EU Demands Reselling of Downloaded Games

The European Union's Court of Justice has ruled that consumers within the EU can legally resell previously purchased and downloaded games and software, even if the End User License Agreement (EULA) prohibits it. Let's delve into the details.

EU Court Sanctions Resale of Downloadable Games

The Principle of Exhaustion and Copyright Boundaries

The Court of Justice of the European Union has declared the resale of previously purchased downloadable games and software legal for consumers. This landmark decision stems from a legal dispute between software reseller UsedSoft and developer Oracle, initially heard in German courts.

The court's ruling hinges on the principle of exhaustion of distribution rights (the Principle of Exhaustion of Copyrights₁). This principle dictates that once a copyright holder sells a copy and grants the customer unlimited use, the distribution right is exhausted, thereby permitting resale.

This ruling applies to EU member states and covers games acquired through platforms like Steam, GoG, Epic Games, and others. The original purchaser gains the right to sell the game's license, enabling a new buyer to download it from the publisher's website. The court's decision 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."

In practice, this might involve the original buyer transferring a game license code, relinquishing their access upon resale. However, the lack of a formal marketplace for these transactions creates complexities and raises numerous unanswered questions, such as the precise mechanics of transferring registration. For instance, physical copies 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)

Resellers Cannot Access or Play the Game After Resale

While the ruling invalidates non-transferable clauses in EU member states' EULAs, a key limitation is that the seller can no longer access the game after resale. The EU court clarifies: "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."

Permitted Reproduction for Program Use

Concerning reproduction rights, the court clarifies that while the distribution right is exhausted, the reproduction right remains, but is limited to "necessary reproductions for the lawful acquirer's use." This allows for copies needed for intended program use, a right no contract can override. As stated in EU Copyright Law: A Commentary (Elgar Commentaries in Intellectual Property Law series) 2nd Edition: "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."

Restriction on Reselling Backup Copies

Importantly, the court specifies that backup copies cannot be resold. The Court of Justice of the European Union (CJEU) ruling in Aleksandrs Ranks & Jurijs Vasilevics v. Microsoft Corp. confirms this restriction: "Lawful acquirers of computer programs cannot resell backup copies of the programs."