The law relating to how digital assets are governed has been shifting. In light of a relatively recent case involving the theft of digital assets within a virtual environment, we consider some steps that businesses running such services can take in respect of their end-user licence agreements (“EULA”).
The Court of Appeal addressed the question of whether digital assets can amount to “property” under English law earlier this year in R v Lakeman [2026] EWCA Crim 4. It was confirmed that virtual assets existing wholly within a licensed software environment can constitute “property”, and are accordingly capable of being stolen for the purposes of the Theft Act 1968 (“the Theft Act”).
Although this case is a few months old now, we wanted to discuss this decision in the wider context of software EULAs, as this decision represents a significant milestone in the treatment of digital assets. R v Lakeman is an interesting highlight amongst the UK’s increasingly coherent approach to digital asset ownership, control and protection.
So, what was the case about?
The case concerned alleged theft of in‑game “gold pieces” – A type of currency in the game Old School RuneScape, being a popular online role‑playing game. The game is operated by Jagex Ltd, and the defendant was a former employee of Jagex. The defendant was accused of unlawfully accessing a number of player accounts and in doing so transferred a substantial quantity of in‑game currency from such accounts to himself. The in-game currency was subsequently sold via various websites and platforms for a real‑world value of over £500,000.
The gold pieces could be accumulated by players carrying out a variety of potentially time consuming tasks in the game, and allowed players to upgrade their character and gave access to additional game functionality. Gold pieces could also be transferred between players (in line with the rules of the game) and there also existed a mechanism by which players could purchase gold pieces in exchange for real-world currency. The central legal issue in this case for the Court to deliberate over was whether these virtual items (being the gold pieces) could qualify within the meaning of “property” for the purposes of the Theft Act. In making a decision on this, the Court looked at whether the in-game currency itself constituted the property in question, rather than the computer programming code responsible for creating it.
As part of its decision, the Court emphasised the deliberately broad definition of “property” within the Theft Act. In reference to the language set out in s.4 of the Theft Act “words of the widest ambit” have been used, capable of encompassing intangible assets unless there is a reason to exclude them. The Court focused on the functional characteristics of the virtual currency (in that it had an impact on the players’ experiences in the game), rather than its technical form. On the basis that the gold pieces had a distinct and identifiable existence within the game, were subject to user control, could be transferred, and possessed real‑world economic value, the Court concluded that they were properly described as property capable of being stolen.
Did Jagex’s EULA say anything about this?
An argument for the defendant relied on Jagex’s EULA, which stated that ownership of all in‑game items remained with the developer. Jagex set out provisions which intended to manage how the gold pieces could be used in the game. These sorts of provisions are common in licences for games or software where a form of “in-game” or “in-software” currency or token exists as part of the service offering, and they frequently state that such virtual items or digital assets do not have any value outside of the game or software. Jagex’s terms provided that it could use its discretion to change the way in which the gold pieces could be used or could even delete them. It further stated that any attempt to trade the gold pieces in the real-world would be considered a breach of the EULA.
The Court stated that such contractual terms did not have any bearing as to whether something can be considered property for the purposes of the Theft Act, and that something may constitute property for the purposes of the Theft Act even if it does not have the equivalent enforceable private law rights.
Why is this noteworthy?
The distinction is particularly significant for software developers and platform operators, as it confirms that contractual disclaimers of ownership will not necessarily prevent digital assets from attracting legal protection where users exercise real control over them. The case has provided further development in laws relating to digital assets already in place resulting from previous precedent and legislation.
For example, the Property (Digital Assets etc) Act 2025 (“the Act”) (which received Royal Assent at the end of 2025) also formally confirms that certain digital assets can constitute personal property under English law, even if they do not fall neatly within traditional categories such as things in possession or things in action (this is particularly in relation to cryptocurrencies and NFTs). The Act creates space for a third category of personal property and leaves its boundaries to be developed by the courts over time – Developments of which decisions such as that in R v Lakeman is part.
How does this affect businesses and their EULAs or other licensing arrangements?
The combined effect of R v Lakeman, civil cryptocurrency/NFT related case law, and statutory reform (such as the Act) is a shift away from digital assets being considered as purely contractual constructs. The position seems to be increasingly that the way in which digital assets function in practice is considered, rather than relying solely on the terms of an EULA.
