The Problem of Virtual Property: Attaching Property Rights to MMORPGs

Alexis Elaine A. Bea

I. Introduction

“There is no wrong without a remedy.”

In an episode of “The Big Bang Theory”, in which one of the characters had his equipment
and items from World of Warcraft. stolen by another player. He approached the authorities to file a
report for robbery to which the officer responded with the punch line, “The Pasadena police do not
have jurisdiction in…Pandora.” This scene from the sit-com was particularly funny because: 1) it was
relatable—most gamers have experienced being scammed or stolen from by another player; and 2)
the character Sheldon’s reaction to the incident was intended by the writers to not be taken seriously
by both the other characters (including the police officers) and the viewers. However, if the items that
were taken from him existed outside the confines of a game, would Sheldon have been ignored?

A similar incident happened in early 20051, when Qiu Chengwei, a player of the MMORPG,
“Legends of Mir III” was sentenced to death for the murder of another player, Zhu Caoyuan. The
former had acquired a Dragon Sabre, a rare and powerful weapon in the said game, through a quest.
He had lent this weapon to his friend, Caoyuan, who subsequently sold the same on eBay for 7200
yuan (this would be roughly Php 57,427.00) without permission or knowledge by the owner. When
Qiu found out, he immediately went to the police to report what he perceived to be theft of his
property. He was turned away because under the laws of China, in-game items are not considered as
property. Without any other redress, Qiu confronted Caoyuan and stabbed him to death.

Virtual worlds are not just a setting for online games anymore, they have created their own
niche as full societies. Regardless of any fantasy or unrealistic simulations, Massively Multiplayer
Online Role-Playing Games (MMORPGs) still have a tendency to mimic or parallel real-life2. While
such parallels may be considered a sign of a healthy in-game community3, its status as a world that
exists through a code provides the distinction that makes it difficult to assign rights to users by
analogy. Because of its inherent nature as a role-playing game, legal, social, and economical
perspectives tend to be overlooked and unexplored.4

Gaming culture is an example of what Jenkins (2006) has called an emerging “participatory
culture.” Player identification with MMORPGs of all kinds has produced a significant
international fan community whose members take pleasure in giving names to their avatars and
local organizations, designing character appearances, crafting objects, and creating innovative
gaming strategies and activities. They share game tips with fellow players, manage game forums
and boards, develop plug-ins, modify game software to produce unofficial versions (a practice
known as modding), create machinima by taking game visuals and manipulating character
movement, take still or moving pictures of their gaming records to share with individuals and
groups, and even write fiction based on game characters or experiences. Thus Taylor (2006)

1
New
2
dfafa
3
Kotaku
4
Veloso Usufruct
suggests that MMORPG culture has implications in terms of cultural innovation and economic
value. Game culture not only enriches gaming experiences, but also injects new ideas and
methods into game worlds. There are many examples of player innovations being adopted by
game designers and appearing in new versions. In other words, MMORPGs reflect an abundance
of player inspiration and effort, and therefore should be viewed as both cultural and commercial
products; similarly, player communities should not be dismissed as consisting of passive
consumers. Prosumers (a term recently coined to describe Web 2.0 users) are similar to players
in terms of game design and production. The large majority of players engage in design and
game testing activity without any demand or expectation of payment, leading Yee (2006) to
describe this new phenomenon as a “labor of fun.” Its estimated economic value has received
considerable research attention. Players now actively assist MMORPG companies with
debugging during public testing stages, post instructions for other players to enter and stay in
games, and respond to other players’ questions. Thus player fan communities not only provide
game companies with free technical assistance, but also support their marketing and customer
service efforts. Such support networks have high economic value.

However, these games generate $30 billion a year on its subscriptions alone. These figures
translate to a higher per capita than that of China.5 In-game transactions for items that 6 easily
matches those numbers for a single game. The finances of these virtual worlds have grown to the
point that some have floating7 or even fixed exchange rates with the US Dollar8. The success of virtual
worlds, combined with the large time investment they require, has given rise to a new kind of market:
real-world dollars being traded for virtual-world assets9. This paper will focus on the application of
property law for the protection of those assets.

