Bragg v. Linden Lab
Encyclopedia
Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593 (E.D.Penn. 2007), was a civil action (No. 06-4925) removed
to the United States District Court for the Eastern District of Pennsylvania
in October 2006. An online virtual world
service provider (Linden Lab
) terminated the account of a user (Marc Bragg) when it discovered that he had found a way to acquire virtual land at a lower-than-market price. The user brought this suit, which was ultimately settled before a final decision was reached. However, the District Court did decide on two issues which may be important in future virtual world
litigation: that the Second Life
Terms of Service
’s mandatory arbitration provision was unenforceable; and that interaction with a person in a virtual world can satisfy a state’s "minimum contacts
" requirement for personal jurisdiction.
developer Linden Lab
when his account was unilaterally disabled by Second Life administrators. Linden Lab claimed that Marc Bragg had violated their Terms of Service
by URL-hacking the Second Life virtual land auction website in order to gain access to otherwise unavailable auctions. As a result, Bragg was able to purchase virtual land within Second Life valued at $1,000 for approximately $300. Bragg’s account was suspended while Linden Lab conducted an investigation, and later closed completely. Bragg argued that by closing his account, Linden Lab also dissolved his virtual assets, which he valued at between US$4,000 and US$6,000.
, Bragg refiled on October 4, 2006. His new complaint named Philip Rosedale, the creator of Second Life, as an independent defendant.
On November 7, Linden Lab responded with three filings: they sought to remove the case to Federal Court
, they sought to dismiss claims against Philip Rosedale due to a lack of personal jurisdiction, and they sought to compel Bragg to participate in the mandatory arbitration outlined in the Second Life Terms of Service.
Bragg opposed the removal and sought to remand the case back to state court. Linden Lab opposed the motion and was successful.
On May 30, 2007, Judge Robreno of the United States District Court for the Eastern District of Pennsylvania
denied Rosedale’s motion to dismiss for lack of personal jurisdiction, finding that Rosedale met the minimum contacts threshold by his nation-wide personal marketing efforts to publicize Second Life. The Court also denied Linden Lab’s motion to compel arbitration, finding that the Terms of Service represented an adhesion contract that was unjustly biased towards Linden Lab.
On October 4, 2007, Linden Lab announced that it reached a confidential settlement with Bragg:
Judge Robreno agreed and held that the Terms of Service was a contract of adhesion, noting that the Terms of Service was presented by Linden Lab on a "take-it-or-leave-it-basis." However, he limited this holding by noting that a claim that a contract is one of adhesion can be defeated if there are "'reasonably available market alternatives'" available to the weaker party. Although there were numerous other online virtual worlds available to Bragg at the time, Judge Robreno noted that Second Life was unique in that it allowed participants to retain property rights in virtual land.
Although some commentators have posited that the court's decision regarding the mandatory arbitration provision will be the seminal decision on the issue for some time, it is unlikely that the decision will have much weight as more virtual worlds (that allow ownership of virtual land) begin to compete with Second Life.
filed a motion to remove himself from the case based on a lack of personal jurisdiction. Although much of Judge Robreno's discussion of minimum contacts
is fairly boilerplate, his analysis includes a unique twist when he recognizes that Rosedale's avatar may have actually interacted with Bragg's avatar within the virtual world:
Removal jurisdiction
In the United States, removal jurisdiction refers to the right of a defendant to move a lawsuit filed in state court to the federal district court for the federal judicial district in which the state court sits. This is a general exception to the usual American rule giving the plaintiff the right...
to the United States District Court for the Eastern District of Pennsylvania
United States District Court for the Eastern District of Pennsylvania
The United States District Court for the Eastern District of Pennsylvania is one of the original 13 federal judiciary districts created by the Judiciary Act of 1789...
in October 2006. An online virtual world
Virtual world
A virtual world is an online community that takes the form of a computer-based simulated environment through which users can interact with one another and use and create objects. The term has become largely synonymous with interactive 3D virtual environments, where the users take the form of...
service provider (Linden Lab
Linden Lab
Linden Research, Inc., d/b/a Linden Lab, is a privately held American Internet company that is best known as the creator of Second Life....
) terminated the account of a user (Marc Bragg) when it discovered that he had found a way to acquire virtual land at a lower-than-market price. The user brought this suit, which was ultimately settled before a final decision was reached. However, the District Court did decide on two issues which may be important in future virtual world
Virtual world
A virtual world is an online community that takes the form of a computer-based simulated environment through which users can interact with one another and use and create objects. The term has become largely synonymous with interactive 3D virtual environments, where the users take the form of...
litigation: that the Second Life
Second Life
Second Life is an online virtual world developed by Linden Lab. It was launched on June 23, 2003. A number of free client programs, or Viewers, enable Second Life users, called Residents, to interact with each other through avatars...
Terms of Service
Terms of Service
Terms of service are rules which one must agree to abide by in order to use a service. Unless in violation of consumer protection laws, such terms are usually legally binding...
’s mandatory arbitration provision was unenforceable; and that interaction with a person in a virtual world can satisfy a state’s "minimum contacts
Minimum contacts
Minimum contacts is a term used in the United States law of civil procedure to determine when it is appropriate for a court in one state to assert personal jurisdiction over a defendant from another state...
