Contract Law and Virtual Worlds

Abstract

Software companies offering subscriptions to virtual worlds want protection for their intellectual and economic investment. As such, companies condition entry to their worlds upon acceptance of a EULA which will generally impose strict restrictions on rights of participants. Professor Julie Cohen’s (1998) explanation in ‘Lochner in Cyberspace’ illustrates how private contracts routinely extend beyond real world law. ‘Lochnerism’ describes judicial activism in the sphere of economic legislation. It comes from the case, Lochner.v.New.York, 198 U.S. 45 (1905). “For an example of the use of the term in the present context, consider the following: Many commentators have recognized the similarities between the Court’s current approach to structural media regulation and its approach to economic and social legislation during the Lochner era. Importing content neutrality and tiered scrutiny into the constitutional analysis of structural regulation has opened the door to deep economic review.” (Burnstein, 2004 pp 1057-1058; Benkler, 2003 pp 201-205) Compare the assertion that First Amendment defences of the right of databases to control access to their contents have “some fairly strong parallels” with “the traditional conception of Lochner.” (Richards, 2005 pp 1212-13) This can be seen to extending to virtual worlds via these complex agreements with their ‘click-wrap format’ which discourage a complete review of their terms. Click-wrap agreements are online interactive contracts similar to shrink-wrap licenses. Shrink-wrap licenses are often used for software, where a consumer is deemed to agree to the license when he removes the plastic shrink-wrap packaging from the product box. Click-wraps appear on-screen and the participant must either agree or disagree to the terms before advancing to the next screen. Click-wrap agreements are of the shrink-wrap license. (Casamiquela, 2002, pp 477-80; Lemley, 1995) The motivation for the explosion of software licensing agreements remains in dispute. There are those who believe EULAs benefit corporations and consumers alike, while critics bemoan its influence on the application of intellectual property law.