In September 2009, Second Life was sued for allowing individuals to sell fake virtual goods. The case has recently moved forward with the filing of a case management statement. While this lawsuit deals explicitly with intellectual property, these issues are also significant for virtual economies in terms of who makes money and which residents are willing to keep their businesses in Second Life.
The case, filed by in-world business owners, alleges that Second Life has both allowed and enabled the sale of content that was stolen by other residents. While content theft is an intellectual property issue, it is also one that is closely associated with virtual economics. It is through the development and execution of their ideas that many Second Life residents make their profits. As such, the sale of copied goods is likely to reduce the profits made by the creator, since they can be sourced from other sellers. However, it can also effect the in-world economy by reducing prices for virtual good. In order to compete with originals, imposter goods need to be sold at a discount, effectively limiting how much money is generated through their sale.
The effect of the sale of fake goods on profits is certainly a concern; however, it also has potential wider ranging effects, including the willingness of vendors who help drive the economy to remain in-world. If the threat to their goods, businesses, and income is significant enough, Second Life residents could simply remove their businesses from the virtual world.
This issue is somewhat reminiscent of an older Second Life debate. In November, 2006 Linden Lab faced controversy around the use of a program called “CopyBot”. Intended as a debugging took, CopyBot had the ability to copy and replicate code, reproducing any item it could see within the world. With no material costs associated with goods, unscrupulous users could easily copy, replicate, and sell any virtual good that they could see in the world. Although the issue was resolved quickly, many resident threatened to withdraw their businesses from Second Life unless CopyBot was removed and banned. Even on principle, the issue was significant enough to drive residents to fairly extreme measures to protect both their property and their businesses.
This is not to say that the current case will result in these particular reactions. With the lawsuit, the situation has already moved in a different direction and, arguably, gone farther than the CopyBot issue was taken by concerned residents. Furthermore, current resident opinions on the case and its merits are, at best, divided. However, if the case carries on this trajectory, it is possible that it could have a significant effect on the Second Life economy, especially if residents decide to remove themselves or their enterprises from the world because they feel their goods and businesses are not being adequately protected.