In Eros LLC v Leatherwood,[1] one of the most successful virtual merchants within the Second Life virtual platform filed suit, eventually, naming a Texas resident, Robert Leatherwood, and ten unnamed compatriots, John Does 1-10) and claiming for unfair competition under the federal Lanham Act,[2] copyright infringement, and civil conspiracy and seeking a preliminary injunction.[3]
Second Life is a virtual world platform owned and operated online by Linden Research, Inc. at http://secondlife.com. Second Life is an Internet-hosted interactive computer simulation by which participants, through their virtual alter-egos, or avatars, see, hear, use, and modify simulated objects within the computer-generated environment. Linden counts the number of distinct Second Life accounts at more than nine million throughout the United States and in many foreign countries. Commerce within Second Life, or “in world,” each day exceeds one million dollars.[4]
[NOTE: Reuters' Second Life News Center has some detailed reporting on this case. Click here.]
Florida-based Eros is one of the world’s most successful merchants in world where it makes and sells virtual adult-themed objects.[5]
Chronology of the Case & Discovery:
Eros originally filed suit on July 3, 2007 against a John Doe, who was also known as “Volkov Cattenaeo” in Second Life and otherwise as “Aaron Long.” Eros then filed an ex parte emergency motion for leave to issue subpoenas and to conduct related discovery as to Linden Research, Inc. (“Linden”), the owner and operator of Second Life, and to PayPal, the online payment processor. The magistrate granted this motion.
Eros then filed a second ex parte emergency motion for leave to issue subpoenas and conduct related discovery, which the magistrate granted on September 5, 2007.
According to a declaration filed with that second motion by Eros’ CEO, Kevin Alderson, Defendant John Doe gave an interview to a reporter in world and claimed that Doe had provide false identifying information both to Linden and to PayPal and that he had no permanent address in the real world. Doe told the reporter that he had sold fifty copies of two of Eros’ virtual products, as named below, and had given the proceeds of those sales to another individual.[6]
The interview was published and stated that one of Eros’ most popular products was the SexGen bed,[7] which contained more than 150 sex animations and sold for L$12,000, that is, Linden dollars, the currency in world, or $45.11 in real world currency. Doe reportedly sold the SexGen bed for L$4,000, sharply undercutting Eros’ price and market. The article reported that Eros had sold some 100,000 SexGen beds.[8]
Alderman declared that Eros had obtained a number of Internet protocol (“IP”) addresses associated with Doe’s activities. With that information in hand, Eros sought to obtain real world identification, address, payment, and other information about Doe through the Internet Service Providers, or “ISPs,” associated with those IP addresses, i.e., AT&T and Charter Communications. Eros also sought from the ISPs Media Access Control, or “MAC,” and Ethernet Hardware Address, or “EHA,” numbers by which to identify the actual computers associated with Doe’s IP addresses. Although their respective privacy policies appeared to permit them to do so, these two companies refused to provide those records without subpoenas. Alderman also stated that he had reported the copyright infringement to Linden under its Digital Millennium Copyright Act policy, but had been redirected by Linden to it abuse reporting system.[9]
On October 24th, Eros filed a first amended complaint and subsequently effected service of process upon Leatherwood. When Leatherwood failed to answer the amended complaint within the permitted time, the clerk entered a default against him on November 16, 2007. In an interesting twist, Eros failed to timely apply for the entry of default judgment in accordance with the court’s local rules, and the Court ordered Eros to show why this case should not be dismissed for lack of prosecution. Eros subsequently filed and was granted a motion to extend the time to respond, and that response is pending, as of March 12, 2008.[10]
The Allegations Against Leatherwood:
Eros’ first amended complaint provides the following allegations.[11]
Under the terms of use that govern users’ participation on Second Life, users retain al intellectual property rights in the digital content that they own, create, or otherwise place within that virtual platform. [NOTE: For more on Second Life's intellectual property terms, click here.]
Florida-based Eros is one of the world’s most successful merchants in world where it makes and sells virtual adult-themed objects. Eros’ products are widely known in world through the marketing efforts of Eros’ CEO Alderman, also known as “Stroker Serpentine” in world. Eros also promotes its products in the virtual world by advertising and by conducting promotional events within many virtual adult, social-themed events in world. In addition to the products’ virtual promotion and fame, Mr. Alderman, Eros, and Eros’ products are widely known in the tangible world by virtue of extensive media coverage by Wired, eBay Magazine, ABC Australia, and others.
