Creating Ubiquitous Computing, Virtual Worlds, and the Displacement of Property Rights

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BOONE M.S., Creating Ubiquitous Computing, Virtual Worlds, and the Displacement of Property Rights, I/S: A Journal of Law And Policy for the Information Society, V. 4, i. 1, 2008, 91

Type Article
Abstract Examining one emerging technology, virtual worlds, may

provide us with insight about another emerging technology, ubiquitous computing. The rapid increase in both the popularity and economic value of virtual worlds has resulted in a conflict over whether players in these worlds have any property rights with respect to virtual world objects associated with their avatars. A close examination however reveals that even if such rights exist, they can be overridden though the combined use of contract and technology. This observation may in turn provide an insight about the future of real world property. The emerging technology of ubiquitous co mputing shares technological characteristics with virtual worlds such that ubiquitous computing would make a displacement of property rights in real world objects possible in the same way that virtual world technology makes such a displacement possible for potential property rights in virtual world objects.

“It is coming because there are too many too powerful institutions vested in its coming, knowing what enormous market possibilities are opened up by the conquest of the everyday. It is coming because it is an irresistible, ‘technically sweet’ challenge, for designers no less than engineers. It is coming because something like it effectively became inevitable the moment our tools, products and services started communicating in ones and zeroes.”

Link http://moritzlaw.osu.edu/students/groups/is/files/2012/02/Boone-Formatted-4_1.pdf
Topics Business Model, Competition, Contract, Property, Technology

Notes

Illustration of "ubiquitous computing"

Ubiquitous computing (sometimes called pervasive computing: p. 99, or internet of things: p. 103) is the third paradigm of computing (after the mainframe and the personal computer: p. 93): it can be defined as '""nothing less the colonization of everyday life by information technology" (p. 99, definition by Adam GREENFIELD). In fact, "the computer leaves its isolated box and its limited connectivity", to become "embedded throughout the physical world"" and "expansive, if not universal, in its connectivity" (p. 93).

"Perhaps the best way to describe ubiquitous computing is to describe aspects of it. In a ubiquitous computing paradigm, computing functionality is embedded and mobile in an environment of universal connectivity that produces a high level of automation" (p. 103). Therefore, the main traits of ubiquitous computing are embeddedness (computing functions become universally available; invisibility is one of the goals of embeddedness: ubiquitous computing becomes commonplace and unremarkable), mobility (we can take computers with us wherever we go, or we always have access to computing capabilities and of our own data), capability of functioning autonomously as well as through conscious user control, "virtualization" of objects (objects are made recognizable and computer readable), interconnection (we have "networks of miniaturized, wirelessly interconnected, sensing, processing, and actuating computing elements kneaded into the physical world": p. 107) (pp. 104-107). Summarizing, "[u]biquitous computing [...] envisions computers that are embedded throughout the physical environment, that can communicate with each other, and that can monitor their surroundings and respond in dynamic, "intelligent" ways" (p. 108).


Ubiquitous computing and personal property rights

"[O]ne legal consequence of the rise of ubiquitous computing may be the displacement of property rights as a rights ordering system" (p. 92).

In fact, it is really probable that the future development of ubiquitous computing - through its capability of remotely monitoring and controlling physical objects (which "gives someone other than the possessor of an object the ability to monitor and control the use of that object": p. 125) - will enable interference with the exercise of personal property rights (and even enable their redistribution) (pp. 92-94).

But what are the prerogatives traditionally associated with personal property rights?

  • The right to use and enjoy: it have rarely been explored, probably because in the past restrictions on it are practically difficult to implement in a non-connected world, and therefore there was no necessity to examine this kind of restrictions. Today, with the emergence of the ubiquitous computing world, the role of these prerogatives should be examined, and BOONE suggests to "look at the detriment to the reduction in rights of use and enjoyment" by looking "at its effect on personal autonomy": in fact, the increased ability of remote monitoring and control might lead to a decrease in personal autonomy: in a pre-ubiquitous world, there was a "very limited ability for the rest of the world to act in the individual's space""(p. 150). This perspective is a perspective focusing on the personality theory of property rights (p. 151).
  • The right of alienation: it "is frequently cited as a longstanding right at the heart of property since the transition away from feudalism"; however, even if restraints on alienation have been strongly disfavoured, little discussion can be found about the value of this prerogative (p. 149).

Ubiquitous computing distances property rights from their traditional configuration: "the exercise of the personal property right to use and to the quiet enjoyment of property" is obstructed by the monitor and control ability of the provider over the use of the object by the purchaser (p. 96) (obviously, restrictions on use of personal property have always existed, but normally they don't concern a particular individual object, and they are generally imposed by the government, not by the provider: pp. 95-96).

