So, as many of us have already seen, there have been some interesting developments surrounding the sale of "used" digital copies of videogames. Most recently, in a case between UFC Que Choisir v. Valve, the Tribunal de grande instance de Paris ruled that so-called dematerialized games, i.e. games that are provided to you via a download, are also allowed to be resold just like games on physical media.
Source: French court rules that Steam’s ban on reselling used games is contrary to European law
For ease of discussion, I tried to break down some points from the case I thought would be interesting/important. Preface: I am not an expert on EU law and interpreting the French ruling involved liberal use of Google translate alongside my own knowledge of the language. If there are inconsistencies, I welcome others to point it out for the sake of accuracy here.
The relevant clause about reselling digital games in the Steam Subscriber Agreement (SSA) that is considered unlawful by the French court in question is 1.C. In it, Valve states the following:
"Your Account, including any information pertaining to it (e.g.: contact information, billing information, Account history and Subscriptions, etc.), is strictly personal. You may therefore not sell or charge others for the right to use your Account, or otherwise transfer your Account, nor may you sell, charge others for the right to use, or transfer any Subscriptions other than if and as expressly permitted by this Agreement (including any Subscription Terms or Rules of Use) or as otherwise specifically permitted by Valve."
Source: Steam Subscriber Agreement
In the court's conclusions about the legality of clause 1.C of the SSA, the Usedsoft v. Oracle case (C-128/11) was cited as a relevant precedent, and it pointed to Article 4 paragraph 2 of EU directive 2001/29/CE, directive 2009/24/CE, and articles L. 122-3-1 and L. 122-6 3° of the French code for intellectual property protection as legal basis for its decision. (See p. 69 of the ruling)
The original ruling , in French, can be found in full here: https://cdn2.nextinpact.com/medias/16-01008-ufc-que-choisir-c--valve.pdf
In the Usedsoft case, the CJEU clarified the usage of directive 2009/24/EC and the applicability of the principle of exhaustion of distribution rights in the context of computer software (the aforementioned art. 4(2)). See below for a link to that. Effectively, it meant that users can, indeed, resell their computer software if a number of conditions were met; Boels Zanders, a legal firm, summarized these as follows:
I decided to reference this site, because I didn't really want to spend a bunch of time synthesizing the points from the case files when they are available online anyway.
To my understanding, Valve argued (among others) that neither directive 2001/29 nor 2009/24 are applicable. The former since it is only applicable to sales of tangible media (which, as we will see in the e-book case, is not true), and the latter because games are "complex works" rather than "computer programs". The court disagreed with the distinction between videogames and computer programs, referring recital 7 of directive 2009/24/EC among others. This can be found under heading "(a) Sur l’application en l’espèce des directives 2001/29/CE et 2009/24/CE" of the ruling on p. 65. This is a bit confusing, but from what I gathered the court disagreed with Valve on the point of video games not being included in 2009/24, on the basis that the Berne Convention for the Protection of Literary and Artistic Works already considers computer programs as being as artistic works, and that there therefore video games should fall under under the rules of directive 2009/24. This would also mean that the conclusions from Usedsoft as pertaining to resale would apply.
The above might become an interesting point of contention as the Interactive Software Federation of Europe (ISFE) is arguing that the court was mistaken in its ruling. Accompanying the ISFE's statement, there is reference to videogames being "complex works", necessitating different protections than software.
Source: French Ruling on Copyright flies in face of established EU law
This interpretation is possibly based on the conclusions of C‑355/12, in which the CJEU found that "videogames ... constitute complex matter comprising not only a computer program but also graphic and sound element, which ... have a unique creative value". See below for a link to this case. I can imagine this being one of the pillars of Valve's appeal.
