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Entrepreneurs sue to protect virtual sales

Staff image

The cuddle rug is one of the virtual sex toys sold by Kevin Alderman, whose online persona, or avatar, goes by the name Stroker Serpentine.

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By ELAINE SILVESTRINI

esilvestrini@tampatrib.com

Published: October 17, 2009

Updated: 10/17/2009 04:04 pm

TAMPA - Pirates are pillaging the virtual sex toy business.

Kevin Alderman is prepared to do battle.

The former plumbing contractor from Lutz, who has called himself "the Hugh Heffner of the digital millennium," has built an adult-themed business in Second Life, a virtual community with millions of registered users worldwide.

Now Alderman is squaring off in court with the corporate owner of Second Life over pirated products. He says the company that nurtured the creation and success of his business is now allowing others to suffocate it.

"We come into Second Life to escape some of the draconian aspects of real life," he said. "We want to have a utopia. But utopia without minimal governance is chaos."

Legal experts say the case could be significant, not only for Second Life, but for the direction of the Internet.

"I think a lot of people are going to be paying attention to this because intellectual property rights are a very unstable area," said Greg Lastowka, a professor at Rutgers Law School in New Jersey. "I think this case presents unusual facts."

Alderman's business is called Eros, and it sells items under the brand name, or trademark, SexGen.

Alderman, whose online persona, or avatar, goes by the name Stroker Serpentine, sells sexually themed products and toys for avatars in Second Life.

"It's a form of digitized, interactive pornography," he said.

His product line ranges from 75 cents to $22.

Alderman, 48, says the recession has hit virtual-world commerce hard, as people have less expendable income. On top of that, he has to deal with pirates - people who copy his products without permission and sell them. He estimates he has lost 20 percent to 30 percent of his business to these thefts, although he said he still is making six figures.

Alderman sued one pirate two years ago in federal court in Tampa, securing a settlement with a 19-year-old Texan. He then joined forces with other Second Life business owners to sue someone they said was stealing their products.

But as those cases settled, more pirates filled the void.

"Now it's to a point where we're just fighting the system," Alderman said. "We're put into a virtual state of 'Whac-A-Mole.'"

Alderman and Shannon Grei, who sells clothing for avatars, are suing Second Life's corporate owner. They accuse Linden Research, also known as Linden Lab, of failing to stop the piracy and of profiting from it.

The lawsuit was filed in federal court in San Francisco where Linden Lab is based. Alderman hopes it will be certified as a class action on behalf of other Second Life merchants.

Second Life differs from other online virtual worlds, which are mostly games, because its users are encouraged to create, market and sell virtual content within the community. That includes everything from real estate to Alderman's adult-themed merchandise. To encourage commerce, users have been given copyright and trademark rights.

However, the lawsuit says Linden Lab "has made trademark and copyright infringement free and easy, turning the Second Life community into a vast virtual flea market in which users peddle knockoffs and pirated copies."

Just like movies and music, the virtual goods sold in Second Life have value, says Michael Aschenbrener, one of Alderman's attorneys.

"Kevin's products are very much real," he said. "They stimulate genuine sensations and emotions for users."

Linden Lab would not comment for this story. When asked for the name of someone who could provide a perspective similar to the company's, a spokesman suggested Fred von Lohmann.

Von Lohmann, a senior staff lawyer with the Electronic Frontier Foundation, thinks Alderman and other business owners have a tough case. He suggests the courts will conclude that virtual life is like the real world, where copyright and trademark owners are responsible for enforcing their own rights by suing anyone who infringes.

There's also the Digital Millennium Copyright Act, which Congress passed to provide immunity to Internet service providers who take certain steps to respond to infringement allegations.

"As long as Linden Lab is taking reasonable steps, I think it will be hard to persuade the court to change how Linden Lab does this," said von Lohmann, who said he isn't affiliated with Linden Lab. He said he thinks Linden Lab will argue, "When you notify us, we do respond. You may not be happy with every response, but it's not as if we're sitting on our hands."

Stephen S. Wu is president of the Second Life Bar Association, an organization of lawyers and non-lawyers interested in law as it pertains to the virtual community. He thinks the lawsuit could help shape the future of Second Life and maybe even the Internet itself.

Wu, whose Second Life avatar uses the name Legal Writer, predicts much of the Internet eventually will be 3-D, like Second Life. Users will have avatars, or characters, that can walk around the Internet.

He thinks the case will go forward "because I think the plaintiffs will be able to show the defendants' inability to use technology to control infringers.

"There is a feeling among a significant group of people that the Lindens aren't doing enough to stop infringement ... and second, they don't care," Wu said.

VIRTUAL WORLD

The virtual online community Second Life was launched in 2003 and has millions of registered users worldwide. According to a Sept. 22 news release from the community's corporate owner, Linden Lab:

•Second Life users have engaged in the equivalent of more than $1 billion in transactions and spent more than 1 billion hours in the virtual community since its inception.

•Users create more than 250,000 virtual goods every day, including vehicles, buildings and automatic language translators.

•Roughly 60 percent of active Second Life residents are based outside the United States, representing more than 200 countries.

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