As a consequence of this remote monitoring and control ability of the provider (technology), and of its strengthening by contractual terms (indeed, when technology alone is not sufficient for the provider in order to reserve to himself the control over the items commercialized, control can be obtained summing up i. the monitoring ability with ii. a contractual scheme; moreover, the information technology present in the environment of ubiquitous computing makes the formation of contract easier: think about click-wrap and click-through contracts: p. 125), personal property rights may become a privately ordered system (p. 96).

It is true that the interference with property rights might have happened also in a non-ubiquitous-computing world simply through contract (but what I wonder is if such interference could be per se legitimate: if property is transferred, are restriction on use and enjoyment and alienation lawful? or, if property is transferred but intermediation of the provider is necessary in order to enjoy it, can we consider a transfer of ownership possible (see Il Cloud Computing: alla Ricerca del Diritto Perduto nel Web)? and if property is retained by the provider, is this retention lawful when the customer has paid a lump-sum and doesn't have to return the object? or can we state that the fact that the ability of the provider to remotely disable the object is the equivalent of the object returning?), but the retention of property rights not accompanied by the retention of possession makes these restrictions easy to be violated without the provider being aware, and therefore the provider didn't have in the past the incentive to restrict the property rights to use and enjoy the items commercialized (p. 128).

In the precedent paragraph we have dealt with "possession", implicitly saying that with the ubiquitous computing retention of the property rights by the provider can be accompanied by retention of the possession. This means that ubiquitous computing may change the possessor of an object: it is no more the one who handles it materially, but the one that can make it enjoyable. BOONE, at p. 130, implicitly contradicts this, saying that "ubiquitous computing technology may give the producer of the object the ability to act on that conflict to the possessor's detriment"", but we can imagine that, in this occasion, he has only made an improper use of the term "possessor", using it as a synonym for "customer". In fact, later in the article (p. 151), he says that ubiquitous computing "may [...] force us to reexamine what possession means". He cites Oliver Wendell Holmes's definition of possession: ""To gain possession, then, a man must stand in a certain physical relation to the object and to the rest of the world, and must have a certain intent [...]. The physical relation to others is simply a relation of manifested power coextensive with the intent". In further describing the necessary physical relation, Holmes said "there must be a certain degree of power over the object". The requisite intent for possession, in Holmes's account, was "an intent to exclude others"." BOONE continues saying that ubiquitous computing impacts both aspects of possession, because the ability to control and exclude and the physical proximity become separated. My remarks are the following. Firstly, the intent to exclude may remain in the hands of the customer, particularly when he is unaware of the provider's powers over the object; so, the problem concerns essentially the corpus possessionis, not the animus possidendi. Secondly, it is not clear if BOONE is saying that the notion of possession should be reconfigured in order to fit to today's customers, which have physical proximity but not the ability to control ans exclude (at least, not entirely, I add), or if the possession shifts to the provider. In my opinion, the advent of ubiquitous computing should drive us to recognise that the possession belongs partly to the customer and partly to the provider, and the latter's is an "horizontal possession", in the sense that the provider has a power over the object (obviously combined with an intention to exclude: therefore, if potentially a remote power of monitoring and control exists, but it derives from technologies adopted for other purposes, e.g. in order to remotely disable a stolen device, we may say that - despite the material power the provider could exercise over the object - he has no possession over it) which doesn't enable his fruition of it, but simply may prevent the exercise of the "vertical possession" by the customer, and which can therefore create a tragedy of anticommons (particularly when the value chain that makes the IoT product usable is composed by different actors: a device provider, a network provider, a platform provider, and an application provider: see Overview of the Internet of Things — Recommendation; see also Essay: A Transactional View of Property Rights, pp. 42-43). Moreover, the advent of ubiquitous computing should lead us to coin a new term in order to define the physical proximity the customer has with the object (i.e. his material handling of the IoT good), in order to not confuse it with the possession of the object, which is shared with the provider.

A television commercial for cellular telephone service well highlighted this shift, through the metaphor of a group of children, each of whom is playing with a ball: a woman enters and asks them how many minutes each of them is going to use the ball each month, warning them to be careful, because if they say too few, they will have to pay overage charges, and if they say too many , they will waste money (p. 95). This is exactly what the Battery Hiring Agreement for the Renault Zoe states: customers have to establish how many km they will cover in the next year, and, if they exceed, they have to pay overage charges.

Another good representation of this shift is the artwork by Steve MANN titled SeatSale: it is a chair which requires periodic license agreement in order to be able to sit in it; if the license agreement expires without having been renewed, several metal spikes would come up from the chair's seat, making the chair unusable (p. 127): it is an example of a combination of contract and technological control that interferes with the exercise of property rights (p. 128). Here also we can find an analogy with the Renault Zoe: if the hiring fees for the battery are not paid, the provider can prevent the car from recharging.

