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Bragg v. Linden Lab

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Bragg v. Linden Lab

Bragg v. Linden Research, Inc.
United States District Court for the Eastern District of Pennsylvania
Date decided May 30, 2007
Citations 487 F. Supp. 2d 593
Judge sitting Eduardo C. Robeno
Case holding
The Second Life Terms of Service's mandatory arbitration provision was unenforceable and interaction with a person in a virtual world can satisfy a state's "minimum contacts" requirement for personal jurisdiction.
Keywords
Arbitration clause, Personal jurisdiction

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.

Facts

In 2006, Pennsylvania lawyer Marc Bragg (“Marc Woebegone” in Second Life) brought a lawsuit against Second Life 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[1] 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.[2] Bragg’s account was suspended while Linden Lab conducted an investigation, and later closed completely.[2] 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.[2]

Case history

On May 1, 2006, Bragg initially filed his suit in the West Chester District Court in Pennsylvania.[3] After retaining private counsel, Jason A. Archinaco, Bragg refiled on October 4, 2006. His new complaint named Philip Rosedale, the creator of Second Life, as an independent defendant.[4]

On November 7, 2006, Linden Lab responded with three filings: they sought to remove the case to Federal Court,[5] they sought to dismiss claims against Philip Rosedale due to a lack of personal jurisdiction,[6] and they sought to compel[7] Bragg to participate in the mandatory arbitration outlined in the Second Life Terms of Service.[8]

Bragg opposed the removal and sought to remand the case back to state court.[9] Linden Lab opposed the motion [10] 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.[11] 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.[11][12]

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."[13]

Issues raised

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."[11]

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."[11] 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.[11][14] 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.[11]

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,[15] 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 Rosedale 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:

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.[11]

References

  1. ^ Dennis G. Jerz, URL-Hacking: Do-it-yourself Navigation (May 18, 2000).
  2. ^ a b c Tateru Nino, Bragg vs Linden Lab - The Story So Far, Second Life Insider (Jan. 27, 2007).
  3. ^ Law Offices of Marc S. Bragg, Virtual Land Dispute Spills Over Into Real World, PR Newswire (May 8, 2006).
  4. ^ Bragg v. Linden Research, Inc. Complaint (Oct. 4, 2006).
  5. ^ Bragg v. Linden Research, Inc. Notice of Removal (Nov. 7, 2006).
  6. ^ Bragg v. Linden Research, Inc. Rosedale's Motion to Dismiss for Lack of Jurisdiction (Nov. 14, 2006).
  7. ^ Bragg v. Linden Research, Inc. Linden's Motion to Compel Arbitration (Nov. 14, 2006).
  8. ^ Second Life Terms of Service at 7.2.
  9. ^ Bragg v. Linden Research, Inc. Bragg's Motion to Remand (Nov. 20, 2006).
  10. ^ Bragg v. Linden Research, Inc. Linden's Opposition to Bragg's Motion to Remand (Dec. 7, 2006).
  11. ^ a b c d e f g Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593 (E.D.Penn. 2007).
  12. ^ Benjamin Duranske, Bragg v. Linden Update: Defendants' Motions to Dismiss and Compel Arbitration Denied, Virtually Blind (Jun. 1, 2007).
  13. ^ Marty Linden, Resolution of Lawsuit, Second Life Blogs (Oct. 4, 2007).
  14. ^ Dean Witter Reynolds, Inc. v. Superior Court, 259 Cal. Rptr. 789, 795 (Ct. App. 1989).
  15. ^ Benjamin Duranske, Bragg v. Linden Update: Defendants' Motions to Dismiss and Compel Arbitration Denied, Virtually Blind (Jun. 1, 2007) (“Bottom line is that this is a pretty extraordinary decision which, assuming it survives an almost certain appeal, will likely be cited as the seminal decision in virtual law for the foreseeable future.").

External links

  • Second Life Website
  • Linden Lab Website
  • Second Life Land Auctions
  • Bragg v. Linden Lab at Virtually Blind
  • Bragg v. Linden Lab at Second Life Insider
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