Edit: from what I gather, the court is already asking preliminary questions to the CJEU (see: p. 5) to resolve how to apply Art. 4(2) 2001/29 and Art. 4(2) 2009/24 to this case. This is already being discussed in the e-book case (see below), in which the AG expressed the opinion that digital downloads of e-books are covered by Art. 3(1) of directive 2001/29 rather than 4(2) of said directive. This means that authors have the exclusive right define how digitally downloaded e-books are distributed, and this right isn't "exhausted" after the first sale, as Art. 4(2) states (which applies only to physical media). This presumes that e-books are not considered "computer programs", which have additional set of rules applied to them under directive 2009/24. The AG argues that e-books cannot be considered "computer programs", making the distinction between tools and artistic works. The AG says that 2009/24 is considered lex specialis and applies purely to computer programs, and that it cannot be extended to other media however comparable -- so I would assume video games wouldn't apply either.
So combined with what has been said in C-355/12 (videogames are complex works) and what's being argued in the e-book case, it seems likely that videogames could be treated the same way as e-books, following preliminary ruling by the CJEU, assuming the court agrees with the AG.
Valve also argued there is no "sale" (and therefore "purchase") to be spoken of (p. 64). Instead, it provides "subscriptions". The French court did not find this to be applicable, however, because the "subscriptions" are for an indefinite period of time (which was also a decisive factor in the Usedsoft case) and as such are considered "purchases", not subscriptions. (See p. 69 of the ruling).
So, from what I gathered, three important conclusions from [the arguments made in the French case] were were that:
1. Videogames can be treated like computer programs with regard to the application of the directives that were relevant to the Usedsoft ruling.
[19/12 update: now confirmed to be false, software is only software, i.e. not also other digital goods like e-books.]
2. There is no relevant distinction to be found in the directive [2009/24] about the distinction between material and immaterial distribution of software, so they are to be treated the same. (I didn't go into this, but the explanation for this is given on pp. 65-66 of the ruling.)
[19/12 update: this is true, but because software rules only apply to software as such (lex specialis), this becomes irrelevant. Instead, 2001/29 becomes the relevant directive, from which you can conclude there to be a difference between these forms of distribution.]
3. A transaction on Steam in exchange for access to a game does not constitute a "subscription" but a purchase.
On the basis of these three reasons, the precedent set by the Usedsoft case would still apply and games can be resold by consumers. However, as alluded to by myself several times earlier, the current e-book case as well as some other factors call into question the accuracy of this conclusion. As said, several questions have been posed by the French court to the CJEU, which, once answered, will help settle this case.
Valve's response (via Doug Lombardi):
"We disagree with the decision of the Paris Court of First Instance and will appeal it. The decision will have no effect on Steam while the case is on appeal"
www.pcgamer.com
=======
Reading over the e-book case (C‑263/18 (Nederlands Uitgeversverbond & Groep Algemene Uitgevers v. Tom Kabinet)), the AG makes some interesting points that could also be applied in the distinction between computer software and videogames, especially if the latter are to be considered "complex works" and thus protected under directive 2001/29/EC from reselling. I'll drop them in a spoiler below to avoid this post from becoming too long.
The court's final judgment is yet to be delivered on this one. I believe I read it should be given by the end of 2019, but I can't find the source on that. The AG's conclusion was basically that e-books don't fall under the same clause that allows computer software to be resold, like in Usedsoft. You can find a link to the case below.
Edit: e-books case judgment
If I had to wager money on the outcome of UFC Que Choisir v. Valve, I would say that the case against Valve will fall apart based on the above once it is referred to the CJEU for a preliminary ruling to interpret the disagreement on the application of the relevant laws. However, I've not really dug into the directives themselves too much, only really scanned case law and some secondary/tertiary sources. It would be interesting but even more time consuming than this thread.
