Virtual worlds need laws to flourish

A legal framework lends a sense of certainty and helps ensure online worlds are attractive business investments, says a U.S. law professor.

SINGAPORE--Establishing a legal framework in virtual environments, such as Second Life, will make them a more attractive place for businesses to invest, according to a U.S.-based law professor.

Speaking to ZDNet Asia on the sidelines of the State of Play conference held here Monday, David Post, a law professor at Temple University, noted that law, like in the real world, will also serve to protect businesses in virtual environments.

"That's one of the reasons we have law in the real world," he said. "If you look at the evolution of legal systems in the can't invest in your land without property law."

"Why would you invest [and] spend six months digging up your land to plant crops if someone could come in the next day and take it from you?" Post noted. "And since you know that before hand, you don't spend the six months [building] a nice structure because you don't have any security that you will be able to keep it under a fair rule."

What applies in the real world applies to virtual worlds, too, noted the law professor.

He noted that businesses would be reluctant to make investments if the people who ran the virtual world could "flip a switch and take it all away", and they had no recourse.

"I think that's what's happening in virtual worlds, and they will need law to become complicated, rich environments where real investments take place," Post added.

Noting the lack of a system of credit in today's virtual worlds, Post said: "You can't have credit, can't have that without a legal system.

"Certainly there's room for interactions based purely on trust, but I think there's a limited amount you can build off on that to have a real credit system," Post added. "You need to have a legal regime in place and you're not going to have fully efficient markets without a credit system."

Describing laws as "complicated beasts", Post said that they serve many functions including protecting free expression and privacy.

"I think until you have some sort of serious legal systems in these virtual worlds, they really are just games," he said. "But I think these (virtual worlds) have the potential to be really more than games, and they won't reach that potential until there's something there that more closely resembles what we call law."

In June, a Pennsylvania, United States, judge ruled that a lawsuit against Second Life should be allowed to proceed to trial. The lawsuit was filed by a former resident, who alleged that Second Life had unfairly confiscated his 'virtual' possessions worth some US$8,000.

Some community members in Second Life have called for oversight and regulation--similar to that in the real world--of virtual stock markets, in a bid to prevent the recurrence of a virtual heist where a perpetrator made off with the equivalent of US$10,000.

Initiated by the New York Law School and the Yale Law School in 2003, State of Play is an international conference dedicated to exploring the evolution of cyberspace and virtual worlds. Held in Asia for the first time, the conference has now grown to include the Harvard Law School, the Trinity University and the Nanyang Technological University of Singapore.


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