Straight from the developer? Oo

[Rones]

Funny, you didn't address IGE's character purchase and selling side. They don't simply match buyers and sellers. Out of curiosity I sent an application to see how my character would be worth. They replied they would give me $195 for it and take it off my hands right then. It was not going to a seller that fast. It would sit in their possession while the character was listed on their website for $600-900. Even if they passed off the character immidiately, it is IGE purchasing a character. Thus they own characters.

I'm also curious where you are getting this idea of how gilsellers work. There have been articles by gaming magazines that specifically counterdict what you describe (Computer Gaming World posting the most indepth I've seen). These farmers work for companies who sell the gil to IGE directly (money is sent from farmer to ige bank character). They do not send money straight from farmer to buyer. That would be a huge liability for IGE to rely on these Chinese farming business to send out all the money orders. Should someone claim they didn't get their gil, IGE would have no way to check. However, by having their own bank characters, they can ensure all transactions are done properlly.

Your theory also fails to explain how IGE would manage regular players gil selling to them (not done anymore, but was common in the first year). (EG: I sell them 2mill gil) They would have you send the money directly to one of their bank characters. IGE has characters, and is party to the ToS.

 

[resipsa]

Funny, you didn't address IGE's character purchase and selling side. They don't simply match buyers and sellers. Out of curiosity I sent an application to see how my character would be worth. They replied they would give me $195 for it and take it off my hands right then. It was not going to a seller that fast. It would sit in their possession while the character was listed on their website for $600-900. Even if they passed off the character immidiately, it is IGE purchasing a character. Thus they own characters.

I'm also curious where you are getting this idea of how gilsellers work. There have been articles by gaming magazines that specifically counterdict what you describe (Computer Gaming World posting the most indepth I've seen). These farmers work for companies who sell the gil to IGE directly (money is sent from farmer to ige bank character). They do not send money straight from farmer to buyer. That would be a huge liability for IGE to rely on these Chinese farming business to send out all the money orders. Should someone claim they didn't get their gil, IGE would have no way to check. However, by having their own bank characters, they can ensure all transactions are done properlly.

Your theory also fails to explain how IGE would manage regular players gil selling to them (not done anymore, but was common in the first year). (EG: I sell them 2mill gil) They would have you send the money directly to one of their bank characters. IGE has characters, and is party to the ToS.

It's an educated guess on my part, based on the fact that it is the only sensible way to run that kind of business. Corporations are easy to form, the corporation is responsible only for the acts of its employees and not of its independent contractors thus shielding them from any action by SE. They have minimal overhead. They have very few employees.

I'm willing to bet they would tell you to send your login information to one of their independent contractors.

I'm sure they have very close ties to the people who own the accounts. There's no reason a corporation can't have independent contractors working in house. Microsoft does it. But i will bet you one million gil IGE as a corporate entity does not own even one account.

I'm going to go out on a limb and ask IGE. Worst that can happen is they refuse to answer.

 

[resipsa]

I can dig, for the most part. Unfortunately this could go in circles forever it's simply a point of symantics, i would argue the breach of contract wouldn't be possible without the third party allowing for it to happen and that they were not only knowingly providing the service but benefiting monetarily off of an illegal transaction they facilitated to the end user making them partially responsible or at the very least an accessory to the illegal transaction which would open them up for prosecution by SE.

'Course i'm no lawyer, i just spent alot of time in a courtroom in my younger days and found that so long as your tongue is silver and your symantics aren't off by so much as a beat, it's not the law that matters just a well illustrated point in cases where there isn't much in the way of physical evidence.

I suppose i'm guilty of arguing for argument's sake. There are plenty of legal theories that didn't exist in the body of law until some creative lawyer convinced an open minded judge to create a new remedy. There's nothing stopping SE from trying to sue IGE on a novel theory like the "facilitating breach" theory you suggested.

The problem is two-fold: First, new legal remedies are created by appeals courts, not trial courts. Trial court judges are very reluctant to go out on such thin limbs. Appeals are ULTRA expensive. Second, if SE sues IGE and asks for monetary damages and wins, they have established as a matter of law that gil has real money value. This is the last thing SE wants to do.

