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Federal Court Hates On Used Software Sales

The 9th Circuit of Appeals ruled in favor of Autodesk in its lawsuit against Timothy Vernor, saying that Autodesk has the right to limit second-hand sales of its software per its licensing agreements.

Vernor's case centered on the application of the first-sale doctrine, which is a century-old legal precedent that prevents merchants and manufacturers from regulating further sales of its products after the first transaction. The three-judge panel ruled that there was no definitive first sale in Vernor's situation, rendering the principle inapplicable to this specific case. The court instead sided with Autodesk's contention that the rights to install the software were being licensed, not sold.

If this decision stands and is expanded to software in general, this is bad news for consumers -- your games will hold no resale value, and you'll have no right to sell or trade games that you've bought. The used market would be illegal. Good luck finding classic games when it's unlawful to resell or trade them.

Admittedly, this doom-and-gloom scenario is a ways off. This single decision doesn't have that kind of immediate reach and impact. It is, however, a step in a decidedly consumer-unfriendly direction. As much as some developers and publishers would dearly love to kill the possibility of used sales, it's hard to see the upside for consumers in this scenario.

EDIT: Alert commenter Drew Williams points out that the original text of this article neglects to point out the counterargument, and that's a fair point. It's understandable why publishers and developers hate used sales -- they don't get anything from them. Buying a game used, whether it's from your cousin or your local retail store, gives nothing directly back to the companies who made it. On the other hand, the cash generated from used sales and trade-ins is reinvested in new games at a highly disproportionate rate. This is all tangential to the original point, however, which is that consumers lose out when the possibility of resale is legally removed. Resale value is a tangible thing, and adds value to a purchase. However you feel about used sales or GameStop or anything else, the bottom line is that losing that value is bad for consumers.

[Source: Associated Press via EvilAvatar]

[Full disclosure: Game Informer's parent company, GameStop, is heavily invested in the used games market.]

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Comments
  • If this goes anywhere, there will be massive amounts of pissed off gamers everywhere.

  • People need to trade in games, without it we can't recycle any games we have no intent for. But that doesn't mean someone else may like it.

  • I fail to see what right game companies have to impose their will against their consumers selling their games if they want to. Once you have bought the product why should they care what you do with it? I could simply give a game to a friend after I'm done with it and the end result is the same. 2 People got to play/own the game and the game company doesn't see any profit from the transaction. This war against used game sales seems to amount to game companies trying to extort consumers.

  • Who cares what the legislative branch says they have no power any way.

  • Not trying to be rude here, guys - and I appreciate the disclosure at the end - but I think going from 'Developers have a right to profit off of their software' to 'OMG you'll never be able to buy SNES games again!!!!' is a bit of underhanded fear-mongering, wouldn't you say? I know this is an entirely different arguement, but there's something to be said for the position that GameStop inherently tries to drive developer's profits down in order to maximize their own profit on used games. It's an entirely different market than, say, Joe First Adopter listing his own used game on Amazon and selling it to Joe Consumer. Slapping down a corporate culture intent on screwing over a company that licenses its software is a far cry from 'no one will be able to sell used games, ever!'

    Again, I appreciate the disclaimer, but can't you go a little farther and at least present the counter-argument against used games?

    EDIT: I appreciate the additional post.
  • yet more ammo has been given to fuel a gaming company's greed, thanks a lot

  • this means it aplys to music and movies right
    because if they still "own" my games even thow i have it on dvd it should still aply to music and movies
    this makes gamer angry you dont want to see gamer angry
    (edit) wait this aplys to non fisical sales of games, than omit the dvd part, cus it still aplys to donloaded music and movies
  • Yeah, this case has been going all over the internet lately.  Technically the first-sale doctrine becomes invalid with software when you check the little "I agree" box during the installation.  If you actually read all the text in the end user license agreement it does say the program was sold, not licensed to you. Technically you can abort the installation up to that point and get a refund from the manufacturer if you return the software. The fact that Autodesk pulled the "licensed, not sold" card on Verner before he ever used the program is still a little scary, though.  I'm sure every automobile company and house manufacturer would be more than happy to make you sign an end user license agreement whenever you bought a car or house.  Even better, what if companies start making you sign a little piece of paper abridging other inconvenient or unprofitable rights if you want to do business with them?  This is definitely a scary precedent and it's only a matter of time before it leads to further trouble in the courts.

