Friday, March 14, 2008

Sex Beds and Virtual Land: What can Virtual Property Do for Property?

Thanks for the introduction, Ben! Ben's description of me as someone "who also teaches Property" is just right; I started teaching Property after over ten years of teaching upper-level Property-related courses such as Secured Transactions, Bankruptcy, and Electronic Commerce. My years teaching Secured Transactions piqued my interest in intangible assets, which is what brings me to sex beds and virtual land. Sex beds and virtual land were at the center of two controversies involving the property rights of participants in the wildly popular virtual world, Second Life. In later posts, I'll explain how property rights arise in Second Life, but in this post, I would like to introduce the two disputes, Eros v. Simon and Bragg v. Linden Research.

In Eros, several Second Life merchants sued Thomas Simon, who had been making and selling unauthorized copies of the plaintiffs’ products. The plaintiffs are described in the complaint as some of the most successful merchants in Second Life. Kevin Alderman, the principal of the lead plaintiff, Eros, built the first in-world sex bed and sells a host of adult-themed items, and the other plaintiffs sell items such as virtual clothing, virtual furniture and avatar skins. According to the complaint, the items sold by the plaintiffs are protected by trademark and copyright laws. The defendant copied all of these items and started selling them to Second Life residents himself. All of the objects were marked “no copy” or “no transfer.” These markings make copying theoretically impossible, but there are security flaws in Second Life that enable copying of such objects. The plaintiffs sued for, among other things, copyright and trademark infringement.   

The plaintiff in Bragg wanted to develop "real estate" in Second Life. To do so, he joined Second Life and started to acquire virtual land. A member purchases virtual land with the Second Life currency, Lindens. Lindens can be freely traded, and the Second Life web site includes a currency exchange, the Lindex. Today, $1 equals 265 Lindens. So, Mr. Bragg bought Lindens, and then bought land.

There are several ways to buy land in Second Life, one of which is by auction. Bragg bought numerous pieces of land and then discovered an exploit in the system that allowed him to buy land cheaply. His use of the exploit violated the Second Life Terms of Service, so Linden (the operator of Second Life) terminated his accounts, denying him access to his land and Lindens. Bragg sued Linden, alleging that Linden converted his property.

Both of these matters settled, but they provide property scholars with the opportunity to analyze rights in intangible assets in the context of intangible assets that look and act an awful lot like real property and tangible personal property. More on that next week.

Juliet Moringiello

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March 14, 2008 in Intellectual Property | Permalink | Comments (3) | TrackBack (0)

Guest Blogger: Juliet Moringiello

I'm delighted that my colleague Juliet Moringiello will be joining us for a guest stint.  Juliet is a cyberlaw and commercial law expert who also teaches property.  Among other things, she will be blogging about virtual property and approaching property from a commercial law perspective.

Welcome, Juliet!

Ben Barros

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March 14, 2008 in About This Blog | Permalink | Comments (1) | TrackBack (0)

Alexander on The Social-Obligation Norm in American Property Law

Greg Alexander (Cornell) has posted The Social-Obligation Norm in American Property Law on SSRN.  Here's the abstract:

This article seeks to provide in property legal theory an alternative to law-and-economics theory, the dominant mode of theorizing about property in contemporary legal scholarship. I call this alternative the social obligation theory.

I argue that American property law, both on the private and public sides, includes a social-obligation norm but that this norm has never been explicitly recognized as such nor systemically developed. I argue that a proper understanding of the social obligation explains a remarkably wide array of existing legal doctrine in American property law, ranging from the power of eminent domain to the modern public trust doctrine. In some cases social obligation reaches the same result as law-and-economics, but in other cases it will not. Even where it reaches the same result as law and economics, social obligation theory provides a superior explanation.

At a normative level I argue that the version of the social-obligation norm that I develop here is morally superior to other candidates for the social-obligation norm. It is so because it best promotes human flourishing, i.e., enabling individuals to live lives worthy of human dignity.

Drawing on Martha Nussbaum's capabilities approach (which itself is based on the Aristotelian notion that the human being is a social and political animal, not self-sufficient alone), the social obligation theory holds that all individuals have an obligation to others in their respective communities to promote the capabilities that are essential to human flourishing (e.g., freedom, practical reasoning). For property owners this has important consequences. If we accept the existence of an obligation to foster the capabilities necessary for human flourishing, and if we understand that obligation as extending to an obligation to share property, at least in surplus resources, in order to enhance the abilities of others to flourish, then it follows that, in the predictable absence of adequate voluntary transfers, the state should be empowered and may even be obligated to step in to compel the wealthy to share their surplus with the poor so that the latter can develop the necessary capabilities. None of this is meant to suggest that the state's power, even as it touches on the facilitation of the capabilities we are discussing, is unbounded. But the limits to the state's proper domain are supplied by the same principles that justify its action: the demands generated by the capabilities that facilitate human flourishing - freedom, practical rationality, and sociality, among others.

Ben Barros

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March 14, 2008 in Property Theory, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Schwarcz on Risk and the Subprime Crisis

Steven L. Schwarcz (Duke) has posted Markets, Systemic Risk, and the Subprime Mortgage Crisis on SSRN.  Here's the abstract:

The subprime mortgage crisis is undermining financial market stability and has the potential to cause a true systemic breakdown. This short and accessible essay, which is based on the author's 2008 Roy R. Ray Lecture at SMU Law School, uses this crisis to demonstrate that existing protections against systemic risk, which focus on banks and largely ignore financial markets, are misguided. Because companies increasingly access financial markets without going through banks, an effective framework for containing systemic risk must focus on markets.

