Second Life's Virtual World Lands in Real Life Courtroom

The creators of virtual world Second Life, San Francisco-based Linden Labs, may well find themselves in a very real courtroom thanks to a lawsuit filed in April.

The class action suit accuses the company of fraud after the company changed its terms of service relating to who owns "land" in the world.

Second life has a fairly bustling economy in Lindens, the in game currency, which can be bought and traded for real-world money. In the first quarter of 2010, the company reported that $160 million in transactions took place over its network.

Among other things, Lindens can be spent to purchase property in the world, which represents space on Linden Labs's servers. There, users can create or buy items such as buildings and vehicles to place there.

The dispute may hinge on the fact that the company uses the terms "buy" and "sell," whereas the Terms of Service which was updated in March says that currency and land are actually licensed from Linden Labs.

It's not the first time that the company has struggled with users and regulators over its economy. Gambling was banned, and the company instituted regulations on banking and investments in the game after a number of ponzi schemes flourished.

The suit argues that the changes to the terms of service, and the denial of access to their accounts until users accepted the new terms, was a violation of California consumer protection statutes.

A 2007 suit that included one of the current plaintiffs ended in a settlement.

Jackson West hops his Second Life avatar at least owns the virtual clothes on its back.