 

[Rones]

Found the article. You can read it here.

Here is a little excerpt:

Even though IGE itself doesn't farm, and IGE representatives recently told us the company is working to ferret out and ban such behavior, it does buy from farmers who could use exploits. "Whoever supplies IGE controls the market," says Smooth Criminal. Even worse, he continues, "IGE looks the other way when you give them currency. They don't care where it came from even if you tell them you duped it." In fact, Smooth Criminal alleges that IGE helped him hide the illegal credits. "They had to keep moving [Star Wars Galaxies] credits around from account to account to avoid the credit trail (i.e., duped credits) because we told them they were duped." (We asked an IGE representative about Smooth Criminal's experience and received no response.) Currently, Chinese farmers are the main suppliers of WOW's in-game items and gold, and they control the market. Does this mean IGE needs to buy from these suppliers to stay competitive?

Even if you claim those are indepedent contractors, IGE owns the characters and gil that those 'contractors' are working with. IGE pays for the gil and characters, if they don't own them, who just bought them?

 

[resipsa]

Here's the email I sent to IGE, containing a few white lies and red herrings. Rones, if I get a reply and I'm wrong, I'll buy the million gil I owe you from IGE :lol:

Hello,

I hope I am writing to the proper email address, but I didn't see one that seemed more appropriate on your web site.

I am not a member of the press, but I am studying business law. I am also a huge fan of online gaming and as such have a basic familiarity with your company. I find your business model intriguing, given the complex legal relationships that exist between the player and the developer.

I want to do a presentation about your business model. If you could take the time to answer a few questions for me I would really appreciate it.

1. I notice you sell Final Fantasy XI gil. Logging in to an FFXI character requires you to accept the Square Enix Terms of Service and End User License Agreement, both of which prohibit real money transactions. I'm wondering how the company insulates itself from legal action by Square Enix. It would seem to me that the best way to accomplish this would be to stay completely out of the game and use independent contractors. Is this what you do?

2. Does IGE.COM as a corporate entity actually own any FFXI characters? I would think that if IGE owns any characters, logging in to those characters would require the company to accept Square Enix's terms of service. If you do own characters, is this a calculated risk?

3. You also sell currency and items from other online games. Do other online games have different terms of service that allow or require you to operate differently? If so, how?

4. Does the company take each online game's terms of service into account when deciding how to operate with respect to that game?

5. Has the company ever been sued or threatened with a lawsuit by any online game developer?

6. Does any online game developer encourage or work with your company?

I understand that these are very pointed questions. I assure you I am requesting this information for my own education and am not planning or encouraging any legal action against you, nor will I use this information to attempt to paint your company in any negative light. I find your business model interesting in light of the many unanswered legal questions arising from online gaming.

My contact information follows:

 

[resipsa]

Even if you claim those are indepedent contractors, IGE owns the characters and gil that those 'contractors' are working with. IGE pays for the gil and characters, if they don't own them, who just bought them?

I'm betting not. I'm betting an individual, as opposed to IGE corporation, receives all the gil and characters, and is compensated by IGE as a contractor. Hopefully they will respond to my email and we will know for sure.

 

[Rones]

If you sell a character or gil to IGE, you receive payment from IGE. If they paid for it, they had legal ownership of it even if just for a moment before sending it to their contractor to handle. They own the merchandise regardless of who the vendor is handling it.

What makes them different from EBay is there purchases and payments are sent directly from buyer to seller. Ebay does not pay you nor does it send you the merchandise. However, unlike Ebay, you are paying IGE when you buy from them and they are paying you when you sell to them. Thus, they have owernship of the goods being sold to you or are buying owernship from you. Who physically handles the characters is irrelevent. IGE survives not because they don't physically have characters and break the ToS, but because they are based in China and it is too hard to enforce laws like this across nations. Heck, Microsoft can't even bust Chinese companies for mass pirating Windows. If SE wanted to they would not have trouble going against the farmers either. There is no need to chase down the individual farmers, as they are working for a company you can see from the article.

