Sheldon Cooper once lost a virtual ostrich to theft and wanted the police involved. It plays as a joke — until you notice that people invest years of effort and substantial real money in virtual assets, and that when those assets are taken, the law struggles to say what exactly was stolen.
The problem
Players pour time, effort and real money into creating virtual characters and accumulating virtual assets. In games and virtual worlds like World of Warcraft, Second Life and GTA, players build genuine wealth and property — items, land, characters, currencies — with real market value.
And if those assets are stolen, the player frequently has no legal recourse, because the thing taken has no physical form and no settled legal character.
The stakes are not hypothetical. A 2011 case involved a player who killed a friend over a stolen virtual sword — and the police had initially refused to treat the theft as theft at all. Whatever one thinks of virtual goods as property, the value people attach to them is real.
What the courts have said
The leading early authority is Bragg v. Linden Research, in the United States, arising from Second Life. It established two useful points: that interactions within a virtual world could satisfy jurisdictional requirements, and that mandatory arbitration provisions in a platform’s Terms of Service might be unenforceable.
That second holding matters more than it first appears. Virtual property disputes are governed almost entirely by terms of service drafted by the platform — typically providing that the studio owns everything and the player merely holds a revocable licence. Bragg established that those terms are not beyond challenge.
Copyright: player or studio?
Under Indian copyright law, the owner of a virtually created thing could be the player or the company — and determining true authorship is genuinely complex.
The studio authored the engine, the assets, the textures and the rules. The player made the choices that produced this particular character, build or structure. Where the player’s contribution amounts to original expression — an elaborate Second Life construction, say — the case for player authorship is real. Where the player has merely acquired an item the studio designed, it is not.
Most platforms resolve this by contract rather than by law, allocating ownership to themselves in the terms of service. That works until someone challenges the terms.
Trademarks in virtual worlds
The trademark question is more tractable and, commercially, more pressing. When brands like Adidas sell virtual merchandise, the same infringement risks follow them in: counterfeit virtual goods, sold to real consumers, trading on a real brand’s reputation.
Trademark law adapts to this reasonably well, since it protects against confusion as to origin regardless of whether the goods are physical. The practical issues are enforcement and jurisdiction, not doctrine.
What has happened since. This was written before the wave that made the question mainstream. NFTs and metaverse platforms arrived, and with them the first real litigation: Hermès v. Rothschild, where a US jury found the “MetaBirkins” NFTs infringed Hermès’s trademarks, and Nike v. StockX over tokenised sneakers. Brands now routinely file trademark applications covering virtual goods and NFT-related services, and the classification practice for those filings has developed accordingly.
India, meanwhile, brought virtual digital assets into the tax net from 2022 without creating any corresponding property or IP framework for them. The gap this piece identified — real value, real investment, no dedicated legal category — has narrowed on the trademark side and remains largely open on the rest.
Where this leads
The most practical path forward is integrating virtual property into existing IP law rather than waiting for a bespoke regime. Copyright, trademarks and contract already do most of the necessary work; what they lack is settled application to virtual assets, which litigation is slowly supplying.
For anyone building or investing in this space, the operative advice is unglamorous: read the terms of service, because they still decide most of these questions, and register the marks you intend to use on virtual goods rather than assuming physical-world registrations reach them.
The takeaways
- Virtual assets carry real value — and often no clear legal category.
- Copyright ownership is contested between player and studio, and usually settled by contract.
- Trademark law reaches virtual goods — brands now file expressly for them.
- Terms of service are challengeable — Bragg v. Linden established as much.
Frequently asked questions
Who owns virtual items in a game? Usually the platform, by its terms of service. Copyright law could support player authorship where the player contributed original expression, but the contract typically decides.
Can virtual goods infringe trademarks? Yes — selling counterfeit virtual merchandise bearing a real brand’s marks raises the same confusion issues as physical goods, and brands now register expressly for virtual goods.
Is virtual property recognised in Indian law? Not as a dedicated category. Virtual digital assets are taxed, but no specific property or IP framework governs them; existing copyright, trademark and contract law applies.
What did Bragg v. Linden decide? That virtual world interactions could satisfy jurisdictional requirements, and that mandatory arbitration provisions in a platform’s terms of service might be unenforceable.
Legislation referred to
- The Copyright Act, 1957
- The Trade Marks Act, 1999