Sure that the term was not in use as it is now. In december 2006 second life had less than 2.5 million residents.
And it is not important if it was widespread use. It was in use and that was enough to show Mr. Minsky that something is not his but public. Nor that is important, that only shows a bit of his personality. What is important is that the term is descriptive so it cannot actually be used as a trademark.
Check Virtually Blind http://virtuallyblind.com/2008/01/25/slart-trademark/#comment-14356 for a good comment on this.

And it is important. Do you leave every little piece of scum to steal public property around just because that piece of property is not the best looking we have?