Online gamers spend a huge amount of time, money, and effort for their character avatars.
Some of them have even created a living out of it. From the moment they enter the game users acquire
access to virtual property ranging from something as simple as their avatars, to property having a net
worth of $1 million10. While these assets can only exist within the paradigm of certain online games,

5
The first serious academic foray into the study of MMORPG economics was done by Indiana
Univerity’s Professor Edward Castronova in 2001. His watershed article, Virtual Worlds: A
First‐Hand Account of Market and Society on the Cyberian Frontier made the astounding claim
that the virtual world of EverQuest had a GNP per capita comparable to that of some real world
developing countrie
6
transactions between players within the game
7
dfaf
8
9
10
Finally, and most importantly for the purposes of this essay, all users of virtual worlds acquire
virtual property simply by entering the world, ranging from holdings as small as their avatar and
the initial items/currency distributed by companies upon entering the world to real and personal
virtual property holdings worth in excess of U.S. $1 million.28 Additionally, thanks to the
increased complexity and richness of the Internet today,29 it has become commonplace for users
to trade virtual property since, at base, all virtual property is merely code and therefore easily
transferable.30
 would these users have any form of legal protection vis-à-vis these hard earned assets? Who owns
the property in these virtual worlds? Are the creators the absolute owners of these items? Are they
allowed to unilaterally dispose of a player’s character or items however they please?

Virtual worlds and these virtual gray-markets have existed for years with no signs of slowing
down (and as a matter of fact, continues to grow). These questions have already been asked before.
Yet, there are a number of varying discussions by property authors with no uniform and definitive
answer in sight due to the lack of any regulation by statute or jurisprudence11. Proponents of
increased property rights in MMORPGs, authors have offered justifications, the most dominant
being: Lockean Labor Theory, Utilitarianism by Jeremy Bentham, and the theory of Personhood.

This paper will attempt to analyse and consolidate all of these arguments and its criticisms
and offer a coherent narrative in delineating what rights users have vis-à-vis other users and even
developers.

II. The Virtual World of MMORPGs

a. What is a Massively Multiplayer Online Roleplaying Game?

b. The value of virtual property: Why the MMORPG industry is not “just a game”.
i. Virtual property have real world value and where there is value, legal protection
should follow.
1. According to Nelson, Virtual resources have real-world value. Virtual world
currency, accounts, and items are bought and sold in gray markets, which
Edward Castronova ha documented.
2. Castronova looked at the gray market value of virtual resources: Edward
Castronova, Virtual Worlds: A First-Hand Account of Market and Society on
the Cyberian Frontier (CESifo, Working Paper No. 618, 2001), available at
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=294828.) from
Sony’s Everquest,
c. There is a need to acknowledge and define the rights of players vis a vis game developers
and other players.
i. Real Money Trading
1. Fairfield believes that developments in technology have created new possibilities
and “new uses of resources.”77 Property law, he argues, is the best way to
efficiently allocate these new uses,78 because “[f]ailure to recognize virtual
property raises both negotiation and search costs for third parties.”79
2. Extending property rights to virtual resources means imbuing those resources
with the four traditional property rights. Therefore, people will be able to acquire
a virtual resource, use it, and then dispose of it. Further, that person will be able
to exclude others from doing the same with that specific virtual resource. Less
clear is who should be given virtual property rights. One can attach property

