Linden Labs own all the things?

First off, let me just say IANAL. Not even close, and I don't even try and play one on the Internet, or even in Second Life. But I tend to be curious and I do read. So...

While I was working on a build today I had half an eye on a discussion that was taking place in the group associated with the Little Blue and Fermi sandboxes. The discussion was wandering about a bit but mostly seemed to be relating to which alternative grid was best and why the alternative grids are better than Second Life (or not).

I didn't pay too much attention to it. Second Life works for me at the moment and I generally can't be bothered with holy wars.

However, one comment, that was chalked up as something against Second Life, was that Linden Labs own everything you create. That caught my attention and caused me to raise an eyebrow. I watched the debate evolve a little and saw a couple of people chime in that this was, indeed, a fact. One person said that it was "like university where anything you create in the lab belongs to them" (I'm ignoring how true, or not, that is, or how parochial it probably is too). Another claimed that if something lives on their servers they own it. Yet another claimed that this was indeed true and that "it's called Possession is 9/10ths of the law".

Everyone making these claims seemed very sure of what they were saying, yet none of them were backing any of it up with citable sources (a common problem in SL in my experience). And, yet, it would be so easy to be sure, wouldn't it?

So I went to the obvious place: I went to check what Linden Labs assert. It's not hard to find, you need only look at section 7 of the terms of service. And what's the first thing we see there? Do we see Linden Labs say "all your works are belong to us"? Erm... not quite:

You retain any and all Intellectual Property Rights you already hold under applicable law in Content you upload, publish, and submit to or through the Servers, Websites, and other areas of the Service, subject to the rights, licenses, and other terms of this Agreement, including any underlying rights of other users or Linden Lab in Content that you may use or modify.

What follows is, of course, the usual requests that I extend Linden Labs a licence to distribute my works. That's fair enough. They'd have a devil of a time getting what I create down to your viewer, or onto various servers, if I didn't allow them to distribute copies of my work.

And, of course, there's potentially a lot of debate to be had about the possible scope for interpretation of the rights they request (this has been a common feature of people's readings of the ToS of various photo-hosting and sharing websites, for example), but that's a different issue.

I raised this in the group chat. I pointed to the ToS. I pointed out that Linden Labs, far from claiming to own everything you make, make a point of asserting that you own it and then go on to request a licence from you that you can only grant if you own the works in the first place. Nobody seemed convinced. Not even by Linden Labs' own words. One person just made their claim again, another brushed it all aside as it being just my opinion (presumably I formulated my opinion and then hacked LL's ToS to have it fit?).

Of course, in practice, it's not all quite that simple. Given the nature of Second Life your works mix with my works (sometimes actually linked together, or embedded in my work, etc...) and a lot of things that get created end up being derivative works with no clear single owner. But, again, I see that as a side issue. The claim was made that by the very nature of your work being on Linden Labs' own machines, they own the work and you don't. I think it's fair to say that that claim isn't true at all.

Even Linden Labs don't appear to believe that.