 

[hellstorm]

rones IGN does not need a character to sell there gil because they never have possession of the gil. They are the ebay of gil they are the middle man. person S <ie seller> put up a amount of gil. IGN then wait till person B <ie buyer> says they want x amount of gil. Then IGN go back to person A saying that person B want x amount of gil. Person A send person B the x amount of gil and IGn get it 2% fee for "being the middle man in the deal". Though where you can get them is if they have gilseller under contract to supply x amount of gil. Though this never been proven.

 

[Rones]

IGN is a gaming site, not a business site. IGE are the resellers. I suggest you read the article I posted here before spouting theories. IGE has never operated like you suggest. As I already explained, they do not operate like Ebay. 2% transaction fee...lol. IGE pays pennies on the dollars for the gil they distribute.

 

[Asuyu]

Ok, I cannot connect for the second day in a row so I have some time on my hands. So I looked into buying gil and Holy Sh*t. Gil is mad expensive. Am I f*cking poor or something? (retorical question, don't answer you asses)

Like really, 1/3 the server is Gil sellers and they all work in 3rd world countries, so how come I cannot buy 10 million gil for the price of a Big Mac. I mean Jesus Christ. Big Mac > 1Mil Gil.

Damnit, I Figured it out. It's because you have supply and demand in effect! Another 1/3 of the server is thoughtless lazy rich ho's who pay for some Chinese biotch to camp my NM, inflate the prices of all items, and buy my Big Macs causing me unendable annoyances while trying to have fun at a game that I once found enjoyable. God damn you assh*les.

 

[resipsa]

If you sell a character or gil to IGE, you receive payment from IGE. If they paid for it, they had legal ownership of it even if just for a moment before sending it to their contractor to handle. They own the merchandise regardless of who the vendor is handling it.

What makes them different from EBay is there purchases and payments are sent directly from buyer to seller. Ebay does not pay you nor does it send you the merchandise. However, unlike Ebay, you are paying IGE when you buy from them and they are paying you when you sell to them. Thus, they have owernship of the goods being sold to you or are buying owernship from you. Who physically handles the characters is irrelevent. IGE survives not because they don't physically have characters and break the ToS, but because they are based in China and it is too hard to enforce laws like this across nations. Heck, Microsoft can't even bust Chinese companies for mass pirating Windows. If SE wanted to they would not have trouble going against the farmers either. There is no need to chase down the individual farmers, as they are working for a company you can see from the article.

Assuming there is even a property interest to be transferred to IGE (a dubious assumption), and as you say they own the character for a brief period of time, they never accept the ToS unless they log in to the account. All they are transferring is login ID and password.

According to the article you referenced: "IGE itself doesn't farm...it does buy from farmers who could use exploits." This supports the argument that IGE has no presence in the game, at least on the supply side.

Also, from IGE's web site: "IGE maintains administrative offices in Los Angeles, California and Miami, Florida. The Company's market making and currency exchange services are operated by Internet Gaming Entertainment, Ltd., the Company's wholly-owned subsidiary in Hong Kong. The Company's auction exchange services and content network sites are administered by wholly-owned subsidiaries in the United States."

Our Offices

Los Angeles
IGE
Suite 239
1223 Wilshire Blvd.
Santa Monica, CA 90403-5400
Miami
IGE
Suite 222
635 Euclid Avenue
Miami Beach, FL 33139
Hong Kong
IGE
19th Floor, Oxford House
979 King’s Road
Taikoo Place
Hong Kong

IGE's wholly owned subsidiary in Hong Kong might have sufficient contacts with the US for Federal courts to exercise jurisdiction.

 

[Rones]

It is a Chinese owned business though. So charges would still have to be filled against them which would be difficult.

According to the article you referenced: "IGE itself doesn't farm...it does buy from farmers who could use exploits." This supports the argument that IGE has no presence in the game, at least on the supply side.

