EU Ruling: Steam, GoG Must Permit Resale of Digital Games

The Court of Justice of the European Union has made a groundbreaking decision allowing consumers to resell previously purchased and downloaded games and software, despite restrictions in End User License Agreements. This ruling has significant implications for digital marketplaces and consumers alike.

EU Court Sanctions Resale of Downloadable Games

The Principle of Exhaustion and Copyright Boundaries

The Court of Justice of the European Union has ruled that it is legal for consumers to resell games and software they have previously bought and downloaded. This landmark decision stems from a legal dispute between the software reseller UsedSoft and the developer Oracle, which was initially heard in German courts.

The court introduced the concept of the exhaustion of the distribution right, or the Principle of Exhaustion of Copyrights. According to this principle, when a copyright holder sells a copy and grants the customer an unlimited right to use it, the distribution right is considered exhausted. This allows the initial buyer to resell the license, enabling another user to download the game from the publisher's website.

This ruling applies to consumers across European Union member states and extends to games purchased through popular platforms such as Steam, GoG, and Epic Games. The court's decision 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 practical terms, the original buyer may provide a code for the game's license and must forfeit access upon resale. However, the lack of a standardized marketplace or system for these transactions raises several questions, including how the transfer of registration would occur, particularly when 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)

Reseller Cannot Access or Play the Game Upon Resale

Despite clauses in user agreements that prohibit transfer, the EU ruling overrides such restrictions for member states. While consumers now have the right to resell digital games, the original seller must relinquish access to the game upon 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."

Allows the Reproduction of Copies Necessary for Program Use

The court further clarified that while the exclusive right of distribution is exhausted, the right of reproduction remains intact but is subject to necessary reproductions for the lawful acquirer's use. This means that any subsequent buyer of a copy for which the distribution right is exhausted is also a lawful acquirer and can download the game onto their computer.

The court's stance is, "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)

Restriction on the Sale of Backup Copies

Importantly, the court has ruled that backup copies cannot be resold. Lawful acquirers are prohibited from reselling any backup copies of computer programs.

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