Court Wants To Hear The Case Of The Second Life Land Deal Gone Bad

from the messy-situations dept

Late last year, we described the complicated case of a lawyer suing Linden Lab for kicking him out of Second Life and "reclaiming" some property he had purchased within the world. The case was quite complex for a variety of reasons. The guy was clearly exploiting a bug in Second Life that allowed him to buy the virtual land at below market values. However, Second Life touts the fact that you own whatever it is that you buy or build in their world, so simply taking it away could be questionable. Even more importantly, since Second Life is a fairly free form world. there's an interesting legal argument that anything that can be done in the world should be allowed, even if it wasn't what Linden Lab intended. Well, we may get to hear some of those arguments as the court hearing the case has turned down Linden Lab's request to have the case dismissed. There are lots of questions raised by this case that could clearly apply to other legal issues within virtual worlds, so it should be worth paying attention to the arguments both sides make, as well as the eventual decisions (and appeals).


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Trojan John, Jun 4th, 2007 @ 1:31am

    ...

    Nerds. Yet another massive waste of time and money.

     

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  2.  
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    Mark Bowness, Jun 4th, 2007 @ 2:43am

    This is actually really interesting to follow as it will set a precident for the way that real life / virtual life court cases may happen in the future.

    Mark Bowness

     

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  3.  
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    Anonymous Coward, Jun 4th, 2007 @ 3:48am

    Mommy! Jimmy's not playing fair!

    It's just a game. Should courts really be involved in this kind of stuff? Will monopoly players be next suing each other for, well, monopolistic practices?

     

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  4.  
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    The infamous Joe, Jun 4th, 2007 @ 3:59am

    Monopoly != Real Money.

    The reason this is in the courts is because you can "cash out" of Second Life and they cut you a check depending on how much of their currency you have, making it much closer to 'an investment' and edging it a little away from being 'just a game'.

    It should be interesting to see how it turns out, at least.

     

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  5.  
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    ReallyEvilCanine, Jun 4th, 2007 @ 4:05am

    No question

    The guy was clearly exploiting a bug in Second Life that allowed him to buy the virtual land at below market values.

    Exploiting a bug, i.e., fraud. I'd normally have trouble believing a lawyer would be stupid enough to take this to court, but I expect he's betting on the judge knowing and understanding even less.

    Since you can "cash out" and real money is involved, there's no difference between this and exploiting a bug at a stock brokerage site which allows you to purchase the stock for less than the actual price.

     

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  6.  
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    Anonymous Coward, Jun 4th, 2007 @ 4:23am

    Re: No question

    Exploiting a bug, i.e., fraud.


    You're looking at the difference between tax avoidance and tax evasion - on paper they can be argued to be the same thing; it's just that there are explicit laws against the latter, while the former involves the exploiting of "loopholes". By their very nature, as long as the loopholes exist, it is legal to exploit them.

     

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  7.  
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    Anonymous Coward, Jun 4th, 2007 @ 4:38am

    Re: Monopoly != Real Money.

    The reason this is in the courts is because you can "cash out" of Second Life and they cut you a check depending on how much of their currency you have, making it much closer to 'an investment' and edging it a little away from being 'just a game'.
    So, it's more like a game of poker than monopoly? (Although I have heard of monopoly being played for money)

     

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  8.  
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    nunya_bidness, Jun 4th, 2007 @ 4:53am

    Re: ...

    They should change the name of the game to Get a Life.

     

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  9.  
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    Killer_Tofu (profile), Jun 4th, 2007 @ 5:28am

    Well

    At least all of the other virtual worlds don't offer such an easy way to cash out. No direct money transfer backed by the companies there. They also state that its on their servers and they own it.
    So this BS that Second Life gets to go through, it brought on itself in a way (crappy laws aside). The other games will probably, and very much so should never be affected by the stupid ass laws that government officials may ever put in place.
    Then again, as the people who are tech educated grows, it will be harder for the stupid congress people to pass stupid laws trying to make them look good.

