European Union Ruling Strikes a Blow to the All-Digital Market

[Floppin]

A ruling by the Court of Justice of the European Union, has denied the publisher’s right to prevent purchasers from reselling legally purchased and downloaded games. This is done by ruling that the exclusive right of distribution is exhausted on the first sale:

An author of software cannot oppose the resale of his ‘used’ licences allowing the use of his programs downloaded from the internet…

The exclusive right of distribution of a copy of a computer program covered by such a licence is exhausted on its first sale.

Furthermore, this ruling renders license agreements from vendors and producers that prohibit after-market sales of downloaded content null and void:

By its judgment delivered today, the Court explains that the principle of exhaustion of the distribution right applies not only where the copyright holder markets copies of his software on a material medium (CD-ROM or DVD) but also where he distributes them by means of downloads from his website.

Where the copyright holder makes available to his customer a copy – tangible or intangible – and at the same time concludes, in return for payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right. Such a transaction involves a transfer of the right of ownership of the copy. Therefore, even if the licence agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.

This new right of sale is further protected by making it a requirement of publishers to allow secondhand-acquired license holders to download their purchased content from the copyright holder’s website:

Therefore the new acquirer of the user licence, such as a customer of UsedSoft, may, as a lawful acquirer of the corrected and updated copy of the computer program concerned, download that copy from the copyright holder’s website.

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So, what exactly does this all mean? Well, there are a few things that we can take from this. First, while I write on this topic from the perspective of a gamer, this judgement does not appear to be applicable to just games, but instead appears to rule over all purchased downloadable media. Having said that, rather than delving into that endless rabbit hole of application, we will stick to the games, as this is, after all, a games website.

The all-digital marketplace, blueprinted by vendors like Steam, has long been thought of as a safe haven for profits, an arena where piracy and used sales could be eliminated, or at least severely minimized. As such, there have been rumblings in the gaming world of a total transition into digital distribution and a move away from physical media. This judgement shatters the developer’s dream of a utopian gaming marketplace devoid of secondhand game sales. While there are no widely established digital marketplaces for the resale of digital licenses, this judgement opens the door and we will inevitably see them begin to pop up.

While this judgement was very obviously intended to uphold the rights of the purchaser, one has to wonder if it wasn’t perhaps irresponsible or, at least, ill conceived. The idea that everyone who resales a license will delete or disable their copy of the game upon sale is both idealistic and foolish and yet there appears to be no way to enforce this requirement. Ultimately this will force the gaming industry to embed code that allows them to remotely disable a product once proof of a resale has been received, otherwise there is nothing to stop a person from distributing unlimited copies of software to friends through fictitious license sales. The ruling also causes publishers to bear the burden of having to provide for download any software who’s rights have been purchased by a second party all while developing a system of verification of such sale. This judgement has the potential to legally open the door for innumerable abuses all while dropping the burden on the gaming industry to prevent this from happening.

http://bnbgaming.com/2012/07/05/land-mark-ruling-allows-resale-of-downloaded-content

The ramifications of this are going to be huge.

[Doc Holiday]

http://bnbgaming.com/2012/07/05/land-mark-ruling-allows-resale-of-downloaded-content

The ramifications of this are going to be huge.

maybe the gaming industry should have thought it through more before threatening the entire game reselling industry by eliminating the possibility of resell

[Floppin]

I'm not so sure that they threatened as much as digital only game sales are an inevitability.

[Inimicus]

Game manufacturers will simply shift their primary revenue stream from a sales based model to a subscription based one. The Madden 2015 media will cost 10 bucks but access to the servers will cost 9.99/month.

Hell Blizzard is practically printing Benjamins with that model.

Oh and micro-transaction. Want the alternate unis for your favorite team? 2.99 please!

[Guild]

Everything will become service based then.

[KendrickPanther]

The Diablo model is an interesting concept thats working out it's issues. Blizzard real money auction house with blizzard taking a nice cut for themselves. All they do is promote themselves as a secure middle man and rake in the money. They have incentive to patch the game because the more people playing= more transactions.

[Ivan The Awesome]

The rule of thumb. "keep it simple" They never do.

[Brandon]

Game manufacturers will simply shift their primary revenue stream from a sales based model to a subscription based one. The Madden 2015 media will cost 10 bucks but access to the servers will cost 9.99/month.

Hell Blizzard is practically printing Benjamins with that model.

Oh and micro-transaction. Want the alternate unis for your favorite team? 2.99 please!

EA already has the system in place, they just limit online functionality in games unless you enter in a one use code that came with the game, or purchase a new online license if you buy the game used.