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Court ruling could affect pre-owned game sales

Ninth Circuit appeals court disallows resale of drafting software due to EULA terms; PC, console games come with similar restrictions.

Pre-owned game sales account for a major chunk of GameStop's profits and have other retailers wanting a piece of the pie. However, a decision on Friday by the US Court of Appeals for the 9th Circuit could imperil sales of pre-owned games--or any other software with a particularly worded end-user license agreement (EULA).

The court overturned a May 2008 decision by the US District Court for the Western District of Washington in the case of Vernor v. Autodesk. The original decision stated that Washington resident Timothy Vernor was within his rights to sell a sealed copy of Autodesk's AutoCAD design software he got at a garage sale on eBay.

The 9th Circuit's decision may imperil sales of pre-owned games.

The 9th Circuit's decision may imperil sales of pre-owned games.

Though the copy of the software was sealed, Autodesk's EULA--which was not visible externally on the retail box--said that the software is only licensed to purchasers, not actually sold. It also said that the license cannot be transferred, so after purchase, the software had to be destroyed if not used.

The Western Washington court's decision upheld the idea that customers own the software they purchase, commonly referred to as the "You bought it, you own it" principle. The appeals court's decision, however, undermines that idea if the software has "license only" language in its EULA.

Tech blog Ars Technica pointed out that the EULAs used by Electronic Arts and many other publishers have similar language in their games. "This software is licensed to you, not sold," reads EA's EULA. "Access to the software requires software registration with the serial code enclosed with the software. Software registration is limited to one EA Account per serial code and is non-transferable."

The EA EULA is for a PC game, which typically requires acceptance of such terms to play. However, comparable wording can also be found in console game manuals, such as that of Take-Two Interactive's recent hit Red Dead Redemption.

"THIS SOFTWARE IS LICENSED, NOT SOLD," reads the license agreement on Red Dead Redemption. (Capital letters in original.) "You agree not to: (a) Commercially exploit the software; (b) Distribute, lease, sell, rent or otherwise transfer the software, or any copies of the software, without the express consent of the licensor." (Emphasis added.)

Inquiries sent to EA and Take-Two about the appeals court's decision were not answered as of press time. However, EA and other publishers have recently taken measures to deter pre-owned game sales, from which they earn no money.

In EA's case, it is enclosing single-use codes in new games to both award extra downloadable content and enable online modes. The latter applies to all of the Redwood City, CA-based company's sports games, which will charge buyers of pre-owned games $10 extra to access online modes. THQ recently adopted a similar model for the online modes for its wrestling and mixed martial arts games.

603 Comments

  • thisisreallybor

    Posted Feb 1, 2011 6:21 am GMT

    AND here we go again. publishers fighting everyone instead of embracing the market. Up goes piracy!

  • thisisreallybor

    Posted Feb 1, 2011 6:19 am GMT

    this would be no problem..... if games weren't 60$ to begin with. Look at Steam on PC. People can't trade those games, but people buy them when they are discounted.

  • garland51

    Posted Jan 29, 2011 3:34 pm GMT

    @jma1024x:

    I totally agree with you. Do the developers, DD fanboys & the anti-used gamers honestly think that the gaming industry would survive on it's own without the used gaming market? If the developers try to take it away, the gaming industry would crash & burn instantly.

  • jma1024x

    Posted Jan 5, 2011 11:33 am GMT

    STUPID, absolutely STUPID decision by the 9th Circuit.
    This will undoubtedly increase piracy 1,000 fold. As consumers will no longer be able to sell their used software nor purchase it. In the words of a famous L.A. D.A., it's 'making a crime of thoughts, while actions go unpunished'.
    I'd have to say that if game publishers dare stop the used game market it will destroy them with a mountain of piracy. Don't make your end users criminals unless you want a backlash.
    As for Autodesk, well they should be trying to compete in the software design field and not the legal field. They will pay dearly for this stupid lawsuit!

  • jubdeidamasta

    Posted Jan 3, 2011 10:46 pm GMT

    Really I am not against, companies making it so people who buy used copies have to pay for the online extras. They have to earn their money some how. Maybe that will help with piracy too. Either way they wont be able to stop people selling on craigslist, ebay etc. From selling cheap games.

  • xXBangomangoXx

    Posted Jan 3, 2011 4:49 pm GMT

    How would he know if his copy was sealed and the EULA was inside the box?

  • BladeVampero

    Posted Jan 3, 2011 9:53 am GMT

    So if this passes does that mean that games at yard sales will be illegal? Gees, this is ridiculous. EA's just mad because their sports games become worthless a week after release because there's always another next year. They need to remember that in order for a game to be used in the first place, somebody else bought it, so they do still get the revenue for that. They're just being selfish.