     

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  10.  
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    Anonymous Coward, Jun 4th, 2007 @ 5:34am

    Re: Mommy! Jimmy's not playing fair!

    "It's just a game. "
    Not really due to the way SL operates, you buy (for real currency) from Linden Lab's currency and items and you can also "cash out" with them converting those items/currency back into real currency. And because LL have these official conversions they make the game more than "just a game".

    It is akin to the stock exchange (not the government/law enforcement) just taking all your stocks away from you because you did something they did not like/approve of.(which they cannot do)

    Unless LL have in their terms and conditions very explicit articles that detail how they retain ownership and that they can reclaim the items at any point (and even if they did they would be questionable legally) they will lose this case.

    This whole thing of ownership is one of the main reasons most other games do not allow real world sales of virtual goods, because they do not "sell" the items they never lose ownership, and with that ownership retain full rights over everything in game

    "Exploiting a bug, i.e., fraud"
    Fraud is a legal term, as there as no laws concerning virtual gaming and it's evironments the better way to describe this would be "bug = loophole" and using loopholes is legal as far as the legal system is concerned

     

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  11.  
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    Anonymous Coward, Jun 4th, 2007 @ 6:18am

    I'm not a SL player, but I'm guessing these problems could be avoided by a carefully worded EULA... Set the rules up front, save yourself from the lawsuits later.

     

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  12.  
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    Anonymous Coward, Jun 4th, 2007 @ 6:27am

    Hasn't anybody but me realized that this Second Life thing is inherently bad for everybody except greedy businessmen? I think people have enough problems in real life. The last thing we need is lawsuits over things that simply do not exist. Get a life, people. A real one.

     

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  13.  
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    Keybored, Jun 4th, 2007 @ 6:37am

    Get a life, people. A real one.

    I agree. Why don't the grownups want to be concerned with real life? If its so bad go roll a bone and escape off into dreamy land. Stop wasting precious resources needed to deal with real problems.

     

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  14.  
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    Zed, Jun 4th, 2007 @ 6:41am

    This guy is a cheater..

    This lawyer is a cheater and a fraud and he has the Ballz to ask people to help finance him getting away with it. Gawd the people sucks sometimes.

     

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  15.  
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    The infamous Joe, Jun 4th, 2007 @ 6:45am

    Get a life or The more the merrier.

    I'd like to start off by saying that I don't play Second Life.

    Now that that is out of the way.. to say that it doesn't exist really shows that you're stuck in the 90's. Just because something is *digital* doesn't mean it doesn't exist. By your definition, software creators have been making money by selling people things that don't exist for some time now. Get with the times and realize that you don't have to be able to put something in your hand for it to be real. Sheesh.

    Second Life has had this coming for some time-- anywhere people can make or lose money there will be someone trying to find "loopholes" and someone else trying to keep things "fair". No surprise.

    Also, greedy businessmen probably have very little to do with SL. Greedy businessmen probably think much like you-- that SL doesn't really exist.

    PS- This comment doesn't exist.

     

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  16.  
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    keybored, Jun 4th, 2007 @ 7:26am

    This lawyer is a cheater and a fraud....

    Oh wait, now he's running in the '08 elections to be President. Our Nation is doomed...

     

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  17.  
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    Norman619, Jun 4th, 2007 @ 7:36am

    This can't be real....

    I'm I missing something here? This is a GAME right? How can this be a real life court case? I'm sorry but shit like this doesn't help keep gamers from looking like complete loosers, idiots, and lunatics. I hope the judge throws this out and as part of his judgement he assigns each party a nice pimp slap back into the 1st Life. WTF!?

     

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  18.  
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    Anonymous Coward, Jun 4th, 2007 @ 7:36am

    usualy games like these have an extensive list of rules, and as far as i know they all have1 saying exploiting a bug is illegal and banable.

    normally this isn't a big deal but since SL is presented as a new world with an anything can go kind of thing. its not looking good for them and they'll probably loose the case.

     

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  19.  
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    Cranston, Jun 4th, 2007 @ 7:47am

    Shouldn't you keep quiet if you don't know anythin

    I have to laugh at all the comments, mostly from Anonymous, starting with "I know nothing about this topic but I have an opinion" or words to those effect.

