ToS changes legal panel transcript (4): Q and A session (1)

Looking at the law Questions (2)

This is the first part of a transcript of the Q and A session of the Terms of Service legal panel discussion which took place on Saturday October 19th, to discuss changes made to the Linden Lab Terms of Service governing their products and services in August 2013.

If you have come to this page first, please read the introductory notes for details on the panel and its purpose. Links at the foot of this page provide access to the other sections of this transcript.

Tim Faith and Agenda Faromet
Tim Faith and Agenda Faromet

Regarding the “perpetual” and “irrevocable” parts. If the licence to LL stops being perpetual and irrevocable, wouldn’t that break people’s inventories and even content, thus causing all sorts of drama. : To make it more specific: People use all sorts of stock content in their builds for SL. 3D  models, textures, scripts, builder’s kits, etc. If the licence was not perpetual and irrevocable, wouldn’t builds using this stock content break? Or, if someone decided  they wanted their content and outfits deleted, wouldn’t people’s inventories and outfits get broken?

00:41 Agenda Faromet (AF): Not necessarily. As I showed you how Facebook handles it, you can revoke you licence unless it has been shared. So with Facebook, when you share photos, when you share a post, you can’t revoke your licence and more. You could very easily have something that says you can revoke your licences in Second Life unless the content has been transferred.

01:15 Tim Firth (TF): I agree. I don’t think that Linden Lab necessarily needs a perpetual licence to everything that you ever post here in order for the world to continue to function. It’s good for Linden Lab in the sense that they can transfer, potentially, that perpetual licence to others; but I’m not sure that’s necessary for the world itself to work.

01:42 AF: Now I will make one point, and it’s a very crucial point, that I think I should have made a long time ago. I’m fairly sure that the reason for the change in [the] Terms of Service is that Linden Lab has been recently making new services, they made the new Minecraft-esque game, they just bought Desura. They’re compiling new services, and I think they’re basically doing what Google did last year, where they’re trying to bring all of their services under one Terms of Service umbrella.

02:36 AF: When Google did that, and Google has some really, really good lawyers, Google got slammed by the FTC [Federal Trade Commission]. They failed to bring all of their terms of service seamlessly together, it was a nightmare for them. So I don’t really know what Linden Lab was doing thinking that they could easily bring all of their terms of service together without any problems. It’s very difficult to bring lots and lots and lots of different services under one terms of service, but I’m pretty sure that’s what they were trying to do, and they’re trying to write into their terms of service all of the little eventualities for every little service that they’re going to have, and in doing so they’ve created something that is ludicrously overly broad and fairly dangerous.


03:46 TF: I guess, Agenda, maybe that’s the answer to how you do it; you just take as many rights as you can (laughs). I don’t know if that helps anybody that actually uses this world, but I guess it might help them. I’m not really sure that’s why we’re here, necessarily, but maybe that’s the only answer.

04:05 TF: And I guess when you raise the Federal Trade Commission with Google, it does kind-of make you wonder; I don’t think anyone of us alone would have enough resources to really pursue a lawsuit against Linden Lab for their terms of service, and you don’t have a class action where lots of people could pay, either, the third wheel of it is the Federal Government itself may have, in one way or another, an entity that regulates, like the FTC, and maybe that’s an alternative place to advocate; to see if they would be interested in doing something about Linden Lab’s [terms of service] so that it’s not as hostile or overly broad.

04:56 TF: Usually FTC actions that I’ve heard about are about rights of privacy as opposed to intellectual property rights, but they may have jurisdiction, at least for consumers, over some of the things that are going on in here. I don’t know if that would help us or not, but it’s another option.

05:18: Has anyone talked directly to Linden Lab about its desire to expand licensure to other virtual worlds explicitly? Can we reasonably try to limit the  scope of their rights-expansion interests to THAT topic?

05:31 TF: I say that I haven’t personally talked to Linden Lab; I don’t know if others have.

05:39 AF: I can’t speak to whether or not anyone has, I know that there are several groups that have been talking to Linden Lab or have been working on petitions to Linden Lab. This has been an issue of tremendous concern to the creator community. I know that whether or not Linden Lab is looking into other virtual worlds as a competing or advancement of Second Life is certainly a concern. So I can’t speak to what individual groups have been talking to Linden Lab about, but I know that there are groups that have been talking to Linden Lab.

05:32 TF: Yeah, I wish Juris was able to participate, as I think she might have some insight.

06:4) Kylie Sabra (KS): Juris can now hear on the live feed, and what she’s going to do is type her answers as quickly as possible, so you guys talk slower when you have your time, and what I’ll do is read those and put those in local chat, so she is going to be able to participate.

07:05 If we remove SL and us from the equation, from a purely corporate standpoint, does this not seem like a preparatory move prior to some kind of large-scale shift, either part of an exit strategy, a selloff or transfer of content (such as from marketplace to Desura)? It seems extreme as a method to simply close legal loopholes in order to protect themselves from liability. Additionally, are these current terms not technically illegal from a Federal and international perspective, if for no other reason than the agreement was done under a certain amount of duress? 

