Second Life Arbitration Clause Unenforceable

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."

Comments

this seemed to be the important one for most games

[jt418-93]

lack of mutuality. The TOS gave Linden Research the right to terminate users "for any reason or no reason," the right to invoke several one-sided remedies to protect its own rights, and the right to modify the TOS at any time, including the arbitration provision.

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.

An eye on WoW

[BobMcD]

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:Not a good decision, really

[cduffy]

We ARE talking about a computer game, here. There is no *real* harm done to anyone if their account is terminated.

Not just any computer game, though -- a computer game where very large amounts of real-world money are exchanged. "Linden Dollars" are exchangeable for real ones; there are folks whose in-game activities constitute their entire income.

As the article says, you need both

[unassimilatible]

The contract must be *both* procedurally (e.g., take-it-or-leave it, no alternatives, pre-printed) and substantively (e.g., unfair or hidden terms) unconscionable to be unenforceable. One is *not* enough - unfair isn't enough. The process must be unconscionable as well. BTW, arbitration clauses are presumed enforceable otherwise. Please do *not* rely on this as legal advice (but especially do *not* rely on Wikipedia for legal advice!). IAALBNYL (I Am A Lawyer But Not Your Lawyer).

Re:I hope this is challenged...

[Jarjarthejedi]

Forced to sign as in "Agree to this or waste the money you spent buying this game because you can't play unless you do and few companies accept returns with opened boxes, a prerequisite to seeing this screen."

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...

Re:Will this carry over to other online services?

[Original Replica]

I have to wonder if the the Linden Dollar (and linden real estate) having a real world value weighs the need for a two sided arbitration more heavily. From the courts view (I imagine) the only thing at stake in a WoW arbitration is your $15 subscription fee, where as Second Life has some more significant monetary attachments. When there is real money involved the government is sure to follow.

Re:The end of Microsoft's EULA?

[taustin]

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.

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.

Re:A good decision - really

[Mr2001]

Many non-material items are legally real property. Drug formulae, music, video game software, and others are ideas. Those are not "legally real property". Copyrights and patents themselves can, in some cases, be considered property, but the formulas, music, software, etc. that are covered by copyright or patents are not a form of property. You cannot own an idea or a number, but you can patent or copyright it.

People deserve to own their ideas and make money with them. No, not necessarily. They deserve to be compensated for the work they do, but that doesn't have to mean legal monopolies on ideas or information: I get compensated for the work I do, and like most people, my job doesn't have any special legal protection. All I need is an agreement between my boss and myself that if I do X amount of work, I'll receive Y dollars. If I don't think that's enough, I have the option to stop working for him and find someone else who's willing to pay my asking price, or to enter another line of work, or to lower my expectations and settle for Y dollars.

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.