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My article, Anti-Social Contracts: The Contractual Governance of Virtual Worlds, just came out in the McGill Law Journal.  I profited enormously from the great discussion on Terra Nova when I first proposed the piece, so my thanks to this wonderful community.   Of course, I always learn a lot while writing a paper, and it’s that further thinking that I want to write about.   (Some of this thinking is based on or responds to Michael Risch's excellent piece, Virtual Third Parties.  I agree with him on many points and disagree on a few, but I think that he has done a fantastic job of presenting the other point of view, and the paper is very short and well worth reading.)

Some background: there are two broad challenges to EULAs, unconscionability and privity.  The first argues that EULAs are unfair due to oppression or surprise; the second asserts that a contract between A and B contracts shouldn’t bind or benefit C as a default matter.  (I talk about third-party beneficiaries below.)

The fairness argument, legally speaking, is that EULAs are so one-sided as to “shock the conscience.”  The problem is that these unconscionability arguments are often unconvincing.  I view most EULAs with a certain dull resignation, not with shock and outrage—and I think that’s the experience of most players.  I am also not particularly convinced that standardized contracts necessarily unfairly surprise consumers.  People know what is in the contract: the player loses, the game god wins. 

So if the argument from unconscionability is not appealing as a theoretical matter (and let me reiterate that these broad unfairness charges are the only thing that have worked to date – as in Bragg), what is the alternative?  In Anti-Social Contracts, I argued that traditional limits of privity might provide a way to understand what has gone wrong with virtual world EULAs.

This privity argument does capture something of the problem.  Can players sue each other for violations of virtual world EULAs?  Should they?  It is just plain odd to use a contract between A and B to govern C’s behavior.  This seems to speak to some of the current cases:  Hernandez arguing that he can benefit from IGE’s promises to Blizzard, or Blizzard arguing (successfully) that MDY is bound by Blizzard’s agreements with its customers.

We can use third-party beneficiary terms to permit C to benefit from an A-B contract; and we can use tortious interference to bind C to the terms of an A-B contract, but both of those actions provoke horror from attorneys I’ve talked to.  First, to quote one inhouse counsel, “my job is to make sure there’s nothing in a contract that can be construed as granting third parties rights.”  And we can see why: game gods really do not want their customers bringing lawsuits against each other for blue chat on third party beneficiary theories.  And companies generally do not want to be subject to suit by parties with whom they did not contract.

Risch asserts, correctly, that the law is quite capable of finding third parties to be beneficiaries of other people's contractual promises even where the contract is silent (but where the court nevertheless detects an intent for the contract promise to run to the third party).  That is, unless game gods actively state that their players cannot sue each other for blue chat or griefing, courts may find that players can in fact sue each other for such EULA violations.  (I would argue that in such circumstances courts should find that players are not intended beneficiaries of the contract.)

But from my conversations with game designers and their lawyers, I find that player-to-player lawsuits were not what they intended.  Some player-to-player suits gain popular support, of course — lots of people were pleased about Hernandez's attempt to sue IGE for RMT.  But outside of the RMT context, it's worth wondering whether players want to run the risk of suit by other players based on EULA violations.  And by extension, it's worth wondering whether game gods want to allow or disallow those lawsuits.

The extension of the obligations of contract terms (e.g., “Thou shalt not use botware”) to third parties is just as problematic, in my view.  We can talk about whether the court’s determination in MDY was limited to its sense of MDY’s knowledge of infringement and profit motive, but the bottom line is that both of those components are present in any commercial software developer.  It bothers me that a game god would be permitted to restrict what software third parties can develop.  I understand that Glider doesn’t seem to have a non-infringing use, and that’s fair enough.  But a few baby-steps away from that, and we enter disturbing territory: game gods using their contracts with customers to block competition, for example.  What if a software provider created botting software that was useful in playing multiple games, including Star Wars Galaxies, in which scripting and botting were part of the game?

It is of course possible that we will limit the lessons of Hernandez (there is no holding there, but perhaps a warning for RMTers) and MDY to cases where a person is violating a EULA in something resembling bad faith.  That seemed to matter to the court in MDY and certainly accounts for most of the discussion that I read about IGE.  But I wonder whether instead we may see EULA provisions applied in less emotionally appealing circumstances–and then, given that "bad faith" has no real part in the legal tests described, I am curious to see what will happen.

Specifically, I am interested to see which way the 3PB issue is resolved.  Will game gods expressly make their customers beneficiaries of each others' promises to the game gods? (My guess is that this is unlikely.)  Will game gods expressly negate 3PB designations?  (I find this more likely.)  Or will game gods not move on this issue until there is a high-profile case in which one player sues another based on the EULA, and then take steps to expressly negate 3PB designations to soothe customer concerns over being sued for Barrens Chat? (I find this most likely.)

I'm interested in your thoughts.

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