Abstract: In the rapidly developing digital information age, an increasing number of people are investing significant amounts of money and energy online. Several years ago, China’s first case involving a dispute over virtual property—the “Li Hongchen” case—brought “virtual property” into the public spotlight and sparked extensive discussions among both the general public and the legal community. Currently, the academic community has yet to reach a clear consensus on the precise definition of virtual property. However, it is certain that virtual property represents a new type of asset—objectively existing in cyberspace, possessing intrinsic value, and subject to human control. In particular, network-based virtual property—data resources that not only carry economic value but also possess the nature of property—has already emerged as a novel form of property. Therefore, this article, drawing upon judicial practice, explores the significance of identifying the legal nature of virtual property and establishing its legal protection.

Keywords: virtual property; criminal law attributes; protection pathways

Preface

With the development of the internet economy, disputes over virtual property have become a pressing social issue. Therefore, it is highly necessary to provide legal protection for virtual property. In a broad sense, virtual property refers to digital resources—such as online user accounts, email addresses, online stores, various works and photographs hosted on online platforms, diverse data resources, and virtual currencies—that rely on the internet and possess characteristics of control, value, and utility. In a narrower sense, virtual property specifically refers to a range of gaming resources—including player-created and controlled game characters, associated skills, in-game currency, various pieces of equipment, and even the game accounts themselves—which can give rise to economic interests. Although Article 127 of the newly promulgated Civil Code stipulates: “Where the law provides for the protection of data and virtual property on the internet, such provisions shall apply,” this article does not offer specific definitions regarding the scope of the concept of virtual property or the extent of its protection.

I. Determination of the Legal Nature of Virtual Property

(1) The Theory of Legal Interests

The theory of legal interests primarily holds that “rights must be legally defined.” Since virtual property was initially not explicitly stipulated in legislation, and given its unique economic value and significance, the theory of legal interests came to recognize it as a legal interest in order to protect its interests. However, with the 2017 General Provisions of the Civil Law explicitly defining the nature of these rights, the theory of legal interests ultimately faded away.

(2) The Theory of Intangible Property Rights

The theory of intangible property rights originated in the “Li Hongchen Hongyue Case” of 2003, in which the court held that the intangibility of virtual game items does not preclude their eligibility for legal redress. Scholars who support this view argue that the meaning of intangible property should be interpreted broadly, encompassing not only intellectual property rights explicitly stipulated by law but also any rights possessing intangibility and economic value—thus enabling targeted legal protection. However, due to the lack of standardization and consistency in its conceptual framework, this doctrine was ultimately abandoned by a large number of scholars.

(3) The Intellectual Property Argument

The discussion on intellectual property rights can be divided into two main viewpoints: One holds that the creativity embodied in virtual assets stems from the network operator, since the essence of virtual assets lies in their program code—and items such as in-game equipment and currency, as well as the ongoing maintenance and operation of the game, are all designed and programmed by the operator’s employees. Thus, the intellectual achievements belong to the network operator. The other viewpoint argues that virtual assets owned by game players or third parties—whether they result from upgrading accounts, accumulating gold coins, or being obtained through other forms of labor—are entirely the fruits of the players’ or third parties’ own dedicated efforts and labor. Hence, these intellectual achievements should be attributed to the players or third parties themselves. Regardless of which viewpoint is adopted, both recognize that the creativity inherent in virtual assets falls under the category of intellectual property as an intellectual achievement. However, given the difficulty in establishing the creative nature of virtual assets, there are very few scholars who support this particular theory.

(4) The Theory of Property Rights

Compared with the earlier views, there is now a significantly larger number of supporters of the property rights theory. The characteristics of property rights stem from the right holder’s power of control and exclusive rights over specific objects as conferred by law. With the evolution of the times, the scope of “objects” is no longer limited to tangible items. Virtual property, due to its unique nature—determined by the distinctness of the rights holder’s online account and password—effectively excludes interference by others, thus also possessing the exclusive characteristic of property rights. As for the right of control over virtual property, although the disposal of such property by the rights holder depends on the technology provided by the network operator, under normal circumstances the rights holder can still dispose of virtual property—and thereby engage in certain transactions—simply by using their account and password. Moreover, given the priority of property rights over creditor’s rights, scholars are increasingly inclined to endorse this view.