=======
Further reading:
Press release by UFC Que-Choisir:
www.quechoisir.org
C‑128/11 (Usedsoft v. Oracle)
curia.europa.eu
C‑166/15 (Ranks & Vasiļevičs v. Finanšu un ekonomisko noziegumu izmeklēšanas prokoratūra & Microsoft)
curia.europa.eu
C‑355/12 (Nintendo v. PC Box & 9Net) - aka "videogames ... constitute complex matter comprising not only a computer program "
curia.europa.eu
ONGOING C‑263/18 (Nederlands Uitgeversverbond & Groep Algemene Uitgevers v. Tom Kabinet) - aka the e-book case
curia.europa.eu
Directive 2001/29/EC
Directive 2009/24/EC
=======
The BBcode editor is being all sorts of screwy so I wasn't able to present this quite as cleanly as I wanted to, but I hope it's still readable enough.
=======
Edit: realized I didn't really explain the relevance of the Usedsoft case anywhere, so I added that. Hope that clarifies some things.
Edit 2: I had to alter some stuff about the part regarding Valve's stance on directives 2001/29 and 2009/24. I misinterpreted that but I think I got the gist of it now. Basically, Valve did not seem to recognize the "out" that they had on the basis of 2001/29, which was also supported by the AG's opinion in the e-book case, and instead opted to use the argument that games aren't being "purchased" but "subscribed to".
Source: French court rules that Steam’s ban on reselling used games is contrary to European law
For ease of discussion, I tried to break down some points from the case I thought would be interesting/important. Preface: I am not an expert on EU law and interpreting the French ruling involved liberal use of Google translate alongside my own knowledge of the language. If there are inconsistencies, I welcome others to point it out for the sake of accuracy here.
The relevant clause about reselling digital games in the Steam Subscriber Agreement (SSA) that is considered unlawful by the French court in question is 1.C. In it, Valve states the following:
"Your Account, including any information pertaining to it (e.g.: contact information, billing information, Account history and Subscriptions, etc.), is strictly personal. You may therefore not sell or charge others for the right to use your Account, or otherwise transfer your Account, nor may you sell, charge others for the right to use, or transfer any Subscriptions other than if and as expressly permitted by this Agreement (including any Subscription Terms or Rules of Use) or as otherwise specifically permitted by Valve."
Source: Steam Subscriber Agreement
In the court's conclusions about the legality of clause 1.C of the SSA, the Usedsoft v. Oracle case (C-128/11) was cited as a relevant precedent, and it pointed to Article 4 paragraph 2 of EU directive 2001/29/CE, directive 2009/24/CE, and articles L. 122-3-1 and L. 122-6 3° of the French code for intellectual property protection as legal basis for its decision. (See p. 69 of the ruling)
The original ruling , in French, can be found in full here: https://cdn2.nextinpact.com/medias/16-01008-ufc-que-choisir-c--valve.pdf
In the Usedsoft case, the CJEU clarified the usage of directive 2009/24/EC and the applicability of the principle of exhaustion of distribution rights in the context of computer software (the aforementioned art. 4(2)). See below for a link to that. Effectively, it meant that users can, indeed, resell their computer software if a number of conditions were met; Boels Zanders, a legal firm, summarized these as follows:
- It is a European license granted for use in the EU.
- It is a license for standard software distributed on media or by internet download.
- The license was granted for an indefinite period.
- The price paid for the license matches the economic value of the copy of the software. In practice this means paying a lump sum amount.
- The software license is resold as a whole and is not split. For example, if the original buyer bought 15 licenses at once, he may not resell them individually but as a bundle of 15 licenses.
- The seller must render any own copies of the software unusable after resale.
I decided to reference this site, because I didn't really want to spend a bunch of time synthesizing the points from the case files when they are available online anyway.
To my understanding, Valve argued (among others) that neither directive 2001/29 nor 2009/24 are applicable. The former since it is only applicable to sales of tangible media (which, as we will see in the e-book case, is not true), and the latter because games are "complex works" rather than "computer programs". The court disagreed with the distinction between videogames and computer programs, referring recital 7 of directive 2009/24/EC among others. This can be found under heading "(a) Sur l’application en l’espèce des directives 2001/29/CE et 2009/24/CE" of the ruling on p. 65. This is a bit confusing, but from what I gathered the court disagreed with Valve on the point of video games not being included in 2009/24, on the basis that the Berne Convention for the Protection of Literary and Artistic Works already considers computer programs as being as artistic works, and that there therefore video games should fall under under the rules of directive 2009/24. This would also mean that the conclusions from Usedsoft as pertaining to resale would apply.
