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Revista de Derecho. Vol. 10 (II) (2021), pp. 1-26.

ISSN: 1390-440X — eISSN: 1390-7794


Recepción: 31-5-2021. Aceptación: 28-6-2021. Publicación electrónica: 26-7-2021
https://doi.org/10.31207/ih.v11i2.283

LEGAL NATURE AND INHERITANCE OF VIRTUAL


PROPERTY IN UKRAINE AND THE WORLD: CURRENT
STATUS, PROBLEMS, PROSPECTS
NATURALEZA JURÍDICA Y HERENCIA DE LA PROPIEDAD VIRTUAL EN UCRANIA Y EL MUNDO:
SITUACIÓN ACTUAL, PROBLEMAS, PERSPECTIVAS

Iryna Davydova*
Larysa Didenko**
Viktoriya Tomina***

Abstract: In recent years, there has been a growing interest in such a


phenomenon as a digital inheritance. Sooner or later, users of social
networks or online games begin to think about the status of their virtual
assets, as they become valuable since users have spent a lot of time to earn
them. However, legislation on digital inheritance remains either imperfect
or does not answer the question of what happens to digital property after
one’s death. The study aimed to describe the situation in the field of digital
inheritance through the concepts of virtual property and IT objects. We used
systemic, formal-legal, and hermeneutic methods to describe the state of the
art in the area of virtual property and digital inheritance through the lens of
jurisprudence. The found results suggest that digital inheritance is a growing
problem due to imperfect or absent legislation with simultaneously

*
Doctor of Legal Science, Professor of Civil Law, Department of National University
“Odesa Law Academy” (Odesa, Ukraine). http://orcid.org/0000-0001-5622-671X. divo-
ira@ukr.net
**
Doctor of Legal Science, Professor at Department of Civil and Commercial Law and
Procedure of the International Humanities University (Odesa, Ukraine).
https://orcid.org/0000-0002-6806-5017. t7959595@gmail.com
***
Ph. D., Associate Professor at Department of Administrative Activities of the Police of
the Faculty of Training for Preventive Activities of the Odessa State University of Internal
Affairs (Odesa, Ukraine). https://orcid.org/0000-0003-1235-1783. medea-5@ukr.net
vol. 10 (II) (2021), p. 1
Iryna Davydova, Larysa Didenko & Viktoriya Tomina

increasing role and importance of the virtual world and digital assets in
everyday life. Accordingly, we have found that court decisions set the tone
for the development of the legislative process in this field, but at the moment,
we are only at the beginning of the creation of solid and harmonized
legislation towards digital inheritance. It is also determined that the concept
of virtual property does not contradict the general principles of civil law, so
it can be applied in the context of digital inheritance.
Keywords: Virtual Property, IT Objects, Digital Inheritance, Social
Networks, Online Games

Resumen: Durante los últimos años ha crecido el interés en la herencia


digital. Tarde o temprano, los usuarios de redes sociales o juegos en línea
comienzan a pensar en el estado de sus activos virtuales, sobre todo cuando
adquieren un gran valor luego de que los usuarios hayan dedicado mucho
tiempo a ganarlos. Sin embargo, la legislación sobre herencia digital sigue
siendo imperfecta o no responde a la pregunta de qué sucede con la
propiedad digital después de la muerte. El estudio tuvo como objetivo
describir la situación en el campo de la herencia digital a través de los
conceptos de propiedad virtual y objetos informáticos. En particular, este
estudio utiliza métodos sistémicos, formal-legales y hermenéuticos para
describir el estado del arte en el área de la propiedad virtual y la herencia
digital a través de la lente de la jurisprudencia. Los resultados encontrados
sugieren que la herencia digital es un problema creciente debido a una
legislación imperfecta o ausente, que no concuerda con el papel y la
importancia del actual mundo virtual y de los activos digitales ahí
generados. Se ha constatado que las decisiones judiciales marcan la pauta
para el desarrollo del proceso legislativo en este campo, aunque por el
momento solo estamos en el comienzo de la creación de una legislación
sólida y armonizada hacia la herencia digital. También se determina que el
concepto de propiedad virtual no contradice los principios generales del
derecho civil, que se pueden aplicar en el contexto de la herencia digital.
Palabras clave: Propiedad virtual, objetos de tecnologías de la
información, patrimonio digital, redes sociales, juegos en línea

Summary. I. Introduction. II. Methodology. III. Analysis of recent research. Iv.


Results and Discussion. III.1. Legal Nature and Inheritance of IT Objects and
Virtual Property. III.2. National Legislation of Ukraine on Virtual Property and
Digital Inheritance. III.3. International Experience of Legal Regulation of Digital
Inheritance and Virtual Property. V. Conclusions. References.