  • PuppetMaster786

    Posted Jan 2, 2011 5:49 pm GMT

    guess i should buy all of the used games from gamestop A.S.A.P.

  • BlueFlameBat

    Posted Dec 7, 2010 10:11 pm GMT

    So what happens when you get sick of a game? Destroy it? Come to think of it, I've never actually sold a game in my life. I'm a hoarder though.

  • Mewone

    Posted Dec 7, 2010 2:57 pm GMT

    I say crucify the greedy bastards. :3

  • Caer_Death

    Posted Dec 5, 2010 2:09 pm GMT

    @SolanOcard

    War creates all three of those things (and is also created by all three of those things), and there are some people who get filthy stinkin' rich off of it. In fact, more money goes to war than goes to video games. But all of this aside the point...

    ...Lesser terms for the buyers mean less buyers at any given price level. Less financing means less ability to purchase. So between not being able to trade in, say, 3 old games that you're not gonna play anymore in order to get one new game, and not having the inherit value of being able to resell and recoup some of your money back will just mean that less people will be willing to buy it, and the prices would have to fall to reflect this. So overall, unless the buyers are ignorant/illiterate, the companies wouldn't be able to make any extra money off of this, and the used game market would hopefully become as violent on the black market as are drugs and such. Maybe with a little pinch of fairy dust, we can get some Mexican Gaming Cartels up and running, decapitating people, and such. And then... they should make a video game out of it. Ironic? You bet.

  • SoulAlchemist

    Posted Dec 4, 2010 1:58 pm GMT

    Wow... I understand both sides of the argument but should this be an issue that the courts take on when the economy is better.
    This will kill GameStop and Gamefly if it stays. That would send a lot of people to the unemployment line.

  • emirblade

    Posted Dec 4, 2010 10:04 am GMT

    I don't think gamers who buy used games are gonna be buying all those new games for 60 bucks. So I don't see much profit on the developer hands.

  • jaborwaki22

    Posted Dec 2, 2010 5:38 am GMT

    If it wasn't for game review sites like this(Gamespot), then we would all be suckers buying ill developed junk. But even then, on occasion I will try a game out, knowing that if it is as horrific as the reviews claim, I could always ebay it getting 50% or more of my loss back, or trade it in and get a smaller percentage.

  • jaborwaki22

    Posted Dec 2, 2010 5:27 am GMT

    Out of the nearly 600 comments before me, I would have to agree with the brainers who are defending the gaming publishers on their right to their property. But, where you are wrong is in the way you see Gamestop and it's used game sells. Where do you think all of those games that Gamestop sells used came from? Most likely they came from people on a limited budget who wanted a cool game, and therefore traded in 3 or 4 games just to get Grand Theft Auto. Selling used games is not one sided, it hurts the sells on game titles, and helps the sells on others.
    Gamestop will not be able to compete with Wallmart, so it will close.

  • nny138

    Posted Dec 1, 2010 11:11 am GMT

    i really dont think it will destroy places like gamestop- they have tons of money and im sure lots of lawyers to fight stuff like this... i could really care less, i started gaming with an atari 2600 and until electronics boutique (now gamestop) popped up, there was no such thing as buying used games and us gamers still got along fine. what have they done for us? we can now get $15 for a brand new game that they will try to sell for $45? oh man what will i do without that...

  • SolanOcard

    Posted Nov 22, 2010 4:03 pm GMT

    Here is a great idea. Make the first game in a series with the EULA (End User License Agreement) so that people will buy it, play it, sell it, and it will be rebought. People who are unsure of the game will wait to buy it used, and if they like it, might be hooked on the franchise... and buy the second game in the series new, where now the EULA comes into play.

    Personnally, I think the whole thing sucks, but the above would be an ok compromise.

    @shugler.

    poverty, famine, violence... none of those things generate MONEY and TAX REVENUE. so are you really surprised?

  • Shugler

    Posted Nov 4, 2010 9:05 am GMT

    This is just absolutely incredible. I would like to go one week, JUST ONE WEEK, without reading "video game" and "court" in the same sentence. There's violence, famine, and poverty going on in the world, but no, these yahoos choose to waste their time on video game liscensing issues. God bless the US government in ALL their glory.

