Sales of In-Game Assets: An Illustration of the Continuing Failure of Intellectual Property Law to Protect Digial-Content Creators (2002)

Sales of In-Game Assets: An Illustration of the Continuing Failure of Intellectual Property Law to Protect Digital-Content Creators^ I. Introduction Technological innovation outpaces legal innovation.1 This rule rings even more true in the digital age, in which innovation speed determines whether a company survives.2 Ever-evolving digital technologies pose particular challenges for intellectual property law because this area of law provides either uncertain protection or no protection at all when technologies fall outside the subject matter contemplated by Congress and the courts3 or when the method of infringement circumvents the protective measures in place.4 This Note analyzes a recent online 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 selling portions of the game, such as characters and in-game assets, to other players for thousands of dollars. If anything, intellectual property law perversely grants players property rights in the characters they have developed to permit sales of those characters. These sales illustrate the general failure of intellectual property law to protect digital-content creators, and this Note concludes that creators IMAGE FORMULA5 of digital content must turn to contractual or technological measures to protect 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 intellectual property and rights at issue. Part III evaluates the game developers' intellectual property rights in in-game objects, while Part IV evaluates the players' intellectual property rights 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 bubble-a bubble characterized by investors finding the generation of revenues, much 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 Internet 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 broadband 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 players to interact simultaneously in a virtual world created by the software development company. Two computer programs control this virtual world-- one program runs on the player's personal computer, and the other program runs on a game server accessed by the player using the Internet. …