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Legal Nature and Inheritance of Virtual Property in Ukraine and the World…

I. INTRODUCTION
The information sphere of human life is currently the subject of serious
scientific research (Brikše, 2003; Buder & Hesse, 2017; Skoryk, 2018). In
this space, we can distinguish a specific product—information, that is
becoming increasingly important, so the information environment is on a par
with the social, environmental, etc. (Durante, 2017; Greif, 2017). In turn,
researchers name, among others, the digital environment, which gives new
meaning to intellectual property rights (Savych, 2015). In addition, the
digital environment in the context of intellectual property is mentioned in
the Recommendations for Internet Service Providers approved by the State
Intellectual Property Service of Ukraine. At the same time, the digital policy
has become a common direction of socio-economic development for
countries such as Germany, France, and Sweden (Sokolova, 2018; Levytska,
2019).
Digital technology has become an integral part of our life. Of the 7.75
billion people living on Earth, 5.19 billion are smartphone users (Deyan,
2020). In 2020, the share of unique Internet users amounted to 4.2 billion
people. We spend an average of 3 hours and 40 minutes a day on online
activity. The average rate of any interactions with a smartphone reaches
2617 times a day, which for active users is 5427 times (Henderson, 2020).
On average, 28 minutes a day are spent by users on the social network
Instagram, according to data for 2020 (Deyan, 2020). The total number of
users of this social network exceeded 1 billion in 2020. The use of social
networks also varies by region of the world. South Americans spend the
most time online—3 hours 29 minutes a day. Next are the Africans, the
population of North America, Asia, and Europe, whose residents spend an
average of 1 hour and 53 minutes on social networks (Whatagraph, 2020).
And even though there are suspicions that such trends will intensify (for
example, concerning the so-called Generation Z (Gen Z), since they
sometimes criticize and leave social networks) (Broadband Search, n.d.;
Origin, Hill Holliday, n.d.), at the moment, the use of digital communication
technologies is at its peak (Broadband Search, n.d.; Deyan, 2020;
Henderson, 2020; Metev, 2021).
Technological development continues its victorious course in the field
of social communications. According to Facebook CEO Mark Zuckerberg,
VR and AR (virtual and augmented reality) technologies are designed to be
at the forefront of progress this decade (Feuer, 2021). It is known, that

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Iryna Davydova, Larysa Didenko & Viktoriya Tomina

currently one-fifth of Facebook employees are actively involved in the


development of these technologies (Robertson, 2021).
Selling goods has become the principal business model of virtual
worlds in online games. This provides a connection between the analog and
digital worlds (Abramovitch, 2009).
The revenue of the online gaming industry is growing (Jones, 2020).
In 2019, the volume of online games on the mobile platform was 45% of the
total, and their total revenue was 68.5 billion dollars. The total revenue of
the online gaming industry, which also consists of games for PCs and
consoles, in 2019 amounted to 152.1 billion dollars. Experts expect that it
will grow to 196 billion dollars in 2022. The eSports segment is also growing
(Reyes, 2021). Its revenues grow to 1.5 billion dollars in 2020. Such trends
are ensured by the popularization of the culture of online gaming and a high
degree of inclusiveness of players because it is possible to join the game
with anyone from anywhere in the world, having sufficient novelty
smartphones and access to high-speed Internet.
At the time of writing, there is a real boom in digital art related to the
sale of virtual lots at auctions. Buyers of such items can place them in a
virtual gallery or sell them if their price rises. Blockchain technology clearly
establishes a chain of ownership that eliminates the counterfeiting of such
objects and helps to establish the original owner (Finzer, 2020). It is called
a non-fungible token (NFT), i.e., a representative virtual object (Clark,
2021), or digital certificates based on blockchain technology, which
correspond to digital objects of virtual property. For example, the online
platform Valuables allows users to obtain certificates of ownership of digital
objects. Their purchase is made possible by an application that is
downloaded for the browser and is analogous to the digital wallet for the
cryptocurrency Ethereum—thus buying and selling (Fairs, 2020; Finzer,
2020). This technology has already been used by some artists to make a
profit. For example, at Nifty Gateway, digital art author Alexis
Christodoulou sold his virtual design for 340,000 dollars, and Beeple’s
digital painting “Everydays: The First 5000 Days”, which is nothing more
than a JPEG image, was sold at Christie’s. for a record 69 million dollars
(Hahn, 2021cd). You can also add the release of fully digital shoes, which
can be “worn” only online, using extensions (applications) of virtual or
augmented reality (VR, AR). For example, such campaigns were recently
conducted by the Gucci and Buffalo London brands (Hahn, 2021ae). It is
known that on March 22, 2021, a digital house was sold for the first time,
which can only exist in VR. The author was an artist from Toronto named
Krista Kim, and the price of the lot was 512,000 dollars (Parkes, 2021). Prior
to that, Argentine Andres Reisinger sold 10 virtual hardware items at an
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Legal Nature and Inheritance of Virtual Property in Ukraine and the World…

online auction for 450,000 dollars (Hahn, 2021b). NFT’s Gold Rush has not
escaped the realm of entertainment and has even touched tweets, which can
now also be sold for digital currency (Knibbs, 2021). In particular, one of
the founders of the social network Twitter did it for 2.9 million dollars, and
the singer Grimes sold digital copies of her music and videos for 6 million
dollars (Kastrenakes, 2021; Peters, 2021). However, it cannot be said that
this phenomenon appeared only in 2021. For example, two years ago, the
virtual dress Iridescence of the digital fashion house The Fabricant was sold
at auction for 9,500 dollars (Fairs, 2020). Consider, from another point of
view, the problem facing us on the scale of democratic institutions,
mechanisms of checks and balances. As multinational companies that own
social networks accumulate information about their users, it can be said that
they accumulate more power in their hands because the information
provided by users has economic value (Zimmer, 2008; Bauman & Lyon,
2012; Ball et al., 2012). But its value goes beyond mere benefit as it can be
intangible. We summarize that by becoming a user of a particular social
network, users consciously provide access to their data since they agree to
the terms of use of the service and their activity is implicit concerning the
terms of the contract of use (Oosthuyzen, 2012). Could this be a sufficient
justification for the accumulation of power in the hands of IT giants? A
positive answer to this question can be assumed only if the contract does not
find contradictory clauses that are contrary to the principles on which the
law is based. In this case, the powers of the judiciary include reviewing the
terms of the contract, and, in the future, the parliament will be obliged to
review the policy towards social networks, if the conditions of their use may
contradict the general principles of law. This is a desirable regulatory
mechanism rather than an actual one, although parliamentary hearings on
Google and Facebook have taken place in the US Congress (Canales, 2021),
and there is constant talk of “shredding” these corporations (Danylenko,
n.d.; Galloway, 2017; Moore & Tambini, 2018). In their conditions of use
of the social network, they state that they obey the law, leaving democratic
institutions the right to make decisions about their future.
Thus, it can be predicted that in the near future (during this or the next
decade), the question of the legal status of IT objects will become acute. The
following factors can be cited to substantiate this thesis. First, it is related to
the process of innovation in the field of VR and AR. This will be a
prerequisite for considering the legal status of virtual objects from a legal
point of view. Second, the commercialization of the IT-sector, namely VR
and AR technology products, such as Facebook or Google, will only increase
the urgency of the problem, forcing it to be resolved legally.

