First Sale Doctrine and Controlling Used Games

So a lot has been said about the Xbone, the PS4, and the possibility of controlling used game prices. This is an interesting one for me, as for once i’m able to wear both my musical and professional hats at the same time.

As i’ve said before, I work for a publishing company (all views expressed are my own yadayadayada,) and one of the things i keep an eye on is consumer rights, and the consumers perception of those rights. I’m not a lawyer by any stretch of the imagination, but there are a couple of points I’m aware of that no one seems to have touched on yet.

First of all, there’s the doctrine of first sale. This is clearly spelled out in US law, and will almost certainly be present in your country’s copyright laws as well. How do i know this? Well, the idea of the doctrine of first sale is that, when a copy of something (be it a book, music CD or game disk) is sold, the original copyright holder’s interest in that particular copy is exhausted. As long as their copyright over the content is respected, they are unable to legally stop you from trading it at a shop, gifting it to a friend or lending it to Aunt Mabel. If the concept wasn’t present in your country’s copyright laws, libraries and second hand shops simply wouldn’t exist. Again, I’m not a lawyer, but on the surface any attempt to control the used game sales (and take a cut of the proceeds) is on very, very slippery ice here: even though Microsoft are still allowing you to sell your old games, by dictating where and how you can do this (and by taking a cut) they seem to quite clearly to be violating the doctrine of first sale.

Ahh, but, as with all things in life, where there is a law, there is also a workaround. For Microsoft there are two things that will help them circumvent the doctrine. First, there’s the old software trick: These days, you tend not to actually own any software you install on your computer – You merely license it. Yes that’s right, if you’ve had to agree to terms and conditions and enter a license key when you installed the thing, you don’t really own it in any meaningful way (even though, of course, your license for that copy will generally last forever) so the doctrine of first sale doesn’t apply. It’s worth noting that this also applies to digitial media as well: the button may say ‘buy’, but you don’t actually own any eBook you’ve ‘bought’ from the Kindle Store (as, indeed,  some people have found to their cost.)

The second thing going in Microsoft’s favour is the muddy waters surrounding the doctrine of first sale and digital copies. The doctrine of first sale goes back a long time (the original wording talks of customers ‘phonographs,’) and in it’s current form cannot work in the digital sphere: the original theory behind it was that tangible media (books, records, VHS tapes) will degrade with use, so aren’t in direct competition with an original (how many used games have you seen that look like they’ve been used as a brillo pad?) In the digital sphere, this isn’t the case: the data won’t degrade, so a brand new MP3 of one of my tracks will sound exactly the same as my original masters. When tested in court (Capitol Records sued RE:Digi  – a company that looked to specialise in ‘used’ digital content,) the ruling went in favour of the record company. This, i believe, is why Xbox One games require installation on the system’s Hard Drive: I presume MS’ argument is going to be that the retail disks are merely installation disks, and that all XB One games are in fact licensed digital copies.

But, it’s not all good news for MS. While in the US the situation is currently very much in their favour (aside from ruling in Capitol Records favour, an earlier lawsuit against Autodesk, saw the courts rule in favour of the licensing model,) the same cannot be said for Europe. In a lawsuit against a company called Usedsoft last lear, The European Court of Justice ruled against the software licensing model. They decided that it was the nature of the sale rather than the wording of the sale that decided whether or not your software was bought outright or merely licensed: Consequently, you cannot grant someone the ability to use your software in perpetuity and then claim they are unable to sell it because it’s actually licensed. Valve are also currently being sued in Germany over the inability for Steam purchasers to sell their used games. 

So what could this mean for Microsoft? Back in 1992, you could get away with treating the US, EU and Japanese gaming markets slightly differently. Today, however, we’re all connected and able to taunt each other on Twitter, Facebook and online forums. How would US gamers react if they could see UK gamers selling on ebay while they were forced to take whatever amount MS and Gamestop decide to give? I can’t see many people being happy with that arrangement. If that wasn’t bad enough, there’s also no guarantee that the US situation will stay the same in the future: The courts may have rulled in favour of Autodesk, but in the ruling the judge specifically pointed out that Congress could change the situation so that Software Licenses could be included under the first sale doctrine. Digital Reader author Nate Hoffeider has also done a good job of pointing out all the potential flaws in the ruling against re:Digi – flaws that someone with a bit of clout (Amazon or Apple) could exploit if they wanted to set up their own used content stores in the future.

So legally, it looks to me like any attempt to regulate the trading of 2nd hand game disks would be on very shaky legal ground indeed – especially in Europe. As for how important this could be in the longterm i have no idea: I’m guessing any courtroom battle on the matter will be a long and drawn out affair. If we, the public, are going to go toe-to-toe over this, we’ll definitely need to have someone with a bit of clout on our side.

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