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Second Life Arbitration Clause Unenforceable
Posted by
Zonk
on Fri Jun 08, 2007 04:43 PM
from the furries-have-rights-too-you-know dept.
from the furries-have-rights-too-you-know dept.
NewYorkCountryLawyer writes "In a decision that could have far-reaching implications, a federal court in Pennsylvania has held that the California arbitration clause in the 'take it or leave it' clickwrap agreement on the Second Life website is unconscionable, and therefore unenforceable. In its decision (pdf) in Bragg v. Linden Research, Inc., No. 06-4925 (E.D. Pa. May 30, 2007), the Court concluded that the Second Life 'terms of service' seek to impose a one-sided dispute resolution scheme that tilts unfairly, 'in almost all situations,' in Second Life's favor. As a result, the case will stay in Pennsylvania federal court, instead of being transferred to an arbitration forum in California."
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Hardware: Gateway Customer Sues to Get His PC Fixed 147 comments
prostoalex writes "The Sacramento Bee tells the story of an El Dorado resident who had to go to small claims court to get his Gateway PC fixed: 'Right out of the box, he says, the computer displayed scattered graphics and wouldn't work properly. He says he called a Gateway salesman five times and sent him an e-mail to get an authorization number to send the computer back, but his phone calls and message were never returned. Then, over the course of months, Sheehan said he called Gateway technical support dozens of times.' Gateway insists that by clicking 'Accept' on a customer service EULA when the computer was first booted, Mr. Sheehan has waived his rights to sue the computer manufacturer in United States courts. The Gateway EULA states that conflicts must be resolved via private arbitrage. Sheehan, though, argues that he never saw the EULA, because of the broken graphics. As such, he's not held to that agreement." Some connections between this and a discussion about a Second Life case we had yesterday.
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this seemed to be the important one for most games (Score:5, Interesting)
no more 'we can kill your account any time and you suck it' from online game companies. a lot of tos's just went invalid today. the shakeout from this will be huge in the pay for online gaming sector.
Re:this seemed to be the important one for most ga (Score:4, Informative)
A majority of Federal courts have ruled that shrinkwrap licenses are in general unenforceable, though a minority have affirmed that it is indeed a legally-binding document.
However, we're dealing with what's called a "clickwrap" license, which hasn't nearly the legal history that shrinkwrap licenses have. This decision, if upheld (I guarantee it's going to be appealed), is certainly an important early move in the right direction.
Parent
The difference doesn't matter (Score:5, Informative)
But the judge didn't rule it unenforceable because there was no law stating that clickwrap agreements were valid. He ruled that the terms were so one-sided that it was "unconscionable" (horribly one-sided), and therefore invalid. If the same terms were in a shrinkwrap license, or even a signed contract, the same terms would have had the same problem.
The statement that it doesn't apply everywhere until upheld by the Supreme Court is, however, quite correct.
Parent
Re: (Score:3, Informative)
Obligatory proviso: while this is basically true, a signed contract may be valid anyway - if it can be shown that the party who loses out to the contract was fully aware of this at the time when they signed it, that the terms of the contract were negotiated by both parties,
Re: (Score:3, Funny)
Please people, please: use IMNAL. We're not interested in your bedroom behavior.
Re:The difference doesn't matter (Score:5, Funny)
Parent
Re: (Score:3, Interesting)
Reading over the article a bit more, okay, let me amend my statement....
The fact that Second Life has a kind of monopoly in virtual land sale seems to enter into it. So this might not be a strike against click-wrap licenses in general. Hmm.
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Finally (Score:3, Insightful)
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Will this carry over to other online services? (Score:2, Interesting)
I wonder if this will be applied to other service on the web. It seams that every site has one of these agreements.
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Re:Will this carry over to other online services? (Score:5, Interesting)
Parent
now I gotta rewrite my EULA (Score:2, Funny)
Precedent? (Score:4, Informative)
Re: (Score:3, Informative)
Re:Precedent? (Score:5, Informative)
Parent
Re:Precedent? (Score:5, Informative)
Judges are looking for reasoning that helps them to resolve the case that is before them. When they find that another judge has thought these issues through carefully, and has fashioned an eminently sensible and just conclusion, they will usually go for it.
Of course it's easier for a judge if there's an appellate decision from his circuit telling him what he must do, but many, perhaps, most, litigated issues don't have the benefit of that kind of binding 'precedent'.... otherwise the issue would not even be in litigation. The lawyers would have read the binding precedent and followed it rather than frivolously ignore it.