    I "play" Second Life. First, there is a play/socializing element that makes it partially a game. But there are also clear rules for ownership of goods, restriction of rights to modify/transfer/copy goods, etc. Land is a particularly interesting sub-case since the virtual land translates fairly directly into real-world machine cycles and somewhat less directly into bandwidth consumption. Part of the cost of owning land and part of the ongoing maintenance for that land is recovery for the real-world costs.

    Now, I have no idea about the specifics of this case so, unlike Anonymous, I won't comment on them. In general, Second Life puts a restriction on who can own land, what it costs, how much monthly maintenance will be, etc. If someone stepped outside the bounds of the contract, then it's theft in the same sense as you downloading Warez versions of MP3 and movies.. The only difference here is that there is potential value due to: the opportunity to raise revenue using the resource; the opportunity to sub-lease the resource; etc.

    By the way, if you check out http://www.secondlife.com you will see that over 150 people cash out in excess of US$5K each month. Since there is currently no direct taxation of income earned in a virtual environment, and since the unscrupulous wouldn't likely develop scruples and pay their taxes, that's well over $60K in after-tax or a better-than $100K salary. Not bad for "playing".

     

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  20.  
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    Norman619, Jun 4th, 2007 @ 7:56am

    Re: Shouldn't you keep quiet if you don't know any

    It's still a game. Much like WoW and others where virtual items get bought and sold in the real world. Doesn't change anything. It's a joke that this is being heard by real world courts. This should be heard by a 2nd Life court and dealt with entirly withing that virtual world. There are rules in place in that world from what I understand that address this kind of situation. I'm amazed motions to dismiss were denied.

     

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  21.  
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    The infamous Joe, Jun 4th, 2007 @ 8:09am

    deDEVILtails.

    Norman, Norman, Norman... so quick to judge.

    Baseball is a game, as is Football and some people might be prone to saying golf is a game. Does anyone tell a Pro Baseball player to get a life?

    Not only that, but SL and WoW *aren't* the same-- in WoW, buying and selling gold and items for real currency is not endorsed-- the items you find and the gold you get are still property of Blizzard, to do as they see fit. In SL, it's a selling point-- the company actually cuts you a check, if I understood correctly. The moment you allow a transfer of 'game' money to 'real' money, then 'real' courts now have jurisdiction. Especially if the numbers on the web site are real.. $5k/month for playing a game? I'm tempted to sign up myself. :)

    Not to mention, there's talk to taxing people for SL money by the 'real' IRS. :P

     

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  22.  
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    dziobak, Jun 4th, 2007 @ 8:46am

    virtual world calls for virtual courts

    since the matter is in virtual court, one should create virtual courts to handle such cases,
    programmers get to work!
    m

     

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  23.  
    identicon
    hackler, Jun 4th, 2007 @ 8:55am

    Just because a concept isn't immediately intuitive doesn't mean it's silly or a joke. I have these ratty pieces of paper in my pocket that couldn't possibly hold any real value, and yet I'm planning on exchanging them for some lunch in about an hour.

    The notion of paper currency was once ridiculed like this (and so was futures trading, options trading, insurance and the whole idea of a stock market).

    A lot of these comments remind me of people who still insist that the stock market is legalized gambling.

     

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  24.  
    identicon
    Little Gray, Jun 4th, 2007 @ 10:01am

    "I'm guessing these problems could be avoided by a carefully worded EULA."

    The trouble here, and what makes this case so important, is that the rights to ownership of property and content created by residents in second life granted by LL is unprecedented. LL isn't so much developing a 'game' as it is attempting to create a new - internet based - paradigm for rl business and personal transactions/interactions.

    LL can spend all the time in the world drafting a EULA, but, until a court sets some basic legal precedents, the legality of the EULA will be open to question. LL is struggling to balance it's interest in maintaining its servers with the legal rights of residents. Ownership of property makes this a very thorny issue millions of dollars at stake.

