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What a new digital game trading law in Europe could mean for you
What a new digital game trading law in Europe could mean for you
July 3, 2012 | By Jas Purewal

July 3, 2012 | By Jas Purewal
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[Jas Purewal is a games lawyer and writer of Gamer/Law. The following was reproduced from the original with his permission.]

The second hand sale of physical and digital software has effectively been declared legal, according to a judgment published by the Court of Justice of the European Union today.  This has the potential to have a real impact on the way that software is sold and consumed – but at the same time the case raises more questions than it answers, so we're really not in a clear cut situation at all.  Read on for more details…

The facts:

The case related to a dispute between software companies Oracle and UsedSoft over whether UsedSoft could sell businesses and consumers used licenses for Oracle software without Oracle’s permission (previously discussed here).  Oracle therefore took UsedSoft to court in Germany, which was referred to the Court of Justice of the European Union ("CJEU").

The judgment – short view:

Essentially, the court held that, under EU law, the right of software developers to control distribution of a piece of software – whether stored physically or digitally –  is "exhausted" (i.e. lost) once the developer has been paid for it (known as a "first sale").  This means that developers lose the ability to prohibit any second hand sale.

However, if a second hand sale goes ahead then the first purchaser must stop using her copy of the software and render it unusable, because the developer's right to control reproduction of software is not exhausted on a second hand sale.  In order to make sure that the first purchaser stops using the software she has sold on, it is permissible for the software developer to use "technical protective measures such as product keys".

IF YOU DON'T WANT TO READ THE LEGAL GOODNESS THAT NOW FOLLOWS (SHAME ON YOU IF SO), SKIP TO "WHAT THIS MEANS" BELOW!

The judgment in more detail:

The case involved resolving complicated questions about how international and EU law determine the legal position of second hand software sales.  My summary (omitting some of the more arcane aspects of the case) follows:
  • Under EU copyright law, a copyright holder has a number of exclusive rights regarding a copyright work – including a right of distribution (i.e. to control how the copyright work is distributed) and an exclusive right of reproduction (i.e. to control who makes a copy of the copyright work)
  • One key provision of EU law, Article 4.2 of Directive 2001/29 (aka the 'Information Society Directive') states: "The distribution right shall not be exhausted within the Community in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the Community of that object is made by the rightholder or with his consent"
Basically, the main part of the case hinged on the key question of whether the initial sale of software amounts to a "first sale" of that software.  If it did, then under Article 4.2 of the InfoSoc Directive the right of distribution would be exhausted and, if THAT happened, it would make it much harder to prohibit second hand sales. 

Key Issue 1: is the sale of software a "first sale"?

The CJEU held that 'sale' means "an agreement by which a person, in return for payment, transfers to another person his rights of ownership in an item of tangible or intangible property belonging to him" (para 42).

Whether there is a first sale of software therefore depends on whether that "right of ownership" is transferred by the software developer to the purchaser.

Oracle argued that there is no right of ownership transferred to its purchasers, and therefore no "first sale" of its software at all, because it makes its software available for free download and separately enters into license agreements with a downloader in return for that downloader paying a fee.  Oracle argued therefore that this was therefore a license arrangement, not a sales arrangement.

The CJEU disagreed.  It held "the downloading of a copy of a computer program and the conclusion of a user license agreement for that copy form an indivisible whole. Downloading a copy of a computer program is pointless if the copy cannot be used by its possessor. Those two operations must therefore be examined as a whole for the purposes of their legal classification" (para 44).

The CJEU therefore decided that making software available for download while at the same time entering into a license agreement with the downloader and receiving payment for it "examined as a whole, involve the transfer of the right of ownership of the copy of the computer program in question" (para 45).

So, the CJEU held that since the sale of software involved a "transfer of ownership" in the software from the developer to the purchaser, that means it also constitutes a "first sale" under the InfoSoc Directive.  That in turn means that the developer's right of distribution is exhausted by that first sale (para 48).

Key Issue 2: so if the sale of software by the developer to a first purchaser constitutes a first sale that exhausts the right of distribution, can the developer still control second hand sales using its right of reproduction?

