"Virtually every aspect of real life is getting duplicated, and all the laws that can be applied to the real world are being applied in Second Life," said Jorge Contreras Jr., an intellectual-property attorney in Washington, D.C.
Last year, Second Life was rocked by a scandal over users who had modified their avatars to look like children and simulated pedophilia. Last month, Linden Lab shut down gambling in Second Life after concerns arose that virtual games of chance might violate U.S. gambling laws when members cashed in Lindens for real money.
Now comes Alderman's SexGen suit, which was filed July 3 and seeks unspecified damages. It accuses the unknown owner of the Catteneo avatar of violating copyright and trademark protections by copying, distributing and selling copies of Alderman's software.
Alderman's attorney, Francis X. Taney Jr. of Philadelphia, said the lawsuit has gotten a lot of attention because it involves sex, but is fundamentally about long-established law.
"It's a piece of software and software is copyrightable," Taney said. "It's also expressed in graphics, which also are copyrightable. There is some sizzle. People like to say it's really far out there, but at the end of the day I equate it to basic intellectual property principles."
Unlike many popular online worlds, such as World of Warcraft, Linden Lab grants its users broad rights to create and sell content with few restrictions. Users can install copy protection and seek U.S. copyright and trademark protections, all of which Alderman did for the SexGen software.
"Whenever you create a situation where people are buying and selling things and potentially misappropriating them from their rightful owners, it is only a matter of time before the legal system gets called in," said Fred von Lohmann, a senior staff attorney at the Electronic Frontier Foundation in San Francisco. "This seems like a relatively straightforward case. It sounds like there is a real copyright issue."
Taney believes he knows who Catteneo is in real life, but is confirming it through subpoenas of records of eBay's PayPal payment service as well as chat logs and trade history in Second Life. He said Linden Lab and PayPal turned over their records, and he is preparing another round of subpoenas.
"We're proceeding carefully," Taney said. "This guy has claimed the information he gave to Linden was bogus. We are looking for ways to cross check and corroborate the information."
Catteneo, who did not respond to several interview requests sent through the Second Life messaging system, will likely have a hard time hiding.
"There is a whole lot less anonymity online than people think," von Lohmann said. "There are over 20,000 people who have been sued for downloading music. They may have felt anonymous, but they're weren't."
Alderman is unlikely to be the last to drag an avatar into court as the designers in Second Life try to protect their creations in the same way clothing designers such as Gucci try to eliminate realistic knockoffs
In recognition of the growing legal issues Second Life is likely to generate, the country of Portugal recently set up an arbitration center in the virtual world, though it has no power to enforce its decisions.
The legal issues may be similar offline and online, but von Lohmann said the trials could be a lot more interesting.
"In a virtual world, you have the ability to gather evidence you don't have in the real world," he said. "Everything that happens in Second Life is reflected on computer servers. Depending on how long they keep the records, you could actually replay the event as it happens."