Steam Loses Lawsuit Over Digital Ownership and Resell of Games in French Court

by Rob Fanzo

Please note the following is a rough translation (with assistance from DeepL.com translator) of the original article that can be found here: Original Story

The UFC-Que Choisir won a major victory against Valve, the Steam publisher of the largest video game platform on the market. The association has obtained the cancellation of several clauses, including the one prohibiting the possibility of reselling dematerialized games.

The court’s ruling is a culmination of almost three years of proceedings. And a victory for the UFC-Que Choisir. In a judgment handed down on 17 September by the Paris Regional Court, and relayed by the Next Impact website, the consumer rights association succeeded in obtaining the annulment of a number of clauses that Valve had imposed on Steam.

The most significant of these concerns the one that effectively prohibited the resale of dematerialized video games, i.e. products that are not linked to a particular physical medium (a cartridge or a disc for example). In the subscription agreement that Valve drafted for its video game distribution platform, provisions prevent this possibility in principle.

The court ruling declared that the Valve account and the information attached to it “are strictly personal”. This applies in particular to subscriptions, which refer to “rights of access and/or use of content and services accessible through Steam”. These contents and services include video games, purchased virtual objects, game content, software or updates.

However, just as it is “not permitted” to sell or invoice the right to use an account to third parties, nor to transfer it, it is also not permitted to “sell or invoice the right to use subscriptions, nor to transfer them”. In other words, you cannot resell dematerialized video games, even though you have the possibility to do so when it is a physical product.

EUROPEAN LAW TO THE RESCUE

This is where the High Court comes in.

The disputed clause (1-C) has been rejected by the French courts, on the basis of European law, via European directives (Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society and 2009/24/EC on the legal protection of computer programs), and on the case law of the European Court of Justice.

These two directives, the court wrote, “prohibit the possible obstacle that copyright protection could constitute by recognizing the principle of exhaustion of the distribution right, which “prohibits”, if only by the interplay of contractual provisions[as, here, those set out in the Steam subscription agreement, editor’s note], the free movement of goods within the Union.

Exhaustion of the right is a principle according to which once a work has been sold with the author’s authorization, the author no longer has control over subsequent resales. This allows the second-hand market, as individuals do not need to seek the prior agreement of the author to sell a particular property. However, this provision also applies to legally acquired dematerialized content.

In 2012, the European Court ruled that a rightful claimant is prohibited from opposing the resale of software. When it is sold, including for download, its purchaser is free to resell it: “Such a transaction implies the transfer of the right of ownership of this copy”, if, “against payment of a price, a licensing agreement[grants] the customer the right to use this copy for an unlimited period”.

IT IS INDEED A PURCHASE

However, the court observes that the licence of a game is indeed purchased and not obtained within the framework of a subscription to the subscription of the said game. Indeed, this subscription mentioned by Valve “actually consists of a purchase, the game being made available to the said user for an unlimited period of time. It cannot therefore be a “subscription” – in the usual sense of the term – but the sale of a copy of a video game, made for a price determined in advance and paid in a single instalment by the user.

The court went on to explain that the owner of the right in question “may no longer oppose the resale of this copy (or copy) even if the initial purchase is made by downloading”. As for the software publisher or his successors in title, it is no longer possible to “object to the resale of this copy or copy, notwithstanding the existence of contractual provisions prohibiting a subsequent transfer.

Of course, the court did not ignore the fact that, in the Intellectual Property Code, there is reference to a “material copy” in the case of exhaustion of the right. But for the sake of justice, this wording “must not be assimilated to the sole physical medium of the software, but must be understood as the downloading of the software from the website and its installation on the user’s computer.

The court thus brandishes another article of the same code, which states that “intangible property is independent of the ownership of the material object”, which distinguishes the work from the material object in which the work is incorporated. Moreover, the Court continues, European law “in no way leaves it to the Member States to provide for an exhaustion rule other than that of Community exhaustion.

CLAUSE DEEMED UNWRITTEN

In these circumstances, the disputed clause is “deemed unwritten” because of its unfair and unlawful nature. Valve cannot therefore in principle brandish it to prevent a player from reselling a game, which was then considered “second-hand”. Its effects are considered non-existent. The clause will have to be removed and, among the court’s decisions, the judgment will have to be posted on Steam for 3 months.

The entire judgment must therefore be accessible and activatable via the site’s home page as well as on those of its tablet and smartphone applications. Valve has one month to comply with this request, from the day of the verdict, otherwise it will be liable to a daily penalty payment of 3,000 euros for each day of delay, up to a maximum of six months. Damages are also planned for the UFC.

Finally, the Court recalls that all the contractual offers of Valve, although under American law, and its Luxembourg subsidiary Valve SARL, “must be governed by French law when they concern users with a residence on French territory”. Which, in theory, should lead Valve to foresee the possibility of being able to resell games on its platform.

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