11
Nevertheless, although virtual worlds and the RMT market have existed for over a decade, the law
has had little to say on the subject of virtual property rights. 112 When cases do reach courts,
EULAs and contract law govern the outcomes.113 Legal scholars, growing increasingly concerned
over the possibility of EULAs unfairly abrogating user rights, have turned to property law
 rights to virtual resources in many ways, granting different people those four
property rights
ii. In-game remedies provide limited protection and deterrence against fraud and
theft
1. Nelson: A rationale for the recognition of property rights for virtual resources is
that it “makes users better off by increasing enforcement rights in virtual
property.” Fairfield outlines how this justification has been used to protect
property in China,61 Korea,62 and Taiwan.63 The implicit argument is that users
need property rights in virtual resources in order to better protect against, punish,
and deter theft by people who illegally gain access to virtual world accounts.
There is strength behind this argument. Law enforcement often refuses to
investigate the theft of virtual items. There seems to be a lack of seriousness in
law enforcement over the theft of intangible, “imaginary” things. After all, drunk
drivers, murderers, and car thieves have a more immediate and recognizable
effect on communities.
2. John Brewer, When a Virtual Crook Struck This Gamer, He Called Real Cops, ST. PAUL PIONEER PRESS, Jan. 31,
2008, at A1. In one such incident, a user of the virtual world, Final Fantasy XI, lost
his account and its resources to a hacker,64 who either deleted or sold
everything.65 According to the user, the estimated gray market value of the items
was $3,800.66 The police, however, declined to investigate on the grounds that
“points earned in games are devoid of monetary value.”67
3. Backed by property rights, law enforcement and civil courts will have to take
these intrusions into a user’s account more seriously. Consequently, users will be
provided with remedies, and abusers will be deterred from future illegal conduct.
III. What Rights Attach to Virtual Property?
a. What property rights do developers have?
b. What property rights do the users have?
c. Property Law: It is necessary to define the property rights in order to have a remedy under
Contract Law
i. It is a well-settled principle that no one can give what one does not have, nemo dat
quod non habet. One can sell only what one owns or is authorized to sell, and the
buyer can acquire no more right than what the seller can transfer legally. (GR
143573)
ii. Sec. 3 - Lands of the public domain are classified into agricultural, forest or
timber, mineral lands and national parks. Agricultural lands of the public domain
may be further classified by law according to the uses to which they may be
devoted. Alienable lands of the public domain shall be limited to agricultural lands
x x x.
As a consequence of these provisions, and the declared public policy of the State
under the Regalian Doctrine, the lease contract between Florentino Teves, Jr. and
Juan Menchavez Sr. and his family is a patent nullity. Being a patent nullity,
[petitioners] could not give any rights to Florentino Teves, Jr. under the principle:
NEMO DAT QUOD NON HABET - meaning ONE CANNOT GIVE WHAT HE DOES NOT
HAVE, considering that this property in litigation belongs to the State and not to
[petitioners]. Therefore, the first issue is resolved in the negative, as the court
declares the contract of lease as invalid and void ab-initio.
 On the issue of whether [respondent] and [petitioners] are guilty of mutual fraud,
the court rules that the [respondent] and [petitioners] are in pari-delicto. As a
consequence of this, the court must leave them where they are found…
Why? Because the defendants ought to have known that they cannot lease what
does not belong to them for as a matter of fact, they themselves are still applying
for a lease of the same property under litigation from the government.
On the other hand, Florentino Teves, being fully aware that [petitioners were] not
yet the owner[s], had assumed the risks and under the principle of VOLENTI NON
FIT INJURIA NEQUES DOLUS - He who voluntarily assumes a risk, does not suffer
damage[s] thereby. As a consequence, when Teves leased the fishpond area from
[petitioners]- who were mere holders or possessors thereof, he took the risk that it
may turn out later that his application for lease may not be approved.
Unfortunately however, even granting that the lease of [petitioners] and [their]
application in 1972 were to be approved, still [they] could not sublease the same.
In view therefore of these, the parties must be left in the same situation in which
the court finds them, under the principle IN PARI DELICTO NON ORITOR ACTIO,
meaning[:] Where both are at fault, no one can found a claim. (GR 153201)
d. The meaning of “property” in common law and why it should be used
i. Property is something owned and possessed: Early English legal books illustrate
this by describing property as “that generall lawe or general customs of propretye
wherby goodis mouable and vnmouable be brought in to a certayne propretye/ so
that euery man may knowe his owne thynge. And this law is called the law or
general custom of property because it is diffused throughout the whole world.” G.
E. Aylmer, The Meaning and Definition of “Property” in Seventeenth-Century
England, PAST & PRESENT, Feb. 1980, at 87, 87 (citing ST. GERMAN’S DOCTOR
AND STUDENT 33 (T.F.T. Plucknett & J.L. Barton eds., 1974)).
e. Property Law in order to have a cause of action for Tort
i. Second Restatement
f. Where do property rights begin and where does it end?
i. Fairfield: characteristics of virtual property that can equate it to tangible property
Joshua A.T. Fairfield, Virtual Property, 85 B.U. L. REV. 1047 (2005).
ii. See, e.g., Michael Meehan, Virtual Property: Protecting Bits in Context, 13 RICH. J.L. & TECH. 1 (2006) (arguing for a
conceptualization of virtual property as “bits in context,” but failing to articulate specific property rights to be applied to the
“bits”); Ryan Vacca, Viewing Virtual Property Ownership Through the Lens
g. The Problem of Ownership Rights
i. The Lockean Labor Theory: Analysis and Criticism
IV. Virtual Property, Virtual Rights: Why Contract Law, Not Property Law, Must be the Governing
Paradigm in the Law of Virtual Worlds
V. Second Life vs. Wow

