The Court of Appeal has handed down a landmark ruling that in-game currency can constitute “property” for the purposes of the Theft Act 1968 (“the Theft Act”), in a ruling that poses interesting questions for the games industry more broadly.

The game

This case concerned an online role-playing game named Old School RuneScape, which typically hosts 100,000 players simultaneously. Players build up in-game wealth in the form of “gold pieces” (“Gold”), the game’s micro-currency, by interacting with a virtual world and completing in-game tasks which include fishing and mining.

Importantly, bonds can also be purchased from the game’s publisher Jagex Ltd (“Jagex”) with real money. These bonds can be redeemed for in-game Gold. This essentially provides a way for a player to simply purchase the game’s micro-currency with real money. 

Additionally, whilst Jagex’s Terms and Conditions and End User Licence Agreements (“the T&Cs”) expressly forbid selling Gold for real money, a thriving secondary market exists regardless. Players negotiate prices for Gold via third-party websites and transfer Gold using in-game mechanics whilst payment is made offline through fiat currency or cryptocurrency. 

The case

The respondent was a content developer at Jagex. He leveraged his role at the company and hacked into 68 players’ password-protected accounts, stripping them of Gold with a real-world trading value of £543,123. 

The respondent faced a five-count indictment, with Count 2 charging theft under section 1(1) of the Theft Act. 

A person guilty of Theft under the Theft Act must:

“Dishonestly [appropriate] property belonging to another with the intention of permanently depriving the other of it.”

Thus, the central question was whether Gold constituted “property” for the purposes of the Theft Act.

The first instance decision

The Crown Court judge held that the stolen Gold was not “property” for the purposes of the Theft Act.

The starting point was the decision in National Provincial Bank v Ainsworth [1965], which requires property to:

• be definable;
• be identifiable by third parties;
• be capable in its nature of being assumed by third parties; and
• have a degree of permanence or stability.

In addition, the property must:

• be rivalrous (meaning that it should be an item that when one person uses/possesses it necessarily prejudices the ability of another to use/possess the item); and
• not amount to “pure information”. 

The Gold at first instance was found to satisfy the four Ainsworth criteria, however, the Crown Court judge held that Gold was not sufficiently rivalrous. His reasoning was that one Gold piece is the same as any other and their supply is infinite, which means that one player holding wealth does not prevent new players accumulating wealth without taking this wealth from any other player. He also considered that the infinite supply of Gold caused it to resemble “pure information” rather than property.

Court of Appeal decision 

The Court of Appeal reversed the Crown Court decision. Its reasoning fell into four key areas:

1. Gold pieces are a distinct asset, not merely coded data or “pure information”

The Court reiterated that physical existence is not a requirement for property in any event. However, they stated that even though Gold exists in a virtual world, it also has a real-world existence in the form of its on-screen appearance and use. Additionally, as mentioned above it is regularly bought and sold offline in a real-world market for real money. The Court drew an analogy to cryptocurrencies which are built entirely on a public code and capable of constituting property regardless. Just as is the case with Bitcoin, the Court held that Gold is an asset distinct from simply the code that creates it. The Court held it would be incorrect to deem the “pure information” forming the Gold, namely the code itself, as the full asset. In support of this, the Court observed that cryptocurrency code copied outside the system that gives it value would carry no value whatsoever, which indicates that the asset must have intrinsic value beyond the code alone. The Court found this rationale to apply equally to Gold.

2. Gold pieces are rivalrous

The Court firmly rejected the first instance judge’s reasoning on this point: 

• The Law Commission defines something as rivalrous if its use or consumption by one person necessarily prejudices the ability of others to use or consume it.
• The Court was of the opinion that the Gold satisfied this test on the following basis: if consumed in-game by player A, it ceases to exist; if transferred to player B only player B can use it.
• The Court also cited the use of usernames and password protection on accounts, which are design features to ensure that Gold is used exclusively by its owner.
• The Court was not persuaded by the first instance judge's conclusion that the indistinguishability of individual units of Gold from one another, combined with their infinite supply, negated their rivalrousness. By way of illustration, the Court noted that paper clips exist in unlimited supply and are mutually indistinguishable and yet would ordinarily be considered rivalrous goods.
• The Court dismissed the respondent's argument that the rivalrousness of Gold was affected by the T&Cs' provision permitting Jagex to withdraw it from any player's account. The Court used the example of a traditional coin which remains property notwithstanding the Bank of England’s ability to withdraw it from circulation.