    Eduardo's ruling on LL's demurrer has profound implications for gamers, game developers, and online content creators. He has basically said that certain portions of LL's EULA (referred to as the Terms of Service (T0S) and Community Standards) are unenforceable because its a one sided adhesion contract. If it were just a game, with no ownership of property, residents wouldn't have legally cognizable rights.

    The heart of this case involves whether LL has complete discretion to terminate an account. My guess is that even though the ToS say's LL has sole discretion to terminate accounts, and, given that LL allows resident's to own property in SL, the Court will ultimately decide that LL cannot 'unreasonably' interfere with a resident's property/business interest in SL. Perhaps, it might be able to nullify the purchase of land acquired by exploiting a software bug, but, should certainly not be permitted to retaliate against a resident in such a manner as to deny the resident of all other property and business interests in SL.

     

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  25.  
    identicon
    Little Gray, Jun 4th, 2007 @ 10:01am

    "I'm guessing these problems could be avoided by a carefully worded EULA."

    The trouble here, and what makes this case so important, is that the rights to ownership of property and content created by residents in second life granted by LL is unprecedented. LL isn't so much developing a 'game' as it is attempting to create a new - internet based - paradigm for rl business and personal transactions/interactions.

    LL can spend all the time in the world drafting a EULA, but, until a court sets some basic legal precedents, the legality of the EULA will be open to question. LL is struggling to balance it's interest in maintaining its servers with the legal rights of residents. Ownership of property makes this a very thorny issue millions of dollars at stake.

    Eduardo's ruling on LL's demurrer has profound implications for gamers, game developers, and online content creators. He has basically said that certain portions of LL's EULA (referred to as the Terms of Service (T0S) and Community Standards) are unenforceable because its a one sided adhesion contract. If it were just a game, with no ownership of property, residents wouldn't have legally cognizable rights.

    The heart of this case involves whether LL has complete discretion to terminate an account. My guess is that even though the ToS say's LL has sole discretion to terminate accounts, and, given that LL allows resident's to own property in SL, the Court will ultimately decide that LL cannot 'unreasonably' interfere with a resident's property/business interest in SL. Perhaps, it might be able to nullify the purchase of land acquired by exploiting a software bug, but, should certainly not be permitted to retaliate against a resident in such a manner as to deny the resident of all other property and business interests in SL.

     

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  26.  
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    csven, Jun 4th, 2007 @ 10:21am

    The problem as I understand it was Linden Lab would hook up servers/sims to the grid and have two links to them. The first was the webpage. The second was the sim itself inside Second Life. Linden Lab could hide the auction webpage thus making it not easily accessible by the public, but the "land" was on the grid.

    So what people were doing was going to the sim inside Second Life. Easy to do since all auction land is color-coded purple on the grid map. These people would then click on the land and open the "About Land" pop-up window. Inside this window was clearly labeled the Auction ID number (a rather long string of numerical digits).

    With that number, they could then go to any auction webpage and cut 'n paste the number in.

    I suspect that because it might be more convenient to *see* the land before you make a bid, someone was on a "public" webpage and hopping from sim to sim, clicking on the land, getting the number and - because it'd be easier than searching for the sim name on the website - simply plug in the number if they liked the land.

    What was discovered was that the "Bid" button on the "public" page wouldn't automatically add $1000. That's it.

    And I don't believe every sim went for a $1. Apparently there were a few individual at least who knew of this and they would bid amongst themselves. Some sims I think went for around $300 or so. Still lower than $1000+, but not inconsequential.

    Linden Lab found out about this only after someone posted a list of sim auction numbers on the official forum. After the acted, a couple of avatars claimed they didn't know better. And they may not have. The land store was announced in March 2006. It was only live for a few weeks before this happened. In addition, if memory serves, this was part of a bigger change to the whole land system that started in the Fall of 2005; Linden Lab stopped auctioning parcels and went to whole sims and thus the change to a standard minimum $1000 entry bid.

    That's how I understand it. Hopefully that helps with how he and others were purchasing the land.

