Digital goods

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If you pay to watch a web conference on your computer screen, you have bought a digital good. Lee Odden on Twebinar.jpg
If you pay to watch a web conference on your computer screen, you have bought a digital good.

Digital goods or e-goods are intangible goods that exist in digital form. [1] Examples are Wikipedia articles; digital media, such as e-books, downloadable music, internet radio, internet television and streaming media; fonts, logos, photos and graphics; digital subscriptions; online ads (as purchased by the advertiser); internet coupons; electronic tickets; electronically treated documentation in many different fields; downloadable software (Digital Distribution) and mobile apps; cloud-based applications and online games; virtual goods used within the virtual economies of online games and communities; workbooks; worksheets; planners; e-learning (online courses); webinars, video tutorials, blog posts; cards; patterns; website themes; templates.loan

Contents

Special legal concerns regarding digital goods include copyright infringement and taxation. Also the question of the ownership (versus licensed use or service only) of purely digital goods is not finally resolved. For instance, the software installers of the digital software distributor gog.com are technically independent to the account but are still subject to the EULA, where a "licensed, not sold" formulation is used. [2] Therefore, it is not clear if the software can be legally used after a hypothetical loss of the account; a question which was also raised before in practice for the similar service Steam. [3]

In July 2012, the European Court of Justice ruled in the case UsedSoft GMbH v. Oracle International Corp. that the sale of a software product, either through a physical support or download, constituted a transfer of ownership in EU law, thus the first sale doctrine applies; the ruling thereby breaks the "licensed, not sold" legal theory, but leaves open numerous questions. [4] Therefore, it is also permissible to resell software licenses even if the digital good has been downloaded directly from the Internet, as the first-sale doctrine applied whenever software was originally sold to a customer for an unlimited amount of time, thus prohibiting any software maker from preventing the resale of their software by any of their legitimate owners. [5] [6] [7] The court requires that the previous owner must no longer be able to use the licensed software after the resale, but finds that the practical difficulties in enforcing this clause should not be an obstacle to authorizing resale, as they are also present for software which can be installed from physical supports, where the first-sale doctrine is in force. [8] [9]

In several cases, content providers have faced criticism for revoking access to digital goods due to expired licenses or the discontinuation of a product, such as ebooks (which resulted in a lawsuit against Amazon.com, Inc.), [10] digital video (with Sony Interactive Entertainment revoking access to purchased StudioCanal content from its now-defunct PlayStation video store; a similar move involving Warner Bros. Discovery content was averted by an updated license agreement), [11] [12] and video games (such as Ubisoft discontinuing and revoking access to its game The Crew without providing refunds or the ability to redownload the game) [13] In September 2024, the U.S. state of California implemented a consumer protection law that prohibits the use of terms such as "buy" or "purchase" during transactions involving digital goods if there is no way to obtain the purchases in a manner that cannot be revoked by the seller (such as allowing it to be downloaded for permanent, offline access), and requires a disclaimer to be displayed to the customer at the time of purchase. [14] [15]

See also

Related Research Articles

<span class="mw-page-title-main">End-user license agreement</span> Software License Agreements

An end-user license agreement or EULA is a legal contract between a software supplier and a customer or end-user.

A grey market or dark market is the trade of a commodity through distribution channels that are not authorised by the original manufacturer or trade mark proprietor. Grey market products are products traded outside the authorised manufacturer's channel.

The first-sale doctrine is an American legal concept that limits the rights of an intellectual property owner to control resale of products embodying its intellectual property. The doctrine enables the distribution chain of copyrighted products, library lending, giving, video rentals and secondary markets for copyrighted works. In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder puts the products on the market. In the case of patented products, the doctrine allows resale of patented products without any control from the patent holder. The first sale doctrine does not apply to patented processes, which are instead governed by the patent exhaustion doctrine.

Software copyright is the application of copyright in law to machine-readable software. While many of the legal principles and policy debates concerning software copyright have close parallels in other domains of copyright law, there are a number of distinctive issues that arise with software. This article primarily focuses on topics particular to software.

<span class="mw-page-title-main">Reseller</span> Company or individual that buys goods or services for resale

A reseller is a company or individual (merchant) that purchases goods or services with the intention of selling them rather than consuming or using them. Individual resellers are often referred to as middle men. This is usually done for profit. One example can be found in the industry of telecommunications, where companies buy excess amounts of transmission capacity or call time from other carriers and resell it to smaller carriers. Resale can be seen in everyday life from yard sales to selling used cars.

<span class="mw-page-title-main">Stardock</span> Software and video game developer

Stardock Corporation is an American software development company founded in 1991 and incorporated in 1993 as Stardock Systems. Stardock initially developed for the OS/2 platform, but was forced to switch to Microsoft Windows due to the collapse of the OS/2 software market between 1997 and 1998. The company is best known for computer programs that allow a user to modify or extend a graphical user interface as well as personal computer games, particularly strategy games such as the Galactic Civilizations series, Sins of a Solar Empire: Rebellion, Elemental: Fallen Enchantress, and Ashes of the Singularity.

