Guest Post: Property Rights in the Virtual World

After a brief hiatus, we come back to our 2nd Annual SpicyIP Fellowship applicant series. In this post, Deepshikha Malhotra brings us an interesting post on property rights the virtual world! This is Deepshikha’s 2nd entry to our fellowship applicant series. Her first post is available here.

Property Rights in the Virtual World

virtual propertyIf being materialistic in real life isn’t enough, we have plenty of opportunities to be so in the virtual world as well. From something as simplistic as FarmVille to the well developed virtual world of SecondLife, we are now capable of owning plots of land, ‘virtual estate’, cars, clothes and shoes. But what is the value of these virtual properties?

Earlier, when we obtained something in a game, it was usually as a result of accumulating points in the game. Now, we can simply buy the points and the property– using real money. This is where things get complicated because it seems that history is about to repeat itself. When man began to accumulate property and when he attached value to it, he made laws to protect it. And we have seen how attaching economic value to intellectual property acted as a springboard for IP laws worldwide (post-WTO and TRIPs). Therefore, by giving virtual property value in real currency, the need to protect them has emerged.

Despite the recent warning from the Reserve Bank of India, the current value of virtual currencies is still going strong. A BitCoin was valued at a staggering 63,000 rupees in November 2013 and is still more than 50,000 rupees. (See latest value here) With this kind of economic value attached to it, and its worldwide acceptance, trading a single item online involves a lot of real money.

With the virtual world presenting a great market to trade products, it isn’t surprising that companies have taken the virtual route and are selling their products in virtual worlds as well. From Reebok shoes to Nike jackets and even Dell laptops, it’s all available in the virtual world.

And just like in the real world, they are not immune to property offences. In 2003, in Li Hongchen v. Beijing Arctic Ice Technology Development Co., a Chinese court ruled that the defendant was required to restore the plaintiff’s virtual property to him, after it had been stolen by a third party through hacking of the plaintiff’s account, at a cost of 1,140 yuan (about US $138) and pay most of Li’s court costs. The court said that the reason of the decision was to “protect a distinct property right – the right of the owner to control the property as against the world, not merely as against the party who committed a wrongful action (here, the third party).” [in Joshua A.T. Fairfield, Virtual Property, 85 B.U. L. REV. 1047,1084 n.188 (2005).]

A Chinese exchange student in Japan was arrested for using a software to commit virtual muggings in the game Lineage and selling the stolen items for real money on an auction website. Taiwan decided that virtual property qualifies as electromagnetic records and should be considered movable property in cases of fraud and theft. Under Taiwanese law, the looting of virtual property can carry a maximum sentence of up to three years imprisonment.

Similarly, they are not immune to violation of IPRs. Virtual counterfeit items bearing trademarks of well known brands exist in circulation. Prominent designs of the real world are copied and used for virtual products.

But are these blatant violations of real world IPRs in the virtual world immune to the remedies available in real life?

Just how laws have been evolved or interpreted to protect virtual property from the various property offences that may be committed, there is an equal need to protect the Intellectual Property associated with virtual property. In-keeping with this objective, in 1998, the Digital Millennium Copyrights Act was enacted in the United States of America for better Digital Rights Management (DRM) and to criminalize certain virtual Intellectual Property Rights infringements.

Thus, in view of the past developments and the need to protect virtual property, including those protected by real-world Intellectual Property Rights, many countries have considered infringement of Intellectual Property Rights in the virtual world an offence in the real world. In cases like Marvel Enterprises v. NCSoft (use of identity and characteristics of superheroes of Marvel’s comic books), and those involving use of real-life identities in online games (e.g.: Kirby v. Sega of America, Inc.), designs, trademarks (e.g., Textron Inc. et al. v. Electronic Arts Inc),  etc., without the permission of the proprietors has been considered as illegal and amounting to piracy.

Since the Indian IPR laws were not framed to deal with virtual infringements, they may not be exhaustive in their scope of application in this regard. How sufficient they are in protecting IPRs in the virtual world would depend on how liberally the existing laws can be interpreted to bring within their ambit the concept of virtual intangible property and virtual markets and economy. However, to what extent they can be interpreted and to what extent they can be applied in their present form, without prompting the need for separate specific provisions dealing with virtual property rights, is something that only time will tell.


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