There can also be combination between monitoring and contract (p. 128): the use of the good by the customer is monitored and, if uses non-authorized by the contract are made, the customer can be sued; an example may be lotus Elise sports car, which is equipped with an engine control unit which records data about usage of the car, and this data has been used by the manufacturer also to void warranty when the car has been misused by the customer (pp. 146).

Technical means can also be used alone, for example to prevent a car from exceeding to allowed speeds (p. 128): in this case, we may have no remote control or monitoring, but simply an object which acts in an autonomic way, which anyway subtracts use ability to the customer (p. 146).

Another example given by BOONE concerns inkjet printer cartridges (they are a good example of how this possibility of remote control is often incorporated by providers in their business models): printers are sold at low prices because remuneration comes from the higher cost of cartridges; and therefore this business model is implemented only if the provider can prevent customer from using third party cartridges and to refill them, and, more generally, if they can ensure a revenue from the commercialization of the cartridges: so cartridges can have an expiration date, or can print only a limited number of pages; providers may use internet connectivity to monitor usage of printers; contracts are also used to control customers' use of the cartridges (the "not intended for refill" statement written on the package may in the future become a click-through license and therefore cease to pose doubts on its binding nature) (pp. 147-148).

Another example is the one of Microsoft Xbox consoles: Microsoft's online gaming services for "Halo 2" have been linked to a system to monitor Xbox already sold (something similar already happened on consoles at the moment of updates): if modifications of the consoles by purchasers are discovered, users are banned from play on Xbox Live, and therefore many features of Halo 2 become not accessible. Therefore ubiquitous computing can be used also to control after-market use of products (p. 148).


Considering the new possibilities of remote monitoring and control of objects allowed by ubiquitous computing, we should wonder if the the traditional personal property rights enjoyed by the owner of an object provide some benefits to society, or if they are only contingent consequences of the fact that - in the past - the possibility of remotely control the items sold didn't exist (p. 98). Or, to put in another way: are the traditional property rights important enough to override freedom of contract? (p. 149) Or, even: can private ordering being preferred to public ordering? (p. 152)

In order to answer to the last questions, we have to consider that:

  • a pure private ordering system couldn't exist in the past, because enforcement of what privately established always required public intervention; however, with the technological control and monitoring enabled by ubiquitous computing, this statement should be revised (p. 152);
  • private ordering systems may show some positive aspects:
    • the ability to practice effective price discrimination (p. 152): price discrimination increases welfare, because different prices can be set for users that place different values on the object (p. 153);
    • the possibility "for an individual to pay only for the uses desired rather than having to pay for all possible uses or for having to pay for ownership when only use for a limited time is desired. In other words, the pre-ubiquitous practical reality that all use of, and control over, a physical object passed to the possessor may be a market inefficiency" (p. 153) (see also The Zero Marginal Cost Society and Internet of Things — Preliminary Report 2014, p. 7).
  • potential negative consequence may flow from an increased private ordering and the loss of potential benefits derived from public ordering (p. 153). We should examine the theories justifying traditional property rights and verify if a privately ordered system may lead property rights to no more ensure the benefits that those theories sustain property brings. Another positive aspect of property rights is that they can overcome the problem of contractual incompleteness (see Essay: A Transactional View of Property Rights).

Another possible approach to examine the question is to examine the reasons of the numerus clausus of property rights: "[i]ndividualized variations, often termed "fancies", have been strongly disfavored", and one reason might be that numerus clausus reduces information costs (see Personal Property Servitudes on the Internet of Things) (p. 154).

Another possible approach should be the examination of "existing legal arrangements that are hybrids of contract and property law: for example, bailment and leases. [...I]n these systems, a possessor's rights [...] are no longer detrmined by property law alone, but rather by property law mixed with contract" (p. 154) (see RFID and Other Embedded Technologies: Who Owns the Data?.


The analogy with the virtual worlds

A situation similar to the one existing in the ubiquitous computing context can be found in virtual worlds (worlds embedded entirely within computers: p. 108) (p. 101). Indeed, ubiquitous computing is sometimes called as "embodied virtuality" (pp. 101 and 115): in fact, with ubiquitous computing, digital world features become part of the real world thanks to computer mediation, and so ubiquitous computing can be seen as the physical embodiment of digital world features (think about, e.g., data collection: the same information collection possibilities that exist in the online world are now available, thanks to ubiquitous computing, in the physical world: p. 119). "Ubiquitous computing spreads interconnected computing ability throughout the physical world. In contrast, virtual worlds attempt to put the physical world inside a computer" (p. 131).