I see it just the opposite. How are they being supplied if the farmers never give it to them? These farming businesses sell to multiple distribution facilities beyond IGE. Yet you expect IGE to call them up everytime they have a delivery to make. 8)

Assuming there is even a property interest to be transferred to IGE (a dubious assumption), and as you say they own the character for a brief period of time, they never accept the ToS unless they log in to the account. All they are transferring is login ID and password

Part of the ToS says that if you transfer ownership of the game (content ids) to someone else, they must accept the ToS. Ownership is passing through them no matter who gets it in the end. They paid for it, they own it. Just because you buy something and immidiately give it to someone else doesn't mean you never owned it.

If this doesn't imply they have it, what does?

In fact, Smooth Criminal alleges that IGE helped him hide the illegal credits. "They had to keep moving [Star Wars Galaxies] credits around from account to account to avoid the credit trail (i.e., duped credits) because we told them they were duped."

It would be absolutly impratical for IGE (or any reseller) to try to conduct business without having bank characters on each server to use as distribution and collection points. The farming companies described in the article are not designed for accepting orders and destribution on demand, however IGE and others like it are. Reseller sites make bulk purchases from farming sites, they are not going to leave that supply with them. Nothing would stop them from selling the gil again to another reseller group then or if the farming company closed, thus screwing the first company out of its money. These resellers are also supplied by many different farming groups, again impractical for distribution of gil unless IGE collects all of it under it's own characters.

 

[hellstorm]

good point, but even if they are the buy from the farmer then they resell it to a 3rd person you then would have to prove that a trasaction of real time currency was made. Which there is no legal way of doing it unless they get the attorites involved. Though as resipsa said

they own the character for a brief period of time, they never accept the ToS unless they log in to the account. All they are transferring is login ID and password.

 

[Rones]

but even if they are the buy from the farmer then they resell it to a 3rd person you then would have to prove that a trasaction of real time currency was made. Which there is no legal way of doing it unless they get the attorites involved.

Maybe I would have to prove that if I was filing a lawsuit, but I'm not. What are attorites? Did you mean attorneys? I also already addressed the point you quoted...

 

[resipsa]

It is a Chinese owned business though. So charges would still have to be filled against them which would be difficult.

Actually, it is a Hong Kong entity wholly owned by a United States entity. Although Hong Kong is now a Chinese territory:

"The Sino-British Joint Declaration on the Question of Hong Kong (The Joint Declaration) was signed between the Chinese and British Governments on 19 December 1984. The Joint Declaration sets out, among other things, the basic policies of the People's Republic of China (PRC) regarding Hong Kong. Under the principle of "One Country, Two Systems", the socialist system and policies shall not be practised in the Hong Kong Special Administrative Region (HKSAR) and Hong Kong's previous capitalist system and life-style shall remain unchanged for 50 years. The Joint Declaration provides that these basic policies shall be stipulated in a Basic Law of the HKSAR. The Basic Law of the Hong Kong Special Administrative Region (The Basic Law) was adopted on 4 April 1990 by the Seventh National People's Congress (NPC) of the PRC. It came into effect on 1 July 1997."

Hong Kong's current legal system is for the time being still based upon English Common Law. (As is ours)

According to the article you referenced: "IGE itself doesn't farm...it does buy from farmers who could use exploits." This supports the argument that IGE has no presence in the game, at least on the supply side.

I see it just the opposite. How are they being supplied if the farmers never give it to them? These farming businesses sell to multiple distribution facilities beyond IGE. Yet you expect IGE to call them up everytime they have a delivery to make. 8)

Yes, or have the farmers send the gil to a trusted contractor closely affiliated with IGE.

Assuming there is even a property interest to be transferred to IGE (a dubious assumption), and as you say they own the character for a brief period of time, they never accept the ToS unless they log in to the account. All they are transferring is login ID and password

Part of the ToS says that if you transfer ownership of the game (content ids) to someone else, they must accept the ToS. Ownership is passing through them no matter who gets it in the end. They paid for it, they own it. Just because you buy something and immidiately give it to someone else doesn't mean you never owned it.

