What does the EU used software sales ruling mean?

July 4th, 2012, 23:26 Posted By: wraggster

A recent Court of Justice of the European Union ruling has deemed that the sale of second-hand software does not contravene any laws, stating that software authors and publishers "cannot oppose" the resale of previously purchased games on physical or digital formats.
While the ruling underlines the legality of software resale once a consumer has paid for a product - regardless of any End User Licence Agreement that may have been signed - it still recognises the right of copyright holders to control reproduction of their software. If a game is to be sold on, it must not be duplicated (in the case of a licence being sold on, the ruling states that the seller's copy must be rendered "unusable") meaning that it is also legal for developers to employ "technical protective measures such as product keys". Online passes, therefore, are unlikely to go away.
"The copyright holder’s distribution right is exhausted," the ruling reads, "on the occasion of the first sale in the European Union by that rightholder, or with his consent, of any copy, tangible or intangible, of his computer program.
"It follows that, by virtue of that provision and notwithstanding the existence of contractual terms prohibiting a further transfer, the rightholder in question can no longer oppose the resale of that copy.
"Since the copyright holder cannot object to the resale of a copy of a computer program for which that rightholder’s distribution right is exhausted… it must be concluded that a second acquirer of that copy and any subsequent acquirer are ‘lawful acquirers’ of it."
The ruling makes no distinction between physical and digital copies, which raises interesting questions regarding the ability to sell on digital copies of games. Valve's Steam service, for example, already offers the ability to trade games - purchase the Orange Box having already bought Half-Life 2 and the game will become available in Steam Trading to swap for whatever another users deems a fair price, be that another game or a hat.
Other systems are more closed, however, especially the likes of PSN, Xbox Live and the App Store. So if a user is unable to sell on their digital games now that the legality of such actions has been ratified, might platform holders be forced to provide a resale button alongside the usual gift?
"It's too early to tell unfortunately," Osbourne Clarke interactive entertainment lawyer Jas Purewal tells us. "Publishers should certainly consider carefully how this ruling applies to their games or software, but it is likely to be some time before the case has a practical impact on them.
"There would need to be a catalyst first: perhaps a lawsuit by a consumer, a regulator investigation or a proposal for new legislation by an EU government. I'm sure though that any move to force platforms to permit second hand sales would be strongly resisted. Besides which, this case of course applies only to the EU and publishers will not want a specialised approach for just Europe and not, say, the USA."
The ruling's definition of physical and digital games is limited, and it fails to account for, among other things, the imminent rise of cloud gaming, subscription based services such as MMOGs where the value lies with the account and even freemium titles. Purewal predicts the lack of clarity could lead to problems further down the line.
"The EU court took a quite old-fashioned approach to what 'software' means," he says. "The reasoning in the case works for traditional pay upfront software like console games or enterprise software, but what about mobile apps? Subscription-based software? Freemium games? Software provided via the cloud?
"It is much harder to see how this second hand sales ruling could work for them - and this is one reason why this case on its own doesn't provide a sufficient clarification of the law on second hand sales, which suggests there will be further lawsuits, or possibly even legislation, in the future.
"There is also the requirement in the EU court's judgment that the person who sells the software must stop using it him/herself, possibly by use of some kind of product key system - which seems a recipe for confusion."
Overall, it would seem that the practical effects of the EU ruling will take some time to filter through to consumers, despite the legal departments of every publisher having no doubt been mobilised to figure out exactly what it means for their respective businesses. But while a legal definition increases the urgency for the game industry to take stock of its position on second-hand sales, Purewal stresses that that won't be the defining factor.
"It's worth remembering that second hand sales have always been driven by economics and tech, not law," he concludes. "So the true future of second-hand sales depends on how the game industry approaches them from a business and technological perspective more than what the law says."

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