Where Real Money Meets Virtual Reality, The Jury Is Still Out

But the rogue program, called a copybot, that appeared last month in Second Life underscored the need to clarify her property rights. After the attack, Linden Lab announced efforts to ban the program and encouraged users to report abuses. Some users argued that even stronger property protections were needed.

"I'm feeling uncomfortable," Brown admitted. "I'm safe for now, but it's very tentative."

Linden Lab made cyber-history when it gave Second Life users the intellectual property rights to their creations -- similar to the copyright real-world authors have to their writings. By contrast, most Web sites offering virtual experiences have not accorded users any property rights, requiring them to accept a license agreement stating that all content belongs solely to the Web site owner.

Four years ago, several online gaming veterans tried to get around this agreement and make real money by selling game items from Dark Age of Camelot on eBay and at specialty online auctions. The items, which included weapons, armor and specialized characters, in some cases went for more than $300 each. The developers of the Camelot game blocked them. When the gaming veterans sued, claiming that they had rights to the items they acquired in the game, a federal court in California ruled against them on the grounds that the license agreement took precedence. Other recent U.S. court rulings in virtual disputes have come to similar conclusions.

But judges elsewhere have taken a different view. A Chinese player in the Korean-made online game Mir 3 claimed that his personal rights had been violated when the game's local Chinese operators deleted the magic sword he used to battle virtual villains. The operators claimed it had been illegally duplicated from an original. The player filed suit, contending that he had bought the magic sword in good faith and that it was worth about $120. A Chinese court in Xuhui district ruled against the game's operators, essentially finding that the player's property rights were paramount.

In Second Life, Linden Lab executives wanted to avoid this confusion, believing that users needed clear ownership for economic activity to thrive, recounted Cory Ondrejka, chief technical officer. Otherwise, users would have little incentive to invest.

But he stressed that this ownership did not extend to full property rights -- creators have intellectual property rights to the software patterns used in making virtual objects but no rights to the objects themselves. Under this formulation, Brown owns her designs but not the individual dresses and pieces of underwear. Nor do her customers "own" the apparel they purchase and hang in their virtual closets.

"Everything in the virtual world is intellectual property, as much as it looks like property or as much as property is a useful metaphor,'' Ondrejka said. "Copying it is not theft. It's infringement, but it's not theft.''

But Joshua Fairfield, a professor at Indiana University School of Law, said there's more to online rights than just intellectual property. He said there are legal reasons to believe that property rights to objects can exist in a virtual realm, but no U.S. court has affirmed the concept.

Earlier this month, U.S. Circuit Judge Richard A. Posner visited Second Life, appearing as a balding, bespectacled cartoon rendering of himself, and addressed a crowd of other animated characters on a range of legal issues, including property rights in virtual reality. Posner stressed that it was in Linden Lab's interest to ensure due process and other rights.

"They want people to invest in Second Life, and we know people won't invest if their rights are not reasonably secure," he told the audience, which included a giant chipmunk and several supermodels. He went on to predict the eventual emergence of an "international law of virtual worlds" similar to international maritime law.

Meanwhile, as mapping technologies rapidly improve, companies are increasingly able to transfer the real world to the online world. But are property rights any clearer in such a "real" virtual world?

Microsoft, for instance, launched an online service last month called Virtual Earth that features highly detailed three-dimensional photographic maps of American cities. Microsoft plans to make money by selling advertising billboards in this virtual depiction of urban America.

But the company's lawyers and advertising executives are still grappling with the question of whether those who own the property depicted in Microsoft's 3-D images have any control over how their depicted property is used online. For instance, does Federal Express have the right to object if an ad for its competitor DHL is posted in the parking lot at virtual FedEx Field?

"We haven't fully delineated all the guidelines for do's and don'ts,'' said Bobby Figueroa, a director of product management at Microsoft.