Second Life is a popular online game in which many thousands of players use avatars to interact in a three-dimensional virtual world. Users can purchase and sell virtual goods in Second Life using “Linden dollars,” which can be exchanged with actual U.S. dollars in a Second Life currency exchange. Ozimals, Inc. and Amaretto Ranch Breedables both sell virtual digital animals in their respective stores within Second Life, with Ozimals selling virtual rabbits and Amaretto selling virtual horses. Both companies require users to feed their virtual animals virtual food to keep the animals alive, and both enable breeding of additional virtual animals.

In November 2010, Ozimals sent a cease and desist letter to Amaretto alleging copyright infringement due to Amaretto having “virtually cloned all aspects of the Ozimals Works, with the only material difference being that its animal is cloaked as a horse.” Ozimals further argued that “it is readily apparent that the features, functionality, structure, organization, and overall expression of Amaretto’s breedable virtual animal is identical to that of Ozimals.”

Amaretto responded to the letter, arguing that copyright does not protect functionality, and that the broad concept of virtual animals was not unique to Ozimals. Ozimals then filed a Digital Millenium Copyright Act (DMCA) takedown notice with Linden Labs, the creators of Second Life, requesting that Amaretto’s virtual products be removed from Second Life. Amaretto subsequently filed a declaratory judgment action in the District Court for the Northern District of California, and successfully persuaded the court to issue a temporary restraining order preventing Linden Labs from implementing the takedown. Amaretto Ranch Breedables v. Ozimals, Inc., case no. c 10-05696 CRB (N.D. Cal.).

This case highlights some interesting points. First, Amaretto was correct to argue that copyright does not protect functionality. As described in 17 U.S.C. §102, U.S. copyright law protects “original works of authorship fixed in any tangible medium of expression,” but explicitly does not protect “any idea, procedure, process, system, method of operation, concept, principle, or discovery,” as many of these excluded items fall within the realm of patent law. The District Court agreed that while Ozimals may indeed have a valid copyright claim against Amaretto, their allegation of Amaretto having copied their “functionality” is not actionable under U.S. copyright law.

Second, Ozimals strategically used a DMCA takedown notice to seek a quick remedy. DMCA takedown notices enable copyright owners to request that service providers remove unauthorized items from their networks, with the service providers being exempt from monetary liability if they reply to the notice in a timely fashion. DMCA takedown notices are frequently used, for example, to remove unauthorized content from YouTube.com, and DMCA takedown notices are often acted upon in a matter of days, whereas it can take months or years to obtain a remedy in copyright litigation. Amaretto’s virtual horses die within 72 hours unless users are able to provide additional virtual food and water purchased from Amaretto. Thus, even if Ozimals was only successful in getting Linden Labs to stop users from purchasing additional Amaretto items for a short period of time, Ozimals could have effectively shutdown Amaretto through starvation of their virtual horses.

As online gaming continues to increase in popularity and the extent to which virtual worlds confer actual property rights continues to evolve, it seems likely that greater numbers of virtual disputes will continue to be addressed in real world courts.