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Iryna Davydova, Larysa Didenko & Viktoriya Tomina

Thus, for jurisprudence, the scope of the above facts is a question that
can be formulated as follows: what is the legal status of these virtual objects,
what rights and obligations will arise, for example, in their purchase and
sale, and in general: what model of legal regulation is suitable or may be
created in the future to regulate the field of virtual reality and so-called IT
objects (digital objects, virtual objects, intangible assets). In the future, there
is also the issue of their inheritance, which is still insufficiently regulated in
the laws of many countries. All this puts before legal science the task of
responding to the challenges of the future, which is already on the threshold.

II. METHODOLOGY
The application of the systemic method made it possible to link all the
facts and consider them together as a systemic problem of digital
inheritance, which is present as part of an array of other civil law problems.
We utilized a systemic method to demonstrate that digital inheritance is not
an isolated issue but also related to ethical problems, privacy issues, civil
law, inheritance law, and human rights in general. With the help of the
systemic method, we showed the contact of such areas of law as property
rights, intellectual property rights, and what place virtual property occupies
in this system. Additionally, using this method, it was demonstrated how
inheritance law and digital inheritance are interconnected, and what legal
norms are applicable for digital inheritance. For example, a systematic
review of property rights in Ukraine shows that digital objects can be subject
to the legal regime of property since they fit into the concept of the property
despite their intangible existence. Another example of systemic method
application is the description of the effect the judicial practice has on the
inheritance law, particularly in the USA and Germany.
Further, the formal-legal method was implemented to characterize the
rules of law from a legislative point of view. This is especially relevant in
the sections on Ukrainian and international examples towards digital
inheritance.
The hermeneutic method was used to interpret the decisions of case
law and to demonstrate their future significance. For instance, it occurs in
the section on international experience regarding the decision of the German
federal court. We also used a hermeneutic method in the introduction to
demonstrate how changes in IT and virtual property affect our understanding
of digital inheritance. Consequently, we interpreted data from various
spheres of human life, for example, concerning online auctions that conduct

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Legal Nature and Inheritance of Virtual Property in Ukraine and the World…

sales in cryptocurrency, the emerging market for online games, and even
data from the eSports field.
Besides, the method of analysis was used in the decomposition of the
concept into its main features. For example, it is applied to perform a
structural analysis of the concept of virtual property. It was essential for us
to understand what the main features of this concept are, and which are
additional, concomitant, and optional. Finally, the results are evaluated
obtained synthetically.

III. ANALYSIS OF RECENT RESEARCH


The history of the study of the concept of virtual property can be
explored by considering the experience of Castronova (2001). In this paper,
the author drew attention to online games and domestic currency, which (in
one of the games) exceeded the value of real foreign currencies. Nelson
(2009) later found that in the famous game World of Warcraft, the game
account cost 717 dollars (as of the time he wrote his study), which drew
attention to further developments in this area since the economic value of
virtual worlds.
Fairfield (2005) was one of the first to state that the separation of legal
regimes of virtual and intellectual property is necessary. The author notes
that much of what we call virtual is created in the likeness of the real world.
Therefore, the researcher concludes, similar legal instruments of regulation
should be applied. Since, in the real world, there are legal regimes of
ownership (for example, property rights) and intellectual property rights, the
same scheme should exist for virtual worlds. The intellectual property rights
to the program code remains with the developer.
In his article, Nelson (2009) opposed the extension of users’ rights to
virtual world objects. He noted that the development of the final product is
a complex technological process that requires significant resources, time,
and investment, so restricting the rights of content owners in this way would
be unfair.
In Gong’s study (2011), the virtual property appears as a category that
includes intellectual property between avatars, domain names, etc. The
author thus refutes the view of their distinction as two different categories
in the context of our study.
Cifrino (2014), in his study, advocates the solution of problems in the
field of virtual worlds based on contract law. The author notes that
modernized regulation based on the End User License Agreement (EULA)
should fairly reflect the balance of interests between users and developers.
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Thus, he notes, the unilaterality of licensing agreements is overcome, which