Gaming Activities
The ongoing-world characteristic of MMORPGs is expressed in the form of routine and daily economic and
social activities. Avatars need food to survive or to heal, and need tools or materials to repair damaged
equipment, thus requiring players to have steady in-game incomes. Real or virtual currency can be used to
purchase decorative objects such as new hairstyles or clothes. To earn money, players can complete quests
that are reset on a daily basis; they receive gold coins for doing so, which provides a basic salary guaranteed
by the system. They can also visit certain areas to collect raw materials (e.g., minerals, herbs, or leather) to
sell in markets, or they can make various products from raw materials (using system provided recipes or
instructions) that they can exchange with the game system or other players in return for virtual or actual
money. Some players focus on making a large series of increasingly lucrative trades to build fortunes, either
via game supported auction mechanisms or through private channels that are not sanctioned by game
companies

Social Aspect
Some MMORPG characteristics make them supportive environments for rich social interactions. First, they
offer foreseeably stable and ongoing worlds that allow individual players and game communities to develop
identities with evolving histories. Second, the pseudonymity of one or more avatars encourages rich identity
play, especially since MMORPGs provide participants with both platforms and materials for interaction. For
those players who interact with gaming friends over distances, the uniform but diverse structure of MMORPGs
allows them to generate shared (and often joyful) experiences that help to generate a sense of community

a. What is Real-Money Trading?

b. In-Game Remedies

The tacit restriction embodied in the EULAs and subsequent modes of prevention notwithstanding, property-
averse game developers have failed to fully stop these allegedly illicit transactions. In Asia alone, the real-
cash virtual item market exceeds $100 million annually. More broadly applied, the online gaming market is
forecasted to reach $13 billion by 2011 with China accounting for # billion in 2010.

The economic success of this secondary industry is not without its set of varying social harms. Oe such
problem, as already mentioned, but not fully described, is the subsistence and unpredictable gray market

Users’ avatars have no easy parallel in the real world, but still may qualify as a form of virtual property.78 For
example, time spent in virtual worlds often grants avatars certain benefits.79 Apart from the accrual of virtual
wealth, these benefits can take the form of unique avatar skills or powers.80 As a result, such benefits may
compel new users to purchase an older avatar from another user, rather than start with a brand new avatar of
their own.81
Whether or not the law sees these assets as property, many users have proceeded to treat them as such by
buying and selling them for real-world money.82 Since the inception of virtual worlds, a lively market—known
as “re- al money trading” (“RMT”)—has emerged for these assets.83 Recent estimates posit that this virtual
property market may exceed $1 billion in transactions annually.84 Entire third-party companies have sprung
up to facilitate these ex- changes.85 Second Life land barons have become millionaires.86