The key to understanding this issue is to remember that there are separate rights of distribution and rights of reproduction in EU copyright law.  By this stage in the case, the CJEU had decided that rights of distribution weren't a problem for second hand sales.  Now it had to decide whether software developers retain an exclusive right to control reproduction under Article 5(1) of Directive 2009/24 (aka the 'Computer Programs Directive') (which, if they do, could still be used to prohibit second hand sales).

Essentially, the CJEU decided that the right to control reproduction is lost against the second purchaser (the reasons why take some explaining, but essentially it is because a second purchaser is held to be a "lawful acquirer" of the software under Article 5(1) of the Computer Program Directive).

Other issues discussed:

Issue 3: can the wording of the EU legislation be read such that the first sale/exhaustion of rights principle only applies to tangible software?

No, said the CJEU following some slightly complex discussion of the relevant legislation (paragraphs 55 – 58).  Later, it said:  "…from an economic point of view, the sale of a computer program on CD-ROM or DVD and the sale of a program by downloading from the internet are similar. The on-line transmission method is the functional equivalent of the supply of a material medium" (para 69).

And even more clear still: "To limit the application…of the principle of the exhaustion of the distribution right …solely to copies of computer programs that are sold on a material medium would allow the copyright holder to control the resale of copies downloaded from the internet and to demand further remuneration on the occasion of each new sale, even though the first sale of the copy had already enabled the rightholder to obtain an appropriate remuneration. Such a restriction of the resale of copies of computer programs downloaded from the internet would go beyond what is necessary to safeguard the specific subject-matter of the intellectual property concerned" (para 63).

Issue 4: does it matter that the software has been patched/updated/changed between being bought by the first purchaser and then transferred to the second purchaser?

Oracle argued that, because the software in question had been updated under a maintenance agreement since it was bought by the first purchaser, it could not be said that the second purchaser was purchasing the same software.  Therefore, Oracle said, there could not be an issue of exhaustion of rights here.

The CJEU disagreed.  It said: "the exhaustion of the distribution right under Article 4(2) of Directive 2009/24 extends to the copy of the computer program sold as corrected and updated by the copyright holder" (para 68).

Issue 5: what happens if the first purchaser acquires more licenses than he actually needs?

The CJEU said that the first purchaser couldn't then slice and dice the licenses into piece and sell them off individually – they had to be transferred en masse (para 69).  (This is only likely to be relevant in block license deals of course).

Issue 6: what happens to the first purchaser's installed copy of the software once he has sold it to a second purchaser?

The CJEU held that the first purchaser needs to "make his own copy unusable at the time of its resale…in order to avoid infringing the exclusive right of reproduction of a computer program which belongs to its author", laid down in Article 4(1)(a) of Directive 2009/24".

(This makes sense – if you sell the software on you shouldn't have the right to keep using it – otherwise you won't really have sold it at all).

Later on, the CJEU acknowledged that in practice this could impose difficulties on the software developer because it'd be hard to know whether the first purchaser has made his copy "unusable".  The CJEU therefore briefly commented "to solve that problem, it is permissible for the distributor – whether ‘classic’ or ‘digital’ – to make use of technical protective measures such as product keys".

Issue 7: can a software developer stop second hand sales on the basis that the second purchaser hasn't signed a license agreement with the developer?

Some EU governments argued that a "lawful acquirer" could only be someone who had signed a license agreement with the developer (i.e. if you don't sign a EULA, you can't sell the game on).

The CJEU disagreed and said: "that argument would have the effect of allowing the copyright holder to prevent the effective use of any used copy in respect of which his distribution right has been exhausted …by relying on his exclusive right of reproduction … and would thus render ineffective the exhaustion of the distribution right under Article 4(2)" (para 83).

Issue 8: does it change things if the developer calls the software transfer a 'license' not a 'sale'?

