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Losing Steam: Is Usedsoft v Oracle Actually Changing the Video Game Industry?

UPDATE: The text of the Regional Court of Berlin’s dismissal of the vzbv’s case has been published by Spielerecht.de. As suggested below, the vzbv’s focus on Steam accounts themselves rather than individual licences for games may have been unhelpful, but in addition the court seemed unconvinced that video games were merely software, but rather a mix of a number of elements, and as such Usedsoft may not be directly applicable. A helpful update, in English, of these developments and the court’s reasoning has been provided by Felix Hilgert and Konstantin Ewald  of Spielerecht.de “Update: Valve May Prohibit Steam Account Transfers – German Judgment Published”

Bad news recently in Germany for those who were hoping the much discussed Usedsoft v Oracle decision from July 2012 would open up the digital video game market to the concept of resale.  In that case the European Court of Justice essentially decided that the doctrine of exhaustion applies to digital copies of software, meaning that once the rightsholder has sold a copy of that software, more often than not phrased as a licence to use that software, they cannot then stop the buyer from reselling that licence on to a third party, and the rightsholder’s exclusive right of first sale has been “exhausted”. Many speculated that this decision would herald the opening up of the currently very restricted market in second hand software licences, in particular that this would open up gamers to selling their digitally downloaded games second hand. An important point to remember about the Usedsoft decision is that the original buyer must make their copy of the software unusable once they have transferred the licence to a third party, otherwise they would indeed be breaching copyright. However, at the end of January of this year the Regional Court of Berlin (Landesgericht [LG] Berlin)  dismissed the lawsuit of German consumer watchdog group Verbraucherzentrale Bundesverband (“vzbv”) against Valve Inc. (the company behind the video game digital distribution platform Steam) over the provisions in company’s terms of service that prohibit the sale or transfer of user accounts on the Steam digital distribution platform. It was the second time the consumer rights activists had sought the help of the courts to force Valve to allow such transfers – the first time being the „Half-Life-II“ decision in 2010 (BGH, Urt. v. 11.2.2010 – I ZR 178/08 )– both times without success. Nonetheless it is important to remember that the court here simply refused to hear the case, and did not produce a new concrete ruling in this area.

It seems that the court, whilst acknowledging the Usedsoft decision, did not feel that the exhaustion right had to be applied to digitally downloaded games which were connected to user accounts in this case. The problem here might also be that the VZBV once again phrased their case along the lines of allowing transfer of accounts themselves, as the games are bound to individual user accounts. It might still theoretically be possible to sell individual game licences by agreeing on a price with a third party, uninstalling the game from your account, writing to Steam to indicate that you want the game removed from your account, and the third party writing to Steam to indicate they would like the game to be added to their account. In just such a case, if Steam then refused to facilitate the transfer of the licence from one account to another, the parties could very well take a case against Valve, as this more directly goes against the decision of the ECJ in Usedsoft. The problem here might hang on whether simply uninstalling the game from your computer, but of course not being able to delete it from your account without Steam doing it for you, would suffice to fulfil the requirement of the original buyer making their copy “un-useable”. It would be interesting to see if in this more narrow complaint Steam could be required to facilitate the transfer, as the ECJ decision also made clear that it was not establishing and overarching requirement for digital distributors to make this transfer easy, it simply decided that they were legal in theory.