" requirement for personal jurisdiction.
Facts
In 2006, Pennsylvania lawyer Marc Bragg (“Marc Woebegone” in Second Life) brought a lawsuit against Second LifeSecond Life
Second Life is an online virtual world developed by Linden Lab. It was launched on June 23, 2003. A number of free client programs, or Viewers, enable Second Life users, called Residents, to interact with each other through avatars...
developer Linden Lab
Linden Lab
Linden Research, Inc., d/b/a Linden Lab, is a privately held American Internet company that is best known as the creator of Second Life....
when his account was unilaterally disabled by Second Life administrators. Linden Lab claimed that Marc Bragg had violated their Terms of Service
Terms of Service
Terms of service are rules which one must agree to abide by in order to use a service. Unless in violation of consumer protection laws, such terms are usually legally binding...
by URL-hacking the Second Life virtual land auction website in order to gain access to otherwise unavailable auctions. As a result, Bragg was able to purchase virtual land within Second Life valued at $1,000 for approximately $300. Bragg’s account was suspended while Linden Lab conducted an investigation, and later closed completely. Bragg argued that by closing his account, Linden Lab also dissolved his virtual assets, which he valued at between US$4,000 and US$6,000.
Case history
On May 1, 2006, Bragg initially filed his suit in the West Chester District Court in Pennsylvania. After retaining private counsel, Jason A. ArchinacoJason A. Archinaco
Jason A. Archinaco is an attorney known for the handling of the first virtual property lawsuit in the United States, Bragg v. Linden Research, Inc. That case is believed to have resolved confidentially....
, Bragg refiled on October 4, 2006. His new complaint named Philip Rosedale, the creator of Second Life, as an independent defendant.
On November 7, Linden Lab responded with three filings: they sought to remove the case to Federal Court
United States federal courts
The United States federal courts make up the judiciary branch of federal government of the United States organized under the United States Constitution and laws of the federal government.-Categories:...
, they sought to dismiss claims against Philip Rosedale due to a lack of personal jurisdiction, and they sought to compel Bragg to participate in the mandatory arbitration outlined in the Second Life Terms of Service.
Bragg opposed the removal and sought to remand the case back to state court. Linden Lab opposed the motion and was successful.
On May 30, 2007, Judge Robreno of the United States District Court for the Eastern District of Pennsylvania
United States District Court for the Eastern District of Pennsylvania
The United States District Court for the Eastern District of Pennsylvania is one of the original 13 federal judiciary districts created by the Judiciary Act of 1789...
denied Rosedale’s motion to dismiss for lack of personal jurisdiction, finding that Rosedale met the minimum contacts threshold by his nation-wide personal marketing efforts to publicize Second Life. The Court also denied Linden Lab’s motion to compel arbitration, finding that the Terms of Service represented an adhesion contract that was unjustly biased towards Linden Lab.
On October 4, 2007, Linden Lab announced that it reached a confidential settlement with Bragg:
"The parties agree that there were unfortunate disagreements and miscommunications regarding the conduct and behavior by both sides and are pleased to report that Mr. Bragg's "Marc Woebegone" account, privileges and responsibilities to the Second Life community have been restored."
Mandatory arbitration provision
Bragg sought to prevent Linden Lab from enforcing its mandatory arbitration provision. He argued that the provision was "both procedurally and substantively unconscionable and is itself evidence of defendants' scheme to deprive Plaintiff (and others) of both their money and their day in court."Judge Robreno agreed and held that the Terms of Service was a contract of adhesion, noting that the Terms of Service was presented by Linden Lab on a "take-it-or-leave-it-basis." However, he limited this holding by noting that a claim that a contract is one of adhesion can be defeated if there are "'reasonably available market alternatives'" available to the weaker party. Although there were numerous other online virtual worlds available to Bragg at the time, Judge Robreno noted that Second Life was unique in that it allowed participants to retain property rights in virtual land.
Although some commentators have posited that the court's decision regarding the mandatory arbitration provision will be the seminal decision on the issue for some time, it is unlikely that the decision will have much weight as more virtual worlds (that allow ownership of virtual land) begin to compete with Second Life.
"Minimum contacts" in virtual worlds
As mentioned above, Philip RosedalePhilip Rosedale
Philip Rosedale is an American entrepreneur, best known as the creator of the virtual world Second Life. Within the Second Life metaverse, his avatar is known as Philip Linden....
filed a motion to remove himself from the case based on a lack of personal jurisdiction. Although much of Judge Robreno's discussion of minimum contacts
Minimum contacts
Minimum contacts is a term used in the United States law of civil procedure to determine when it is appropriate for a court in one state to assert personal jurisdiction over a defendant from another state...
is fairly boilerplate, his analysis includes a unique twist when he recognizes that Rosedale's avatar may have actually interacted with Bragg's avatar within the virtual world:
Once inside Second Life, participants could view virtual property, read additional materials about purchasing virtual property, interact with other avatars who owned virtual property, and, ultimately, purchase virtual property themselves. Significantly, participants could even interact with Rosedale's avatar on Second Life during town hall meetings that he held on the topic of virtual property.