Second Life Arbitration Clause Unenforceable 161
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."
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.
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.
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You are correct, really, but it's important to note why.
The idea of a contract is that two parties enter into a mutually beneficial arrangement. A contract that gives one side of the deal nothing (or, apparently, almost nothing) is not a valid contract.
Most "click-wrap" licenses, as we understand the term, would fail this test for the same reason Second Life's license failed it, as practically all of them are CYA deals that exist primarily to restrict users from doing unforeseen things that co
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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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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,
Signed contracts of adhesion (Score:2)
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Please people, please: use IMNAL. We're not interested in your bedroom behavior.
Re:The difference doesn't matter (Score:5, Funny)
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As for "being a party to" EULAs, it's a standard form contract and a l
Finally (Score:3, Insightful)
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Refs:
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)
now I gotta rewrite my EULA (Score:2, Funny)
Precedent? (Score:4, Informative)
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Re:Precedent? (Score:5, Informative)
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.
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.
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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
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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.
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.
Re:Not a good decision, really (Score:4, Interesting)
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If I possess something that can be legally traded for cash, and I'm deprived of it, then I've suffered harm. Now, there might be an argument as to whether the person who caused the loss had a duty to care for your stuff. If
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An autograph can have value greater than the paper and the ink. A baseball hit over the center field wall can have more value than the baseball that was fouled out by the previous pitch to the same batter.
Even in online games that forbid trading of characters, such trading occurs, and therefore such characters have value. Now, you can potentially argue whether players had been given advance war
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.
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
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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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Not in SL (Score:2)
Note that I'm not arguing whether that equivalence to RL money is ridiculous or not. (Ok, so I do think it's
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1) Ask the users nicely not to do it, warning them of suspensions if they do not listen
2) suspend them
3) Fix bug
4) unsuspend them
That seems pretty straightforward to me.
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I've heard worse (Score:2)
There is no *real* harm done to anyone if their account is terminated.
Just like there is no "real" harm done if J. Random Blackhat changes the computer records of your bank account to indicate you spent the past month withdrawing it all as cash overseas? After all, it's only numbers in a computer; the fact that they're directly equivalent to and exchangeable with "real" money is irrelevant.
To misquote Philip K. Dick, "Reality is that which, just because you don't believe in it, doesn't go away."
Wha
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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
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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...
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Okay...so I buy a product that I know will take away, say, 1 of my rights. I open it up and read the right it wants to take away to let me use the product. I don't want to give up that right. I'm therefore at fault for deciding to buy the game? Just because I know there's going to be a EULA for the game doesn't mean I know what it's going to demand. If I don't know what it's going to demand I have
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1 a correct and complete description of the game
2 a list of currently available patches
3 a list of currently available addons
4 the [redacted] EULA: to be put on a separate page suitable for printing
What i would like to see is more companies that will do things like Steam (if i don't own the game then i should always be able to get a new copy from the publisher)
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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 was a classic contract of adhesion, and the decision is a very important precedent.
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As any judge will tell you, ignorance of the law is no excuse.
If you are unwilling or unable to understand the details of a contract you've got two options... don't sign it and go without, or sign it and blindly hope that everything goes without a problem.
Not quite Paris (Score:2)
That's the whole reason why there exists a "right to an attorney" in criminal cases: a defendant cannot be expected to know all the niceties of the legal system the State imposes, enforces and adjudges. Those with a chance of competing in that system are mostly professionals, a.k.a. lawyers. Therefore, the defendant must have access
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It's a great thing to grow up in a modern western society where you're so wealthy and protected that you can't even conceive of anything existing outside your utopian libertarian ideals. I hope you aren't too disappointed when you get out of high school and realize Ayn Rand was a writer of fiction, and the people in power dynamics she discussed had little relationship to reality.
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If you believe that firearms are the only way to force anyone to do anything, then you're the one who is ill-informed.
