Thursday, October 14, 2010

Used Games and The Law

Hey. The Dallas Morning news printed something that was sort of worth reading. Who'd a thought.

In all seriousness, the DMN (yes, they call themselves that) has reported a court ruling that could affect sales of used video games. The paper focuses on GameStop because the company is based in the Dallas-Ft. Worth Metroplex, but the reality is that this ruling could affect other retailers such as Ebay, Amazon, and Best Buy.

Last month, a ruling by the 9th Circuit Court of Appeals ruled that a software publisher can prohibit the buyer of their products from reselling it. They have been hammering out the details since then. Previously, retailers were safe under the "first sale" doctrine which allowed buyers to resell products. Libraries and video rental stores fall under this doctrine.

The original case was from an individual, Timothy Vernor, whom was selling copies of Autodesk's AutoCAD design software via eBay. Autodesk complained to eBay cliaming violation of copyright, to which Vernor protested. eBay sided with Vernor and the suing began. Whether or not the copies Vernor was selling were purchased legitimately or illegal copies of the original program, is unknown. 


There is some surprise that the appeals court made such a decision, and many legal experts believe that this ruling won't be upheld at the next level. Simply because it would affect everything from libraries to garage sales to pawn shops to major retailers.


I can understand the argument from both sides of the fence. On the one hand, retailers reserve the right to sell something second hand. They purchased a product from it's previous owner, and wish to provide it to another end-user at a lower price. On the other side, second hand sales means the software publisher gets nothing. They only receive a cut of the new product that is shipped to a retailer. (Basically retailer buys the product from the publisher for a value and the retailer can only sell that product at a certain price point, keeping profits minus the monetary value paid to the publisher for the initial purchase of said product.) In essence, the publishers feel cheated that they don't receive a cut of that second hand sale. Because this is America and all people care about is money, not the fact that someone is playing your game and you are able to continue producing such a product.


For some companies such as eBay and GameStop, second hand sales make up a huge chunk of their profits. eBay in particular is an online garage sale of used items. And while eBay can work without video games, GameStop can not. The article says roughly 30% of profits are from used games sales, but I know better. It's more then that. There's a reason why you see the walls of every store littered with used games, and half a shelf for new games. Used games sell. People are ok with buying video games second hand because of the discounts. And really, it comes down to the all-mighty dollar. If software companies want a share of the used games market, that means less used games will be available for sale. Prices on used games will increase so that retailers will maintain some margin of profit. Which trickles down to the consumer, because now that $15.98 buyback value will go down to $10.50 so that profit can be made.


It'll be an interesting outcome if the higher courts rule with the appeals court.

2 comments:

  1. "On the other side, second hand sales means the software publisher gets nothing. They only receive a cut of the new product that is shipped to a retailer."

    This is true for ALL items sold second-hand: used cars, furniture, clothing, anything sold at Goodwill or a flea market or a garage sale, etc. Why should the software publishers feel slighted about something that virtually every other manufacturer deals with?

    ReplyDelete
  2. That's why I pointed out the following:

    "There is some surprise that the appeals court made such a decision, and many legal experts believe that this ruling won't be upheld at the next level. Simply because it would affect everything from libraries to garage sales to pawn shops to major retailers."

    I think software companies feel more entitled to a share of profits because their works are copyrighted. And they ignore that things like books, music, etc. are also copyrighted materials. I'm not saying that I agree with the manufacturers. Rather, I can understand their viewpoint.

    As far as I'm concerned once the product is sold, it's in the consumers hands and s/he can do what they wish of it.

    Thanks for the comment!

    ReplyDelete

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