The above might become an interesting point of contention as the Interactive Software Federation of Europe (ISFE) is arguing that the court was mistaken in its ruling. Accompanying the ISFE's statement, there is reference to videogames being "complex works", necessitating different protections than software.
Source: French Ruling on Copyright flies in face of established EU law
This interpretation is possibly based on the conclusions of C‑355/12, in which the CJEU found that "videogames ... constitute complex matter comprising not only a computer program but also graphic and sound element, which ... have a unique creative value". See below for a link to this case. I can imagine this being one of the pillars of Valve's appeal.
Edit: from what I gather, the court is already asking preliminary questions to the CJEU (see: p. 5) to resolve how to apply Art. 4(2) 2001/29 and Art. 4(2) 2009/24 to this case. This is already being discussed in the e-book case (see below), in which the AG expressed the opinion that digital downloads of e-books are covered by Art. 3(1) of directive 2001/29 rather than 4(2) of said directive. This means that authors have the exclusive right define how digitally downloaded e-books are distributed, and this right isn't "exhausted" after the first sale, as Art. 4(2) states (which applies only to physical media). This presumes that e-books are not considered "computer programs", which have additional set of rules applied to them under directive 2009/24. The AG argues that e-books cannot be considered "computer programs", making the distinction between tools and artistic works. The AG says that 2009/24 is considered lex specialis and applies purely to computer programs, and that it cannot be extended to other media however comparable -- so I would assume video games wouldn't apply either.
So combined with what has been said in C-355/12 (videogames are complex works) and what's being argued in the e-book case, it seems likely that videogames could be treated the same way as e-books, following preliminary ruling by the CJEU, assuming the court agrees with the AG.
Valve also argued there is no "sale" (and therefore "purchase") to be spoken of (p. 64). Instead, it provides "subscriptions". The French court did not find this to be applicable, however, because the "subscriptions" are for an indefinite period of time (which was also a decisive factor in the Usedsoft case) and as such are considered "purchases", not subscriptions. (See p. 69 of the ruling).
So, from what I gathered, three important conclusions from [the arguments made in the French case] were were that:
1. Videogames can be treated like computer programs with regard to the application of the directives that were relevant to the Usedsoft ruling.
[19/12 update: now confirmed to be false, software is only software, i.e. not also other digital goods like e-books.]
2. There is no relevant distinction to be found in the directive [2009/24] about the distinction between material and immaterial distribution of software, so they are to be treated the same. (I didn't go into this, but the explanation for this is given on pp. 65-66 of the ruling.)
[19/12 update: this is true, but because software rules only apply to software as such (lex specialis), this becomes irrelevant. Instead, 2001/29 becomes the relevant directive, from which you can conclude there to be a difference between these forms of distribution.]
3. A transaction on Steam in exchange for access to a game does not constitute a "subscription" but a purchase.
On the basis of these three reasons, the precedent set by the Usedsoft case would still apply and games can be resold by consumers. However, as alluded to by myself several times earlier, the current e-book case as well as some other factors call into question the accuracy of this conclusion. As said, several questions have been posed by the French court to the CJEU, which, once answered, will help settle this case.
Valve's response (via Doug Lombardi):
"We disagree with the decision of the Paris Court of First Instance and will appeal it. The decision will have no effect on Steam while the case is on appeal"
Valve will appeal French courts ruling that Steam cannot ban resale of 'dematerialised' games (updated)
Valve face a half-million Euro fine.
www.pcgamer.com
=======
Reading over the e-book case (C‑263/18 (Nederlands Uitgeversverbond & Groep Algemene Uitgevers v. Tom Kabinet)), the AG makes some interesting points that could also be applied in the distinction between computer software and videogames, especially if the latter are to be considered "complex works" and thus protected under directive 2001/29/EC from reselling. I'll drop them in a spoiler below to avoid this post from becoming too long.
