A Civil and Commercial Law Perspective: Exploring the Division of Virtual Property in Divorce Disputes

With the development of the Internet and digital technology, virtual property has become an important part of modern family assets, especially among younger generations. In divorce disputes, the definition, valuation, and division of virtual property are gradually becoming complex and controversial issues. Virtual property mainly includes, but is not limited to, online game equipment, social platform accounts, virtual currency, e-books, digital music, domain names, and online shops. The "Civil Code of the People's Republic of China" formally incorporates virtual online property into the legal protection framework, filling a legal gap and laying the foundation for future legislative exploration and judicial practice on the protection of virtual online property.

Virtual property refers to products that exist in the form of data on servers and are virtually represented in cyberspace. In a broad sense, virtual property refers to property that exists in a virtual form in the internet space. This specifically includes electronic service accounts for online games and social networking platforms, e-mail, virtual currency, game items, etc.; in a narrow sense, virtual products only refer to virtual property with specific trading value, mainly virtual products that game players obtain by spending time and money during the game, which can be exchanged between players, between players and service providers, and between players and third parties to obtain real benefits. [1]

Legal characteristics of virtual property: First, value; as a product existing in virtual space, virtual property is obtained by players spending a certain amount of time or investing a certain amount of money. If players invest energy and obtain emotional experiences, it shows the use value of virtual property. Virtual property trading reflects its exchange value. Use value and exchange value jointly support the value of virtual property. [2] Value is also one of the reasons why virtual property should be protected by law. Second, non-reality; virtual property does not actually exist in real life, but is stored in the form of data on the operator's server and is displayed in the game through this data, bringing corresponding benefits to the players. Third, tradability; because virtual property has value, it can be traded in the game or in reality. This includes: transactions between players and operators, that is, reselling equipment to the operator in exchange for game currency or cash; transactions between players, bartering or exchanging for real or virtual currency; transactions between players and third-party platforms or agents, that is, third-party platforms or agents, for profit purposes, buying and selling virtual property as intermediaries. Fourth, spatiotemporal specificity; virtual property can only exist within the operating period of the service provider. If the service provider stops operating or terminates service, the virtual property will lose its existence and will be destroyed. In terms of space, virtual property only exists on specific servers, and has spatial specificity. Fifth, control; as the right holder, players can control virtual property, specifically manifested in being able to exclude other players from encroachment, exclude the operator from hindering the use, and dispose of the virtual property. [3]

Article 127 of the "Civil Code of the People's Republic of China" stipulates that if the law has provisions on the protection of data and virtual online property, the provisions shall be followed. Since then, there is a clear legal basis for the protection of legally operated online virtual property.

Because the value of virtual online property is unstable, and there are no relevant provisions on how to determine its economic value, there is too much controversy over the protection and qualification of online property. In order to ensure the rigor of legislation, the nature of virtual online property is not defined, and it is stipulated together with data in the General Principles of the "Civil Code of the People's Republic of China" in the form of "referral clauses." Although it provides a highly compatible institutional interface for the protection of virtual online property, it cannot provide accurate and operable legal guidance for complex and ever-changing judicial practice. As for how to identify and divide virtual property, it can only be done through judicial practice.

Virtual property has the attributes of quasi-property rights and has certain value, so theoretically, it can be divided as property. Due to the high value of virtual property, and some do not require too much time and effort to manage, because of value fluctuations, and the time points of acquisition before and after marriage are not clear, it makes it very difficult to determine whether the virtual property is marital common online virtual property. Through searching cases, it is found that judicial practice requires two prerequisites: firstly, one or both spouses have online virtual property under their name; and secondly, the online virtual property belongs to the marital common property. Three basic principles should be noted during the division: firstly, the principle of prior consultation between husband and wife; secondly, the principle of gender equality; and thirdly, the principle of taking care of the interests of children, women, and the innocent party.

If the marriage registration is used as the time node, the time point of obtaining online virtual property can be divided into three segments: before the marriage relationship, during the marriage relationship, and after the marriage relationship. The ownership of online virtual property obtained at different time points will be different. This article will discuss the online property obtained during the marriage relationship.