Where a market develops, legal protections often follow.111 Nevertheless, although virtual worlds and the
RMT market have existed for over a decade, the law has had little to say on the subject of virtual property
rights.112 When cases do reach courts, EULAs and contract law govern the outcomes.113 Legal scholars,
growing increasingly concerned over the possibility of EULAs un- fairly abrogating user rights, have turned to
property law.114 In arguing for in- creased property rights in virtual worlds, commentators offer various
theoreti- cal justifications, with three predominating: Lockean labor theory, personhood theory, and
utilitariani
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In the virtual world context, works made for hire become important when one user commissions
another user to create content for him or buys existing content from that user to create content for
him or buys existing content from that user12. This is because the Copyright Act provides that
ownership of a material object and ownership of a copyright in that object are distinct from one
another13. Moreover “transfer of ownership of any material object…does not itself convey any
rights in the copyrighted work embodied in the object…”14

Molly stepehns sales of in-game assets: an illustration of the continuing failure of

intellectual property law to protect digital-content creators (analyzing the sale of in-game
assets as potentially infringing the exclusive rights granted to a copyright owner and
concluding that none of these rights are actually infringed by in-game asset sales);

Sales of In-
Game Assets: An Illustration of the Continuing Failure of Intellectual Prope
rty Law to Protect Digital-Content Creators^

12
Importantly, the signed written agreement “must precede the creation of the [commissioned]
property… “Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, 413 (7th Cir. 1992)
(emphasis added); Playboy Enters., Inc. v. Dumas, 53 F.3d 549, 558-59 (1995)
13
17 USC Sec. 202 (2009)
14
Id. Opposite : transfer of ownership of a copyright of any exclusive rights under a copyright
does not convey property rights in any material object
I. Introduction

Technological innovation outpaces legal innovation.1 This rule rings even m

ore true in the digital age, in which innovation speed determines whether a
company survives.2 Ever-
evolving digital technologies pose particular challenges for intellectual prop
erty law because this area of law provides either uncertain protection or no
protection at all when technologies fall outside the subject matter contempl
ated by Congress and the courts3 or when the method of infringement circu
mvents the protective measures in place.4 This Note analyzes a recent onlin
e practice that circumvents the intellectual property protection expected by
digital-content creators.

Companies that develop massively multi-

player online games receive copyright protection for their games and game
graphics,5 yet that protection does not allow them to prevent players from s
elling portions of the game, such as characters and in-
game assets, to other players for thousands of dollars. If anything, intellectu
al property law perversely grants players property rights in the characters t
hey have developed to permit sales of those characters. These sales illustrat
e the general failure of intellectual property law to protect digital-
content creators, and this Note concludes that creators IMAGE FORMULA
5

of digital content must turn to contractual or technological measures to pro

tect their intellectual property.

Part II describes the dispute over sales of in-

game objects and the technology of online role-
playing games to provide a background for better understanding the intelle
ctual property and rights at issue. Part III evaluates the game developers' in
tellectual property rights in in-
game objects, while Part IV evaluates the players' intellectual property right
s in in-game objects.
II. Background

A. The Business of Online Role-Playing Games

From the early days of the dot-

com craze, many analysts predicted the inevitable burst of the Internet bub
ble-
a bubble characterized by investors finding the generation of revenues, muc
h less profits, unnecessary for any company incorporating dot-
com into its name.6 The last half of 2000 validated these forward-
looking analysts: the dot-
com craze ended as rationality prevailed over mania and notable dot-
com stock prices fell by as much as 78 percent.7 Despite the burst of the Int
ernet bubble, investors did not abandon the dot-
com; they simply began valuing dot-
coms as they valued any other traditional business by requiring dot-
coms to generate revenues and post profits.8