otherwise contributes to the monopoly of developers. The author criticizes
the idea of extending ownership to virtual worlds, noting that none of the
doctrinal approaches to the concept of property such as the Lockean theory of
labor, utilitarianism, etc. cannot fully reflect the specifics of regulating virtual
worlds, therefore, only EULA-based contract law regulation can do that.
Nekit (2019) explored the civil law nature of the virtual property. In
particular, the legal nature and content of virtual property rights were
described, according to which it is determined that it is the right of ownership
of a disembodied thing or an intangible object, therefore, in the future it
should be subject to the regime of property rights. The possibility of using
virtual property in the legislation of Ukraine, as well as international
experience in this context, were also analyzed.
Alina (2020) described the inheritance of IT objects in her thesis.
According to her definition, traditional legal regimes cannot be applied to IT
objects. The definition of this concept is given through a set of features,
which include: (i) predominantly intangible form of existence; (ii) creation
with the help of information technologies; and (iii) the exercise of rights to
them is carried out by subjects of civil law.
IT objects do not need analogs in reality and can be reproduced only
with the help of appropriate technical means.
For the researcher, the fundamental demarcation between IT objects
and virtual objects is that the former are part of the so-called “IT
ecosystems” that include physical things such as digital media, such as
computers, laptops, tablets, smartphones, and more. At the same time,
virtual objects have no and do not need analogues in physical reality, they
are a value, they exist as a part of the virtual space, which is accessed through
software (existence through computer code). A similar difference between
IT objects and virtual property can be found in thesis of Palka (2017). Both
scholars agree that the object of virtual property is a virtual asset.

IV. RESULTS AND DISCUSSION


III.1. Legal Nature and Inheritance of IT Objects and Virtual Property
The main problem with the inheritance of digital property is the lack
of its definition (Conway & Grattan, 2017). To analyze whether IT objects
as digital “things” are ephemeral and volatile, it is necessary to refer to the
civil law doctrine, which does not deny the plurality of civil rights objects
(Alina, 2020). An approach to the definition of the object of subjective law,
which is carried out through its definition as “good”, has been used.
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Legal Nature and Inheritance of Virtual Property in Ukraine and the World…

Therefore, the objects of law are material and intangible goods, in respect of
which there are relations between the subjects of civil law. Thus, the subject
of civil law regulation is formed. For example, according to Art. 170 of the
Civil Code of Ukraine, the objects of civil rights, in addition to things, money,
and securities, are also information and other tangible and intangible goods.
Alina (2020) suggests that there is a point of view according to which
virtual objects are special immaterial objects which are an intermediate link
between the objects of intellectual property and classical objects of property
rights (Duranske, 2008). Consequently, they do not belong to the latter as
they exist only virtually likewise they do not belong to the former because
in some cases they are not the subject of the creative work of the user (ibid).
As arguments in favor of their position, proponents of extending property rights
to virtual objects refer to the fact that such objects can be acquired and alienated
and have a clear consumer value (Hunt, 2008; Lastowka & Hunter, 2017).
Since both legal regimes of intellectual property and property rights to
disembodied things can be extended to virtual property it seems appropriate
to investigate this problem independently at first as long as there is no
consensus among both legislators and scholars. For instance, when a virtual
property is not the subject of a user’s creative work (for example, a Bitcoin),
it is not subject to intellectual property rights. The need to allocate virtual
property in a separate class of research is due primarily to the format of its
existence, which is an immaterial existence in the digital (virtual) space.
The legal nature of virtual objects is different from the legal nature of
things, due to the immateriality (incorporeality) of such objects and the
peculiarities of the exercise of civil rights against them (Alina, 2020).
Nowadays, virtual property means not only in-game objects and avatars, but
also domain names, URLs, e-books, tickets, email accounts, social media
accounts, websites, chats, bank accounts, cryptocurrencies, etc. (Fairfield,
2005; Palka, 2017). Although, it should be noted that if we are considering
digital objects in the context of intellectual property rights then some sort of
things cannot be inherited. For instance, according to Art. 423.4 of the Civil
Code of Ukraine and Art. 14.2 of the Law of Ukraine “On Copyright and
Related Rights” personal non-property rights of the author may not be
transferred (alienated) to other persons. In addition, Art. 29 of the exact Law
states that personal intangible rights of the author cannot be inherited. The
heirs have the right to protect the authorship of the work and to oppose the
distortion or other alteration of the work as well as any other encroachment
on the work that may damage the honor and reputation of the author. The
examples for that may be objects of digital art, e-books, websites, i.e. the
results of author’s creativity.

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Iryna Davydova, Larysa Didenko & Viktoriya Tomina

For example, according to Art. 8 of the Civil Code of Ukraine, civil


relations not regulated by this Code are subject to regulation by analogy of
law. Alina (2020) notes that the presence of such objects of civil law as
honor, dignity, business reputation, information, other intangible goods
(intangible rights) indicates the heterogeneity of the system of objects of
civil law. This is a prerequisite for the allocation of such a class as virtual
property. Simultaneously, the reduction of virtual property to goods or
services, things, or information is a significant narrowing of this category.
Virtual property in this context is, first, the elements of virtual space that do
not have a similar material expression; secondly, they are of a certain value
(aesthetic, cultural, informational, economic, etc.); thirdly, integrated into
the corresponding virtual system, which is accessed by technical means
using information technology. The combination of these features is the
concept of virtual property in its legal scientific interpretation.
At the very moment, there is no single point of view in the scientific
community regarding the ratio of virtual and intellectual property. It is noted
that the legal regime of intellectual property in the context of digital objects
tends to be confusing, so some difficulties for both lawyers and scholars are
represented by the adequate demarcation between intellectual property and
virtual property (Stephens, 2002; Nelmark, 2004; Hurter, 2009). For
instance, concerning End User License Agreements there is a risk of
disproportionate restriction of the user’s virtual property rights by the
content developers. An example is a prohibition to dispose of any game
content in any form. One can argue that nothing is violated in this case as
far as this is a contractual relationship, which means that the freedom of
contract must be respected. The parties signed an agreement using the right
to make an independent transaction, to choose conditions and a counterparty,
which means that users themselves have signed these conditions and must
comply with them. Therefore, content developers have all rights to put such
restrictions in the agreement since they created the game and all in-game
objects. Hence, the virtual property can be owned by the players only as of
the right of paid or free use. However, there is another side to this story.
Beyond the freedom of contract the question remains unresolved: are such
terms of the agreement fair for both parties? We discuss this issue in more
detail below.
To distinguish between virtual and intellectual property, a
competitiveness criterion is introduced (Fairfield, 2005; Blazer, 2006),
which refers to access to a property at a particular point in time. This concept
is used in opposition to exclusive intellectual property rights. A typical
example of the competitiveness of virtual property is access to a gaming
account, which can be accessed by only one person, and all other people who
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Legal Nature and Inheritance of Virtual Property in Ukraine and the World…