Parent
An eye on WoW (Score:4, Interesting)
I, for one, will be VERY interested to see if Blizzard responds to this in any way. Their policy is very much the same, as is their penchance for banning accounts and restricting access to real-world-value. (And remember, legality does not negate value in most cases. The IRS would have you pay income tax on your drug deals, if you follow the letter of the law.) So will the rules shift in favor of the end-user?
Likewise, what other EULA's might fall victim to the 'no viable market alternative' argument? Windows comes to mind.
This will surely die on appeal, but still, the possible implications are interesting.
Re: (Score:3, Funny)
It would be interesting if MS were attacked on those grounds, because the obvious (IA certainly NAL) defense is highlighting the viable market alternatives, which any monopolist is loath to do. Likewise, all those who would enjoy seeing MS lose would be caught in the Catch-22 of admitting that [insert favorite minority OS] is a non-viable alternative... I think this has solid potential for some entertainin
Re:An eye on WoW (Score:4, Insightful)
In other words, Second Life offers to let you buy a portion of its sandbox, while Blizzard merely lets you play in it. In one case, you can take your toys and go home since you own the toys, in the other, you cannot.
Parent
Not a good decision, really (Score:3, Interesting)
We ARE talking about a computer game, here. There is no *real* harm done to anyone if their account is terminated.
And more importantly, the makers/administrators of giant multiplayer games (or worlds) kind of NEED to be able to terminate accounts at will. What if a player/group of players find a bug in the game and are able to use it to cheat? Or worse, use it to gain access to the personal computers of OTHER players without their permission? If they had to go through a whole "termination process", players could wreak havoc at will in those kinds of situations. And what could the admins of the servers do? They can't terminate the accounts. They can't just shut off the servers (because that would be the equivalent of terminating *everybody's* account). The only recourse it to quickly try and patch the software before the problem gets entirely out of hand. They do that anyway, really, but it's a lot harder when the entire server is going to hell because of the exploit.
I won't even get into the whole idea of Second Life property being equivalent to "real" property. That's just ridiculous, and I expect this guy to lose his case because of that anyway.
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except linden has set up a direct dollar to linden exchange procedure, giving things a real world value. that is something they created themselves.
as to other games, whether you agree or not, as long as someone will pay real money for something, it has value and is treated 'real'. they're going to tax your online income i
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Re:A good decision - really (Score:4, Interesting)
Similarly, if an artist or musician wants to get paid for painting or recording, he can find someone who'll agree to pay him for it. If he wants $10,000 to make a painting, and someone is willing to pay him $8000, he has the same options: accept the lower offer, look for another customer, or enter another line of work where customers are willing to pay more. What he doesn't need or deserve, however, is the option to make his painting for free, plaster copies of it all over walls and galleries, and then force anyone who looks at it or makes their own copy to pay him $10,000. That's just a way to avoid honest negotiations.
Parent
Re:Not a good decision, really (Score:4, Interesting)
Parent
Re:Not a good decision, really (Score:4, Informative)
So far the judge has decided it is unreasonable to expect users to have to go through Arbitration court since it gives all the benefits to the company and all the downsides to the user.
The case itself though will most likely be lost by the user since virtual property doesn't have any real value (if it had you would have to pay tax for it and I wouldn't want to do that).
What I would like to see is that admins get to keep their ability to ban people for whatever reason but that users get a fair chance to defend themselves if they feel they became unjustly banned.
Parent
Re:Not a good decision, really (Score:4, Insightful)
Besides, what does taxing have to do with anything? If I don't pay taxes on something that the tax code claims should be taxed you are not dealing with something with no value: what you have is tax evasion. Don't put the cart before the horse
Parent
Re: (Score:3, Insightful)
It isn't about creating "your own legal tender," it is about creating something which has value. And in the case of Second Life, the value can be potentially bartered or sold.
Keep in mind that stocks are virtual property, too, but you wouldn't want the NYSE kicking out of trading and keeping your stocks. Also, the IRS **is** looking into the possibility of taxing virtual property in games.
"Kind of like how they put "no cas
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To the extent that the people involved pay real money and to the extent that they feel genuinely frustrated about losing the account, the harm is very, very real. Using your logic, there is no harm in being publicly ridiculed or finding out that your girlfriend enjoyed a whole soccer team. An MMO can be an important social activity (in the sense that it involves people) and please realize th
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Correct, it is obviously for censorship.
I hope this is challenged... (Score:3, Insightful)
America shouldn't be in the business of forcing people to obey the random "magical wishes' contained within every contract some jerk forces people to sign.
The next thing I fear: We'll have to find a federal judge to sign our EULAs to authorize the active denial our own rights before we get to play a game. Either that, or a law passed by congress or a new ruling by the justice department to take away the rights they can't get by contract anymore.