No.  The CJEU held "if the term ‘sale’ within the meaning of Article 4(2) of Directive 2009/24 were not given a broad interpretation as encompassing all forms of product marketing characterized by the grant of a right to use a copy of a computer program, for an unlimited period, in return for payment of a fee designed to enable the copyright holder to obtain a remuneration corresponding to the economic value of the copy of the work of which he is the proprietor, the effectiveness of that provision would be undermined, since suppliers would merely have to call the contract a ‘licence’ rather than a ‘sale’ in order to circumvent the rule of exhaustion and divest it of all scope" (para 49).

What this all means:

At first blush, this seems to be a pretty comprehensive decision by the CJEU coming down on the side of second hand sales of software.  The CJEU was clearly not persuaded that there is a legal justification for the prohibition on second hand sales (at least not as advanced by Oracle or its supporting parties).

EU Member States are bound by EU law (which now includes this case) and have to interpret their own law in a way consistent with it – any domestic law which conflicts with EU law can (and has in the past been) struck down.  So, in principle this case now means across the EU that:
  • It will become much harder for developers and publishers to prohibit second hand sales of software via legal means.
  • It will probably raise a spotlight on the technical restrictions imposed on software at the moment.
That said, there are some large holes in the case which means that unfortunately the position isn't completely clear-cut.  I've set out my initial thoughts below…

Problem No. 1: what about software that physically doesn't permit second hand sales?

How does this case apply to mobile apps, where of course there is no resale/trade ability?  We don't know.  On the one hand, a straightforward analysis might be that mobile apps are software just like Oracle's program in the case and therefore that the first purchaser of a mobile app should be able to sell it to a second purchaser (even if technically the ability  to do that doesn't exist…yet).  On the other hand, there is at least an argument that the first purchaser of an app shouldn't have the ability to resell the app to a third party due to this case, because when that first purchaser bought the app she would have had no technical ability – or even the expectation  - of being able to sell it to a third party. 

In other words, what I'm saying here is, if the software was never technically capable of being sold to a third party in the first place, does this case change anything really?  The return might be, of course, that arguing about technical abilities isn't really the point: if the law says that mobile apps should be capable of being sold second hand, then the mobile platforms better do something about it.

Leaving mobile aside, the real problem area is where software easily could be made capable of second hand sales – but hasn't.  Digital distribution platforms, for example, could in principle permit digital second hand sales (Green Man Gaming already does, for example) – so it will be interesting to see what impact this case has on them.  

Problem No. 2: what about software which doesn't have an upfront sale value? 

The case relates to Oracle software which I believe featured a single upfront payment.  What about World of Warcraft, or The Old Republic, with their subscription models?  Or freemium games, which don't even have a subscription model?  Does this case mean anything to them?  Arguably not, because their value lies in their experiential content and their 'services' aspect (more on that later)– not the actual software itself.

That said, things could still get a little uncomfortable here because the case could be read to argue that free software can continue to be distributed for free from person to person once it has been released on to the market.  I doubt that many software companies would like having even their installer file, for example, legally passed around from person to person (in practice of course that happens often online, but software companies have been able to argue previously that that would be illegal, or at least a breach of the software EULA).

Problem No. 3: what about software which has substantial periodic updates? 

The CJEU rather blithely said that there isn't a problem if the software changes/is updated/patched in between being bought for the first time and then for a second time.  Really?  What if the software goes from alpha to gold, or if it has substantial additional content added to it?  Is it really the same thing then?  I suspect the CJEU has stored some trouble up for itself here. 

Problem No. 4: how will "technical protection measures" work in practice? 

The CJEU, despite its rather diplomatic language, clearly could see there was a big problem with its analysis: it permits first purchasers to sell software on, but what then stops the first purchaser from keeping a copy for herself at the same time?

Like I said above, as a matter of law the first purchaser can't do that, but so what?  In practice, the software developer would need to use "product keys" or similar tech according to the CJEU.  But how will that work?

To my mind, it suggests a situation in which product keys go from being one use only to becoming multi-use subject to some kind of transfer mechanism being put in place.  Imagine that Windows 9 goes from having a single, one-use product key to having a product key which can be 'wiped' and reused by a second purchaser.  Sound like it could cause problems to you?  Me too. 