try to enter it will be blocked. Thus, a gaming account as a virtual property


is competitive in this sense, as only one person has access. In contrast, the
song in MP3 format can be listened to by many people. An example is music
streaming services such as Apple Music, Spotify, YouTube Music, Deezer,
etc. In this case, one song can be listened to by a lot of people simultaneously
thereby gaining auditions and popularity, but the exclusive rights to it are
protected by law.
In this context, Abramovitch (2009) proposes to solve the problem by
distinguishing between three levels of virtual ownership. According to this
concept, the first level is protected by intellectual property rights, because
computer code, which is the nature of virtual reality, falls under its
protection. On the second level, there are virtual analogues of real-world
objects, for example, game goods (swords, spears, rings, balls, vehicles,
etc.), tokens (valuable subjects), construction objects (houses, buildings,
infrastructure), etc. On the third level, there are the so-called hybrids, which
have their expression simultaneously in real and digital form. These can be
virtual books, the content of which is the object of intellectual property
rights, and the original is a physical thing that exists in reality; designer
clothes that have a physical original and their virtual version. Thus,
according to this concept of three levels of virtual ownership, the developer
retains the rights to the created object as the object created its content,
software, and the object of the virtual property is passed to the subject of
ownership. Hence, a similar distinction is made between the right of (virtual)
ownership (of disembodied things) and the right of intellectual property, as
in the traditional concept of ownership between the right of ownership of
material objects and the right of intellectual property.
The game developers can appeal to the fact that all in-game items are
provided to the player based on the following principles:
(i) on a paid or free basis;
(ii) they are provided for use, i.e. developers reserve the right of
ownership to these objects, because: a) they are the developers of the
software based on which the “reality” of the game functions; thereby, b)
everything in the game is subject to and belongs to their discretion, and the
right to dispose of the in-game object or character remains with them;
(ii) prohibition of access of third parties to the game account, which as
a result of the paid receipt of the right to use was provided with game items
or characters based on the contract of sale, the rules of the game, i.e. End
User License Agreement.
The position of content owners is clear in this situation. They do not
want the game items or characters to be passed from hand to hand on a paid
basis while they have no benefit from these operations. On the other hand,
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Iryna Davydova, Larysa Didenko & Viktoriya Tomina

the ban on third-party access to the game account can be traced to the
concern for the security of personal data of players, which is more of an
advantage for them because by and large in addition to reputational losses
the developer does not care from whom to receive money for game content
(objects or characters) (Fairfield, 2005). In what position do players find
themselves if they only receive game content for use on a paid basis? It turns
out that according to the rules of the game which are set by the developer
that players cannot transfer their account for use to third parties. They can’t
dispose of game content to third parties, although it still happens unofficially
(Glasser, 2010; Lin & Sun, 2011; Felder, 2012; Lee et al., 2018).
Consequently, it is possible to trace the conflict of interests between game
developers and players, which is to respect the intellectual property rights
and mainly economic interests of the developer on the one hand and the
interests of players who want to dispose of the game virtual property
received on a paid basis and transfer it for use to other persons.
If we take a step forward and move into the general theoretical sphere,
in this context, we can trace the worldview conflict between developers and
players. Its main features can be formulated as a confrontation between
freedom of contract and personal non-property rights. The argument on the
part of game developers here will be that the players voluntarily agreed to
the terms of use. Since no one forced them to download and participate in
the game, it is their own choice, for which, as well as for their actions in the
game space, they are responsible. The same applies to the use of game
content on a paid basis. Instead, from the point of view of players, their stay
in the game provides economic benefits to the developer—there is a certain
symbiosis. In addition, the time spent on the game accumulates in tangible
and intangible significance for players, becoming something personal. Legal
logic tells us that the right to use as a type of intangible asset should be
inherited1. For example, in case of the death of a player, his heirs have the
right to access his account and at least use his virtual gaming property, as
the right to use is part of the inheritance. As for the disposal of virtual gaming
property and the conflict of interest that arises, we can offer the following
algorithm. Its idea is that after buying a particular gaming attribute or other
virtual property, the seller (for example, an online games-content developer)
receives a percentage of the alienation of virtual property to third parties
from the original buyer. This algorithm is already used in NFT-sales, where
the author receives a percentage of the alienation from each resale of a copy.
NFTs are sold primarily for Ethereum cryptocurrency on decentralized
exchanges (Finzer, 2020). This resolves conflicts of interest and can

