Landmark EU ruling permits resale of digital downloads/licenses [updated]

A political map of Europe, overlaid with the stars of the flag of the European Union and a pair of golden scales in the middle

So, here’s an interesting divide between USA law and EU law. In the USA, you almost never buy software or video games. No, the license says you’re only buying a license to use the software (which is conveniently being loaned to you free-of-charge on a disk or as a digital download or whatever) under limited circumstances as laid out by the license. Did you buy a copy of Windows or Call of Duty or whatever? No. The paperwork says you bought a right to use that software until the publisher says otherwise, and that the software remains the property of the publisher.

This arrangement has been upheld by US courts on a number of occasions, so no, you’re not buying those games. They’re just loaned to you under a limited set of circumstances. This holds doubly true for digital downloads, in the main.

What makes this a bit weird is that the USA’s Uniform Commercial Code (variations of which exist in most countries) has always maintained that once a purchase has been made, no further conditions can be imposed. That is, any license agreements and the like have to be agreed to before the purchase takes place and not (for example) once you open the box or start installing. US Court rulings on End-User-License-Agreements (EULAs) and shrink-wrap/click-through agreements say much the opposite, however, and it is what is ruled in court that matters.

And that brings us to the Court of Justice of the European Union, which has basically ruled that all those EULAs, and click-through license agreements are basically bunk as far as this is concerned and that you actually did buy the software itself.

Having bought it means that you have all the rights that you would normally have with (say, for example) a paperback book. In this case, the ruling just contents itself with the right of resale (actually it’s a part of what’s called Exclusive Distribution Rights, but let’s not overcomplicate things). That is, that you can sell or give or trade your copy to someone else.

The publisher still maintains the copyrights, of course, which means that once you have sold, given or traded yours away you can’t use yours anymore. If you did, that would be a breach of the publisher’s copyright.

“Where the copyright holder makes available to his customer a copy – tangible or intangible – and at the same time concludes, in return form payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right. Such a transaction involves a transfer of the right of ownership of the copy. Therefore, even if the licence prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.”

“If he continued to use it he would infringe the copyright holder’s exclusive right of reproduction of his computer program. In contrast to the exclusive right of distribution, the exclusive right of reproduction is not exhausted by the first sale.”

[Source: Eurogamer.net]

Update: VG24/7′s Brenna Hillier has more.

11 thoughts on “Landmark EU ruling permits resale of digital downloads/licenses [updated]”

  1. Oki, is it applicable to everything and anything digital including textures, max models, full permission content for sale on Second Life etc. Or just software?

    1. To me (and I’m not a European lawyer) it looks like it covers everything that can be purchased that is ordinarily sold according to a specific grouping of license terms – so not just software, but – by the same token – not quite everything.

  2. In the USA we have the “First Sale Doctrine”, which says, for books, when you buy the book, you own the book itself, and can resell it. You don’t just have a license to read the book. The question then becomes, if you buy a boxed copy of software in a store, which purports to be non-transferable or merely licensed, how is it treated? You were not presented with those terms at the time of purchase, and certainly not by the store you are giving money to.

    With a paper book, once you get it home, you may deface the book by tearing out the copyright page. That does not extinguish the creator’s rights, merely change your copy. So what happens if you take that software, and before you install it, you deface your copy to tear out the copyright and license popup, so you don’t see that when you then install the software? An interesting question, and one I have not seen addressed elsewhere.

    1. We’ve also had the “First Sale Doctrine” here for a long time, and yet up until fairly recently, the flyleaf of most books would include a short license forbidding lending, or resale. I’m never quite certain why that paragraph was included. It smacks of the modern EULA.

      As for defacement – there’s the difference between the media on which the material is stored, and the material itself. Damaging a book merely affects the storage medium. Altering software binaries, on the other hand, creates a derived work – which is one of the two rights exclusively reserved for the copyright holder (or her licensees).

      1. What about writing over the text on the book or scraping the ink that makes some of the words on the paper?

        1. If you modify the content sufficiently, that makes it a derived work – which is alright, so long as it remains for personal use and is not distributed to another.

          1. What if someone defaces a book and removes all traceable identifiers (serial numbers etc) and then anonymously mails that book to you, are you breaking the law by receiving that book?

          2. No, the provider of an infringing work is liable, but almost never the receiver. If you buy or receive a dodgy DVD that’s an unlawful copy, you’re not infringing copyright. The person who gave or sold it to you is.

          3. So as long as you claim it wasn’t you that put the program on your computer you can use so called “pirated” software without worrying about the law?

          4. You’d have to be able to convince a court. Plus, file-sharing networks (eg: BitTorrent) turn every downloader into a distributor – which makes the act of using those kinds of networks infringement, by default, for content you don’t have the rights to share.

          5. Can they prove how the file got there beyond reasonable doubt? Seems a surefire way to get away with piracy would be to install some backdoor on your computer; even if the ISP got byte-by-byte logs of unencrypted data showing your computer downloading those files as long as you once in a while used any encrypted connections those could’ve been done by the backdoor talking with the botmaster receiving instructions to download those things…

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