From the Playonline User Agreement:

4.1 Ownership and Rights.
SEI (and, to the extent applicable, its licensors) owns and shall retain all right, title and interest in and to the PlayOnline Service, the Software and all Documentation, and will be the sole owner of any and all data you generate through your use of the PlayOnline Service, and you receive only limited rights to access and use PlayOnline Service, the Software and all Documentation, as set forth in any applicable license agreement.

All you are transferring when you sell an account is your login and password. It is axiomatic that you cannot sell more than you have. If you don't own the character, you cannot sell it.

4.2 Restrictions.
To the maximum extent permitted by law, you may not:
(b) rent, lease, loan, sell, sublicense, distribute, transmit or otherwise transfer the Software, your User or other account-related information (including, but not limited to, your User ID or password information) to any third party;
(d) use the Software or your PlayOnline user account to provide service bureau or time-sharing services, or for any other commercial purpose. The PlayOnline Service and the ability to access PlayOnline are for the personal use of Users only and may not be copied, resold, leased, transferred, exchanged or bartered.

Again, why impose a covenant on a transaction that is absolutely prohibited?

If this doesn't imply they have it, what does?

In fact, Smooth Criminal alleges that IGE helped him hide the illegal credits. "They had to keep moving [Star Wars Galaxies] credits around from account to account to avoid the credit trail (i.e., duped credits) because we told them they were duped."

Ok, so IGE may have characters in Star Wars Galaxies.

It would be absolutly impratical for IGE (or any reseller) to try to conduct business without having bank characters on each server to use as distribution and collection points. The farming companies described in the article are not designed for accepting orders and destribution on demand, however IGE and others like it are. Reseller sites make bulk purchases from farming sites, they are not going to leave that supply with them. Nothing would stop them from selling the gil again to another reseller group then or if the farming company closed, thus screwing the first company out of its money. These resellers are also supplied by many different farming groups, again impractical for distribution of gil unless IGE collects all of it under it's own characters.

I'll say it one more time. There is no reason these bank characters have to be owned by IGE. If IGE is smart, they are not.

 

[Mokk]

I'll say it one more time.

Is this prosecutable? Sure, by a slick enough lawyer.

Will it ever be prosecuted? No, it wouldn't make any sense to invest in the prosecution of every RMT vendor out there as it would require not only SEI but every other developer to declare war on on the RMT business which i'm sure more than a few developers have their respective hands in.

Furthermore; you're quoting the ownership and rights section of the EULA states implicitly:

4.1 Ownership and Rights.
SEI (and, to the extent applicable, its licensors) owns and shall retain all right, title and interest in and to the PlayOnline Service, the Software and all Documentation, and will be the sole owner of any and all data you generate through your use of the PlayOnline Service, and you receive only limited rights to access and use PlayOnline Service, the Software and all Documentation, as set forth in any applicable license agreement.

So clearly unless you've never logged in and never generated any data then you would be correct in your statement that all you sell is the ID and password, which would negate you from accepting the ToS/EULA also. But seeing as how you'd have to register an account and generate data this statement is entirely false.

It should also be noted that if SEI retains sole ownership of said properties this kinda of thing wouldn't happen and the fact that RMT occurs is simple neglect on the part of the developer.

As far as imposing a covenant on a trasnaction that is absolutely prohibited. You proved my point for me, the illegal transaction was facilitated by the third party making them liable in part for the transgression against the agreement with the end user. Unfortunately to prosecute you'd have to hunt down every end user that broke their part of the bargain which would be, as i said, counter-productive and next to impossible without a court order for the records of transactions for said third party.

Regardless aside from an employee standing up and spilling all the beans with company records to back it up (which would be larceny, and let's face it, not bloody likely) any evidence would simply be inadmissable in a court of law on this soil. Basicly not only is SEI (or any developer) not going to invest in prosecution which would cut into the bottom line, no company is going to provide incriminating evidence as to what they're doing in the slightest as it would open them up for a developer to go straight to the jugular.

 

[Rones]

To the maximum extent permitted by law, you may not:
(b) rent, lease, loan, sell, sublicense, distribute, transmit or otherwise transfer the Software, your User or other account-related information (including, but not limited to, your User ID or password information) to any third party;

I think you trumped your own point with this. Doesn't matter if all you are selling to them is the id and password, they included it.

