By Simon Atkinson

Business Reporter, BBC News



More than 100 big name firms have a Second Life presence

Take a trip to an inner-city market stall and there's a good chance that you will be able to pick up a watch or a pair of sunglasses, being passed off as made by Rolex or Oakley.

The goods will invariably be cheap and, almost certainly, bootleg - or fake - versions of the real thing.

Now go on a shopping spree in the virtual world of Second Life - the 3D world populated by on-screen representations (avatars) of real life people, and you will see a similar phenomenon.

Here, the possessions don't physically exist. They are computer-generated adornments for your avatar, in the game.

But products like these are appearing - often without the permission of the brand owner.

Legal presence

The design of Second Life means that players, or rather residents, can make and sell goods in exchange for the world's currency, the Linden Dollar, which has an exchange rate with the US dollar.

Currently $1 will buy about 240 Linden Dollars.

And commerce is booming, with transactions worth about $1.5m in real money taking place every day.

Creating a virtual presence can be expensive

Firms are clamouring to get involved with more than 100 big brand names having a presence - from Coca-Cola and Microsoft to BMW and the fashion designer Jean-Paul Gautier - as well as thousands of smaller traders.

But when they do get on board, some are finding that their intellectual property (IP) - typically brands and content they own - are already there.

So perhaps it is inevitable that one of Second Life's newest residents is a UK law firm.

Rip-offs

Inside the virtual world, visitors to the swish offices of Field Fisher Waterhouse see floor-to-ceiling glass windows, fish tanks built into the walls and can meet representatives of the firm.

In part, it sees its arrival as another means of promoting the company and attracting potential employees.

And by hosting a real-world, real-time conference in its virtual office, attendees from around the world can participate, all at little cost.

But, says partner David Naylor, it is also positioning itself to drum up some business - advising on legal matters which crop up in the virtual world.

"Second Life's technology makes it as easy for users to create infringing contents and assets as it is to create original, non-infringing items."

SECOND LIFE FACTS Registered users; 8.7m Active users: 1.7m Amount spent a day: $1.5m Source: Linden Labs

"Often the people buying it won't be able to tell it is a rip-off and probably don't care. But the sellers are cashing in on the goodwill that has been built up in the real world by these brands for their own gain.

"It's a frontier-like environment and the economics of piracy-related activities are too compelling for some."

While nothing is certain in the rapidly developing environment of the virtual world, Mr Naylor feels it is inevitable that the situation will come to a head at some stage.

"Given the increasing amounts at stake, the real question might not be whether we see IP infringement-related actions brought in connection with virtual world activities, but how will they play out," he says.

Setting bad example

A Second Life resident himself, Mr Naylor's avatar is called Solomon Cortes, a dapper chap, whose wardrobe includes a smart suit he bought in-world to customise his appearance.

There is little to stop an offender creating another avatar - or character - and start infringing again

David Naylor, Field Fisher Waterhouse

While his clothes have come from "official" outlets, not all people who should know better are so scrupulous.

"There are some companies, even quite high profile ones, which have created virtual replicas of real world buildings or deck out their Second Life offices with designs, artwork and virtual furniture which are blatantly infringing copyright," he says.

"So when you consider that even they are doing it, it's no wonder there's a problem."

Second Life has about 8.7 million users worldwide - though only about 1.7 million have accounts used in the past three months.

Many regularly spend a few Linden Dollars on things which boost their enjoyment of the environment from trips to a bar to buying a replica football kit.

Until recently, they could also indulge in a little gambling at a casino, though these were banned last month.

Users can also buy vehicles as a means of travelling around Second Life.

These include cars, sold by dealerships set up by real-life motor firms. Other sellers flog unauthorised versions of the same cars.

David Naylor, aka Solomon Cortes, dresses to impress potential clients

Buying something branded without the authorisation of the company concerned not only means it misses out on revenue - but - Mr Naylor argues leaves them open to the risk of damaged reputation.

In the case of Mercedes, the firm has built a race track where users can test drive its latest models.

"They will have spent a lot of time and money on doing that," Mr Naylor says.

"If someone comes along with a fake Mercedes car which does not work well or looks like an old version of a vehicle, or underperforms against Mercedes own virtual cars, then you can see why the company might be unhappy."

Cinema sessions

As more businesses move in to the virtual environment, it is also becoming increasingly possible to buy real world goods from Second Life's virtual stores.

Dell, for example, allows users to customise a PC within the virtual world and have the real thing delivered to their doorstep.

"That this is happening makes protecting your brand in-world even more important," Mr Naylor argues.

Many firms already anxious about IP abuse in the virtual world are already facing the situation elsewhere on the internet.

While music and film companies battle against illegal downloading and the plethora of their copyrighted material on websites such as YouTube, Second Life is equally full of such content.

A visit to in-world cinemas will allow you to watch releases including the latest Pirates of the Caribbean film to The Simpsons movie, while the bars play hits from Rhianna to the Rolling Stones.

However despite what seem to be legitimate legal concerns - and the presence of lawyers such as Mr Naylor - it is not always clear what action, can be taken. not least because avatars mean that real identities are kept secret

Companies are adding unusual features to their virtual offices

"Finding out who is behind illegal practices could be a drawn out process, potential requiring legal action forcing the identity of the perpetrators to be revealed," Mr Naylor adds.

"And even if successful, there is little to stop an offender creating another avatar - or character - and start infringing again."

Then there is the problem of establishing under which jurisdiction the offence is committed.

Is it in the country where the perpetrator is based? Or perhaps in San Francisco where the Linden Labs' servers are located?

Despite the difficulties, Mr Naylor feels that there will become a need for advice to be offered to those firms which choose to get involved in virtual worlds.

This could range from what rights you have over land in-world to the employment law implications of hiring another resident in your virtual business.

"There are definitely risks for firms which get involved in virtual worlds, but there also great opportunities too."