According to a French court, the principle of exhaustion applies to video games acquired via a game download platforms

TGI de Paris, 4ème chambre, 17 Septembre 2019 ; UFC Que choisir c. Valve Corp, RG n°16/01008

On 17 September 2019, The Paris Tribunal de grande instance applied, the exhaustion rule found in Directive 2001/29/EC (on copyright) and in Directive 2009/24/EC (on software) to game download platforms, without distinguishing between tangible and intangible works.  

This case, initiated by a consumer association, led to the deletion of 14 clauses in the platform's general conditions.  

According to this decision, the notion of "material copy" in art. L.122-3-1 (but also the notion of "copy" in article L.122-6 3°) does not only concern the tangible medium of the software, but also extends to the downloading of the software from the website and its installation on the user's computer. (In accordance with L.111-3 CPI: "intangible property is independent from the ownership of the physical object"). 

The court indicated that the fact that users would "subscribe to the game" should in fact be construed as a purchase, because the game was in fact made available to the user for an unlimited period of time. Hence, the court considers that it is sale at a price determined in advance and paid only once by the user.  

As a consequence, the exhaustion of the distribution right would apply regardless of the mode of distribution of the video game, such as making it available on the market through downloading.  

This judgment is surprising because it uses the right of exhaustion specifically applicable to software, in a case concerning video games. 

Indeed, the CJEU's UsedSoft decision of 3 July 2012 applied the rule of exhaustion of the distribution right exclusively for software. It is not intended to apply to other works.  

It is therefore very surprising that the Paris Tribunal de grande instance held that the UsedSolft decision is applicable to the provision of online video games.  

Moreover, Article L122-3-1 of the CPI, which implements Article 4 of Directive 2001/29 of 22 May 2001, only concerns "material copies" of a work. It is therefore not intended to apply to the making available of works in digital format. 

In any event, this decision has been rendered by the Paris first-level court, and has been appealed. 

A much more important decision than this judgment of the Paris Tribunal de grande instance will be rendered by the CJEU in the currently-pending case on the resale of digital books (the "Tom Kabinet" case). This decision shoud have a real impact on the interpretation of the rule on the exhaustion of distribution rights.  

The Advocate General at the CJEU, Maciej Szupunar, recently expressed his opinion to the Court in this case. 

The main question before the CJEU is whether the making available through downloading to users of protected works should be considered as covered by the distribution right with the effect that this right is exhausted by the original supply made with the author's consent.  

The logical answer will be no. 

As the Advocate General points out, used digital copies are perfect substitutes for new copies. Thus a parallel second-hand market would most likely affect the interests of copyright owners much more than the second-hand market. The risk is therefore an uncontrolled multiplication of copies in circulation. Deletion of its own copy by the seller would be very difficult to enforce, especially among individuals. 

The Advocate General makes it clear in his opinion that the downloading must be considered as a communication to the public and not as a distribution.  

Thus, within the meaning of European legislation, digital resale must not be affected by the rule of exhaustion of the distribution right.   

Admittedly, the Advocate General's opinions are not binding on the Court, but they often guide the final decision. It is therefore highly likely that the CJEU will follow this analysis, which would be the least damaging to rights holders.  

In any event, the judgment of the Paris Tribunal de grande instance is highly questionable and its impact should be very limited pending the decision of the Court of Appeals.  

On the other hand, the decision to be taken by the CJEU in the Tom Kabinet case on digital books will have a much greater influence on the application of the rule of exhaustion of distribution rights, the outcome of which seems to be moving towards the protection of rights holders in the light of the opinion given by the Advocate General.”  

Although the Advocate General's opinion focuses specifically on e-books, the decision of the CJEU will be applicable to other relevant sectors such as music and films.