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Digital Rights Over Video Games Under International Scrutiny

Two people playing a console video game
By Joseph Fawbush, Esq. on September 27, 2019

Anyone else remember blowing on their Nintendo cartridges when games failed to load? Or selling games at a garage sale when you could upgrade to a new system? Today, PC gamers and an increasing portion of console gamers use digital distribution methods. Leaving the house just takes time away from gaming.

But the digital distribution of games can cause issues beyond giving me nostalgia. Some game distributors such as Steam and Origin classify their businesses as services, not goods, thereby avoiding the obligation to allow the purchaser the right to resale. In the United States, European Union, and most other developed nations, companies cannot prohibit the resale of goods by the owner. In the U.S., the right to re-sell a copyrighted work is known as the “first sale” doctrine. It applies only to the particular copy owned.

Digital Game Distributor “Subscriptions”

Valve, which owns Steam, does not have an end user license agreement, but rather a “Steam Subscriber Agreement.” This states in relevant part:

Valve hereby grants, and you accept, a non-exclusive license and right, to use the Content and Services for your personal, non-commercial use . . . The Content and Services are licensed, not sold. Your license confers no title or ownership in the Content and Services.

Nowhere on Steam’s current site do they have a “buy” icon next to games. They simply list the price of what they apparently classify to be an additional one-time subscription cost for a non-transferable license to play the game.

In France, that prompted a challenge from UFC-Que Choisir, a consumer rights organization, which filed a complaint in 2015. It argued that digital property should be treated as a good, not a service.

The EU Ruling

Earlier this month, the Paris Court of First Impression ruled in favor of UFC-Que Choisir, finding that Steam could not prohibit the resale of games based on the games’ method of delivery. While UFC-Que Choisir is claiming victory, Valve is appealing the ruling. While the appeal is pending no changes to the resale rights will change, in Europe or, of course, the U.S.

Furthermore, the penalty for noncompliance is 3,000 Euros a day for up to six months, or about 500,000 Euros. That doesn’t provide a lot of incentive for Valve to comply.

Re-Selling Digital Games in the U.S.

In July, the Supreme Court declined to take a case regarding the resale of digital music files. In Capital Records v. ReDigi, the U.S. Second Circuit Court of Appeals found that ReDigi was violating copyright by allowing the resale (of only one copy) of previously downloaded music files.

Similarly, there is no indication that digital video game distributors will feel pressure under U.S. law or the courts to change their business strategy. Although some have voluntarily agreed to provide ownership and the right to re-sell games as a marketing tool. As of now, it is premature to anticipate policy changes for all large distributors in the U.S. But future lawsuits on the issue may still occur.

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