The European Union's Court of Justice has ruled that consumers can legally resell downloaded games and software, even if the End User License Agreement (EULA) prohibits it. Let's delve into the details.

EU Court Sanctions Resale of Downloadable Games

Exhaustion of Copyright and its Implications

The European Court of Justice's decision stems from a legal dispute between UsedSoft and Oracle, ultimately establishing the principle of exhaustion of distribution rights. This means that once a copyright holder sells a copy granting unlimited use, the right to distribute that specific copy is exhausted, allowing for resale. This ruling impacts consumers across all EU member states, affecting digital games purchased on platforms like Steam, GoG, and Epic Games. The original purchaser gains the right to sell the license, enabling a new buyer to download the game. The court's decision explicitly states: "A license 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...Therefore, even if the license agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy."

Practically, this might involve the original buyer transferring a license code, losing access themselves upon resale. However, the lack of a formalized resale system introduces complexities and unanswered questions, particularly concerning the transfer of registration. For instance, physical copies remain registered to the original owner's account.

(1) "The principle of copyright exhaustion is a limit on the copyright owner’s general right to control the distribution of their work. Once a copy of the work has been sold, with the copyright-holder’s consent, the right is said to be “exhausted” – meaning the purchaser is free to re-sell that copy, and the rights-owner has no right to object." (via Lexology.com)

Resellers Lose Access Upon Resale

While the ruling overrides non-transferable clauses in EU member states, a key limitation is that the seller forfeits access to the game upon resale. The EU court clarifies: "An original acquirer of a tangible or intangible copy of a computer program for which the copyright holder’s right of distribution is exhausted must make the copy downloaded onto his own computer unusable at the time of resale. If he continued to use it, he would infringe the copyright holder’s exclusive right of reproduction of his computer program."

Permitted Reproduction for Program Use

The court distinguishes between distribution and reproduction rights. While distribution rights are exhausted upon initial sale, reproduction rights remain, but only for necessary use by the lawful acquirer. This allows for the downloading and installation of the program by the new owner. "In this context, the Court’s answer is that any subsequent acquirer of a copy for which the copyright holder’s distribution right is exhausted constitutes such a lawful acquirer. He can therefore download onto his computer the copy sold to him by the first acquirer. Such a download must be regarded as a reproduction of a computer program that is necessary to enable the new acquirer to use the program in accordance with its intended purpose." (via EU Copyright Law: A Commentary (Elgar Commentaries in Intellectual Property Law series) 2nd Edition)

Backup Copies Remain Unsellable

Importantly, the court specifies that backup copies cannot be resold. As stated by the Court of Justice of the European Union (CJEU) in the case between Aleksandrs Ranks & Jurijs Vasilevics v. Microsoft Corp.: "Lawful acquirers of computer programs cannot resell backup copies of the programs."