1
As for the type of an intellectual property right reputation is an exception for this.
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overcome the monopoly of the intellectual property developer in the


presence of the virtual property.
While having multiple digital copies is an advantage of virtual
ownership, it is not always possible to have these copies. In the absence of
digital copies of the virtual property object, in case of damage and loss of
the information carrier, for example, destruction or loss of a hard disk, there
is a risk of irrecoverable data loss. You may also want to preserve the digital
object for as long as you have access to it if it is of value to you. NFTs deal
precisely with such cases (for example, saving collectibles, in-game items,
cards, or digital art as a unique digital object).
The accumulation of the value of the “goods” of the virtual property
leads to the fact that there is a need to pass them on to the next generation.
Furthermore, the procedure of registration of the last will of the person for
his life concerning his virtual property acquires features. All this is a
promising area of research, as it aims to address current and future issues
(Alina, 2020).
The factors that affect the speed of proper legislation development on
the inheritance of IT objects and virtual property include:
(i) The dynamics of their existence. Since IT objects arise and spread
very quickly, as well as expanding the scope of their application while
modifying the originals, they also disappear quickly or are replaced by new
IT objects (e.g., creating digital images, or turnover of different types of
cryptocurrencies). This has a significant impact on the legislative function
in this area, which means that state participation is minimal when it comes
to the national system of civil law regulation of social relations in the field
of IT objects (Alina, 2020).
(ii) Impersonality of the use and possession of individual IT objects.
When searching for digital assets, a notary may face problems with the
anonymity and confidentiality of their ownership. For example, it is known
that the testator owned a digital wallet with a large amount of
cryptocurrency. But it is impossible to identify such a wallet if the testator
did not provide the keys to it. Thus, the loss of such a wallet by almost 100%
means the irreversible loss of assets. Added to this is the general anonymity
of being on the Internet, meaning the challenge of establishing a real person
by nickname or account on social media. Anonymity decreases only when
persons directly claim their rights to digital assets. For example, when they
undergo an account verification procedure or if they want to transfer
cryptocurrency in cash through a banking institution. In this case, they need
to identify and verify themselves.
(iii) Unconventional ways of monetizing individual IT objects and
uncertainty of their present and potential value. A proper example of this is
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cryptocurrency and Bitсoin as its main representation. Initially, it was an


unremarkable innovation, but now Bitcoin holders are equated with the
world’s wealthy (Böhme et al., 2015). The point is that there is an ambiguity
of the long-term result of the digitalization of assets at the moment
(Urquhart, 2016; Nadarajah & Chu, 2017). It puts the legislator in an
awkward position where digitalization processes are in full swing, gaining
momentum, and the legislative framework does not react to this in any way.
That is a discrepancy between the actual state of affairs (unregulated sphere
of life) and the desire to regulate it. So far, by and large, we are in limbo,
and that is the case for virtual property and digital inheritance.
One way or another, virtual ownership cannot exist outside of digital
platforms. In this case, an essential aspect for the transfer of at least the right
to use such an asset is the transfer of access keys to the account—whether
gaming or social network. However, it is not possible to do so by law, as
there is no legislative regulation. What then remains to be done?
The first option is beyond legal, informal, and is that a person notifies
in the usual way, for example, orally, in writing or electronically, another
person he has chosen as an heir, the keys to access his account in the game
or social network (this option also applies to e-mail, etc.). In this case, the
main task is to transfer to another person confidential information about the
user’s login and password. Login name and password obviously are
protected by a well-known right, the right to privacy. But digital property
can include the right to change the password and other things. What is the
problem here? First, there is no guarantee that confidential data will not be
leaked during the transfer process and will not be lost in this way. Secondly,
if everything can be arranged so easily at the household level, why create
legal regulation? We believe that adequate regulation, which provides a legal
opportunity to transfer access to their accounts by inheritance, solves both
of these problems: in the first case, the issue is technical in nature, in the
second—it is legal. As for the second, the regulation is necessary to prevent
ambiguous interpretation of the right of a person to inherit the right to use
his virtual property (at least), and at most—to provide the opportunity to
dispose of it. Therefore, the legislator must ensure that the lack of regulation
does not create conditions for the oppression of the rights of subjects of
inheritance or narrowing of their content. At the same moment, the absence
of a specific rule of law cannot be a ground for refusing to protect subjective
civil rights (Alina, 2020).
The second algorithm is the use of existing tools of legal regulation.
The appointment of the executor of the will can be used for this purpose. In
this context, we would also like to draw attention to the institution of trust
property. Under this model, one person (the founding owner) can appoint
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another person (the trustee) as a trustee of his property (Kolos, 2019; Nekit,
2019). However, this model is valid only if the law provides for the
possibility of alienation of property (not just the trustee, but in general).
Otherwise, it turns out that the trustee can only transfer the object of virtual
ownership for further use following the terms of the agreement on the
transfer of the object in fiduciary ownership, which is concluded between
the founding owner and trustee. For such a model, it is necessary to at least
legislate the possibility of inheriting the right to use virtual property, such as
an account in an online game or social network. In the case of recognizing
the right to further dispose of such disembodied property, the institution of
trust property becomes irrelevant because we can legally provide for
inheritance without intermediaries directly in the will or if the inheritance
will take place by law.
Additionally, it is worth mentioning that following the de minimis rule
minor and insignificant games probably should not fall in the provisions of
inheritance law (Veech & Moon, 1947).