First, the determination of one or both parties obtaining online virtual property during the marriage relationship.

According to Articles 1062 and 1063 of the "Civil Code" and Article 25 of the Supreme People's Court's "Interpretation (I) on the Application of the Marriage and Family Chapter of the Civil Code of the People's Republic of China," the disputed online virtual property was obtained during the marriage relationship and does not belong to the personal property of one party, it should be considered marital common property.

Second, the determination of the ownership of the income of online virtual property acquired before marriage by one party after marriage.

If it is an online store registered by one party before marriage, and the online store's operation generates increased value and inventory after marriage, this belongs to marital common property.

If it is an online store registered before marriage, and the online store generates interest and natural appreciation without participating in the operation after marriage, it does not belong to marital common property. This type of situation is an idealized state and is extremely unlikely to occur because it is highly probable that the online store will continue to be managed after marriage, but it still has the possibility of existing, such as if the online store is abandoned after marriage, the remaining inventory of the online store itself appreciates, this would be the situation.

If it was obtained by one party before marriage, and positive investment, trading, and management are carried out after marriage, resulting in increased value or monetizable income, this belongs to marital common property.

If acquired by one party before marriage and no active management resulting in income or natural appreciation occurred after marriage, it does not belong to the jointly owned property of the couple. The general principles for determining virtual currency, virtual property based on network social platforms, and virtual property based on online games are consistent, although some special situations may arise in practice, the same method can still be applied for judgment. For example, a WeChat official account registered before marriage, which operates well and has a certain fan base and popularity, but is no longer operated or managed after marriage, is left idle. Due to its pre-marital established reputation and market factors, even if it is no longer managed after marriage, if the account itself still appreciates in value, it can be considered as not belonging to the jointly owned property of the couple.

Finally, the determination of the ownership of the income and natural appreciation of online virtual property.

The above-mentioned "income and natural appreciation" may appear in different situations in judicial practice. The author defines the concepts of income and natural appreciation to facilitate readers' understanding and easy judgment of different situations in practice.

First, income can be divided into natural income and legal income. Natural income is the income obtained based on the natural properties of an object or the laws of change of the object. For example, eggs laid by hens, offspring of livestock, fruits grown on fruit trees, and plants such as grains, grass, and trees naturally grown on land. From the above analysis, it can be seen that online virtual property does not involve natural income. Legal income refers to the income obtained due to the subordinate relationship stipulated by law, where the owner of the property obtains income by transferring the use right of the property for a certain period, such as deposit interest, stock dividends, and rent.

Secondly, natural appreciation refers to the appreciation of property solely due to market factors without any investment of time, intelligence, money, or labor by the couple. The judgment of natural appreciation mainly depends on whether there is any human contribution, such as the input of time, energy, or money, management, operation, etc. In the second situation mentioned above, online virtual property mainly falls under the situation of natural appreciation.

First, online property has economic value, but this economic value is in a virtual state and has strong personal attributes. When dividing, it is advisable to adopt the method of assigning ownership to one party and the other party receiving economic compensation.

By reviewing relevant cases, it can be seen that the division of online virtual property in divorce disputes is constantly emerging and has become an issue that family court trials must clarify the rules for. Although cyberspace is virtual, the economic value it brings is real. For example, highly-followed WeChat official accounts, Douyin accounts, Kuaishou accounts, and other self-media accounts can generate economic benefits through platform traffic income, advertising lead generation, product sales, and live streaming rewards. Even if the self-media account is registered and operated by an individual, it cannot deny its nature as jointly owned property of the couple. The operation of a self-media account has strong personal attributes. In order to avoid diminishing its value, it is advisable to assign it to the registrar and operator and have them compensate the other party.

Secondly, in the valuation of online property, the autonomy of both parties should be respected, and it should be determined by a professional institution or the court according to law.

