Li Hongchen v. Beijing Arctic Ice

Li Hongchen v. Beijing Arctic Ice Technology Development Co. Ltd.,

This is generally is regarded as the first instance of ‘virtual theft’ being recognised by a court.  The case concerns virtual items taken from a player’s account through some form of account hacking. The case was brought by the victim of the theft against the game company (rather than the other player) as the company refused to re-instate the virtual items.

While the details of the case are slightly complex, the final judgment (over turning an appeal) found that the game publisher has a duty of care to its players, and specially that in this case its security systems were insufficient to ensure that virtual items could not be transferred out of players account through hacking and that this act constitutes theft.

Li Hongchen claimed that when he logged into his account “President” on 17 February 2003 he found that all the contents, including such things as: ‘2 poisons’, 1 God of War’ had been sent to account SHUILIU0011. He asked for the details of the account but Arctic Ice refused to provide these as it would breach the personal privacy of the other player, they also stated that the action had nothing to do with them as the security of the account is the player’s responsibility. It seems like some of the items in question were generated through game play and some through ‘pet cards’ individual payment for a given item.

When the matter eventually went to court Arctic Ice made a number of general and very specific claims:

  • the security of a player account is their responsibility (as defined in the ToS), hence any thefts form the account are the player’s responsibility;
  • players are obliged to maintain standards of security and loss due to failure to meet this contractual obligation is their liability;
  • operator obligations under Consumer protection law should be limited;
  • virtual items are a ‘pile of data’ and do not constitute a ‘thing’ under Chinese Civil Law;
  • there are three possibilities for why the items where no in the account: (1) stolen, (2) hacked at a network level, or (3) given away – and that the player could not prove that it was (1); and
  • the account in question was not the players as it did not have the player’s name associated with it.

Li Hongchen made a number of counter claims:

  • the account was his, and though he had used pseudonyms, the phone number on the account was his. Moreover he evidenced things such as game CD ROM, game cards and a whiteness; and
  • while the ToS were agreed to when he initially registered for the game, the ToS were no displayed during the account re-charge process

The court found for Li Hongchen in respect of the return of the virtual items and costs, including the travel costs of his witness. Li Hongchen’s claim of compensation for ‘mental damages’ was not held.

China: Virtual (only) currency rule

On 29 June 2009 the Ministry of Commerce of The People’s Republic of China released a statement (see full text below) announcing that ‘China has unveiled the first official rule on the use of virtual currency in the trade of real goods and services to limit its possible impact on the real financial system.’

Rather than banning virtual currency, the regulation limited its application, the key being: ‘The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services. That is, virtual currency could be used in the context of a game but not as a substitute for hard currency.

Read more…

White Paper: Virtual Items and Public Policy

7 February 2011. Today the Virtual Policy Network has released a White Paper on Virtual Items and Public Policy. The Paper provides an overview of virtual items and virtual currency are – covering the spectrum from Xbox points to MMO characters. The paper defines what the key public policy interests are in virtual items, and provides a survey of the legal responses to issues involving virtual ‘goods’ from jurisdictions as diverse as China, Korea, Finland the US, citing a number of cases of virtual ‘theft’.

Released today as a .pdf under Creative Commons, the white paper will also be a living document held as part of the Virtual Policy Network’s database of resources. See the new Global Policy section of the site for details.

the Virtual Policy Network is looking for people to support this work, extend the number of countries covered and keep our database up to date with legislative changes impacting convergent media – if you would like to become an associate of tVPN or support our work in other ways please contact us at: info AT virtualpolicy DOT net.

Download Virtual Items and Public Policy (.pdf)