  • I would love to see all of the developers and publishers faces when they fight to make used games illegal and they force all of those people into piracy in order to afford all of the games they want to play. You know that is what will happed.

    I have never illegally downloaded a game. Ever. If they ever try to fight used games, I would be forced to turn to piracy in order to afford my video games...

  • I really don't think it will get to that point. But, someone has to be on the other side so it doesn't get to that point. I agree with previous user's points about fear mongering. It's not the end of the world yet. That's 12/21/2012.

  • That's like saying I can't trade my car when I buy a new one. This ruling will get overturned.

  • Whether this case is used as precedence in the future or not, game-producing companies are still going to limit the number of "owners" per game.  In recent years there has been an increase in the number of games that one must register online with.  Sometimes it's the full game that is registered and sometimes it's only the online portion, but either way the consumer is being prevented from reselling the full version of the game.  And already consumers are getting up in arms about it.  The title Spore is a good example of this.  It came with so much digital rights management (DRM) that thousands of people--myself included--opted to not buy it or play it at all.

    Ultimately, what's going to dictate how far a game company can go to reduce the amount of reselling is up to the consumer.  If we don't like it enough, we have the choice to not buy the game.  My fear however is that due to the mainstream culture of games these days, many people won't even consider this aspect before they decide to purchase a game loaded with DRM or other built-in software protection.

  • So when will the second downfall of gaming happen?

  • Although the possibilities do raise some concern, I find it hard to believe that all used sales would become illegal. Making it illegal for corporations to profit off of used game sales is much more feasible -- not to mention more enforceable.

    If it did become illegal across the board, I'm sure the re-release business would ramp up significantly.

    I'm not sure that this scenario would be the best way to handle the used game "problem", as it would surely encourage more piracy, but I can't fault game companies for wanting to protect their business -- if most of us were in their position (CEO, board member, etc.) we would do the same thing.

    I just hope they actually do what's in the industries best interest, and don't take it too far.
  • WOW really is it that big of deal. I can see were people say that it's "stealing" from the game company and I also get that people want to keep trading games at a fair price. If it does get big enough(not saying it will) it is very possible that we could have to buy just new games. So the game company can jack up the prices since there is no other way to get the game unless bought from them. And has there been game companies closing just because of used game sales(and if there has can you tell me because i haven't heard about any). The used game sales probably contributes to a very little bit of profit loss but i don't think it could shut down a company. Look at Modern Warfare 2 and how many that sold, i don't think the game company was too worried about people reselling the game afterward since there were rich from the main sale of it. There are alot of worse things out there they should be trying to stop instead of used games sales.
  • Its one thing when you sell your used game on ebay then it is to mass sell them in a retail store for profit and then not giving the makers any part of that

  • That's really bad news, not just for GameStop, but for other, smaller stores that sell really old games- how will I be able to get old SNES games now?

  • The used game market will live on its one of those things that won't die which I have no problem with. Because I am not hunting down a new version of a 4 year year old game just to have it I think everyone should get over the fact people like to get used games heck I wouldn't have gotten 2 new copies of Just Cause 2 if I had never picked up the first used and loved it.
  • This would suck for me, as I sell used games all the time on eBay and to GameStop etc. It's like the updated article said, I reinvest almost all of the money from my used game sales into purchasing new games. If I hadn't sold used games, I wouldn't have any next gen consoles right now and would have few games. The used game market helps kids, poorer consumers, and those just looking to save some money afford to buy new games, effectively supporting game companies in the process. This is very important, especially in this economy when consumers are trying to save as much money as possible. It's not all one-sided.

  • Autodesk's software is very different from that of a video game. They license their powerful software tools out to people, and its always been that way, they don't sell their product. I see how this could eventually affect video games if the sale of video games is considered licensing, but as it is, the producers of video games are actually selling their product. I agree with this ruling in Autodesk's case, but not for video games if that time comes.

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