Yes, or have the farmers send the gil to a trusted contractor closely affiliated with IGE.

And I suppose that contractor also paid for it too. You know, your line between employee and 'independent contractor' is very hard to see.

'll say it one more time. There is no reason these bank characters have to be owned by IGE. If IGE is smart, they are not.

You are arguing technicalities that would not likely do them any good if this went to court (which is the whole reason for it). That's like having a drug lord claim he doesn't own any drugs because his 'independent contractors' own them. :roll:

Believe what you want. It is an extreme and illogical procedure for IGE in my view just to argue the legality on a minor technicality.

 

[resipsa]

To the maximum extent permitted by law, you may not:
(b) rent, lease, loan, sell, sublicense, distribute, transmit or otherwise transfer the Software, your User or other account-related information (including, but not limited to, your User ID or password information) to any third party;

I think you trumped your own point with this. Doesn't matter if all you are selling to them is the id and password, they included it.

I don't understand how I trumped my own point. The person doing the selling violated the ToS. You still haven't explained how this puts IGE on the hook if I am correct and IGE never accepted the ToS.

Yes, or have the farmers send the gil to a trusted contractor closely affiliated with IGE.

And I suppose that contractor also paid for it too. You know, your line between employee and 'independent contractor' is very hard to see.

From a layman's point of view maybe, but from a legal point of view the line couldn't be any brighter. There is no reason I couldn't start a corporation today and hire myself as an independent contractor. As Chairman and CEO of my corporation I am required to direct the corporation to act within the law and the bounds of the corporate charter. As long as I do so, I am not personally liable for the acts of the corporation. Furthermore, the corporation is not responsible for the contracts I personally enter. Corporations are a person with their own existence and identity in the eyes of the law. Nobody can hold the corporation responsible for my personal debts and obligations. (There are exceptions to this that don't apply here - Shareholder's derivative suits, actions to pierce the corporate veil, etc.)

Hypothetical: McDonald's enters into a contract with a food supplier (an indepedent contractor) to supply food and ship it to their stores. The food supplier breaches it's contract with the shipper and fails to pay it's bill. Does McDonald's have to pay the shipper? If you say yes, you are taking a ridiculous position to avoid conceding a weakness in your argument.

'll say it one more time. There is no reason these bank characters have to be owned by IGE. If IGE is smart, they are not.

You are arguing technicalities that would not likely do them any good if this went to court (which is the whole reason for it). That's like having a drug lord claim he doesn't own any drugs because his 'independent contractors' own them. :roll:

Criminal Law and Corporate law coudn't be more different. A drug lord cannot form a corporation to shield himself from liability for criminal activity.

Believe what you want. It is an extreme and illogical procedure for IGE in my view just to argue the legality on a minor technicality.

It is far from a minor technicality. It is, in fact, the backbone of Corporate Law. I don't have the time or inclination to educate you on hundreds of years of Corporate Law. If you don't believe me, I suggest you find the Law Library at your university and research basic corporations law. Then if you care to discuss this matter further I would be happy to.

 

[resipsa]

Mokk, your second post, which started this derailment, stated:

agreed, i've yet to find info on any suit involving this situation. Any lawyer who can't point out breach of contract and ride it to the right verdict isn't worth his weight in guano.

I'm simply trying to dispel your idea that this is an open and shut case.

I'll say it one more time.

Is this prosecutable? Sure, by a slick enough lawyer.

Square Enix -vs- IGE: Is this prosecutable? Maybe. Is this winnable? Not likely, at least on the theory of "Facilitating Breach". I don't care if your lawyer is Clarence Darrow.

If I am correct, and IGE and other online sellers operate in game only through independent contractors, they have done a very good job of insulating themselves from action by SE.

I never disputed that the farmers, the independent contractors, and the buyers are in breach of the ToS. But suing those people would be prohibitvely expensive and futile. The only way SE could stop gil selling would be to take out IGE and others. But they can't.