While Boyle’s response is pretty good, I strongly recommend that interested readers instead take a look at the transcript of Eben Moglen’s presentation at Harvard for JOLT (cited here) that he gave as a followup to Darl McBride’s visit. I think he lays out (and wipes out) the arguments much more cleanly, albeit in much more space.
Recently, in the massively multiplayer online role-playing game A Tale in the Desert, an uproar erupted after an in-game trader declared that he would not sell to women and then inquired whether one female character was for sale.
After the developers refused to take a stand against the trader, many players were outraged that the game would tolerate such discriminatory and misogynistic behavior. But the trader was actually a non-player character controlled by the developers to intentionally start a controversy in a virtual world they feel is sometimes too polite.
[…] Over the course of the 90-minute panel, “Avatar Rights, Virtual Liberty and Free Expression in Virtual Worlds,” Schauer, Yale Law School professor Jack Balkin, and Peter Ludlow — author of Second Life Herald, a blog about MMO worlds, The Sims Online and Second Life — debated whether situations like the one in A Tale in the Desert would expose developers to legal liability. If so, they pondered, what kinds of operating policies should game developers implement to protect themselves, even as they strive to create stable communities that foster healthy behavior, discourse and creativity?