Problem No. 5: do other countries agree?

There hasn't been much law on second hand sales abroad so far, but what there is doesn't necessarily agree with this case. I've written about the evolving position adopted in the USA in cases like Vernor v Autodesk for example here.

Problem No. 6: is the real world going to pay any attention? 

Not many businesses are using legal methods to control second hand sales anyway (apart from Oracle, obviously).  The focus is much on putting pressure on the retailers facilitating second hand sales while also devising technical, creative and business solutions to reduce the appeal of second hand sales. I'm not sure this case will do much to stop that (although, as I said, over time there might be more focus now on these 'workarounds' now it has been established that the principle of second hand sales is permitted). 

Problem No. 7: does this even matter in the long run? 

Two words: cloud computing.  Actually, four more words: Software as a Service.  As software and games increasingly become long-tailed services rather than digital goods, the question of the legality of second hand sales recedes into the distance.  (Of course, eventually we'll get to a stage when questions about the legal transferability of SaaS services starts coming up, but we're a way off that yet). 

Closing thoughts:

As you can see, this is a pretty big case (and probably one of the longest posts I've written on G/L!).  I think it will have a sizeable short term impact, with a whole range of software businesses considering how it affects them.  However, looking beyond that it seems clear already that the CJEU has posed more questions than it has answered and, in any event, nothing stays still in the world of tech and software.  Will this case seem so epic in a year or three's time?  Watch this space…


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Comments


John Trauger
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Problem 1: Just because you theoretically *can* resell your iphone app doesn't require Apple give you a means to do so.

OTOH, I *can* (in the EU) sell my iphone 3GS with all its apps intact to someone else. I can perhaps charge more for a tricked-out phone. I would probably have to sell my app stpre account along with the phone.

I ought to be able to simply sell my App Store account without any tie to a physical device if I wanted.

I encountered Problem 4 over the weekend by upgrading the motherboard/processor/memory of my Windows 7 box. Suddenly Windows thought it was stolen. I couldn't find my product key, didn't want to mess with it, so I bought another. If I were in the EU, I could re-sell the first product key if I ever find out what it was. I'm sure MS would not be happy with me doing so.

Kevin Reilly
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Thanks for the summary of the case Jas, it seems the court opened a can of worms in trying to preserve a fairly expansive interpretation of "first sale". Did they indicate which technical measures they think will work to disable software without violating other personal rights? How does this case correlate to the EU directive to the "right to be forgotten", if companies cannot keep tabs on licensees using their software? Could a EULA contain a "right of first refusal" or "buy-back" right at a certain nominal amount to comply with this ruling? Sorry, lots of questions and it would seem to conflict with US law entirely at the moment.

Daniel Gooding
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Smaller teams that can keep costs down, and stay connected with their fans on an emotional level don't have as much to worry about.

But larger studios with larger target audiences really have to find new ways to build a solid loyal fanbase, and for new IP's, possibly some awesome physical rewards for buying the first copy.

Ian Uniacke
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This ruling seems more disastrous than helpful. I'm not 100% against second hand sales but it seems like all this does is create a warzone between publishers and consumers. I can only see it leading to abuse of privilege by consumers, and draconian DRM by publishers.

Jorge Ramos
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Like they aren't already.

Need I bring up the various rootkit-style DRMs that have already appeared in several PC games? Some of which, I would have bought until finding out about the DRM, and then choosing to spend my money elsewhere as a result?

Jeremy Alessi
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This doesn't make sense and is evidence that the "old guard" doesn't comprehend the digital age. There's no reason to retrofit digital goods with the moral code necessitated by the laws of physics.

Ian Uniacke
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Back when I was a youth we'd go down to the local yoyo store to buy a sheckles worth of yoyos...we used sheckles at the time which were shells inlaid with copper because all the gold supply had dried up. We kept our sheckles in an onion on our belt. An onion of sheckles we'd say to the shop keep and we'd buy our onions worth of yoyos and be damned if anyone tried to stop us selling those yoyos to the kids in the play ground.

