By Becky Jones - Wednesday September 15, 2010
Potential bad news for gamers: that used copy of Assassin’s Creed II you just bought for PS3? It may not be legally yours. In a surprise ruling on September 10th, The US Court of Appeals for the Ninth Circuit ruled against defendant and software consumer, Timothy Vernor, in favor of software mogul, Autodesk, Inc. The software company claimed that Vernor, who purchased unopened copies of the design software, AutoCAD, at local garage and office sales and then sold the software on eBay, is in violation of Autodesk’s intellectual property rights, as he did not purchase the product from its true owner, Autodesk, Inc.
The company submitted an appeal after a District Court ruled in favor of the defendant. In the preceding trial, Vernor’s defense maintained that the resale of the product in question was protected under the First Sale Doctrine, a law originating in 1908 which states that copyright holders can’t prevent a buyer from reselling or renting an item purchased from the owner, as long as copies aren’t made. In their appeal, Autodesk, Inc. disputed the admissibility of this claim, as Vernor did not purchase the software from its owner.
In the appeal, the company also referenced its licensing agreement contract, to which all users must agree, before using the AutoCAD software. Although Vernor never signed or accepted any virtual contract, because he never actually used AutoCAD, the court ruled this license reference admissible, because they claim that the contract, itself, is the legal property of Autodesk, Inc., and is theirs to interpret as they see fit.
The decision raises concerns for consumers in whether or not they may “own” anything that is considered to be the intellectual property of the publisher/producer. The re-sale of movies, books, music, computer software, and video games may face significant impending changes due to this ruling.
It would seem that the definition of true “ownership” is at a crossroads. Can you truly own the brainchild of another person? If you buy a painting from an artist, are you legally bound to give that painting back when you don’t want it anymore, or can you sell it to your neighbor at your yard sale for $15?
The debate here is whether or not it is ethical to re-sell intellectual property that, according to this ruling, now technically “belongs” to the producer. This could have a potentially crippling affect on the used-game industry, particularly for stores like GameStop, whose inventory stock seems to be practically 50% used games. Currently, a game developer makes a percentage of the initial sale of the game, and a small commission whenever the game is rented. Technically, the developer does not make commission on used games sold by a third-party distributor, but that’s not to say that they don’t see any benefits from the used-game market.
Think about your copy of Halo 3, Mass Effect 2, Dragon Age, or Fallout 3. How much money did you spend on map packs, add-ons and story-continuations? While someone may not have paid the full $60 for a new copy of a game, they may be sending extra cash the developer’s way through online gaming marketplaces like the PlayStation Network, the Xbox LIVE Marketplace, or the Wii Shop Channel. Even developers of Massively-Multiplayer Online Role-Playing Games (MMORPGs) are able to forgo the $15-per-month standard in favor of being free-to-play, because they know players will be willing to buy items in-game if they aren’t charged a regular, monthly rate. Furthermore, not only can used games boost the sale of online add-ons (that sometimes come close to equaling the price of the game), but by being able to offer games at a lower cost, used games encourage gamers to try out new developers and genres that they normally wouldn’t pick up at full-price.
Someone who is usually only interested in first-person-shooters, for example, may walk into GameStop one day, and find a used copy of Mistwalker’s Lost Odyssey. Enticed by the cheaper price tag, they decide to branch-out and buy it. If it turns out that this person loves the game, or even mildly enjoys it, they are much more likely to pick up the developers preceding and subsequent releases at full price, which they never would have bought before.
Someone who has a positive experience with a game isn’t going to want to wait for the slightly-cheaper used copy of the sequel to hit the shelves; they’re going to buy it new. That one initial purchase, even though it may not immediately benefit the developer, will earn them money in the end. Aside from the impact that the court ruling may have on developers, this ruling may yet prove to be a double-edged sword.
Although the banning of used games from retailers may potentially cut-out an entire consumer market for those who may only be able to afford games at the lower, used rate, this may also potentially mean that developers will have more robust funding to create better, more intuitive games; but for whom are they developing? Only for gamers who are able to keep up with the $60-a-game status quo?
I see two potential outcomes of this ruling on the way in which games are transferred from developer to consumer. The most probable outcome is already emerging as the latest trend in media: the digital download. This shift is not only becoming well-established in the gaming industry via online marketplaces, but in the music (iTunes), literature (e-readers), and movie (instant-queue Netflix) industries as well.
The digital download knocks-out the potential for third-party re-sales by removing a physical product. With programs like iTunes, you do not physically own the media that you download; you just pay a price to unlock the ability to play it in your iPod or laptop. The downfall for the developer, though, is that with digital downloads, come hackers. There already exist countless game torrents, easily playable with a few console modifications and hacks like the Homebrew channel on the Nintendo Wii. With stricter regulation comes the black market; this is proven to be true time and time again.
In a second possible outcome, game companies may decide to take a different route that would allow them to retain their used-game market-base, and earn income off of their second-hand products at the same time. This scenario would either eliminate the third-party by having the game developer, themselves, buy and sell used copies of their games online, or by creating a law that retailers like GameStop must pay a commission on all used sales. Obviously this would not stop personal transactions like that which began this debate.
Whether or not the gaming industry will start cracking-down on elderly couples selling their grandson’s copy of DOOM II that he left at their house fourteen years ago, is yet to be seen. One thing’s for sure, though, and that’s that the intellectual property market, and the impending laws that come with it, are going to change and evolve as media does. Vernor and his defense are now seeking an 11-judge review of the recent decision, and will apply to the Supreme Court if necessary.
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