  • PoofMaester

    Posted Oct 28, 2010 4:45 pm GMT

    I smell some major Bull S#!^

  • TheMercMaster

    Posted Oct 17, 2010 10:30 am GMT

    This is crap

  • voyager529

    Posted Oct 8, 2010 9:22 am GMT

    So I'm thinking that what is going to end up happening is a scenario like this:

    The guy who intends to sell his used $4,000 copy of AutoCAD later on is going to go to his local county office, get a DBA for some randomly named company and purchase the software in the company's name. Then, sell the company for $1,500. The software hasn't been sold, the company has been sold and its assets have been transferred. Let's see AutoCAD challenge THAT scenario in court!

    granted, it doesn't work nearly as well to have to do that for $50 copies of Mass Effect, but it seems like the kind of technicality that is begging to find its way to court just to spite Autodesk.

  • cjr1976

    Posted Oct 8, 2010 7:52 am GMT

    @mycatdied

    the first commment you made right here is exactly the problem with all this. Since when has it become legal for a company to take rights off an individual to increase profits? When you own an IP and you put it out into the public you take certain "risks", just like you do by putting inventory on a shelf. I challenge anyone to show me indisputable proof that used game sales actually hurt profits in any appreciable amount. It's impossible to do. This really has little to do with used games hurting profits anyway, it's about absolute control and the ability for companies to continue to milk the general public. If the developers are not getting their checks it's either because they made a crap game that didn't sell or someone else in the chain is taking more than their share. I think you'd be hard-pressed to find a quality, well-marketed game that has not been quite profitable even with all these demon used games out there. Keep in mind that the used game market is not real strong for new(er) releases because a) there are not many copies available because people are still enjoying them and b) like you mention, the margin between the selling price of new used copies is usually pretty slim and at that point most people would shoot for new, especially with the incentives they have been offering for new purchases ($10 credits, free add-on content, etc..)

  • KILLZoneKILLall

    Posted Oct 7, 2010 3:12 am GMT

    If you make a crap ass game. I should be able to do with as I please upon purchase. It is mine. PERIOD. So basically the poor guy that buys my Madden or READ DEAD is gonna have to shell out an additional $10, next to the ROBBERY price of only $4 off the orig price I paid for it. Because as we all now. GAMESTOP are CROOKS. Swindlers!!!!!

  • drybonesXD

    Posted Oct 3, 2010 8:28 pm GMT

    Wow this is just stupid.

  • mycatdied

    Posted Oct 3, 2010 8:16 pm GMT

    @cjr1976

    I understand your concern with consumer rights, but if a company chooses to issue a EULA, that implicitly states you give up your rights to sell, copy, etc, than you have no rights. We also forget that this issue could be hurting developers more so than the publisher. Who's not to say the the developers contigency of producing a sequel, or bonuses hinge on the sales of "said" game produced. Reselling of used copies would not contribute to an overall picture of how well the game is received. Investors also pump money into companies, and want to see high returns (i.e. sales). If these investors are not appeased than some of our favorite companies will not have the capital to produce the titles we love, or we may not see that groundbreaking new game from a little-guy studio.

    Finally, go into any Gamestop for example, and most new, to semi-new used games only sell $5 less than the new copy; just get the new one.

  • hujhujg

    Posted Sep 30, 2010 7:54 pm GMT

    WTF DOES THE GOVERNMENT WANT FROM US!!???!!!

  • felipe_k3

    Posted Sep 29, 2010 3:24 am GMT

    This is really bull**** cause many people can't get 40 bucks out of nowhere to buy a game and then if you wait for prices to drop you'll find yourself giving 10 bucks? no way. I hope this decision will be cancelled.....

  • Tcbys1

    Posted Sep 28, 2010 8:35 am GMT

    I dont think this would hold. Someone would hopefully appeal it and change the court decision. If the Used Game market goes down the Game Industry will take a major hit. Like they say History will repeat it self. Another Video Crash. And a another Revival of the Industry only to make it better.

  • cjr1976

    Posted Sep 27, 2010 5:23 pm GMT

    @brokenspirit116

    It's this kind of thinking that continues to baffle me. I want the game industry to be profitable also, but not at the expense of my rights as a consumer. When you or anyone else makes statements that imply that used games hurt the industry, you are making arguments that are not measurable. How do you know if and by how much? You would have to assume that every used game that is sold is a new sale lost and that is just ludicrous. Most people buying used games either would not have bought the game new anyway and if they did, it would not be until it was in the bargain bin, at which time the profit on the game is nil. I am speaking from many years working for and around the gaming industry. Publishers are trying to buy pity and legislation by posting these huge loss numbers that they can't possibly prove. If used games really are disastrous to the industry, how to you explain the great success of the NES, SNES, Genesis, N64, PS1,2, etc...? These are all systems that had used games readily available to their users and they did just fine. Game companies loose money by making crappy games and rightfully so. Now they are being allowed to write some do's and don't's on a piece of paper, put it in the box, and it's legally binding. Can't you see how dangerous this precedent is to all of us as consumers? Yes, gaming is not a right, but sometimes you have to look at the big picture.