Ben Barros

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March 14, 2008 in Real Estate Transactions, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Foldvary on Land Rent Taxation

Fred E. Foldvary (Santa Clara - Department of Econ) has posted The Ultimate Tax Reform: Public Revenue from Land Rent on SSRN. Here's the abstract:

An ideal public revenue policy respects a person's right to privacy, does not discourage work or savings, and does not induce dishonesty. While income, sales, and value-added taxes fall woefully short of this ideal, land value taxation meets each requirement.

Ben Barros

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March 14, 2008 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 12, 2008

Eagle on Common Law and the Environment

Steven J. Eagle (George Mason) has posted The Role of the Common Law in Defining and Protecting the Environment: A Prolegomenon on SSRN.  Here's the abstract:

This article surveys contemporary issues in defining and protecting the environment. It stresses the continuing relevance of common law methodology and doctrine. It reviews the development and imprecision of the term "environment," together with the influence of various philosophical and utilitarian views of environmentalism. These are juxtaposed against corresponding approaches to human flourishing. Finally, the article analyzes how contemporary notions devaluing meaning of property and property rights have contributed towards a lack of interest in developing common law principles - principally those of nuisance - in dealing with environmental issues.

Ben Barros

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March 12, 2008 in Property Theory, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Monday, March 10, 2008

Cultural Property Dispute Between Sweden and ...

Amidst all of the earth-shaking news about the governor of New York, it's easy to miss this: today's New York Times brings news of a dispute over 350 year old spoils of war captured by Sweden from Denmark--but in a twist of fate, that section of Denmark is now part of Sweden.  The story begins:

It’s hard to find anyplace in Europe today, even here in peaceable Sweden, where people aren’t squabbling over cultural property and the spoils of war. For some time, it turns out, a handful of nationalist Danes have been loudly barking about booty that the Swedes nabbed 350 years ago in a war with Denmark. The cache includes an ornate canopy from Kronborg Castle, of Hamlet lore, and recently people in Skane, a region in the south of Sweden that was ceded by Denmark in 1658 after losing the war, said they wanted the canopy handed over.

[I]nto the 18th century, as the show recounts, Sweden stocked its libraries and museums and churches with stolen arms, books, altarpieces, textiles and art by painters like Titian and Tintoretto, Dürer and Archimboldo. Much of this loot was pinched from Poland and Lithuania. The show argues that this was the custom of the day and that the best thing now is simply to lay everything on the table for all the world to see. But the clock can’t be turned back.

Not until the Congress of Vienna in 1815 (notice how that date falls after Sweden’s empire collapsed, a happy coincidence, no doubt) did countries in Europe generally agree that taking booty was a war crime. So there’s a cut-off date, a legal line in the sand.

Lot to talk about here.


March 10, 2008 | Permalink | Comments (1) | TrackBack (0)

Civil Rights Owner v. KKK Life Tenant


A black civil rights activist is fighting to close a store that sells KKK robes and T-shirts emblazoned with racial slurs. David Kennedy is confident he can make it happen. After all, he says he owns the building.

Since 1996, the Redneck Shop has operated in an old movie theater that, according to court records, was transferred in 1997 to Kennedy and the Baptist church he leads.

"Our ownership puts an end to that history as far as violence and hatred, racism being practiced in that place and also the recruiting of the Klan," Kennedy said. "This is the same place that we had to go up into the balcony to go to the movies before the Klan took it. So there's a lot of history there."

But legal documents also indicate that the man who runs the store, 62-year-old John Howard, is entitled to operate his business in the building until he dies. Now the dispute may go to court.

Kennedy, 54, has led protests outside the store since it opened but said he's never been able to close it because of the agreement that Howard can run the shop for life. . . .

Howard used to own the whole building. When his store first opened, he said, people threw rocks at his windows, spit in his doorway and picketed. A month later, a man intentionally crashed his van through the front windows.

"If anything turns people off, they shouldn't come in here. It's not a thing in here that's against the law," Howard said, adding that he was once the KKK's grand dragon for South Carolina and North Carolina.

To blacks, Kennedy said, the store is a reminder of this region's painful past, which includes the lynching of his great-great-uncle by a white mob.

The town of Laurens, about 30 miles southeast of Greenville, was named after 18th century slave trader Henry Laurens.

Some street addresses are still marked with the letter "C" that once designated black homes as "colored."

I'm curious about Howard's interest -- is it a life estate?  Or a tenancy "for life?"  If the later, depending on how it is written, it could actually be a tenancy at will, which might allow the landlord to terminate.

Ben Barros

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March 10, 2008 in Real Estate Transactions | Permalink | Comments (0) | TrackBack (0)

Sunday, March 9, 2008

Oust Tenants, Convert to Condo

The Washington Post has a lengthy story on a loop-hole in a DC statute that limits the conversion of apartments to condos: if there are no tenants, you don't need their permission to convert.

Here's a taste of the article:

In the past four years, landlords emptied more than 200 buildings from Columbia Heights to Southeast, most of them rent-controlled, thwarting the intent of one of the nation's toughest tenant rights laws with the approval of the city government, a Washington Post investigation found. ...

Nearly three decades ago, city leaders created a law that gave tenants extraordinary power: the right to vote on whether property owners could convert rental buildings into condominiums. The law also requires owners to pay the city a fee on the sale of new condominiums, which would help displaced renters with relocation costs.

But as the District's real estate market thrived, landlords found a way out: The law doesn't apply to vacant buildings.

By emptying buildings and taking advantage of a provision known as a "vacancy exemption," landlords can avoid the tenant vote and the tax and turn rental apartments into condominiums. City officials have granted the exemptions even when government records chronicled widespread evictions and buildings riddled with code violations.


March 9, 2008 | Permalink | Comments (0) | TrackBack (0)