(5) The Debt Theory

The “creditor-debtor” theory holds that the relationship between internet users and internet operators is one of creditor and debtor, because the user authorization agreements signed between them are viewed from a contractual perspective. By entering into such an agreement with the internet operator, internet users acquire a right to request the operator to provide specific services—for example, gaming-related services—and ultimately obtain a creditor’s right. Since the internet user’s control over virtual property necessarily depends on the technical support provided by the internet operator, such control cannot be considered full-fledged “property rights.” In judicial practice, when virtual property is damaged, the remedy of “returning the original property and removing any interference…”—a typical property-rights protection measure—is rarely applied. Instead, courts tend to hold the operator liable under the “duty of safety assurance” applicable to creditor rights, requiring the operator directly to restore the relevant data.

(6) The Theory of New Property Rights

The new type of property right simultaneously possesses both the legal attributes of “property rights” and “creditor’s rights.” On the one hand, since network users and network operators enter into licensing service contracts, this gives rise to creditor’s rights. On the other hand, because the rights holder maintains control over the password for the network account, this confers upon the rights holder the in rem nature characteristic of property rights. In judicial practice, the protection of virtual property generally does not follow the traditional approach used for property rights. Moreover, in criminal judgments, judges do not typically characterize the theft of virtual property from the perspective of creditor’s rights. As a result, virtual property has acquired a special kind of “independence,” making it a novel type of property right that does not conform to conventional understandings.

II. Specific Legal Protection Paths for Virtual Property in Cyberspace

(1) The Legal Relationship and Protection Between Network Operators and Network Users

The rights and obligations between internet users and internet operators stem from the “End-User Agreement” signed by both parties. This agreement also serves as a crucial prerequisite for the creation of virtual property and plays an essential role in providing legal protection for such property. Although the content of “End-User Agreements” varies somewhat among different internet operators offering various types of virtual property, nearly all of these agreements consist of “standard terms” unilaterally provided by the internet operators. These agreements frequently include clauses such as: “Accounts that remain unused for an extended period will be suspended, and any associated virtual property will be reclaimed without compensation. All transactions involving accounts or related virtual property are prohibited.” Moreover, different types of internet operators—such as social media platforms, e-commerce platforms, and online gaming companies—do not have a clear and uniform determination regarding the ownership of virtual property rights within their respective “End-User Agreements.” The differing attribution of virtual property rights leads to different legal remedies available to users. When virtual property rights belong to the internet operator, if an internet user’s virtual property is damaged, the user can hold the internet operator liable for breach of contract according to the terms of the “End-User Agreement.” If the agreement contains standard terms that “exclude the other party’s essential rights,” the user may also invoke principles such as good faith and fair dealing to compel the internet operator to provide appropriate redress based on its duty to ensure security. On the other hand, when virtual property rights belong to the internet user, in the event of an infringement, the internet operator bears responsibility solely under its duty to ensure security.

(2) Legal relationships involving third-party entities and their protection

When the infringement upon virtual property originates from a third-party entity, the principle of relativity of contracts—according to which agreements between internet users and network operators are binding only on the parties themselves—means that such agreements cannot impose obligations on the third-party entity. In this situation, the nature of the rights associated with the virtual property will determine which party is entitled to claim damages. If the virtual property rights belong to the network operator, the network operator can directly seek compensation for damages from the third-party entity in its own name, while also providing some degree of redress to internet users based on its technological advantages and its obligation to ensure network security. However, this also increases internet users’ reliance on the network operator for protection of their rights; once the network operator fails to actively pursue remedies, internet users may find themselves in a difficult predicament. On the other hand, if the virtual property rights belong to the internet user, the internet user can directly bring a lawsuit against the third-party entity. This implies that the internet user enjoys absolute control and exclusive rights over the virtual property, placing the virtual property rights in a position of absolute property rights.

Conclusion

In summary, virtual property on the internet is intertwined with both cyberspace and the real world; it exists objectively, has a clear source of value and established methods for determining its value, and falls within the category of other property defined in Article 92, Item 4 of the Criminal Law of the People’s Republic of China as private property of citizens. Therefore, such property should be regarded as “property” under criminal law. For criminal acts involving the theft of virtual property on the internet, the crime of theft—rather than the crime of illegally obtaining data from computer information systems—should be applied. Furthermore, account-based virtual property, given its dual characteristics of serving as both a form of property and a means of identifying personal information, should be treated differently depending on the perpetrator’s intent behind the act.

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