EU Court Rules: Steam, GoG Must Permit Reselling of Digital Games

The Court of Justice of the European Union has made a groundbreaking decision, affirming that consumers within the EU can legally resell their previously purchased and downloaded games and software, even if an End User License Agreement (EULA) prohibits such actions. This ruling has significant implications for digital marketplaces like Steam, GoG, and Epic Games. Let's delve into the details and understand the full scope of this decision.

EU Court Sanctions Resale of Downloadable Games

The Principle of Exhaustion and Copyright Boundaries

The legal basis for this ruling stems from a dispute between software reseller UsedSoft and developer Oracle, initially contested in German courts. The European Court of Justice established the principle of exhaustion of the distribution right, commonly referred to as the Principle of Exhaustion of Copyrights. This principle dictates that once a copyright holder sells a copy and grants the customer the right to use it indefinitely, their exclusive right to control the distribution of that copy is exhausted.

This landmark decision empowers consumers across the European Union to resell licenses for digital games and software. The original purchaser can transfer their license, allowing the new buyer to download the game directly from the publisher's website. The court's ruling explicitly states:

"A license 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... Therefore, even if the license agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy."

The practical implementation of this ruling, however, presents challenges. The original buyer must provide a code to transfer the license and must forfeit their access to the game upon resale. The absence of a standardized marketplace for these transactions raises questions about the logistics of license transfer, especially since physical copies may remain registered to the original owner's account.

(1) "The principle of copyright exhaustion is a limit on the copyright owner’s general right to control the distribution of their work. Once a copy of the work has been sold, with the copyright-holder’s consent, the right is said to be “exhausted” – meaning the purchaser is free to re-sell that copy, and the rights-owner has no right to object." (via Lexology.com)

Reseller Cannot Access or Play the Game Upon Resale

While this ruling overrides non-transferable clauses commonly found in user agreements, it imposes a significant limitation: the seller must make the digital copy unusable on their own computer upon resale. The European courts emphasize that:

"An original acquirer of a tangible or intangible copy of a computer program for which the copyright holder’s right of distribution is exhausted must make the copy downloaded onto his own computer unusable at the time of resale. If he continued to use it, he would infringe the copyright holder’s exclusive right of reproduction of his computer program."

This ensures that the resale does not lead to unauthorized duplication and use of the software.

Allows the Reproduction of Copies Necessary for Program Use

The court also addressed the issue of reproduction rights, clarifying that while the exclusive right of distribution is exhausted, the exclusive right of reproduction remains intact, albeit with certain allowances. The ruling states that:

"In this context, the Court’s answer is that any subsequent acquirer of a copy for which the copyright holder’s distribution right is exhausted constitutes such a lawful acquirer. He can therefore download onto his computer the copy sold to him by the first acquirer. Such a download must be regarded as a reproduction of a computer program that is necessary to enable the new acquirer to use the program in accordance with its intended purpose." (via EU Copyright Law: A Commentary (Elgar Commentaries in Intellectual Property Law series) 2nd Edition)

This means that necessary copies for the use of the program are permitted, and no contract can prohibit this.

Restriction on the Sale of Backup Copies

Finally, the court clarified the rules surrounding backup copies, stating that:

"Lawful acquirers of computer programs cannot resell backup copies of the programs." This is according to the Court of Justice of the European Union (CJEU) in the case between Aleksandrs Ranks & Jurijs Vasilevics v. Microsoft Corp.

This ruling underscores the nuanced balance between consumer rights and copyright protection, setting a precedent for digital content resale in the European Union.