Attorney (of course he is) Marc Bragg exploited a sort of game cheat within the virtual world to buy up some prime virtual real estate at below market value. Bragg invested about $8,000 in the digital land, but once Linden Labs figured out he’d gamed the, um, game, they yanked his account and declared a type of virtual eminent domain.

Bragg sued because, well, he did invest real money in the fake world. Linden Labs moved for dismissal because Bragg, in their estimation, had cheated the system. But it’s not that simple, says the judge, the TOS does indicate that users own the things they purchase within Second Life.

Since Linden Labs set it up that way, and allowed for an exploit, they sort of had it coming…at least that seems to be the tone taken by a few observers.

Valleywag’s Tim Faulkner writes:

The "commerce" (largely characterized by pyramid schemes, faulty valuations, and unreal exchange rates) could be subject to real world law. Policing griefers could give way to policing "real" crimes.

Mike Masnick of TechDirt updates us on the case, but he had more interesting comments from when the lawsuit was filed a year ago:

Neither party comes out looking very good in this situation, and it’s certainly hard to side with the guy who was exploiting a cheat to make money within the system…

Because, you know, nobody ever games the system in the real world…

 …but it does show one of the big questions that are going to face many more online worlds, as events within the virtual worlds end up in real world courts.

There is a 46 page PDF available, if you have that kind of time.