Ryan Fenton
Re: (Score:2)
Care to share which contracts you have been forced at gun point to sign? I've signed a few in my day and clicked I Agree to plenty of others... but never were firearms involved... in those cases I felt the contract's terms were 'unfair'... I simply refused to sign.
Re:I hope this is challenged... (Score:4, Interesting)
I don't know of any recourse you can take to get your money back in the case you don't agree with, say, Battlefield 2142's EULA. The moment you see that EULA none of the game stores I know of will let you refund as you opened the box and the company's just going to tell you to accept it.
Force doesn't necessarily mean physical force. In many cases the most potent forces are the ones of the mind, a blackmailer doesn't hold a gun to your head but I don't think you'd say he's not forcing you to do something. In the same way many software companies hold your money ransom and demand you accept or lose it and get nothing back.
This becomes irrelevant if you can returned the open game or find the EULA before opening the box but both are exceedingly rare where I live. You really have no good choices if you don't like the EULA, you can decline and lose your money or accept and lose your freedom. What a choice...
Parent
Re: (Score:3, Insightful)
That argument is a sham. It relies on the assertion that a person could realistically read and understand the ridiculously complicated legal agreements that govern a hundred different things you do every day, from credit card agreements to software EULAs. That assertion is false. Pretending people could take the time and have the expertise to plow through multitudes of lengthy legal documents is just absurd. Busin
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It is?
I'm not sure how an "ultra-liberal" could hold the idea that the only purpose of government is to force people to do things with guns. I really am not sure in what way your professor could be ultra-liberal in a traditional political sense if he genuinely believed governments had no legitimate function -- political liberalism generally relies heavily on the notion of collective action for greater good. Are you sure he
The end of Microsoft's EULA? (Score:5, Insightful)
The interesting thing about this is that is being adjudicated under *Federal* law, rather than state law, because it involves interstate commerce. Any EULA -- not just Microsoft's -- is now in jeopardy, because, according to this ruling, an EULA is -- by definition -- a "contract of adhesion".
The next thing that they should go after is the concept that you don't actually *own* software that you purchase, you only "license" it. That could certainly be seen as a "contract of adhesion" ('procedurally unconscionable') imposed in a one-sided way and thus unlawful as well.
The ruling is based on California law, though :-( (Score:3, Informative)
I think this sets some precedent already, but also that it can end up in the Federal Court of Appeals, and eventually the Supreme Court if i
Re:The end of Microsoft's EULA? (Score:5, Interesting)
Adobe v. Softman is old news, and addressed exactly that, and was ruled in the correct way. In California, at least, if you A) pay a set amount, and B) get indefinite use of the software for that payment, it's a Sale of Goods, and the Right of First Sale (under Title 17) applies. That ruling is at least four or five years old now.
This is why Microsoft is so desperate to get Windows and Office transferred over to a "pay per month or we turn it off" model.
Parent
Wrong wrong wrong (Score:4, Informative)
No, federal district court jurisdiction is granted either via diversity jurisdiction (plaintiffs and defendants from different states in suits exceeding $75K) or federal question jurisdiction. In this case, since the court is obviously using state law, diversity is how they got into court (and of course the judge finding CA arbitration unenforceable). Pennsylvania plaintiff, California defendant, = federal court diversity jurisdiction using state substantive law (but federal civil procedure and evidence).
The next thing that they should go after is the concept that you don't actually *own* software that you purchase, you only "license" it. That could certainly be seen as a "contract of adhesion" ('procedurally unconscionable') imposed in a one-sided way and thus unlawful as well.
Also wrong! Read the case or the article, for a contract to be unenforceable, it must be both procedurally and substantively unconscionable. Contracts of adhesion are enforceable if they do not contain grossly unfair terms. And software licenses are generally considered enforceable (assuming no grossly unfair terms - read the article or case!).
Parent
EULAs? (Score:2)
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This Bodes Well for the Dell Guy (Score:2)
Don't forget the FAA! (Score:3, Informative)
Arbitration (Score:3, Insightful)
Several state judicial systems have already found that out-of-state arbitration limits due process. Alltel got hit hard for this and their 'consumer pays all arbitration fees' clause a couple of years back. I don't think arbitration will last much longer, especially since many businesses are moving to mediation for b2b stuff.
As the article says, you need both (Score:5, Interesting)
Parent
You need both, but you already have one... (Score:3, Interesting)
"A contract or clause is procedurally unconscionable if it is a contract of adhesion. A contract of adhesion, in turn, is a "standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subsc
Yes, but (Score:3, Informative)