Netizens are spending more and more of their time living their lives online in virtual worlds. But while many virtual world interactions are not real and take place in fictitious places, virtual disputes increasingly are landing in real courts back in terra firma.

Second Life is one of the best known virtual worlds. Through interactive computer simulation, participants act through their avatars and are able to see, hear, and work with simulated objects in a computer-generated environment.

Participants, who come from the United States as well as various other countries, number in excess of 9 million people, according to Linden Research, Second Life's owner and operator.

Second Life residents are governed by terms of service which specifically allow users to retain all intellectual property rights in the digital content they create or own in Second Life. Although we're talking about a virtual world, users conduct transactions that cumulatively involve more than $1 million per day.

But when dollars are at stake, disputes inevitably follow. And just as it is true for real world transactions, this is becoming true with respect to virtual world transactions that involve real money.

This brings us to the case of Eros LLC v. Thomas Simon. The complaint was recently filed in federal court in New York on behalf of several plaintiffs. Let's focus on the allegations of the lead plaintiff, Eros.

Eros is engaged in the sale of a number of adult-themed virtual objects for use within Second Life. Eros alleges that through the marketing efforts of its CEO (referred to as "Stroker Serpentine"), Eros' products have become very well-known in Second Life.

Indeed, Eros alleges that its products have built a reputation within Second Life for "performance, quality and value" (we won't go there in this piece), and consequently, are among the best-selling adult-oriented virtual objects in Second Life.

Among the Eros products are the SexGen Platinum Base Unit v4.01 and the SexGen Platinum-Diamond Base v5.01. Eros alleges that it has used the SexGen trademark to sell these Eros items in Second Life and that the trademark has become famous and distinctive.

Eros also asserts that it has filed an application to obtain a federal trademark registration for the SexGen trademark and that it also has filed applications for copyright registrations for the Eros items.

What's the rub? According to Eros' complaint, along comes defendant Thomas Simon, who is known as Rase Kenzo in Second Life. Simon allegedly has been making unauthorized copies of Eros' products and has been using Eros' trademark without permission.

The complaint asserts that Simon has been selling unauthorized copies of Eros' products while misrepresenting that these copies are authorized and legitimate copies of Eros' products. Accordingly, this has led to alleged consumer confusion as to the origin of the products.

Eros complains that Simon has been trading off of the reputation and goodwill associated with Eros' products and trademark, unjustly profiting from this wrongful conduct. Eros contends that sales and profits have been siphoned away to Simon.

The Eros complaint raises a number of causes of action. It not only seeks an injunction barring Simon's conduct, but also requests triple damages, attorneys' fees, and further statutory damages.

The complaint is detailed and reads just like a complaint that addresses transactions and conduct in the real world. However, here, one must step back and realize that the true transactions and conduct have occurred in a virtual world created on the Internet.

Assuming the complaint stands up and the litigation proceeds, the unmistakable point is that even virtual interactions that do not take place in real life can lead to real legal action in our brick-and-mortar courts when actual monetary interests are affected. If the stakes only were virtual, then perhaps the disputes could be resolved by judge and jury avatars in a place like Second Life. But that might not be resolution enough when money's at stake.

Biography

Eric Sinrod is a partner in the San Francisco office of Duane Morris. His focus includes information technology and intellectual property disputes. To receive his weekly columns, send an e-mail to with the word "Subscribe" in the subject line.

Disclaimer: This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.

Reprinted with permission from CNET News.com.