Initial Thoughts on Second-hand Sales Rulings

The European Court was recently requested by the German federal court to answer the following questions (shortened for readability, full quotes can be found through sources liked at the bottom):

1.      Is the person who can rely on exhaustion of the right to distribute a copy of a computer program a “lawful acquirer”?

2.      If ‘yes’: is the right to distribute a copy of a computer program exhausted […] when the acquirer has made the copy with the rightholder’s consent by downloading the program from the internet onto a data carrier?

3.      If 2 is “yes”: can a person who has acquired a “used” software licence for generating a program copy as “lawful acquirer” […] also rely on exhaustion of the right to distribute the copy of the computer program made by the first acquirer with the rightholder’s consent by downloading the program from the internet onto a data carrier if the first acquirer has erased his program copy or no longer uses it?

In which the reply was (again, in shortened form):

1.     … the right of distribution of a copy of a computer program is exhausted if the copyright holder who has authorised … a right to use that copy for an unlimited period.

2.      … in the event of the resale of a user licence entailing the resale of a copy of a computer program downloaded from the copyright holder’s website, […] the second acquirer of the licence, as well as any subsequent acquirer of it, will be able to rely on the exhaustion of the distribution right […] , and hence be regarded as lawful acquirers of a copy of a computer program […] and benefit from the right of reproduction provided for in that provision.

In other words, they deem a sold digital copy as being legal, although note this isn’t a legislating decision as much as an answer to the german federal court.

Rock Paper Shotgun – whom shall a huge thanks for finding this, spreading it and being a generally awesome site to read – then spins this as “all distribution sites nowmust allow re-selling”. This is based on the paragraph of the ruling’s press release, which writes:

Under that directive, the first sale in the EU of a copy of a computer program by the copyright holder or with his consent exhausts the right of distribution of that copy in the EU. A rightholder who has marketed a copy in the territory of a Member State of the EU thus loses the right to rely on his monopoly of exploitation in order to oppose the resale of that copy. In the present case, Oracle claims that the principle of exhaustion laid down by the directive does not apply to user licences for computer programs downloaded from the internet.

Which sounds as going a bit contrary to what the ruling above say. If we take the most central line of this phrase, “A rightholder who has marketed a copy in the territory of a Member State of the EU thus loses the right to rely on his monopoly of exploitation in order to oppose the resale of that copy“, and read it in a very literal sense,  doesn’t mean they are forced to allow re-sales. It means they can’t actively oppose owners to re-sale. This may sound like making a double-negation for argument’s sake, but it’s really worlds apart. Rather than “everyone is able to re-sell their games super-easy now!”, it means “if you make it through the hazzle of sending the copy, recieving the money and removing your copy (otherwise it’s copying), they can’t stop you”.

In any case – given that consumer pressure, or demand, makes sites like Origin or Steam open the gates for gamers to re-sell, what would this mean for gamers and for the business?

The gamer may see only up-sides to this, at least initially. The physical stores have long made a fortune re-selling copies early and at a cheap price, meaning gamers may see reduced prices even on digital games. However, with the ecosystem of regular mega-sales and price-points going down as far as to 5 dollars/euro, you could ask if the demand would be the same for second-hand small games.

For the indie game developer, this could be anything from a slight inconvenience to a major problem, depending on the game you’ve got going. A free-to-play service or a game with loads of replay value may not take too much damage. A short-but-sweet single player game, however, will have to do some major convincing to hinder people from getting a nickle back of their dime (for others to save, what, 2 bucks?). On their side is the image of being the small underdog. As long as the indies as a group and the developer as itself can maintain the feeling of true-to-it’s-soul artist, they are way better of than…

… the big players. Who are likely to have the biggest problem with this, money-wise. They may be more financially secure, and have spread their risks more, but a major investment into a PC game is about to be a hard sell again for single-player pay-up-front games. Especially if they only hold, or are designed for, one play-through. As if the pirates weren’t enough.

Luckily, an ability to re-sell digital games could mean somewhat less piracy. Attempts have been made for years now from various media businesses to “stop” pirates, but that’s been as effective as stopping water from pouring in to a boat with a leakage. As people smarter than me have already said, piracy is a problem with a lack of proper options – as consumers and digital natives, we want stuff easy, fast and preferably cheap or even free. If you get us caring, however, we can pay a lot. That’s pretty much why free-to-play work while Collector’s Editions also does. And being able to buy a game super-cheap, and be able to sell it on from there could make it very cheap to try a game out you’re not sure about.

I pretty much started writing this as Coilwork’s Skype channel got ablaze with discussion. They were, to understate thing, worried. I think they – and anyone else worrying – can relax. You should really take this change into consideration when finding your business model for a game, but it’s not the End Of The World. It could actually be a change for the better!

By the way, for the last year I’ve become increasingly politically active and concious about it. I don’t want to write two separate blogs, though, and this blog isn’t as active as I want (besides, “[my name] on game design” sounds arrogant and cheesy as hell). So I guess this is as good a time as any to merge this “game design” blog with my old Oh-so-insanely inactive politics blog. The two topics are very much alike, in my opinion – but that’s a matter for another post.

And, in case any reader wonders, it’ll be leaned towards liberalism, feminism (in the “free people of both genders from our own oppression”-style) and, to some degree, (secular) humanism.

Source: http://curia.europa.eu/jcms/upload/docs/application/pdf/2012-07/cp120094en.pdf (via http://www.rockpapershotgun.com) – full source at http://curia.europa.eu/juris/document/document.jsf?text=&docid=124564&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=2613954

A rightholder who has marketed a copy in the territory of a Member State of the EU thus loses the right to rely on his monopoly of exploitation in order to oppose the resale of that copy

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