III.2. National Legislation of Ukraine on Virtual Property and Digital


Inheritance
The things in civil law are understood as all the objects of the material
world, which can meet the individual needs of man and be in his possession.
The basic feature of a thing is its belonging to the material world, objectivity
in it, corporeality. The concept of the disembodied thing, which appeared in
Roman law, is now applied to property rights and securities (Spasibo-
Fateeva, 2015).
Hence, following Art. 316 of the Civil Code of Ukraine, the object of
ownership is a thing (property). And under Art. 190 of the Civil Code of
Ukraine property as a specific object is a separate thing, a set of things, as
well as property rights and obligations. A concept of “thing” in Ukrainian
law is interpreted broadly and includes not only objects of the material
world, but also disembodied things. Property rights and obligations are in
fact incorporeal things and therefore the domestic concept of property rights
does not preclude the application of property rights provisions to virtual
assets (Nekit, 2019; Alina, 2020).
Inheritance involves the transfer of rights and responsibilities from one
individual to another (Article 1216 of the Civil Code of Ukraine). Here we
include: (i) all rights and obligations that existed at the time of the opening
of the inheritance; and (ii) they did not end with the death of the testator.
Exceptions to this rule are given in Art. 1219 of the Civil Code of Ukraine—

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it contains a list of rights and obligations that cannot be a part of the


inheritance2.
This list is exhaustive. It does not contain links, for example, to the
impossibility of inheriting an account on social media. Social media
accounts are currently objects of a particular tangible and intangible value,
but the owners have the advantage in their regulation. Although, nothing
prevents you from transferring access to your account by leaving your login
and password. Still, this will violate the common rules for the use of social
networks3, and also poses a risk of leakage of personal data if the login and
password fall into the wrong hands.
According to Art. 32 of the Constitution of Ukraine, no one may be
subject to interference in his personal and family life, except as provided by
the Constitution of Ukraine. Art. 31 of the Constitution of Ukraine enshrines
guarantees of secrecy of mail, telephone conversations, telegraph, and other
correspondence. However, the secrecy regime of correspondence applies to
any messages, even one that does not contain the circumstances of a person’s
personal or family life. The secrecy of correspondence is protected primarily
by constitutional law, and this applies not only to traditional letters but also
to all other means of transmitting information (by phone, e-mail, various
messengers, or private messages on the Internet resource). This right is one
of those that does not terminate after the death of a person. According to Art.
306 of the Civil Code of Ukraine “in case of death of the natural person who
sent the correspondence and the addressee, the use of correspondence, in
particular by its publication, is possible only with the consent of their
children, widow (widower), and if not—parents, siblings. At the same
instant, correspondence that has scientific, artistic, historical value may be
published in the way prescribed by law.” However, the above articles of the

2
The inheritance does not include rights and obligations that are inextricably linked to the
person of the testator, in particular: (i) personal non-property rights; (ii) the right to
participate in associations and the right of membership in associations of citizens, unless
otherwise provided by law or the constituent documents; (iii) the right to compensation for
damage caused by injury or other damage to health; (iv) the right to alimony, pension,
assistance or other payments established by law; and (v) the rights and obligations of a
person as a creditor or debtor, if the obligation is inextricably linked with the creditor,
inextricably linked with the debtor and cannot be performed by another person (Article 608
of the Civil Code of Ukraine).
3
See, for example, Facebook and Instagram Terms of Use. “You must not share your
password, nor give access to your Facebook account or transfer your account to other people
(without our permission)”, said in Facebook Terms of Use. “This agreement does not grant
any rights to any third parties. You may not assign your rights or obligations under this
Agreement without our consent”, said in Instagram Terms of Use. See
https://help.instagram.com/581066165581870 and https://www.facebook.com/legal/terms.
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current regulations cannot be organically applied to online messages, as


permission to use correspondence must be granted by persons who are
members of the deceased’s family and have access to correspondence (in the
case of traditional letters). If the solution to the issue of information from
messages from the computer and mobile devices of the deceased (provided
access to the latter and their content) seems obvious, the question of using
correspondence to which relatives do not have access due to their placement
on certain resources and personal password protection does not have an
unambiguous solution. Several factors must be taken into account when
deciding whether to grant access to the deceased’s history. First, the factor
of the relative anonymity of users on the Internet does not make it possible
to unambiguously determine that this account belonged to the deceased.
Secondly, it is difficult to determine precisely the content of the will of the
deceased to provide access to third parties to their online correspondence.
Thirdly, in many cases, it is virtually impossible to obtain the consent of the
other party to the messages (for example, due to its anonymity). In addition,
the operator of the correspondent information may not even have the
technical ability to remotely access the message history.
The national legislation of Ukraine does not provide for the procedure
of inheritance of virtual property. This means that both tokens and pages on
social networks as well as other disembodied things are not regulated by law.
The judicial practice currently does not meet the criteria of sufficiency to
speak of a sustainable approach to solving this problem (Alina, 2020). As of
intellectual property, we mentioned Art. 29.1 of the Law of Ukraine “On
Copyright and Related Rights” above. It states that the property rights of
authors and other persons who have exclusive copyright can be inherited,
which is not true for personal intangible rights of the author.

