The Court of Justice of the European Union (CJEU) has made a groundbreaking ruling that allows consumers to resell previously purchased and downloaded games and software, despite restrictions in End User License Agreements. This significant decision impacts how digital goods are handled within the European Union.

EU Court Sanctions Resale of Downloadable Games

The Principle of Exhaustion and Copyright Boundaries

The CJEU's ruling stems from a dispute between software reseller UsedSoft and Oracle in German courts. The core principle upheld by the court is the exhaustion of the distribution right, also known as the Principle of Exhaustion of Copyrights. This principle dictates that once a copyright holder sells a copy and grants the customer the right to use it indefinitely, the right to control its distribution is exhausted. Consequently, the original purchaser can resell the license, allowing a new buyer to download the game from the publisher's website.

This ruling applies to consumers across EU member states and affects games bought on platforms like Steam, GoG, and Epic Games. The CJEU stated, "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."

In practice, the original buyer would typically provide a code for the game's license, relinquishing access upon resale. However, the lack of a structured marketplace for such transactions raises practical challenges and leaves many questions unanswered, such as how the transfer of registration would be managed, especially since physical copies might still be registered under the original owner's account.

Reseller Cannot Access or Play the Game Upon Resale

While the ruling overrides non-transferable clauses in user agreements within EU member states, it comes with a key limitation: the original seller must render their copy unusable at the time of resale. The CJEU clarified, "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."

Allows the Reproduction of Copies Necessary for Program Use

The court also addressed reproduction rights, stating that while the right of distribution is exhausted, the right of reproduction remains, but is "subject to necessary reproductions for the lawful acquirer's use." This means that subsequent buyers can download the program onto their computer, as this is considered a necessary reproduction to use the program as intended. No contract can restrict this.

The CJEU emphasized, "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."

Restriction on the Sale of Backup Copies

Importantly, the court specified that backup copies cannot be resold. The CJEU ruled, "Lawful acquirers of computer programs cannot resell backup copies of the programs," in the case between Aleksandrs Ranks & Jurijs Vasilevics v. Microsoft Corp.

This ruling by the CJEU is set to reshape the digital marketplace in the EU, offering consumers more freedom in reselling digital goods while also presenting new challenges for digital distribution platforms and copyright holders.