Businesses should be mindful of the current shift in the law’s approach – Especially where their service offering involves a form of digital asset. They would do well to adopt a best practice approach with these developing views in mind, and would benefit from reviewing their contractual frameworks, particularly around user control, transferability and the economic value of digital assets (see a few points on this to consider below). If digital assets are found to be scarce, tradable and valuable, they are increasingly likely to attract property protection under UK law, potentially with corresponding criminal and civil consequences.
In practical terms, businesses operating digital platforms, websites, software, games, or SaaS arrangements should consider approaching digital assets on the basis that, depending on their characteristics, they may attract proprietary status under English law.
Although the law here is not set in stone yet, we suggest the following considerations are starting to be worth bearing in mind when such businesses are preparing or reviewing their EULAs:
- Clearly characterise the nature of the digital asset:
- Define whether the relevant item is intended to function merely as a contractual entitlement or whether it has features (for example persistence, exclusivity, scarcity) consistent with a form of property;
- Recognise that assets which are identifiable, controllable and capable of holding value are increasingly likely to be treated as property by the courts.
- Address control of the digital asset explicitly:
- Specify who has practical and technical control over the asset (for example the user, the platform, or both);
- Consider how such control is exercised in practice, as it seems that English law is increasingly becoming concerned with factual control rather than purely contractual labelling.
- Address language that asserts “ownership”:
- Avoid overreliance on blanket statements that all in‑platform items remain the property of the licensor – Carefully consider when this might not be the case;
- Distinguish between the ownership of the underlying intellectual property rights (such as those arising out of or in connection with the source code) and any proprietary or quasi‑proprietary interest that may arise or be granted in the digital asset itself.
- Consider transferability and restrictions on dealings:
- Set out clearly whether digital assets may be transferred, assigned, traded, or sub-licensed, and on what terms and in what circumstances can this occur;
- If restrictions are imposed, ensure they are realistic and enforceable.
- Address economic value and monetisation:
- Where digital assets are capable of being bought, sold or exchanged (whether within or outside the platform), acknowledge this explicitly;
- Consider how pricing mechanisms, second-hand markets or in‑platform economies may support the argument that such assets have real‑world value.
- Include provisions for modification, suspension and deletion rights:
- Clearly reserve rights for the business to modify, suspend or remove digital assets, but ensure these rights are framed transparently and exercised consistently;
- Recognise that extensive user reliance and value accumulation may make blanket deletion rights more contentious in practice.
- Match your EULA to the way in which the law develops:
- Ensure that drafting reflects the principles underpinning the Act, which confirms that digital assets are not excluded from constituting property simply because of their form;
- Appreciate that the courts retain flexibility to determine, on a case‑by‑case basis, whether particular assets fall within a developing “third category” of personal property.
- Contemplate proprietary remedies and risk allocation:
- Consider the potential availability of proprietary remedies (for example transaction tracing, restitution, or injunctive relief) if digital assets are misappropriated;
- Reflect this in liability, indemnity and risk allocation provisions.
- Ensure consistency:
- Align EULAs, other contractual arrangement, and rules with the technical functionality of the service offering;
- Avoid inconsistencies between the contractual wording in an EULA and actual end-user experience.
Taken together, these considerations point towards what could become a more nuanced approach to drafting these sorts of licences. Rather than attempting to exclude for user-ownership altogether, businesses should consider that certain digital assets may attract property rights and draft their agreements in a way that anticipates and manages that possibility.
R v Lakeman is therefore not only a significant criminal law decision, but also a clear signal to businesses that the combined effect of the developing case law and legislative reform is that digital assets are increasingly being assessed by reference to their real‑world function and value, rather than their contractual labelling. For software developers and platform operators, the prudent course is no longer to rely on traditional licence language alone, but to try to adopt a more sophisticated and forward‑looking approach to drafting their EULAs – One which acknowledges that, in the right circumstances, digital assets may attract the full spectrum of proprietary rights and remedies under English law.
If you would like to discuss any queries relating to these developments, or the issues that relate to EULAs or other types of software licensing – Please get in touch – We would be happy to provide you with more detailed advice in connection with the above.
Please contact [email protected].
