Virtual world mirrors reality in copyright and trademark infringements

In Eros LLC v Simon (CV-07-4447 (EDNY (Brooklyn Division), October 24 2007), a group of virtual merchants selling virtual products on Second Life have joined together to sue Thomas Simon (also known as Rase Kenzo) based on Simon's alleged wilful and unauthorized copying of virtual products within Second Life and his alleged misrepresentation that the products he sells are authentic.

Consisting of millions of residents, Second Life typifies virtual online sites, where users interface virtually with other residents and engage in a virtual economy buying and selling products and services. It has been estimated that each day in excess of $1 million-worth of transactions take place in Second Life. Not surprisingly, the virtual economy of Second Life has brought trademark and copyright infringement lawsuits to real world US federal courts.

The Second Life merchants that are suing Simon include:

• Eros LLC, which sells adult-themed virtual items;
  
  
• DE Designs Inc, which sells virtual clothing;
  
  
• RH Designs, which sells virtual furniture;
  
  
• Le Cadre Network, which sells virtual shoes and boots;
  
  
• Nomine, which sells virtual 'skins' to cover avatars; and
  
  
• Pixel Dolls, which sells virtual clothing and avatar skins.

The merchants are seeking an injunction, damages, enhanced damages and attorney fees against Simon. The complaint includes claims of:

• unfair competition under Section 43(a) of the Lanham Act;
  
  
• copyright infringement under the US Copyright Act; and
  
  
• counterfeiting of the registered trademark of one of the merchants under the Lanham Act.

Based on the complaint, only DE Designs owns a registered trademark. What the complaint does not state is that the DE DESIGNS mark is registered for computer graphic services, graphic art design, graphic design services and graphic illustration services, but not for virtual clothing or any other virtual product. Notably, also not stated in the merchants' complaint is that other alleged, pending trademark applications have encountered office action objections from the US Patent and Trademark Office for the goods descriptions of, and specimens provided with, the merchants' pending trademark applications.

As to the copyright infringement claims, notably absent from the complaint is any allegation that any copyright registrations have issued for any or all of the alleged copyrights. This deficiency may dispose of the copyright infringement claims by a motion to dismiss, since generally a registration must issue before a copyright infringement lawsuit can be brought. Indeed, the Copyright Office provides an expedited procedure for issuing registrations if infringement claims are looming, since the registration process can otherwise take over six months to complete.

Further, the complaint raises other notable unanswered issues as to copyright claims stemming from the virtual world. By way of example, will copyright law protect virtual clothing when it does not protect clothing designs in the real world in the United States, except under certain defined circumstances, such as where the fabric design has been infringed? Does Simon's use of the copyrighted designs constitute fair use? And, in all events, are the designs sufficiently original to be protectable under copyright laws?

Ironically, the answers to these IP issues of the virtual world appear to be headed for ultimate resolution by federal courts in the real world. Until one of these real-world lawsuits arising from the virtual world reaches final judgment, the uncertainty about the scope and the enforceability of IP rights in the virtual world will remain for virtual and real-world companies alike.

Rochelle D Alpert, Morgan Lewis & Bockius LLP, San Francisco