Joe Wreschnig
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"There's no reason to retrofit digital goods with the moral code necessitated by the laws of physics."

This argument works equally well to claim we should be able to copy games as much as we want and share them with whoever we want.

Ian Uniacke
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That's not really a fair comparison because there are legitimate business and innovation reasons to "not" treat software as a traditional product in terms of sales but there is no solid reasoning behind allowing copying of games, within the current economic political landscape. If games were socially funded (for example) than maybe fair enough, but there has to be a compromise somewhere so that developers can be encouraged to develop as well as consumers encouraged to consume.

Luis Guimaraes
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"if the term ‘sale’ within the meaning of Article 4(2) of Directive 2009/24 were not given a broad interpretation as encompassing all forms of product marketing characterized by the grant of a right to use a copy of a computer program, for an unlimited period..."

Jeffrey Crenshaw
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And enter a rolling-license equivalent of gamestop, who calculates the highest (or a reasonably high) number of users their site will have at any point in time, buys that many licenses, and constantly "sells" the game to a user who logs in to play (who then contractually "sells it back" when they log out). It will be like an OnLive system that doesn't have to make special licensing deals with developers but merely buys up used games from gamers like gamestop. Hell Gamestop might be the one to do it.

I have concerns over second hand games. Not ethical necessarily, but logistical. Let's say a legal version of megaupload opens up, legal because it manages these second hand digital games. Gamers are just going to go there first and see if a license for their game is available at a markdown rate that developers can't compete with (no matter how much they lower the first-hand cost of their game, the web site can go even lower as they don't have to pay the R&D for making the game). Only the day 1 sales will bring anything to the developers, and games are already too lop-sided toward day 1 sales (with some exceptions). Now what does the developer do, charge more than sixty dollars for day 1 sales to make up for players swapping games around (because let's be honest, a lot of second hand sales come from people who loved the game and beat it but still want second hand money because they can, not necessarily those who felt legitimately ripped off). Gamers already complain that games cost too much, but if this result occurs then day 1 sales will need to be even higher to subsidize the loss of profits (if this plays out like I think it will) from gamers conglomerating and strategizing a turn-around strategy. So people who sell their game won't be able to play that game again? Hell with digital distribution you could easily get a group of friends to create a game license library. One rotating license for each game. And that group of friends could become a community, which could become a for profit business. You could easily pass around far less licenses than players playing the game, meaning the developers are pleasing as many customers as before but getting less money. Buy a game, put the license in the library when you're done, and have access to thousands of other licenses for a small monthly fee -- none of which goes to the developer who has no say over this. So developers and publishers will obviously fight this, which means DRM will get worse (best case scenario; worst case scenario is that game developers won't be able to fight this and will go out of business, reducing the number of quality games that get made).

I will say that the real problem isn't second hand sales or DRM or anything like that -- it is this competitive nature we all are embedded in. Developers and publishers are enemies. Developers and gamers are enemies. Gamers and publishers are enemies. Staff and management are enemies. It needs to stop. If we could move toward a more cooperative future where, instead of wanting only what is best for oneself, we could all look around and make mature decisions like "I could buy this game second hand, but I want to support the developer so I won't" or "I could put DRM in the game to make money, but it would ruin the experience for gamers and I trust them to support me". I know there are people out there like that, I try to do it myself (buy first hand, donate "shelf price" to indie bundles even when only interested in one or two titles in the bundle) and my friends do too, and there are good studios that refuse to use DRM. Hopefully these kinds of attitudes can become more prevalent. But I have my doubts, and this sounds like it will get messy.

Aleksander Adamkiewicz
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"I will say that the real problem isn't second hand sales or DRM or anything like that -- it is this competitive nature we all are embedded in."

That, and outdated IP laws.

Adam Bishop
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Developers have an easy way around this problem, though many people don't like it - free to play and/or microtransaction based games.

Ian Uniacke
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"Developers have an easy way around this problem, though many people don't like it - free to play and/or microtransaction based games."

Only until courts rule that game save data is equally a product you paid for and can be traded.