     

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  27.  
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    ReallyEvilCanine, Jun 4th, 2007 @ 10:29am

    Not Fraud?

    Anon Coward (#10), where did you go to law school? The lawyer knowingly and intentionally exploited an error in order to purchase an item which has value and which can be resold for cash. That's fraud. This wasn't a pricing mistake so cases like Donovan v. RRL Corp. (Cal. 2001) don't apply.

     

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  28.  
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    calabi, Jun 4th, 2007 @ 10:35am

    Re: Monopoly != Real Money.

    I agree. And I bet Linden Labs wants this sort of thing kept out of the courts as long as possible - because if judges start taking a look at this thing I suspect it will be revealed as a massive-multiplayer Ponzi scam.

     

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  29.  
    identicon
    Anonymous Coward, Jun 4th, 2007 @ 11:55am

    Re: deDEVILtails.

    "Does anyone tell a Pro Baseball player to get a life?"

    Sure, all the time. Doesn't matter though, they don't listen.

     

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  30.  
    identicon
    Anonymous Coward, Jun 4th, 2007 @ 5:25pm

    Re: Shouldn't you keep quiet if you don't know any

    Since there is currently no direct taxation of income earned in a virtual environment, and since the unscrupulous wouldn't likely develop scruples and pay their taxes, that's well over $60K in after-tax or a better-than $100K salary.
    Are you sure that income is tax free? In that case couldn't one just launder all their income through Second Life and avoid all federal income tax? That just doesn't sound plausible to me.

     

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  31.  
    identicon
    Anonymous Coward, Jun 4th, 2007 @ 5:28pm

    Re:

    A lot of these comments remind me of people who still insist that the stock market is legalized gambling.
    Why isn't it?

     

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  32.  
    identicon
    Anonymous Coward, Jun 4th, 2007 @ 5:46pm

    Re: Not Fraud?

    Anon Coward (#10), where did you go to law school?
    Likewise, yourself?

     

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  33.  
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    ReallyEvilCanine, Jun 4th, 2007 @ 6:01pm

    Me?

    UC Law. Cincinnati. Queen City represent, etc. Now with that ad hominem out of the way, how about you answer why this isn't fraud.

     

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  34.  
    identicon
    Anonymous Coward, Jun 5th, 2007 @ 12:13pm

    Re: Me?

    UC Law. Cincinnati. Queen City represent, etc. Now with that ad hominem out of the way, how about you answer why this isn't fraud.
    Why should I? I never said it wasn't, I just wanted to know where you went to law school.

     

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  35.  
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    Anonymous Coward, Jun 5th, 2007 @ 8:30pm

    Could one of you just compare the other to Hitler so this discussion can reach a proper Internet conclusion.

     

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  36.  
    identicon
    Anonymous Coward, Jun 7th, 2007 @ 5:14pm

    Re: Me?

    Hey Genius Lawyer,
    You do realize that "Anonymous Coward" is an automatically generated name for those that choose to not enter one and so there are likely to be several different ones posting here, don't you? Assuming that the comments form all Anonymous Cowards are from the same person is illogical. Didn't they teach logic where you went to school?

     

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  37.  
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    Wahtever, Aug 1st, 2007 @ 2:05pm

    Re: No question

    Just how clear is the offense? I Keep hearing that being repeated but I have yet to see anyone clearly describe his actions. I have to wonder how clear the author's facts are.

     

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  38.  
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    whatever, Aug 1st, 2007 @ 2:06pm

    Re: Mommy! Jimmy's not playing fair!

    "It's just a game" ... so is the NFL

     

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  39.  
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    Anonymous Coward, Mar 9th, 2009 @ 5:17pm

    I don't think anyone understands how Second Life works. It's exactly what the name suggests, so it's understandable that he would want to sort this out. Infact, he payed for his land with real money. REAL money.

    But, while the game is free-roaming, abusing glitches is like breaking the law, as you are deliberately breaking the laws put down by the creators of the game. If we ever arrive in more important and influencial virtual communities then glitches should be punishable by law.

     

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