(Par. 61) "Third, in the case of literary, musical or cinematographic works, the usefulness is often exhausted, so to speak, after a single reading, hearing or viewing. The user is therefore prepared to dispose of his copy of the work after the first occasion on which he is acquainted with it, having thereby fully satisfied his needs in connection with the work. That is not the case of a computer program, which is normally intended to be used in the long term. Computer programs are therefore much less likely to be put quickly in circulation on the second-hand market than works in other categories."
(Par. 67) "In the present case, Tom Kabinet maintains that an e-book constitutes a computer program and that the judgment in UsedSoft should therefore be applied directly to it. That argument cannot succeed, however. An e-book is not a computer program, that is to say, a set of instructions for the computer to perform certain operations, but a digital file containing data which the computer must process. There is thus no reason to apply to an e-book the specific rules designed for computer programs, as interpreted by the Court. Furthermore, an e-book is protected by copyright not as a mere digital file but because of its content, that is to say, the literary work which it contains. And that protection is covered by Directive 2001/29."
(Par. 87) "In the first place, as I have already mentioned, dematerialised digital copies do not deteriorate with use, and used copies are therefore perfect substitutes for new copies. To that must be added the ease of exchanging such copies, which requires neither additional effort nor additional cost. The parallel second-hand market is thus likely to affect the interests of the copyright holders much more than the market for second-hand tangible objects."
(Par. 91) "That results in two risks for the copyright holders. The first is the risk of competition from copies of the same quality offered at a fraction of the original market price and the second is the risk of an uncontrolled multiplication of the copies in circulation. Multiple exchanges, over a brief period, of a digital copy of the work are equivalent in practice to a multiplication of copies. That is especially true when, as is often the case for books, the user’s needs are satisfied after a single reading."
(Par. 92) "In the second place, there is a risk of multiplication, this time genuine multiplication, owing to the fact that downloading consists in a reproduction of the copy on the receiving computer. Although, in principle, after the content has been downloaded by the purchaser, the seller is under an obligation to delete his own copy, compliance with that obligation is difficult to verify, especially among individuals."
(Par. 95) "Last, it must be borne in mind that downloading with a permanent right of use as a mode of supplying online content is in the process of being relegated to the past. New modes of access like ‘streaming’ or subscription access have emerged and are widely approved, not only by copyright holders and distributors but also by users. These new modes of access ensure higher revenues for the former and provide the latter with more flexible access to a much greater ranger of content. It is true that these new modes of access do not initially concern e-books: it is difficult to imagine streaming a book. Nonetheless, solutions already exist whereby, for the price of a monthly or annual subscription, the user obtains access to an entire library of e-books. Although that access still requires the downloading of the book, there is no payment for each object downloaded and it would therefore be difficult to speak in that case of a ‘sale’. However, the sale of a copy of the work is the condition of the exhaustion of the distribution right."
(Par. 67) "In the present case, Tom Kabinet maintains that an e-book constitutes a computer program and that the judgment in UsedSoft should therefore be applied directly to it. That argument cannot succeed, however. An e-book is not a computer program, that is to say, a set of instructions for the computer to perform certain operations, but a digital file containing data which the computer must process. There is thus no reason to apply to an e-book the specific rules designed for computer programs, as interpreted by the Court. Furthermore, an e-book is protected by copyright not as a mere digital file but because of its content, that is to say, the literary work which it contains. And that protection is covered by Directive 2001/29."
(Par. 87) "In the first place, as I have already mentioned, dematerialised digital copies do not deteriorate with use, and used copies are therefore perfect substitutes for new copies. To that must be added the ease of exchanging such copies, which requires neither additional effort nor additional cost. The parallel second-hand market is thus likely to affect the interests of the copyright holders much more than the market for second-hand tangible objects."