Jeffrey Crenshaw
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I don't dislike f2p or micro-transaction augmented gameplay in-and-of-itself, but I believe that these (like all design decisions) should be made to answer the question: "How can I make this the best experience for the player?" not "How can I defend myself financially?"

If f2p is really the most fun breeding grounds of game ideas then I don't mind if it is The Future. But I would hate it if it becomes the future simply because of legal arm twisting.

Andy Mussell
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To work, wouldn't this hypothetical retailer still have to charge some amount when the gamer tries to re-launch their game? This amount would then be refunded when the gamer quits the game. Assuming that there is an actual electronic transfer of funds and not just some sort of trivial amount of credit being passed back and forth from the retailer to an online wallet system they manage, I would assume this means that the credit/debit card processor would take a cut, and thus some amount of the transfer fee would not be refundable. Unless the retailer offered really good deals on expensive games, I doubt many players would warm to a fee-per-launch system to play their games.

Even in the case where it's all retailer-managed 'credits' that are used to play the game, wouldn't that mean that the gamer, hypothetically, could in fact decide to sell their license to another party before they quit the game? And thus this retailer would need to have a mechanism by which this was allowable. So, in fact the retailer would probably want there to be a nontrivial amount of money changing hands when the game was launched, to provide a disincentive to doing so. And this would provide a strong disincentive to using the retailer's service in the first place.

Kyle Redd
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@Daniel

That's one of the more ridiculous bits of fear-mongering I've seen in a long while. What exactly is in this ruling that would facilitate the scenario you've outlined?

Stealing games you haven't paid for was illegal before and is still illegal now. Selling a copy of a game you've stolen was illegal before and is still illegal now. Anyone who wants to open a store selling stolen goods isn't going to have any more legal cover now than they did last week.

Daniel Gooding
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Wasn't really attempting any such fear-mongering. Was just pointing out that people already sell stolen games. But I'll change it. Sorry if I angered you.

Kyle Redd
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No, you didn't anger me. Sorry for seeming short; I think I misread your original post.

Matthew Clemson
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"the downloading of a copy of a computer program and the conclusion of a user license agreement for that copy form an indivisible whole. Downloading a copy of a computer program is pointless if the copy cannot be used by its possessor. Those two operations must therefore be examined as a whole for the purposes of their legal classification"

I'm not sure I agree with this - doesn't this imply legal implications for free trials which include the unlockable full product? XBLA demos, various software applications.

Another thought, in light of Australia's recent law changes and various cryptographic rulings: does that implicitly make it illegal to sell a license for a product banned in a country to a person in that country, even if they never import (download) the banned content? How do you police that? Would the download service be responsible if they allowed the download, even if they never permitted the original sale?

Finally: If a digital distribution service was *explicitly* made a rental system (perhaps hypothetically under a long duration period), does that not affect the "lawful acquirer" part of the ruling? I'm not sure I'm comfortable with something that implicitly offers *less* consumer benefit (even if it's only nominally less) being *more* protected by the law; it strikes me as something of a double-standard.

Colin Schmied
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I actually don't see this altering things that much as far as games themselves are concerned, especially in the long run. The trend has been to move towards freemium or subscription anyway. Selling accounts could happen but I wouldn't expect that to hit a game makers bottom line much and it may in fact increase it as the new user will most likely want to buy new stuff as well.

What I'm very curious about is how it will affect game production assets. Currently you can't buy an old license for something like 3DS Max or Photoshop. The only way to acquire a used one was if one company bought another in it's entirety and got the licenses in the process. But if I have an old version of 3DS Max just sitting around I'm not using I can't sell it to someone else and legally transfer the license.

If I am reading the ruling right you could buy an older version of Max from someone who has no plans to use it. This could potentially make getting the tools needed to start up a studio a little easier as you could make due with older products and save some much needed cash.

Christopher Enderle
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Going along with your first paragraph, I see this ruling as, at most, speeding along the current transition to freemium and subscriptions. Companies don't have to worry about consumers reselling their product if they never sell their product in the first place, but instead only stream the game to the consumer.