So it seems, at least in Germany, that Usedsoft isn’t going to be great victory for consumers and gamers who want to be able to sell their digital copies second hand. Other European countries haven’t done much in the way of attempting to really push through the practical applications of the ECJ decision. However, all is not lost. There are movements towards models which might allow sharing or reselling of digitally copies of video games (the constant clarification that these are “digital” copies might be somewhat redundant, as the problem with selling on a copy exists even with CD or DVD copies which are linked to an account such as Steam or Origin). Green Man Gaming (GMG) have had such a system now for quite a while. Their “Capsule” client can be downloaded and installed on your computer and then when you buy a game through them it is linked to this client. So far, so “Steam”-y. However, the idea of Capsule is that you may then choose to sell back this copy to Green Man Gaming, for a reduced price, against cash or store credit. Furthermore, part of the resale will go to the developers, so, everyone’s happy, right? Sadly not. This system is held back by that fact that many games bought through Green Man Gaming have to be linked to Steam accounts anyway, and cannot, as such, be unlinked from the Steam account, therefore negating the usefullness of the capsule client. So for this system to work, you must make sure the games you buy on GMG are not ones which require an activation on Steam to play. The problem is, as far as my experience goes at least, that the majority of big name and popular games available on GMG are only available through Steam. And so this rather clever system, which might benefit gamers, developers and middle-men like GMG, goes criminally underutilised.

Even Steam themselves, who normally have a fairly good track record with their customers regarding consumer satisfaction, are recognising the demands for some form of reselling or sharing of games and have introduced Steam Family Sharing for a limited number of close friends and family (who need access to the same computer as you for at least the set up stage), allowing them to access and play games on your account, so long as you are not playing them at the same time. It is possible that Steam might introduce a form of reselling, perhaps utilising the existing Steam marketplace or even along the lines of Green Man Gaming in allowing sale back to the distributor and giving the creators a cut of resale profits. This would seem also to make economic sense in a market where consumers are becoming disillusioned with the idea of paying full price for a product they can not then resell, given that they can pay up to €60 for a new game, but perhaps (depending very much on the nature of the game – I played Spec Ops: The Line for 8 hours and was finished with no great want to do a second playthrough despite the high quality of the game’s narrative, but I have clocked up around 200 hours on Skyrim and am nowhere near finished) not use again after initially playing quite a bit for the first few days, weeks or months.

The idea of giving the developers a cut of the resale price is of its own right also a very interesting area, and perhaps a reason that developers and publishers might want to jump on this bandwagon sooner rather than later, lest they be left behind without any cut at all. Think about it – in the majority of second hand and resale markets, do the original creators or rightsholders receive a share of any resale price? If you sell a used book,  DVD,  table,  toothbrush, pet duck, would you be either required to, or even feel you should, pay a certain cut of that resale price to the original seller or creator of your book/DVD/table/toothbrush or duck? I would presume not. Now, this does become more complicated as it is so easy to copy games, and many business practices in the industry are geared towards mitigating lost sales from illegal copying and downloading, but nonetheless the distributors of video games, particularly purely digital distributors, seem to forget that they have been allowed thus far carry on with selling products with far more restrictions (region locking, non transfer of licences) and with lower transaction costs (digital distribution cuts out much of the cost of getting video games to market) and that refusing to move with the consumer opinion on the extent to which consumers “own” their copy of a game or licence could have a backlash which leads to further illegal downloading and copying, or could drive business towards competitors who are acknowledging this movement, such as Green Man Gaming, the now-famous-but-still-anti-DRM CD Project Red, the originally-just-for-classic-games-but-catching-on-for-new-anti-DRM-titles Good Old Games, and many others.

~ Shane

Osborne Clarke “Despite UsedSoft – German Court Rules Valve May Prohibit Steam Account Transfers”, available at http://spielerecht.de/wp-content/uploads/2009/08/Despite-Usedsoft-German-Court-Rules-Valve-May-Prohibit-Steam-Account-Transfers-new-2.pdf 

Telemedicus (German),  “Neues aus dem Verfahren vzbv gegen Valve vor dem LG Berlin”, (Jan 2014) available at http://www.telemedicus.info/article/2708-Neues-aus-dem-Verfahren-vzbv-gegen-Valve-vor-dem-LG-Berlin.html

Photo Credit: arbyreed via photopin cc

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4 thoughts on “Losing Steam: Is Usedsoft v Oracle Actually Changing the Video Game Industry?”

    1. Thanks a mil Felix! I was looking at this today and though a quick update of my post might be in order. I’ll add your article to the UPDATE paragraph I’m about to write for this post.

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