Agenda Faromet (Inara Pey)
Agenda Faromet (Inara Pey)

07:45 AF: No. That’s a question that has been addressed by several courts, and there never has been a really, really good test case for it. Every time something like that has come up, it’s always been a user will accept the terms of service and then go back into the service, and so the court will throw it out. So we’ve never had a case where someone will not accept the terms of service then sue to try to get their content, so we don’t have a good test case for that.

08:27 AF: But as far as duress, it’s not really duress. It’s really a matter of whether you have a right to your intellectual property, to access your intellectual property.

08:48 Juris Amat (JA): Yes it does appear to be a manoeuvre by Linden Research to secure their rights to the content submitted in world. The transfer of copyright rights under ToS agreements has been recognised.

09:02 AF: Not only has the transfer or rights under ToS been recognised, there’s actually a case in the Fourth Circuit, where the Fourth Circuit accepted a terms of service that required the transfer of ownership in copyright. A terms of service for realtors required that anything that they posted on this site, they transferred ownership – not just rights – but ownership of their content to the site, and the realtors sued saying this was ridiculous and this should not effect a real transfer of ownership, and the court said, “Yup, sure does!”

09:53 JA: Again I will say that I do not believe that this is purely an intellectual property issue. This, as I’ve said, is more of a visual artist issue. That is exactly the case I’m referring to. This is why in my legal defence of creators I focus on their rights not as copyright owners but as visual artists and their content not as copyright protected subject matter but as digital art.

10:22 AF: That’s a really good approach.

10:24 TF: Well, the problem is that moral rights is one of the other things that’s real specific in copyright law for visual artists, and the terms of service here have you specifically waiving that. Which I find again, curious. I’m not really sure why that would be required for the normal operation of the world. However, I would not be able to speculate as to what else is really going on at Linden Lab; I mean, they’re a big company, it is quite possible that they want to sell their assets and move on and cash-out. Maybe that’s what’s really underlying all this. It wouldn’t be the first business to do that. However, I really don’t know, and of course they’re not going to tell you that.

11:10: The current slide, Second Life Terms, says “Do not be freaked out…That’s not what’s wrong with this section”. Could you clarify what is wrong with this section?

11:22 AF: I touched on this when I was speaking earlier, but I really, really breezed through it because I wasn’t sure how fast I needed to go, sorry about that.

11:31 AF: So when it says “sell and re-sell”, those are not exclusive rights to copyright; those are exclusive rights to patent, and I have no idea why whoever drafted this terms of use put those in there. It makes no sense; it just sounds like they grabbed some verbs that sounded really interesting and stuck them in there. Same thing with “use” and “disclose”; “use” and “disclose” are trade secrets rights; they have nothing to do with copyright.

12:08 AF: The reason that I say don’t pay any attention to those is if you’re not putting any patentable content in Second Life, which I don’t really think many people are, they don’t have anything to do with your content.

Audience comment: Some of us are doing research and patent content here.

12:26 AF: Yes, but Linden Lab is not claiming the right to make, practice, import, they’re not claiming any other very important patent rights. They’re just claiming one patent right, and if they’re not claiming the right to make or practice, it’s not very useful.

12:48 AF: So the reason that I say don’t be as freaked out about that is because when it comes to copyright rights, you can sell and resell copyrighted material without claiming the right to sell or re-sell . Sell and re-sell have nothing to do with copyright rights. So putting that in their when it comes to copyrighted content, doesn’t really affect it. What’s wrong with this section is lack of limitations. It’s the things like unrestricted, unconditional, unlimited, irrevocable, perpetual , for any purpose whatsoever, in all formats, on or through any media, software, formula, or medium now known or hereafter developed, and with any technology or devices now known or hereafter developed, – that’s what’s dangerous; that’s what is damaging; that’s the problem and whether it is copyright or patent or trade secret, having that unlimited, vast broad language in there, is dangerous.

14:09 JA: Sale and resale does implicate the exclusive rights of copyright owners.

14:14 AF: OK. I’m just saying that you can sell and re-sell copyrighted content without claiming the right to sell and re-sell. That’s what the distribution right gives you.

14:28 JA: But my concern is the ability of Linden under these new terms to export content and rename themselves as owners without attributing the original author. That eliminates the ability of the author to control the modification and display of their work.

14:45 AF: Well that’s why I’m saying that the danger here is the lack of limitation; the lack of limitation in the purpose; the lack of limitation in the terms and the lack of limitations in the scope. You need a limitation in purpose; you need a limitation in terms; you need a limitation in scope. And what Juris is saying is a great example of some of the dangers in a licence this broad.

15:15 TF: I thought I would just contribute this. The copy right rights that everyone has as an author are intangible rights. If I was to buy a painting from someone else, I own the thing., and under Section 109 of the first-sale doctrine1, I have the right to re-sell that thing, typically, and I can set the price that I sell it for. But I don’t have a right to the copyright. so, for example, I couldn’t publicly display someone else’s painting without permission; that’s not implied in my purchase of the painting itself. There has to be some other agreement that addresses that.