3. Terms and Conditions do not necessarily override criminal law 

The T&Cs described the Gold as not a player’s own private property but as “a measurement of the extent of [their] licence” in the game. The court was unpersuaded that this settled the position:

• Even though contractual documents may preclude players from having enforceable civil law property rights, this on its own is not determinative as to whether Gold constitutes property for the purposes of the Theft Act.
• The Court drew on the position regarding illegally held drugs: Class A drugs are capable of being stolen under the Theft Act notwithstanding that no civil law property rights in them are recognised. The Court highlighted the policy reason behind this: namely that criminal law is concerned with keeping the peace and not vindicating civil property rights. The Court held that the same should be the case where the restriction on transfer of an asset is contractual rather than criminal. Even though a player may not have a civil property right to an asset, that asset could still be recognised as property capable of being stolen for the purposes of the Theft Act. 

In addition, the fact that Jagex prohibited the real-world trading of Gold did not prevent a thriving secondary market from existing, the Court treated that market as legally relevant to the real-world value of the Gold regardless of the prohibition.

4. The “widest ambit” principle 

The Court relied on the Privy Council’s decision in Attorney General of Hong Kong v Nai-Keung [1987], which confirmed that the definition of property in the context of the Theft Act should be read in a way which gives it the “widest possible ambit”. 

The Court also referenced the reasoning in this decision which indicated that the term property in this context should apply to any item “freely bought and sold” which “may clearly be the subject of dishonest dealing (i.e. being stolen) which deprives the owner of the benefit it confers”. The Court highlighted that the prohibition on the real-world trading of Gold did not stop Gold being an item that could be “freely bought and sold”. Hence, Gold fulfilled these criteria.

Scope of the decision

One important caveat: the Court emphasised that whether a digital asset constitutes property under the Theft Act requires a case-by-case assessment of its individual characteristics. 

The decision’s impact and practical steps to be taken

As well as emphasising that the test under the Theft Act involves a case-by-case assessment of the individual characteristics of the virtual currency in question, it should be stressed that here the Court was only concerned with the meaning of ‘property’ within the scope of the Theft Act. Whilst we would therefore hesitate to draw parallels with other areas of law where an analogous assessment is required (e.g. under gambling and consumer protection regulation), it will be interesting to see if this decision emboldens regulators in those areas to take a more aggressive approach. For example, whilst there may be good arguments for distinguishing the position in this case, could the Gambling Commission refer to this case in challenging the long-held view that virtual in-game currency that cannot be “cashed out” (and only operates within the “closed loop” of the in-game economy) is unlikely to constitute “money or money’s worth” under the Gambling Act 2005, which in turn means it cannot constitute a “bet”, “stake” or “prize” under gambling regulation? Of note here is that the decision considered the virtual currency in this context to carry real-world value despite the T&Cs expressly prohibiting real-world trading; and the Court also considered the active secondary market for the currency as part of its analysis.

With that in mind, game developers and publishers should:

• review their in-game mechanics regularly and be mindful of player ability to buy and sell micro-currency on the game itself or via external sources for real-world currency. Publishers of games which can be played by individuals under the age of 18 should be particularly mindful of this issue;
• conduct real-market audits and assess whether a secondary market for their in-game items exists. Where such markets are found to exist, publishers should treat this as a matter of potential legal significance and consider options for reducing the scale of those secondary markets;
• conduct regular reviews of their Terms and Conditions and EULAs and seek to limit the ability to trade micro-currency as much as possible;
• take into account that the Court cited Law Commission guidance which indicated that decisions on whether virtual currency is property should be taken on a case-by-case basis. Publishers should look to put themselves in the best possible position when taking the above steps; and
• ensure appropriate staff training. This decision makes clear that criminal liability for employees handling in-game accounts is now a real and not merely a theoretical risk.

If you have any questions or queries concerning this topic or any other gaming related matters, please do not hesitate to contact us.