual Economies,”, Volume 3, Issue 2 (December 2003); which can be viewed at:

[3] David Wong, “A World of Warcraft World,” (2005); which can be viewed at:

[4] Id.

[5] David Becker, “Inflicting Pain on ‘Griefers’,”, (December 13, 2004); which can be viewed at:

[6] Edward Castronova, “Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier,” The Gruter Institute Working Papers on Law, Economics, and Evolutionary Biology, Vol. 2: Article 1. (2001), which can be viewed at:

[7] James Lee, “Wage Slaves,”, (July 5, 2005), which can be viewed at: feature?cId=3141815.

[8] Sean Carton, “Is Your Business Ready for Virtual Business?,” (October 20, 2006), which can be viewed at:,1895,2034559,00.asp.

[9] “Wage Slaves,” supra.

[10] Kathleen Craig, “Second Life Land Deal Goes Sour,” (May 18, 2006), which can be viewed at:,70909-0.html.

[11] “Land Lawsuit Hits Linden Lab,” (May 9, 2006), which can be viewed at: 20060509/land-lawsuit-hits-linden-lab/.

[12] Id.

[13] “Chinese online gamer gets life for murder,”, (June 8, 2005), which can be viewed at:

[14] 72 Am. Jur. 2d. Statute of Frauds.

[15] “U.S. outlaws Internet Gambling,” The Washington Post, (October 14, 2006)

[16] G. Linden, “The Unlawful Internet Gambling Enforcement Act of 2006 and Second Life”, (October 4, 2006), which can be viewed at:

[17] Issues such as these were discussed at a recent conference entitled: Sex in Video Games, held on June 8-9, 2006, in San Francisco, CA ( 

[18] EverQuest Strips the Dark from ‘Dark Elf’,'”, (October 9, 2000) which can be viewed at:

[19] Ren Reynolds, “Intellectual Property Rights in Community Based Video Games,” (2002), which can be viewed at:

[20] K. Jaishankar and V. Uma Sankary,Cyber Stalking: A Global Menace in the Information Superhighway,” which can be viewed at:  

[21] Id.


© Lawrence G. Walters (2011). All rights reserved.