Who Owns That Computer Game?

The latest hot debate in the computer game industry has been the question of how the publishers of a game can make money on used game sales.

GameStop, and now Best Buy, have been making some money on reselling "used" games. But the publisher of a game (and eventually the developer) sees not a dime of this secondary market. To try to offset this, some games are now being designed with an online component that must be activated with a special one-use code that comes with the original game. Once a player uses that code for that copy of the game, it's no longer available. This means that only the original purchaser of a game can get full value for their money -- purchasers of resold games that have this feature are stuck with whatever offline content is provided.

Naturally some gamers have objected to this, arguing that they've bought the game and are entitled to all the features of that game.

At this point many of the discussions on the question of reselling computer games eventually sink to the fundamental legal question: when you go to a store (whether it's a retail store such as Best Buy or a digital download system such as Valve's "Steam") and plunk down cash for a game, what is it that you're really getting for your money?

I believe considering that question reveals a severe disconnect between what a lot of people believe the answer to that question is, and what it actually -- legally, ethically, economically and philosophically -- is.

What a lot of people today seem to think is that when they pay for a game, they're actually buying the game -- that is, that some kind of transfer of ownership of property takes place when they hand over their money. And most sellers promote this by talking about "buying games" from them.

But the reality is that no consumer is actually buying a computer game to play it. As the End User License Agreement in most commercial games states, all that any player is doing is paying for a license to play the game -- no transfer of ownership of any kind takes place.

To understand this, we need to look at where the notion of the "license" comes from and what it's for. (Note: I'm not a lawyer, but I believe the following to be correct from a layman's perspective.)

The concept of the usage license is defined through a series of beliefs and legal articles encoded in our legal/economic system:

1. Created things, whether tangible/moveable objects or organized ones and zeros, are in our economic system considered to be the personal/private property of the entity who created those things. That applies to software developers (game creators) like anyone else.

2. The fact of ownership confers a couple of fundamental rights: the right to sell an owned thing, and -- importantly -- the right to allow others to use a thing without ceding ownership of that thing.

3. The right to sell a thing is pretty clear, but the important bit is that when you sell something, you give up all claims over how that property can be transferred or used by its new owner. Again, that's a requirement for a workable definition of "ownership."

4. The right to allow others to use a thing without giving up ownership of a thing is also hugely important for a functional economic system because (sort of like the concept of capital lending by banks) it dramatically expands the productive use of created things. People can create more things than they can personally use, but those things still get some use because the law says other people can be allowed to use things belonging to someone else without transferring the actual ownership of those things.

5. This concept of use-without-ownership is important enough to get its own specific and accepted legal formalisms: leasing and licensing, of which the latter is what we care about in terms of computer games. As the End User License Agreement for every game says (if unclearly), when you pay to play a game, you are not "buying" the game itself -- ownership of the code doesn't change hands -- you are instead paying the owner of property for the limited use of that property.

NOTE: There is a link to massively multiplayer online roleplaying games (MMORPGs) here. Real-money transfers (RMT) for in-game items are considered illegal because of this notion that you don't own the virtual objects in a gameworld. The game's owner licenses you to use the ones and zeroes defining those intangible goods . You don't own them, therefore you're not permitted to "sell" them outside the game for real money to other players.

6. So the confusion is about licensing versus ownership -- people believing they have rights to dispose of some piece of software that they don't actually have. When you agree to license the use of some piece of property from that property's owner, you agree to whatever usage restrictions the property owner may impose... in the case of games, up to and including that you don't get to use the online component for free. (Of course these restrictions should be reasonable, but if you agree to an unreasonable restriction that was your decision, and judges have so held.)

For that matter -- despite the fact that publishers have chosen not to enjoin game retailers from the practice -- it would seem that even "reselling" games is generally not permitted, since the person who paid to play a game never owned that game in the first place. However, this brings us to the notion of selling the medium that the game is stored on (such as a CD-ROM or DVD-ROM). Just as books can be resold even if the content belongs to the author or publisher, can't game software be resold?

7. There are usually two objections to the reasoning that licensed games aren't owned by the player and thus can't be resold. One is that ones and zeros are somehow different from tangible property, that the fact of ones and zeros being relatively easy to clone somehow makes them less a form of property and therefore less deserving of the legal protections for the assertion of ownership rights over property. So far, however, I haven't seen anyone make a principled defense of this argument, which really is nothing more than the "because I wanted it" excuse for theft.

8. The other objection is the slightly more sophisticated "first sale" argument. This appears to be based on people reading Wikipedia (edited by individuals who occasionally exclude facts that don't support their preferred beliefs on some subject) and seeing that one judge ruled that an agreement to let someone use a piece of software (through a license) was exactly the same as selling a physical object to someone, which caused the "first sale" doctrine to apply. This (supposedly) set a precedent that software licenses don't exist (regardless of EULAs), and that once you pay for a piece of software you own it and can do whatever you want with it. (Hence "used game" sales.)

In reality, this "first sale" doctrine says that when you sell a copy of an owned object to someone, you can't dictate what the new owner will do with that copy. That's fine... but the judge then magically decided that licensing a piece of software for someone else's use actually constituted a sale. At a stroke, this one judge (or perhaps judges in several states; the Wikipedia entry is strangely vague on this) bizarrely chose to arbitrarily discard the entire concept of for-use licensing that doesn't convey property ownership. On balance, I think that's clearly a bogus ruling; even if you buy the Wikipedia entry there are still plenty of states where established licensing law -- applying to software like any other kind of intangible property -- still happily applies.

On balance, then, I think the problem here is one of understanding. Gamers need to understand that they don't own games -- they're paying for the opportunity to play a game, just like they'd rent an apartment or a car without actually owning either.

At the same time, End User License Agreements ought to be much clearer, with the point made in plain English: "You don't own this software -- what you're paying for is the opportunity to user our computer software to play a computer game. That means you can't resell this software as a 'used game' because it was never owned by you in the first place."

Whatever publisher does that will probably get to enjoy a legal fight, since it would be a direct blow to resale revenue from GameStop and Best Buy. But it would least help to better define how -- or whether -- the "first sale" doctrine applies to computer game software or not.