  • brokenspirit116 posted Sep 27, 2010 2:54 pm GMT (does not meet display criteria. sign in to show)

    brokenspirit116

    Posted Sep 27, 2010 2:54 pm GMT (hide)

    If no one bought new games, there would be no gaming industry, let alone a used gaming market. It's not about greed, it's about good business. All I'm seeing are people who think that this is unfair when it actually very much isn't. These companies lose money when you sell their software to someone else. You have property rights to the disk which contains the software, but not the software itself. Copyright laws very much say that the software belongs to that company, not you. It's not about hurting gamers in general. As the only gamer I can see being affected by this is the cheap gamer. This is a hobby people. A hobby we all very much enjoy and like but it is not a right, it's a privilege. And privilege's that are abused are taken away. And it isn't a complete downer as this law only affects games that aren't yet public domain. All games eventually become public domain as they get older and they can then be freely traded among owners. But the lifeblood of the gaming industry is in new games. And I very much support these companies trying to stay profitable so that they can continue to give us new games to play.

  • mavfenix

    Posted Sep 27, 2010 11:09 am GMT

    @HellblazerAngel
    As far as I understand, the used game market does nothing for game makers, just as the used car market does nothing for auto makers.
    The major damage that will be done goes to used game retailers like Gamestop. I imagine that used game retailers will make some sort of statement or claim on this matter, but only time will tell.

    With respect to the whole concept of a game being "licensed, not sold" is total garbage to me - on this, I completely agree with you. I, however, do not agree for charging additional fees for used games to have additional "online only" content. Games these days are expensive enough - we buy used games because they are the same as new games, but cheaper - and they come with the risk of losing functionality earlier in their life than a new game. If I'm going to buy a used game and shell out more for online functionality, I might as well buy a new game (at least this might be the manufacturer's thought process).
    More or less, this could turn out to be a very interesting argument. Time will tell on this one.

  • HellblazerAngel

    Posted Sep 27, 2010 1:51 am GMT

    I wonder if there wont be an appeal of the 9th courts ruling. While I agree that the used game market may hurt game makers, does that mean that buying a used CAR hurts the auto industry? I'm thinking not. And if not, why should it be handled any differently? As for EULAs stating that a game is Licensed to you? Sorry EA, that's total b.s. I would really love to see how many Madden games you sell once you go all Big Brother on us and start enforcing that one. If that becomes the way of it, then it wont be long before EVERYTHING a person buys will be 'licensed only' products that can never be re-sold, auctioned, or (if you really want to get technical with the clause) donated to charity. I can agree, however, that if you buy a used copy of a game or software and you want to access parts of the game online (thus, using it in the public domain) that charging a nominal fee for an 'online' license is totally viable. Being a collector of video games, if the market for the re-sale of used games became illegal, this would really put a hurt on me. I'm not sure what I would do then. Maybe take up needlepoint?

  • bguy9

    Posted Sep 26, 2010 2:14 pm GMT

    Well if I can't own a game I refuse to pay a whopping $60 to get it "licensed" to me. It's time to take a stand.

  • cjr1976

    Posted Sep 25, 2010 10:03 pm GMT

    @Vilinastor78

    Used games contribute to the overall lowering of game prices over time. They are not going to have an effect on what a new release is going to cost, but they help to drive prices down on games that have been around for a bit. Consider a game that has been out for 6 months and has a lot of used copies of it out there in the wilderness that are, say, $20 each. It would be foolish for a publisher to continue to expect people to pay $60 when there are so many available for $20, so they drop it to maybe $30 to remain competitive. Now assume that we no longer have used games, once you buy it you're stuck with it. You can only buy it from one place, so there is no competition at retailers, and you can't sell it, so there is no competition from the used game market. There is much less incentive to drop the price. Just look at Xbox, the majority of arcade games are still exactly the same price as when they were released, even the launch ones. Expect to see this quite a bit more if we can only acquire games digitally.

  • killer690

    Posted Sep 25, 2010 9:39 pm GMT

    - So, I do NOT own any my games, They have only been licensed to me, then again, everything comes down to money, and they could not care less about us, the gamers, AKA the ones that buy their games in the first place -

  • sebetai

    Posted Sep 25, 2010 7:04 pm GMT

    next week my speech is doing a current event, can't be older than 3 months, and I've selected this. best way to make good of a bad situation.

