From the Reuters Second Life Desk:

SECOND LIFE, July 3 (Reuters) - Second Life entrepreneur Kevin Alderman filed a copyright infringement lawsuit on Tuesday against Second Life resident Volkov Catteneo, and Alderman’s lawyer said he plans to subpoena Linden Lab to force it to disclose Catteneo’s real-world identity.

Alderman (Second Life name: Stroker Serpentine) runs the adult-content company Eros LLC. One of the company’s most popular products is the SexGen bed, virtual furniture that contains more than 150 sex animations and retails for L$12,000 (US$45.11).

In “Eros LLC vs John Doe,” filed in the U.S. District Court in Tampa, Alderman accuses Catteneo of illicitly copying and selling the SexGen bed for as little as L$4,000, sharply cutting into Eros’ sales.

If Doe actually copied the creations of Alderman, this doesn't seem any more complicated than tracking down the Does.

This section caught my eye:

Alderman said he tried to report the copyright violation to Linden Lab in accordance with its Digital Millennium Copyright Act compliance policy, but that he was told to use the in-world “abuse reporting” system.

Here is the DMCA policy. It's clearly tailored toward real world content turning up in Second Life. It's not too surprising that Linden Lab would turn them away. Things here get a little muddled.

While users of Second Life "retain copyright and other intellectual property rights with respect to Content [they] create in Second Life," they also automatically grant to Linden Lab "a royalty-free, worldwide, fully paid-up, perpetual, irrevocable, non-exclusive right and license to (i) use, reproduce and distribute your Content within the Service as permitted by you through your interactions on the Service, and (ii) use and reproduce (and to authorize third parties to use and reproduce) any of your Content in any or all media for marketing and/or promotional purposes in connection with the Service. . . ." Of course, it makes sense that the Linden Lab must be able to use, reproduce, and distribute the content. How else can the content exist in their world.

The question is, who is reproducing and/or distributing these sex beds? Is Linden Lab an intermediary that must take that content down? That seems unlikely. After all, as long as that content exists in Second Life, it would appear that Linden Lab has a license to copy and distribute in-world. Sending Linden Lab a DMCA notice to take down content that it has a license to copy and distribute does seem problematic.

There are some tricky ownership issues in Second Life, but I don't think this is one of them. I originally caught this on TechCrunch, where Duncan Riley overstates the importance of this case:

The case, the first of its kind for Second Life, will be interesting from a legal perspective. There is no legal precedent for the case, and as Stanford University’s Lauren Gelman said in a Four Corners report earlier this year, the concept of virtual property ownership is vexed:

“All of this is virtual bits and bytes, ones and zeros that are sitting on the servers at Second Life’s headquarters and the server farms they have around the world…how much can you own something that’s really under the control and domain of another party, this is really where the law is being tested to see how they’re going to figure that out.”

On the surface it also seems a little strange that Linden Lab has not already dealt with it; Second Life has strict rules in relation to copyright infringement and has previously acted in favor of in-world copyright owners.

I think he needs to reread that report. The confusing areas are in property ownership. The intellectual property issues are nowhere near as complex, especially seeing as Linden Lab grants ownership to in-world creators. What's more, we don't really get a good sense from the article what Second Life has done about this. It's certainly not their role to award civil damages. If the copying doesn't violate policy, maybe there was nothing for them to do.