(Par. 91) "That results in two risks for the copyright holders. The first is the risk of competition from copies of the same quality offered at a fraction of the original market price and the second is the risk of an uncontrolled multiplication of the copies in circulation. Multiple exchanges, over a brief period, of a digital copy of the work are equivalent in practice to a multiplication of copies. That is especially true when, as is often the case for books, the user’s needs are satisfied after a single reading."
(Par. 92) "In the second place, there is a risk of multiplication, this time genuine multiplication, owing to the fact that downloading consists in a reproduction of the copy on the receiving computer. Although, in principle, after the content has been downloaded by the purchaser, the seller is under an obligation to delete his own copy, compliance with that obligation is difficult to verify, especially among individuals."
(Par. 95) "Last, it must be borne in mind that downloading with a permanent right of use as a mode of supplying online content is in the process of being relegated to the past. New modes of access like ‘streaming’ or subscription access have emerged and are widely approved, not only by copyright holders and distributors but also by users. These new modes of access ensure higher revenues for the former and provide the latter with more flexible access to a much greater ranger of content. It is true that these new modes of access do not initially concern e-books: it is difficult to imagine streaming a book. Nonetheless, solutions already exist whereby, for the price of a monthly or annual subscription, the user obtains access to an entire library of e-books. Although that access still requires the downloading of the book, there is no payment for each object downloaded and it would therefore be difficult to speak in that case of a ‘sale’. However, the sale of a copy of the work is the condition of the exhaustion of the distribution right."
The court's final judgment is yet to be delivered on this one. I believe I read it should be given by the end of 2019, but I can't find the source on that. The AG's conclusion was basically that e-books don't fall under the same clause that allows computer software to be resold, like in Usedsoft. You can find a link to the case below.
Edit: e-books case judgment
If I had to wager money on the outcome of UFC Que Choisir v. Valve, I would say that the case against Valve will fall apart based on the above once it is referred to the CJEU for a preliminary ruling to interpret the disagreement on the application of the relevant laws. However, I've not really dug into the directives themselves too much, only really scanned case law and some secondary/tertiary sources. It would be interesting but even more time consuming than this thread.
=======
Further reading:
Press release by UFC Que-Choisir:
Condamnation de Steam – L’UFC-Que Choisir fait reconnaître le droit de…
L’UFC-Que Choisir se félicite de sa victoire au profit des « gamers » utilisateurs de la plateforme de jeux vidéo Steam. Par sa décision du 17 septembre 2019 (susceptible d’appel), le tribunal de…
www.quechoisir.org
C‑128/11 (Usedsoft v. Oracle)
CURIA - Documents
curia.europa.eu
C‑166/15 (Ranks & Vasiļevičs v. Finanšu un ekonomisko noziegumu izmeklēšanas prokoratūra & Microsoft)
CURIA - Documents
curia.europa.eu
C‑355/12 (Nintendo v. PC Box & 9Net) - aka "videogames ... constitute complex matter comprising not only a computer program "
CURIA - Documents
curia.europa.eu
ONGOING C‑263/18 (Nederlands Uitgeversverbond & Groep Algemene Uitgevers v. Tom Kabinet) - aka the e-book case
CURIA - Documents
curia.europa.eu
Directive 2001/29/EC
Directive 2009/24/EC
=======
The BBcode editor is being all sorts of screwy so I wasn't able to present this quite as cleanly as I wanted to, but I hope it's still readable enough.
=======
Edit: realized I didn't really explain the relevance of the Usedsoft case anywhere, so I added that. Hope that clarifies some things.
Edit 2: I had to alter some stuff about the part regarding Valve's stance on directives 2001/29 and 2009/24. I misinterpreted that but I think I got the gist of it now. Basically, Valve did not seem to recognize the "out" that they had on the basis of 2001/29, which was also supported by the AG's opinion in the e-book case, and instead opted to use the argument that games aren't being "purchased" but "subscribed to".
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