In this new era of traditional valuation, three types of Internet businesses-

pornography, information services, and online games-
will continue attracting investors because they have consistently generated
revenues and profits on the Internet.9 The online-
gaming market holds particular promise for investors because of potential
market growth from the introduction of Internet-
accessible game consoles and the emerging widespread availability of broad
band access.10 In fact, the market is already very profitable. The Interactive
Digital Software Association calculated that consumers spent $500 million
playing online games in 1999.(11) Datamonitor projects that online gaming
will generate revenues of nearly $5 billion by 2004.(12)

A large segment of the online-

gaming market is occupied by massively multi-player online role-
playing games, which include Microsoft's Asheron's IMAGE FORMULA9
Call, Sony's EverQuest, and Origin's Ultima Online.13 These games allow pl
ayers to interact simultaneously in a virtual world created by the software d
evelopment company. Two computer programs control this virtual world-
- one program runs on the player's personal computer, and the other progra
m runs on a game server accessed by the player using the Internet.

David P. Sheldon, Comment, Claiming Ownership, but Getting Owned: Contractual

Limitations on Asserting Property Interests in Virtual Goods, 54 UCLA L. Rev. 751 (2007).

see also discussion infra Section VB A copyright license, whether exclusive or nonexclusive,
generaly cannot be assigned to others unless the license agreement expressly so provides.
Gardner v. Nike, Inc.; harris v.

Copyright problems may arise, however, when transfers of ownership of virtual items
occur outside of the game and involve real-world currency. “Commodification” is “the
treatment of virtual objects (or currency or characters) as objects of real world
commerce”15

One helpful example is the case of a player using eBay to sell his…prohibit…nevertheless

An argument against infringement is that there can be no infringement because the in-
game item is neither being copied nor physically transferred16

Any such item or in-game currency stays exactly where it was created—inside the game

One author explains—transfer of a license

In fact from a copyright holder’s perspective, there is no difference between a real-world

transaction and an in-game transaction

When an avatar gives sword to another avatar…everything occurs within the computer
code

Moreover no copy of any code or image is ever created, and therefore there can be no
infringement of the reproduction right

15
ffafdasf
16
dkfjdkf
While rea-world transfers may not infringe game owners’ copyrights, these do often violate
the contracts between owner and player. The issue was recently raised in

Hernandez v. Internet Gaming Entertainment, Ltd17. Hernandez alleged that he had been
injured…gold farming…sell them plaintiff claimed that this violated EULA…2008
settlement

Through license agreements copyright owners can permit others to exercise the owner’s
exclusive rights under copyright and and thereby exploit and control access to and use of
protectedworks.

Often a copyright owner can maximize value of her work by allowing others to exploit it in
return…section will

Perhaps one of the most problematic aspects of the EULA is the clause dealing with property and
intellectual property rights. EULAs are contracts that seek to - amongst other things - assign
property and intellectual property interests in potentially valuable items without any possibility
of negotiation. In Second Life for example, there have been reports of virtual millionaires, [47]
with their wealth being generated solely from their interaction and activity within a given
environment. If such reports are accurate, and there are other users with large amounts of virtual
wealth, what rights do such users have to it? If a standard clause in a EULA states that all
property rights, title and interests vest in the game developer or platform provider, that implies
that users only have a right to use the items and wealth i.e. in a license form, rather than an
absolute right to own them. Such a situation is far from satisfactory. It is even more morally
unconscionable. If you have invested time and money into something, it seems only fair that you
should be entitled to reap at least some of the reward as Locke’s theory of labour suggests. [48]

he EULAs, whilst being the common regulatory mechanism are not free of controversy. These
contractual agreements are ‘click-wrap’ [42] agreements requiring a user only to agree to the
terms. There is no way of ensuring a user has read the contents, or if he has, whether he
understands what it means. Studies suggest that very few users ever read the contractual
documents they are signing. [43] GameStation have even conducted an April fool to show how
poor the readership of contractual agreements is. [44]GameStation changed their standard terms
and recorded the number of transactions that were processed until someone noticed the change in
their conditions in April 2010. This ‘prank’ revealed that out of the 7500 customers who made
purchases on April Fool’s day, not one read the terms and conditions closely enough, if at all.
Given that EULAs are binding agreements, such reports are disturbing as it suggests users are
entering into the contracts without any knowledge of the contents and potential implications.
EULAs are adhesion contracts; [45] they are none negotiable standard form agreements that can
be issued to multiple parties simultaneously. No user can attempt to negotiate any of the terms
with the developer. [46] Quite simply, if a user wishes to access a particular MMORPG or
Virtual World he must assent to the terms of the EULA or go elsewhere