The point the two worlds have in common is the fact of being both "mediated by computing ability" (p. 108). Think about the virtual world objects: they are "essentially code": "The files that code for the virtual world objects are, in most cases, located on the player's computer. However, the player’s avatar cannot use or control the object unless authorized [...] by controllers of the virtual world" (p. 114); "if a player wishes to act on an object in the virtual environment through his avatar, the computing system underlying the virtual world must be able to sense that action and have the virtual world object respond in a dynamic and intelligent manner" (p. 117). Therefore, we have a "good" (the computer file) in the hands of the customer, but which can't be enjoyed without the authorization and collaboration of the provider: exactly like it happens in the IoT world.

It exists a market in the real world for the virtual objects existing in those virtual worlds. The emergence of this market has raised the questions of the existence or not of property rights on those objects (in the financial world, it is said that anything that someone will pay money for is property; and Robert P. MERGES says that "the contours of property rights change over time [...] when economic assets become more valuable": it is in those circumstances that property rights are more tightly specified: see Essay: A Transactional View of Property Rights, p. 4; however, in the legal world people may ask if virtual world objects can be subject to property rights: p. 131), and of the belonging of those property rights (p. 97).

For what concerns the possibility of property rights on virtual world objects, the Locke's labor theory (because of the effort players invest in obtaining those objects), the Bentham's utilitarian theory (recognizing such rights creates the greatest good for the greatest number, given the number of players, the amount of time spent in the virtual world ant the magnitude of money transfers), and the personality theory ("the recognition of property rights helps the self to be realized by protecting human rights such as liberty, identity, and privacy"; and "virtual worlds naturally facilitate the projection of identity into the virtual space through the avatar": p. 137) all justify the existence of property rights (pp. 135-137). So, I can answer my previous question - "If property is transferred but intermediation of the provider is necessary in order to enjoy it, can we consider a transfer of ownership possible (see Il Cloud Computing: alla Ricerca del Diritto Perduto nel Web)?" - analysing the theories justifying the existence of property rights.

Professor Joshua FAIRFIELD also underlines that the rivalrous character of virtual world objects plays for the recognition of property rights: property rights can therefore provide incentives for their productive use (pp. 137-138) (see also Personal Property Servitudes on the Internet of Things, where I comment that software in the IoT world becomes rivalrous, i.e. obtains the same characteristics of the corpora mechanica of the analogical world). However, property right should be allocated not as "horizontal property rights" (which are not per se useful, but which simply cut across vertical rights, therefore leading to a tragedy of the anticommons, because the virtual resources are divide up between to many users), but as "vertical property rights" (which permit the property to be used as a whole) (pp. 138-139). Well, we can say that personal property rights as a privately ordered system create horizontal rights of the provider, which are not useful by themselves, but which simply obstruct the enjoyment of the IoT products by the customer (see Personal Property Servitudes on the Internet of Things, pp. 50-52, where it is said that the choice of how to use a chattel should remain with its [material] possessor, and not with the provider, because the former has better information and the latter has no interest in reaching an optimal result).

If property rights can exist on virtual world objects, it remains the problem to establish whom they belong to: to the provider or to the customer? Dealing with this problem, BOONE highlights the contractual and technological limitations that virtual world controllers establish on players' enjoyment of the virtual world objects: and these restrictions are really similar to the ones imposed by the providers of IoT products to their customers:

  • by contract, they deny players' property rights on virtual world objects, or they alter traditional property rights by establishing restrictions on enjoyment and prohibitions of further transfers (p. 140);
  • they use, in order to do so, an EULA: the assent of the player is given by a simple click of the mouse (no negotiation); the EULA can be modified over time, and player's subsequent logging into the world means that he accepts such modifications (dynamic property rights), and, because such logging is necessary in order to use the object, this acceptance of modifications becomes nearly mandatory (pp. 140-141) (in the IoT world, the same happens because the ToS can change over time, and to accept those changes it is sufficient to access the services: and, because of the fact that - in order to use the good - access to the service is necessary, the sole tool the customer has to refuse the modifications is to cease using the good);
  • technology makes the conclusion of those contracts easy for the controller and devoid of awareness for what concerns the player (p. 141);
  • technology enables provider's remote control of the use of the virtual world object, independently from the fact that the player may have a property right on the object itself: the controller may remove objects from an account or cancel accounts; they may implement practices as "soul-binding" (the object is linked to a single avatar and cannot be transferred; in the IoT world, it happens when an object - e.g. the Google Glass - can be linked to a single account) or "nerfing" (the functional characteristics of a virtual world object are changed when it passes into the hands of avatars; <u> in the IoT world, something similar happens when an object can be transferred from a person to another, but the need to create a new account in order to use it makes the object deprived of all knowledge acquired during the previous utilization; even if, in this case, privacy concerns may justify this attitude) (pp. 141-142).

So, in a virtual world, players' property rights on objects "are determined not by traditional property rules, but by a private system defined by contract and by computer code". The same may happen in the future in the ubiquitous computing world (p. 142).