I’ve been interested for a while in the extra-game markets for items like weapons, spells and so on created in online games. This story involves two Chinese gameplayers who acquired a highly valuable virtual sword. One of them borrowed it and sold it for about $1000. The other player went to the police without result, and eventually confronted his partner, and in the ensuing argument, pulled a knife and stabbed him to death. It’s sad that this happened, but the most interesting aspect for those not directly involved is the question of whether the seller had committed a crime, and if so what. The following discussion is based on very limited knowledge, so feel free to correct me.
Even if this was a real sword, I doubt that the police would have become involved in the dispute because it was jointly owned, so only a civil action would have been available.
More generally, if the law does become involved in this kind of dispute, it’s unlikely that ordinary property law is the right place to look. Even if your virtual castle may look like genuine, it isn’t real estate. It’s the product of a contract between you and the game’s operators. In many cases, that contract forbids outside resale of items, so your rights are pretty limited. But even in a game like Entropia which encourages such things, your rights over virtual items are defined within a set of rules created by the game operators. If, for example, they arbitrarily confiscated virtual land for which you had paid, your remedy, if any, would be under contract law or (in particularly outrageous cases) the game operators might be prosecuted for fraud.
Of course, all this could change. There’s nothing to stop governments creating new categories of virtual/intellectual property. But, as with intellectual ‘property’ in general, intuitions based on standard (rival, excludable) private goods aren’t likely to provide a good basis for thinking about such things.
There’s more discussion at TerraNova where this kind of issue has been debated before.