III.3. International Experience of Legal Regulation of Digital Inheritance


and Virtual Property
It is possible to count the legal regulation on the issue of inheritance
of virtual property from the adoption of the United Nations Charter on the
Preservation of Digital Heritage on October 15, 2003. Art. 1 of this
document states that there is a need to store digital materials for future
generations, which may include text documents, databases, images, audio
and graphics, software, web pages, etc. Because they are created and exist
in the short term and can also exist in many formats, which is also constantly
growing, it only reinforces the need to preserve them because they are multi-
industry values (Prykhodko, 2019). Due to the actualization of the problem,
special terminology acquires a new status. Thus, terms such as “digital
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inheritance”, “digital estate”, “data heir” are increasingly used in English-


language sources (Rosen, 2012).
If we examine the case law of foreign countries, we can see that courts
tend to uphold the rights of users and their relatives, even if the use
agreement indicates otherwise (Alina, 2020). For example, in the case of
Ajemian v. Yahoo!, Inc. Massachusetts Supreme Judicial Court held that
personal representatives may provide lawful consent for the release of a
decedent’s emails (Harvard Law Review, 2018). In this case, the legislation
(The Stored Communications Act), which is a part of the Electronic
Communications Privacy Act of 1986) prohibited electronic-communication
companies from disclosing a person’s communications to third parties
without decedents “lawful consent”. Accordingly, such a requirement was
included in the user agreement of telecommunication service providers and
social media companies (ibid). Nevertheless, the court decided that a fair
exception could be made from this presumption.
At present, in the United States, home of most companies that provide
digital technology for general use, no federal laws are governing the
inheritance of digital assets. However, some states have passed laws to
address this issue. In 2005, Connecticut passed a law that regulates the
access of relatives to the deceased’s e-mail. In the states of Idaho and
Oklahoma, according to local law, relatives of the deceased can access
various objects: blogs, e-mail, and social pages, and in Indiana, relatives
have the right to access documents and information stored electronically, or
can receive their copy.
In August 2014, Delaware became the first U.S. state to pass a law that
allowed family members to access the digital assets of deceased relatives
and inherit digital assets (Heddaya, 2014; M&R Blog, 2014). According to
the law, the lawyer responsible for fulfilling the deceased’s will may transfer
access to his e-mail, social media accounts, subscription to services, cloud
storage, and other data posted on the Internet to one family member. The
lack of comprehensive legal regulation encourages the Internet company to
independently regulate these relations in a contractual form. Modern user
agreements provide not only for the closure of user accounts after their death
but also the possibility of their complete destruction or memorization of
information available there. The latter means the actual archiving of data
with the right of limited access to some sections of the account only to
registered “friends” of deceased users (Alina, 2020).
For example, a precedent has become known in Germany, according
to which the parents of the deceased girl were given the right to inherit her
personal Facebook page (BBC News, 2018). In the original lawsuit, the
court of the first instance granted her parents’ claims for access to the
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account so that her parents could find out whether her death under the wheels
of the train was suicide. However, the appellate court decided to satisfy
Facebook’s requirements for the protection of privacy policy, which
prohibits the disclosure of correspondence even after the death of a person.
Hence, the case reached the Supreme Federal Court of Germany. In the
motivational part of the decision, Judge Ulrich Hermann noted that it was
previously accepted to inherit correspondence after the death of the testator,
so there was no reason to treat digital messages differently. In addition, it
was noted that parents had the right to know with whom their minor child
corresponded.
This precedent demonstrates that if such claims begin to multiply, they
can be resolved based on the analogy of law, which suggests that legal
relations can be settled by their similarity based on common principles for
civil law because the rules on the substantive nature of subjective rights
already exist. And only the form in which it applies has been changed,
namely: instead of correspondence as a thing of the material world in the
form of letters or diaries there appeared digital correspondence. However,
the fact that the number of such lawsuits will increase over time may indicate
the need for unified legislation based on case law. This can help harmonize
it and reduce the burden on the judiciary.
In Spain, legislation on digital inheritance is being developed.
According to Art. 7 of the draft Charter on Digital Rights, the right of
individuals to inherit digital assets and rights acquired in the digital
environment should be recognized (Velasco, 2020). Among other things, the
document regulates other issues in this area, such as the protection of the
rights of minors on the Internet, the regulation of artificial intelligence, etc.

V. CONCLUSIONS
The revenue of the online gaming industry, as well as the general
digitalization of communication, poses new challenges to legal science
related to the status of IT objects and virtual property. The question of the
status of virtual gaming property is acute on the agenda. While logins and
passwords are not generally considered to be property objects, the very
possibility of inheriting them does not contradict the general notarial
practice but may contradict the rules of using the social network, according
to which the transfer of an account to third parties is strictly prohibited. In
this case, the user can inherit their content such as photos, audio, and video.
Also, in this case, the problem of the right of use remains unresolved,
because it is a property right of the user. Virtual property issues, if such
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assets can be expressed in monetary terms and the heir has the right to access
them, are easier to resolve, as they require notarial procedures that do not
differ from access to funds in the testator’s bank account. The main problem
in the field of online games and the inheritance of virtual property in them
remains the protection of copyright of game developers. Social networks
have a flexible approach to solving the problem and offer their options for
solving it in case of the death of the testator, so we can say that most often,
such issues will be resolved through a bilateral contractual settlement.
Otherwise, there is the option of litigation, where a person can demand
recognition of his right to inherit.
One way to solve the problem of protecting the intellectual property
rights of content owners is to extend the legal regime of ownership to virtual
objects. The way it can be done leads to either judicial review or
parliamentary revision. This does not contradict the Ukrainian concept of
property rights, which recognizes the possibility of the existence of property
rights to disembodied property which are in fact virtual objects. Virtual
property rights should be distinguished from intellectual property rights and
can be defined as a specific type of property right that is the object of virtual
property. In addition to the specifics of the object of such a right (which will
always be disembodied things, i.e. virtual property), this right will be
characterized by the specifics of the grounds of origin, content, protection, etc.

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