As a result of their reputation for performance, quality, and value, Eros’ products are among the best-selling adult-themed objects in world. Eros particularly described and provided images of its SexGen Platinum Base Unit, version 4.01, and its SexGen Platinum+Diamond Base, version 5.01 products. Eros filed applications for copyright registrations for both products on June 25, 2007. Both products are sold in world, as also are a number of other Eros products, under its trademark, SexGen.
Eros sells both of the named products on a “NO COPY” basis. Eros explains that this “NO COPY” permits Second Life users purchasing these products to transfer them to other Second Life users, but copying by non-Second Life users is prohibited.
According to United States Patent and Trademark Office records, Eros filed an application to register its SexGen word mark on June 11, 2007, that is, shortly before filing the original complaint in the instant action. The application states that the date of first use in interstate commerce was January 1, 2005 and seeks to register the SexGen mark to the class for a “[s]cripted animation system utilizing a defined menu to actuate avatars within a virtual world access through a 3-dimensional virtual platform.” As of March 2008, that application is pending under serial number 77202601.
According to Eros’ first amended complaint and beginning in at least April 2007, Defendant Leatherwood made and sold numerous unauthorized copies of Eros’ above-named virtual products in world using its trademark, thereby violating the Lanham and Copyright Acts.[12] Leatherwood maintains one or more Second Life accounts and has sold these products to Second Life users located in Georgia and West Virginia in the United States and in Great Britain. Leatherwood also misrepresented the copies as authorized and legitimate copies of products created by Eros, thereby causing actual consumer confusion as to the origin of those products.
Eros claimed that Leatherwood acts in concert and conspiracy with a number of other unknown individuals residing in the United States and named in the complaint as Defendants John Does 1-10. These unknown conspirators include one or more Second Life users. The John Does allegedly compensate Leatherwood for making and distributed the unauthorized copies of the products or otherwise assist, aid, abet, and contribute to his illegal conduct or otherwise violate the relevant laws by all of the foregoing conduct.
Eros’ amended complaint repeats its general allegations to set forth its three causes of action. It asserts that the complained-of acts are willful, wanton, malicious, and committed in bad faith and then sets forth allegations in keeping with the standards for the grant of a preliminary injunction order and praying for the range of damages and other relief.
Points of Interest:
For lawyers with a virtual worlds practice, this case illustrates the challenges of properly identifying and discovering the identities and other fundamental facts about defendants and other actors in cyberspace, a. As a practical matter, it also shows that, from a plaintiff’s perspective, DMCA and privacy policies may not produce optimum responses from online businesses with respect to reporting and resolving copyright infringements online or to obtaining member information by which to identify the subject actors.
In addition, it shows the need for constant monitoring of virtual assets and, as Eros did in this instance, a rapid response to misappropriations or other misconduct, particularly given the fleeting and highly chameleon nature of electronic identities.
As with other reports of currency intersections between the real and virtual worlds, Eros v. Leatherwood demonstrates that virtual assets can have significant real value in monetary and intellectual property terms.
[1] Eros, LLC v. Robert Leatherwood & John Does 1-10, Dkt. No. 8:07-CV-0115-SCB-TGW (M.D. Fla., filed July 3, 2007). This case was originally filed under the caption, Eros, LLC v. John Doe.
[2] See generally 15 U.S.C. §§ 1125 et seq.
[3] See Eros, First Amended Complaint 7-11 (filed Oct. 24, 2007).
[4] See id.
[5] See id.
[6] See id., Second Decl. of Kevin Alderman, para. 4 (filed Sept. 4, 2007).
[7] The article does not equate the SexGen bed to one of the two products called out in Eros’ original or first amended complaint.
[8] Eric Reuters, SL Business Sues for Copyright Infringement (July 3, 2007), attached as Exhibit 1 to Second Decl. of Kevin Alderman, supra note 4.
[9] See Eros, Second Decl. of Kevin Alderman, paras. 6-12 (filed Sept. 4, 2007).
[10] See id., Docket Rep’t.
[11] See generally id., First Amended Complaint.
[12] Eros bases its alleged trademark use in interstate commerce on its sale of objects within Second Life to users throughout the United States and in many foreign countries. See id. at para. 12.
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