Closed environments locking down consumers’ rights

By EDRi · July 17, 2013

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Deutsch: [Geschlossene Systeme sabotieren Rechte der Verbraucher |]

Can you resell your used apps for your iOS or Android device? How about
your video games that you purchased from Valve’s Steam Store?

The answer is yes and no. Legally, you are allowed to resell your used
apps and Steam games if they were marketed in the EU. However, from a
practical perspective, the owners of closed platforms such as Apple’s
App Store and Valve’s Steam Store don’t allow users to transfer their
unwanted software licenses to other users, effectively making it
impossible for a user to resell their used apps and games.

According to the European Court of Justice (ECJ)’s decision in UsedSoft
v Oracle case of last summer, if you pay a fee for software and are
granted a license to that software for an unlimited period of time, then
the copyright holder has exhausted their exclusive distribution right.
Even if the license agreement prohibits a further transfer, the
rightholder can no longer oppose the resale of that copy. This applies
to both software distributed on a physical medium (CD-ROM or DVD) as
well as downloaded software. Thus, consumers in the EU are legally
allowed to resell most of their apps and games.

However, closed environments like Valve’s Steam Store are preventing
consumers from reselling their used software in two ways. The first is
through restrictive user agreements. For example, the Steam Store’s
license agreement states that “The Software is licensed, not sold.
Your license confers no title or ownership in the Software.” However,
since consumers pay a fee for a license that lasts an unlimited period
of time, games bought via the Steam Store clearly fall under the
UsedSoft v Oracle ruling and Valve cannot oppose their resale.

The other way closed environments like Steam prevent consumers from
reselling their unwanted software is by failing to provide a mechanism
that allows a Steam user to transfer a license of their software to
another Steam user’s account. The omission of this simple mechanism
makes it impossible for Steam users to resell their unwanted software,
since the consumer has no way to complete a sale, which would require a
license transfer of the software being sold to the buyer’s account.

Since consumers cannot resell their unwanted software purchased from
closed environments, second-hand markets for used apps and Steam games
are prevented from forming, even though distributors like Valve have
exhausted their distribution rights and cannot oppose resale of their

With software increasingly being distributed via downloads, closed
environments are gaining popularity. Apple, Microsoft, Google and Valve
all distribute software for their platforms via their own closed
environments. Owners of these closed environments take a percentage of
the sales of any software distributed via their online store and the
software developers who make the applications that are sold no longer
lose sales to consumers buying cheaper used copies of their software
instead of new copies.

Consumers, however, have their right to resell their digital property
restricted and also lose access to secondary markets where they would be
able to obtain the same product at lower prices. As software is
increasingly distributed via closed environments, we must protect
consumers’ right to own and resell their software.

ECJ case – UsedSoft v Oracle ruling (3.07.2012)

(Contribution by Michael McNeff –