Since the economic value of self-media accounts largely depends on the operation of the operator and the market situation, there is currently no unified standard for the valuation of online virtual property. Therefore, both parties can negotiate to determine the value of the self-media account. If they cannot reach an agreement, they can entrust a professional asset appraisal institution for assessment. In practice, the factors affecting the assessed value mainly include the number of followers of the self-media account, interaction rate, industry influence, whether it is a Brand cooperation, and previous transaction prices of similar accounts. The People's Court can determine the property value of the self-media account according to law based on the asset appraisal report.

Furthermore, the value of online virtual property is generally in a fluctuating state and there is no unified valuation standard. In practice, there are cases that refer to the valuation method of houses for reference.

Article 76 of the Supreme People's Court's Interpretation (I) on the Application of the Marriage and Family Chapter of the Civil Code of the People's Republic of China stipulates: "When both parties cannot reach an agreement on the value and ownership of the house in the jointly owned property of the couple, the People's Court shall handle it according to the following situations: (1) If both parties claim ownership of the house and agree to obtain it through bidding, it should be allowed; (2) If one party claims ownership of the house, the appraisal agency shall appraise the house at market price, and the party who obtains the ownership of the house shall give the other party corresponding compensation; (3) If both parties do not claim ownership of the house, the house shall be auctioned or sold according to the application of the parties, and the proceeds shall be divided."

Finally, due to the non-physical characteristics and market volatility of virtual property, its assessment is more difficult. Social platform accounts such as Douyin and WeChat have a close relationship with the registrant and have certain personal attributes. At the same time, the value stability of this type of online virtual property is poor, and there are no relevant regulations on how to determine its economic value. Therefore, online virtual property such as Douyin accounts cannot be simply treated as ordinary property for division. Therefore, by reviewing cases, the following five assessment methods are summarized.

1. Price Agreed Upon by Both Parties

Based on the principle of prior consultation between the couple, the high cost of assessing online virtual property, and the maximum autonomy of the couple's intentions, it is the optimal solution for division.

In divorce lawsuits involving vending machines, automatic game machines, shared washing machines, shared car wash machines, shared charging piles, online store operating rights, etc., whose inherent value is not high but whose operating income is considerable, there are no clear regulations on how to divide the new shared economy formats and virtual property. In this case, one party often agrees to divide according to the assessed value of the machines themselves, while the other party claims to divide after assessing the market share or overdue profit. For such requests for division of property, the court faces the problem of how to make reasonable, legal, and market-oriented property identification and division. Therefore, the court usually organizes both parties to bid on the disputed virtual property, etc. In the bidding, both parties are often unwilling to bid due to uncertainty, resulting in the failure of the bidding. If the bidding fails, the court generally starts from the power of "ownership", respectively based on the power of disposal and the right to benefit, balances the power of disposal and the right to benefit of both parties, and ultimately can prompt both parties to reach a mediation and get a proper solution.

2. Auction

If both parties do not want to hold the online virtual property, the court can organize an auction. In judicial practice, some virtual property is not yet assessable, and there is uncertainty in the market, and in fact, it cannot be assessed, which brings practical difficulties to the legal division of property. In this case, the auction method can be considered.

3. Bidding

If both parties want to possess it, they can bid, and one party gives compensation to the other party. When divorcing, consideration should be given to facilitating production development and business management, and reasonable division or discount should be given. Combining the spirit of the Supreme People's Court on handling property division issues, for means of production that belong to jointly owned property, it is not limited to the disposal value of the property itself, but focuses on its income attributes as means of production, and the key should be to evaluate its income value.

4. Court Entrusts a Third-Party Appraisal Institution

When courts are unable to assess the value of such online assets, they generally commission a third-party appraisal agency. In practice, factors influencing the assessed value mainly include the number of followers of the self-media account, interaction rate, industry influence, whether it involves brand cooperation, and past transaction prices of similar accounts.

5. Joint Assessment by Multiple Departments

Such as joint assessment through network operators, software development companies, etc.

(Declaration: This article is a summary of the author's views based on experience and is for discussion only.)