15:57 TF: So I guess that within this world, one of the things that Linden probably has to be able to do is sell your stuff through XL Street [the SL Marketplace]; I guess there’s some implication that you posted stuff up on XL street to be sold, or whatever the marketplace is called today, they’re the mechanism by which the transfers occur. And if you don’t have a no transfer permission, if it’s freely-transferrable, the things that you’ve offered, then other people could in theory sell it or re-sell it to someone else.

16:30 TF: But that still isn’t really the copyright right; that’s a separate set of intangible rights. I wonder whether their licence is intended to reach that as well, and I don’t know how that would work. I guess I really don’t have a clear answer. I guess I would be cautious about whether they’re over-reaching how that might impact authors here in the world.

16:55 AF: That’s a good point, Tim, but another thing to consider is that we’re in the Ninth Circuit, and this is all digital. Even if it’s art, it’s still digital art, it’s digital content and under Vernor, right of first-sale is limited when it comes to digital goods. So if something has restrictions on transfer and restrictions on  modification, it’s technically licensed, first-sale isn’t implicated.

17:31 TF: I don’t disagree; Vernor v Autodesk was specifically because AutoDesk had a licence that restricted re-sale. But the default position under copyright law is Section 109, which is first-sale doctrine; I don’t think that’s been undone merely because it’s a digital good. You could have a licence that restricts the first-sale; that’s probably enforceable, for sure. And I think a lot of you do; you have no transfer objects that you offer for sale; they can’t be transferred, the world itself doesn’t permit it. I wonder though, whether this licensing, the way the terms of service are set-up, means that Linden Lab isn’t limited by that. Maybe that’s what they’re trying to get at. And I don’t know what the purpose of that would be for them.

18:18 JA: Referring back to Agenda’s comments, that’s the ToS killer, but again it would be for a court to decide whether the waiver or irrevocable agreement not to enforce moral rights was 1) specific in regards to the content to which the rights were waived under a generic ToS and 2) whether the ToS would be considered a signed, written agreement under the VARA [Visual Artist’s Rights Act].

Tim Faith (inara Pey)
Tim Faith (inara Pey)

1847 TF: I guess I just wouldn’t want to be the first artist to go and spend $100,000 on a bunch of lawyers in order to figure that out (laughs). I think they’re trying to over-reach by getting rid of your moral rights, and I think it’s notable that other systems like Facebook, I don’t think there’s a moral rights clause like this. It doesn’t help you if you’re not a visual artist. VARA is specific to visual arts, it doesn’t necessarily affect every other kind of copyright here. One of you mentioned in open chat about novels and things. I don’t know if anyone publishes novels in Second Life per se,  but VARA doesn’t really impact you. That’s specific to visual arts people.

19:34 AF: Juris, I’m pretty sure that it would be, or at least if we were in the Fourth Circuit, which we’re totally not, it would be considered a signed, written agreement under VARA. The Fourth Circuit gives us that precedent. But as Tim said, who wants  to be the person to spend $100,000 to go to court to find all this out? And again, you’ve got the arbitration agreement, you’ve got that sending you to arbitration rather than to [an] actual court that would be far more friendly to you. I think trying to figure this out, and trying to look to court to validate your claims is dangerous. I think this is something that needs to find a peaceful solution rather than finding an antagonistic solution.

20:38 JA: So Tim is saying that digital art is not visual art? I disagree but it would for a court or arbitrator to decide.

20:50 TF: I don’t think that’s what I said, no.

20:55 AF: I think it’s what I said that under Vernor, it would be digital art.

21:05 JA: The point is that trying to assert copyright against the ToS is an auto loser.

21:10 AF: Yeah.

21:19 Does the new TOS apply only to items uploaded after you agreed to it? Or all your items from before also?

21:25 AF: All your items. Do you want me to expand on that, or Tim do you want to expand on that?

21:35 TF: I was just going to say the way that they define content means any works of authorship, creative works, graphics, images, textures, photos, and so on. This terms of service doesn’t say, “all this stuff you uploaded after you signed it”. I’m not sure I have a clear answer. But I think it’s intended to cover everything  in your inventory whether you uploaded before or after; which is kind-of crazy.

22:04 AF: Well, it’s the way that terms of service work. It has to cover everything, because otherwise they would have to keep track of different iterations of their terms of service and tie each thing that you uploaded to which terms of service was in effect at the time you uploaded; which rules governed the thing that you uploaded at the time that you uploaded it, and it would just be impossible for a company to stay alive if that’s how it works. So what they do is they put the new terms of service into force and they require you to affirmatively agree to the new terms. And it kind-of sucks, but that’s the way that they do things.


  1. A legal principle that limits a rightsholder’s rights to control content after it has been sold for the first time. According to first sale doctrine, lawful ownership of an item, such as a music CD or a book, is not the same as owning the copyright of the item – see here.

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