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Can you sell second hand games legally? Should you?

By on April 16, 2013

Jas Purewal, an interactive entertainment lawyer at Osborne Clarke and writer of Gamer/Law, takes a look at the fraught question of the legality of second hand sales of games.

The second hand sale of digital content (including games) excites lots of emotive debate. Is it a good thing for consumers, giving them choices at more flexible price points and the ability to recover money for further purchases? Or is it killing the creative industries? Could it be both?

Whether or not second hand sales can exist as a business is in large part a legal question: does the law permit the resale of used digital content? Can you sell your unwanted digital games, music, books or films to someone else? Seemingly a simple question, with ongoing legal efforts to answer it…but we don’t have much clarity yet.

What the judges are thinking

  • In 2010, a US appeal court decided in the case of Vernor v Autodesk that, in general terms, there is no right of resale in digital content – in part due to the original publisher continuing to have IP rights over the software.
  • In 2012, the European Court of Justice published its decision in Oracle v UsedSoft, which in general terms supported the legality of second hand sales of digital content in the European Union.  However, the decision had a number of ambiguities which render its practical effect unclear.  Does it apply to cloud services?  How far down the rabbit hole do we go: does it cover the second hand sale of in-game virtual goods as well as the game itself?
  • 2013 has already seen two further important cases on the subject.  In Kirtsaeng the US Supreme Court ruled in favour of an individual who had been reselling textbooks in the US on the basis of the first sale doctrine – rejecting arguments that would have limited the individual’s ability to engage in second hand sales.  More on the case here.
  • On the other hand, in ReDigi a US judge has just thrown doubt on the legality of reselling digital music, again on the basis of the first sale doctrine and its interaction with IP laws.

What the publishers and manufacturers are thinking

Some aspects of the creative industries are busily getting on with technical solutions to limit the resale of digital content.  So, for example, the widespread rumours that the next generation games consoles will have ‘always on’ DRM.  On the other hand, there are voices moving in the other direction.  The games digital distribution platform Green Man Gaming, for example, prominently features the ability to trade in unwanted digital games purchased via them.

So can you sell second hand games or not?

We don’t know frankly – it’s a bit of a mess at the moment.  The EU, based on the most recent ECJ case at least, seems to be moving towards recognising some kind of legality to second hand sales, but the practical implementation of that is utterly fraught with uncertainty and we shouldn’t assume that a single case means the EU has made up its mind. Then, on the US side, we’re seeing conflicting decisions which ultimately need to lead to a resolution of one kind or another. Together they control around 50%+ of the worldwide games industry, though that raises the question of what the rest of the world thinks about the importance of a legal debate about second hand sales. In the meantime, consumers and creative businesses are left unsure what to do. The creative industries don’t even know what to think between themselves: what’s the likelihood that film, games, music and books will all agree on a common approach to this issue which affects them all?

Games as a service won’t save us (yet)

Zooming out a little, in the long term this is perhaps a problem that will lose significance as digital content increasingly moves from a goods to a services model. Or put it another way: this is ultimately a question about who controls the distribution of digital content, at a time when distribution of digital content is being disrupted significantly. I’d wager that the second hand sales question was even more important for console manufacturers back in 2007 when they still dominated the games industry or for DVD distribution businesses when DVD was the dominant distribution method, but the consoles now they have to deal with mobile, social and online competitors and DVDs have to contend with Lovefilm, Netflix and Hulu –  which is likely a much bigger problem than second hand sales in the grand scheme of things.

Still, that doesn’t mean we can ignore the issue. In the medium term (i.e. for the next several years), it looks like consumers will continue to spend significant money on  digital content that essentially looks, and is treated like, its physical equivalent: a digital game that once downloaded is just like the DVD version, for example. Consumers and regulators will continue to think of the digital and physical versions as being the same (or at least very similar), with the courts having to decide if they agree or not. As a result we can expect this legal saga to continue, unfortunately with no prospect of a consistent answer anytime soon.

About Jas Purewal

Jas Purewal is an interactive entertainment lawyer at Osborne Clarke and writer of Gamer/Law