I was merely being optimistic that you are in junior high or high school and recently read Ayn Rand to be clinging so dearly to such a naive view of power dynamics. That your views happen to coincide exactly with her fictional libertarian utopian ideals -- and not with any form of economic, political or social reality in world history -- was me
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Did I say that a gun is the only form of force? No. Do you honestly think that I think that firearms are the only way of exerting force? Don't bother answering, I really don't care what you think and am done.
I'd suggest though being less quick to pronounce judgment... or are you the sort that if someone sounded cheap you'd call em a jew? If they sounded lazy you'd call them
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I'm not sure what you mean here... If you are saying that Ayn Rand views on top down government and control are to fictional to have any weight in the here and now of this reality, Id have to say that you haven't done your home work, and you aren't capable of seeing truth in fiction. People use lies to reveal the tr
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Indeed there is, but that's not what he said.
He was providing the standard party line of Ayn Rand fans everywhere, that only through the use of guns is anyone ever forced to do anything. If there were no guns involved, then obviously everyone involved was on an equal negotiating footing and everything was
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Anyone who has lived or traveled outside the modern western world (or heck, even thought about economic history for a few minutes) knows that there are plenty of forms of "persuasion" that don't involve the use of firearms, but can be sufficiently coercive and threatening to survival.
That would be me (I've lived a lot more in Asia than I have in the US of late), but the person who first brought up the gun-point argument to me was an ultra-liberal college professor (ultra-liberal == someone who says the LA Times is a conservative newspaper). Government is all about the organized and authorized use of violence, by definition.
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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
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And example would be banking in the UK. Even thóugh in theory there are four or five highstreet banks and you can change between them, few people do because most banks have the same terms. For example they all decided to charge for cash withdrawals from other banks machine within days of each other. Similarly, when charges for cashing cheques increase, the increase is done by all the banks simultaneously. So
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Sure, you may feel compelled to own a car but at no point are you absolutely required to own one, there are always alternatives. Hell, I live in a town of
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Nope. They are required to use things I have a "right" to use. So, if I have a right to use them, and have to sign something before I can use them, then I was forced.
Last I checked a tax return isn't a contract.
It is a legal document. The terminology isn't quite right to call it a contract, but it is pretty close to one.
Don't like it? Last I checked you are free to move and even renounce your citizenship
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Driving is a right? I could have sworn it was a privilege, hence the need for a license, something that historically is known for being a means of giving permission.\
Again, you make the choice to exercise this privilege and by doing so you play by the rules... just as you play by the rules of paying the bill when you go out to eat at a restaurant. No one is forcing you to do either.
Even if such activities are 'rights'... rights do not stand
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No, but using the roads are.
Once again, freedoms are not free.
Yes, you are FORCED to make concessions. Note the word "force." It is appropriate in this case, despite the complaints otherwise.
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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.
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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.
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!).
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If you owned Windows by buying one copy of it, you could e.g. start selling it. Ownership of software (as opposed to ownership of a copy) means ownership of intellectual property rights, i.e. ownership of copyright. You didn't that by buying a copy you own the software, did you.
EULAs? (Score:2)
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This Bodes Well for the Dell Guy (Score:2)
Don't forget the FAA! (Score:3, Informative)
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the company is better off (Score:2)
You're already liable for virtual income. (Score:2)
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.
I wonder.... (Score:2)
Granted, my game was free and as such, I wonder if would have been subject to the same rules.
As the article says, you need both (Score:5, Interesting)
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Just curious, anything in particular in Wikipedia that hit your Beware nerve?
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Not if they always make it available for you to read and compare, it doesn't.
Yes, but (Score:3, Informative)
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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
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-only have one account at a time in any online game
-and pay for 3 months in advance at most.
So if anything along these lines happens to my account, my financial loss will be rather limited and the company in question will never see me again as a customer.
BTW, I'm talking about MMOGs in general, not Blizzard in particular. Blizzard are already on my personal boycott list for different (political) reasons.
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No, it doesn't. Linden Labs are essentially creating Linden Dollars from thin air and injecting them into the exchange (via "Supply Linden") in order to keep a stable exchange rate against the US Dollar. Supposedly, it was at one point possible to make money off fluctuations in the exchange rate, though.