17
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Given that users are free to contract with whoever they like, and only parties to a contract are
bound by its terms, users can only rely upon a EULA against a game developer or platform
provider. [52]There is no express contractual agreement between one user and all other users of a
MMORPG or Virtual World. As such, if a user has a dispute with another, reliance will have to
be placed on third party rights, rather than the EULA. This is far from desirable when it is likely
that a dispute between users could arise more easily than between a user and developer.
Moreover, given that most EULAs expressly state users have no property rights, how can a user
enter a dispute to something he is contractually stated not to own? These difficulties highlight the
unsatisfactory nature of property rights and the interdependence of copyright and contract in
EULAs.

Intellectual property laws are about protecting developers and their creative work. These
laws protect the developer from pirates and competitors that want to take a game work
and use it without any compensation. What does someone buy when they buy a game? In
the old days before digital distribution, there were retail computer and video game stores.
People would actually drive or walk down to a physical building called a video game store.
They bought a box with a manual and a CD made from less than five dollars’ worth of
material. How, then, could people be persuaded to pay sixty or seventy dollars for a
product we call a ‘game?’ People are persuaded, even eager, because they are really buying
a larger entertainment experience beyond the physical goods.

This experience is legally enjoyed by consumers through a limited license to the IP. The
game code, manual text, box art, title, game art, music, story, game world, middleware and
graphics are all IP.

As we venture into the next generation of game consoles with an increasing number of
major platforms including social, tablet, and mobile, more money than ever will be put into
game development.

This has been the trend since the start of the game industry and will likely continue into
later generations. Game development budgets for many large titles already meet or exceed
film budgets in terms of years in production and total expenditure.110 As a result of this
trend, protecting that ever growing capital investment from competitors and pirates is
becoming increasingly important. Of equal importance is harnessing the IP in a game for
maximum value in order to recoup costs and generate profits. As simplistic as these
statements are, the questions and strategies generated by them are immediately more
complex. IP is an emotionally charged issue in the software community generally and the
game development community in particular. Many people are in favor of open source
initiatives and are against software patents, patents in general, or even intellectual property
in general. These points of view are clearly influential and hotly debated at the highest
public policy and legislative levels throughout the world. Still, as an
Currently, in South Korea, offenses involving unauthorized in-game transfers of items by
MMORPG players by logging in as another user and moving items from the victim’s inventory
to their own inventory or that of a third party, are treated either as crimes against information
systems and computer data pursuant to Item 6 of Article 6 of the Act on Promotion of
Information and Communications Network Utilization and Information Protection and Article 49
of the same Act (Misuse of Personal Data and Confidential Information) or as 'fraud through
computer manipulation'. This inconsistency in the judiciary’s treatment of in-game item-related
cases appears to precisely stem from the lack of a clear distinction between game items, rights-
of-use and ‘gwonri-geum’ associated with them. - One of the several precedents where a
defendant involved in an unauthorized item transfer was charged with violation of the Act on
Promotion of Information and Communications Network Utilization and Information Protection
and judged guilty as charged is the June 3, 2003 ruling by the Seoul District Court (judgment No.
2003-godan-3578): “Notwithstanding the fact that no individuals should tamper with, or alter,
any information processed and stored by others over an information and communications
network, Defendant, around 09:00 on the aforementioned date, using a computer at an
unidentified game arcade, located in Hwagok-dong of Gangseo-gu, Seoul, accessed the Lineage
site and entered the user ID and password of a certain Kim (ID: jfk2914, password: ‘rla whd co')
obtained