  • Kou-Nurasaka

    Posted Sep 25, 2010 6:36 pm GMT

    I don't get it. If I buy a game, isn't it my property then? I should be able to decide what to do with it. What's next? Are we supposed to package games back up and send them back to the developer when we are done with them? This is really just innane.

  • sebetai

    Posted Sep 24, 2010 8:46 pm GMT

    there are not a lot of games i will buy new. it has to be really good for that. Pokemon black/white i will get new. that's about it unless toys r us has a sale.everything else, about 95% of the other games i will get, will be used. besides, how will this be enforced if you prefer to play non online single player games? also i prefer multiplayer games to be ones where i can play with people in the same room since i have no broadband connection for my wii and one day ps3.

  • lcarnegie4

    Posted Sep 24, 2010 8:30 pm GMT

    ah quit worrying noway this happens

  • Xaviersx

    Posted Sep 24, 2010 11:33 am GMT

    EULA's are insane, legal jargon that mostly only addresses protecting the creator/seller of the subject and offering little to no recourse to the buyer. Fine. But EULA's should be visible prior to sale to avoid the NO RETURN policies of retailers regarding shrinkwrapped products once opened. IF you don't know what's in the EULA until after you've opened and started an install, that there is a point of failure on the sellers/creators part to properly disclose terms in a reasonable/timely fashion - prior to purchase. But then, that could limit sales and not obligate consumers to the terms in said EULA. Hmmm. Now, for online software, hopefully all the EULA stuff is pre-sale, right? Oh the things the lawyers have wrought on the world. I don't mind registration, or software keys, but please, stop telling me that I don't own and can't sell or at least tell me beforehand so I don't buy and license by mistake.

  • JHG6784

    Posted Sep 24, 2010 1:07 am GMT

    this is insane, how can a company charge you money give a product and then say you don't own it? Does this mean you can get your money back from the gaming companies if you no longer want there license. Also if the disk break will they give you a new one for free since you still own the license.... there other points but those are the first few that pop in my end at this late hour.

  • BigJohnWV

    Posted Sep 23, 2010 9:29 pm GMT

    Give it time, give it time. Mark my words, this will be the beginning of the next video game "bust" and EA will drive the industry right into the ground.

  • archlvt

    Posted Sep 23, 2010 4:33 pm GMT

    "If used games drive the prices of games down...Then why I am paying $10 extra for new games this generation? I have been buying used and new since the N64 and have only seen prices rise"

    I think he meant to say that game PROFITS are going down, not prices; which is true.

  • Vilinastor78

    Posted Sep 23, 2010 4:45 am GMT

    @cjr1976

    If used games drive the prices of games down...Then why I am paying $10 extra for new games this generation? I have been buying used and new since the N64 and have only seen prices rise.

  • 01Cappo10

    Posted Sep 22, 2010 2:19 pm GMT

    i hate activision!

  • dibgilberg

    Posted Sep 21, 2010 8:34 pm GMT

    some companies should work on making games that people don't want to get rid of...how about that? and as far as online goes...don't give a crap. i have xbox...i ain't paying crap. if i had a ps3 then i might care. it would also be nice if companies cared about people who have friends...who actually sit in the same room as them...i seriously need more co-op...it saddens me when companies say co-op but they really mean online co-op...pisses me off...

  • MagUnreal

    Posted Sep 21, 2010 3:22 pm GMT

    This is the best comedy article I've ever read.....wait, what?

  • chang_1910

    Posted Sep 21, 2010 8:19 am GMT

    hopefully this would NOT be approve.. the end of used game would mean a HUGE drop in the industry.. I know many ppl that just buy used games.. and lets face it... our collection would be much more smaller if we could not buy/sell games... Even if some of us do not buy used games, we may sell them, either bc we want to buy the next pre-order or to recover some the money we spend on X game that we really wanted on release day... no used game on sale, no trade in.. It will affect the market, the Co.. but it would be BAD for us as well...

  • Kratier

    Posted Sep 21, 2010 4:33 am GMT

    Games are a PRODUCT, EULA is just an agreement, because there is a "i agree" button does not make it a legal binding contract. Also because its written down does not make it legal.

    You buy a disc in the store, you are legally entitled to the disc and all its contents.

    I see backlash if this court ruling went the other way, and people started questioning the method of already-on-the-disc DLC thats locked upon retail distribution.

  • Gradius55

    Posted Sep 20, 2010 7:06 pm GMT

    Wow... just wow... I see a new videogames crash like the one Atari did during the 80s. Way to go, EA!

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