What will be interesting is to see how this affects deals with the middlemen that currently exist: network providers, cable/satellite companies, telecoms, etc. It'll be like the Steam/Origin thing magnified by the entire rest of the industry, except, and maybe I'm naive, but I'd think Valve would be much easier to deal with than Comcast or Verizon.

Cordero W
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This is my only response to it as I've detested game companies diluting the quality of games more and more for their own monetary gains through freemium games and cutting out content:

http://www.youtube.com/watch?v=Aip2aIt0ROM&t=0m39s

Nnnnnngngggggghhhhhh!

k s
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That was a really interesting video on game design thanks for posting.

Jorge Ramos
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It always seemed silly that there was this arbitrary restriction against being able to resell stuff. Then again, I never understood why Gamestop(s) here flat out refused to take PC games in everywhere except where they are forced to compete with local chains that do (and do well doing so).

Then again, I'm still waiting for XBLA or PSN or the Wii Shop to do a steam-level mega-sale at any time of the year.

Daniel Boy
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5 points considering for steam et al:
1. My pond:
Make trading possible, but a hassle outside of your ecosystem. 2/3/4 step verification process, only via telephone etc.
2. My gang:
Small developers will need your tech (steamworks etc.) even more to satisfy this verdict.
3. Taking the sting out:
Take a medium sized fee (10% to 30%) and share it with the publishers.
4. Cheap as chips, not:
Take a minimum of 1/2/3/4$.
5. Yesterday's news:
"Age" products: Make small quarterly updates for every major game (game of the quarter editions). You can even give out the updates for free (until the consumer catches on: e.g. Witcher vs. Witcher Enhanced/ FF VII vs. FF VII _with Achievements_).

edit:
typo

John Tynes
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The notion of a user-revocable license more or less exists technically in iTunes. I can authorize up to five other computers to use my iTunes Store account and thereby play all of my DRMed content including movies and TV shows. Effectively I am making my wife or whomever a sub-licensee of my iTunes licensing. I can later revoke that authorization, even remotely, and subsequent attempts to use that licensed content on a formerly authorized computer fail to validate with the server.

I think the technical problems inherent in this ruling are highly solvable. Piracy and cracking will be a problem but they already are. What this should mean is a world in which physical and digital goods are equally fungible and that is a very good thing for consumers.

Stephen Horn
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One thing I wasn't sure about: Does this apply to all licenses, even short-term licenses, or does this only apply to indefinite licenses? Could someone purchase a 30-day license, use it for 10 days, then sell it to someone else?

Andy Mussell
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Speaking of "World of Warcraft" and the like in Problem 2, I'm curious to see how this will shake out for games that have both an initial fee-to-purchase and a subscription fee for continued access, games where you buy a retail copy and then link that to an account.

Could it be legal, and a mechanism in place, for me to buy "Mists of Pandaria", link it to my account, and then resell the retail copy to a friend, who does the same on their account? How would Blizzard handle this - would they de-link that retail copy from my account? What sort of identification would be require, i.e. how would they prevent people from guessing my key (or just stealing the slip of cardboard it's printed on) and pretending to be me on a web interface? Even if they required my password, couldn't a hacker sell not just my gold but all my expansions?

Would this and similar problems ultimately lead to MMOGs going to a full-subscription model, forgoing the initial retail purchase, and how would you be able to charge for expansions in this environment? (The last, I assume, could be handled though an all-digital store, although that wouldn't necessarily solve the hacker problem.)

Vade Jackson
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I can see it now. CoD 2013 comes out, it requires you to be online to play single player(Activision Blizzard already did it with Diablo 3) or multiplayer. Game sells well(like always). Year change. CoD 2014 comes out, Activision Blizzard kills the CoD 2013 servers a few days after the release of CoD 2014 thus making the old version worthless and anyone who buys it a sucker. Now I know this is a bit far fetched, but when it comes to profit everything is fair game to the big boys.

We will be free to trade around our expensive cup holders and lumps of code, welcome to the age of throw away software -.-


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