<span class="mw-page-title-main">Ticket resale</span> Act of reselling tickets for admission to events

Ticket resale is the act of reselling tickets for admission to events. Tickets are bought from licensed sellers and then sold for a price determined by the individual or company in possession of the tickets. Tickets sold through secondary sources may be sold for less or more than their face value depending on demand, which tends to vary as the event date approaches. When the supply of tickets for a given event available through authorized ticket sellers is depleted, the event is considered "sold out," generally increasing the market value for any tickets on offer through secondary sellers. Ticket resale is common in both sporting and musical events.

The exhaustion doctrine, also referred to as the first sale doctrine, is a U.S. common law patent doctrine that limits the extent to which patent holders can control an individual article of a patented product after a so-called authorized sale. Under the doctrine, once an authorized sale of a patented article occurs, the patent holder's exclusive rights to control the use and sale of that article are said to be "exhausted," and the purchaser is free to use or resell that article without further restraint from patent law. However, under the repair and reconstruction doctrine, the patent owner retains the right to exclude purchasers of the articles from making the patented invention anew, unless it is specifically authorized by the patentee to do so.

Green market products are previously owned products that have been previously used and put back into productive use. These products are often repaired, refurbished and recycled by brokers, resellers or the original manufacturer. They are suitable for resale to customers as a lower cost alternative to buying new goods from standard distribution channels.

Proprietary software is software that grants its creator, publisher, or other rightsholder or rightsholder partner a legal monopoly by modern copyright and intellectual property law to exclude the recipient from freely sharing the software or modifying it, and—in some cases, as is the case with some patent-encumbered and EULA-bound software—from making use of the software on their own, thereby restricting their freedoms.

Digital rights management (DRM) is the management of legal access to digital content. Various tools or technological protection measures (TPM), such as access control technologies, can restrict the use of proprietary hardware and copyrighted works. DRM technologies govern the use, modification and distribution of copyrighted works and of systems that enforce these policies within devices. DRM technologies include licensing agreements and encryption.

<span class="mw-page-title-main">Copyright infringement</span> Illegal usage of copyrighted works

Copyright infringement is the use of works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, such as the right to reproduce, distribute, display or perform the protected work, or to produce derivative works. The copyright holder is usually the work's creator, or a publisher or other business to whom copyright has been assigned. Copyright holders routinely invoke legal and technological measures to prevent and penalize copyright infringement.

GamersGate AB is a Sweden-based online video game store offering electronic strategy guides and games for Windows, macOS, and Linux via direct download. It is a competitor to online video game services such as Steam, GOG.com, and Direct2Drive.

<span class="mw-page-title-main">GOG.com</span> Digital video game distribution platform

GOG.com is a digital distribution platform for video games and films. It is operated by GOG sp. z o.o., a wholly owned subsidiary of CD Projekt based in Warsaw, Poland. GOG.com delivers DRM-free video games through its digital platform for Microsoft Windows, macOS and Linux.

Discount-Licensing is a Burton-upon-Trent, UK-based vendor or broker of secondhand Microsoft software licences. It is notable for being the first company to establish a secondary market in such licences which is accepted by Microsoft as being valid.

<i>Vernor v. Autodesk, Inc.</i> United States district court case

Vernor v. Autodesk, Inc. was a case in the United States District Court for the Western District of Washington regarding the applicability of the first-sale doctrine to software sold under the terms of so-called "shrinkwrap licensing." The court held that when the transfer of software to the purchaser materially resembled a sale it was, in fact, a "sale with restrictions on use" giving rise to a right to resell the copy under the first-sale doctrine. As such, Autodesk could not pursue an action for copyright infringement against Vernor, who sought to resell used versions of its software on eBay. The decision was appealed to the United States Court of Appeals for the Ninth Circuit, which issued a decision on September 10, 2010, reversing the first-sale doctrine ruling and remanding for further proceedings on the misuse of copyright claim. The Ninth Circuit's decision asserted that its ruling was compelled by Ninth Circuit precedent, but observed that the policy considerations involved in the case might affect motion pictures and libraries as well as sales of used software.

Digital goods are software programs, music, videos or other electronic files that users download exclusively from the Internet. Some digital goods are free, others are available for a fee. The taxation of digital goods and/or services, sometimes referred to as digital tax and/or a digital services tax, is gaining popularity across the globe.

In the video game industry, digital distribution is the process of delivering video game content as digital information, without the exchange or purchase of new physical media such as ROM cartridges, magnetic storage, optical discs and flash memory cards. This process has existed since the early 1980s, but it was only with network advancements in bandwidth capabilities in the early 2000s that digital distribution became more prominent as a method of selling games. Currently, the process is dominated by online distribution over broadband Internet.

ReDigi was an online marketplace for used digital music, eBooks, games, apps, and software. It claims to be the only cloud storage service that verifies whether each digital file uploaded for storage was legally acquired from an eligible source. ReDigi's Cloud and Marketplace only accept lawfully purchased digital media. The service allowed users to buy and sell pre-owned digital content directly from one user to another. As of December 2020, the website is offline.

<i>Capitol Records, LLC v. ReDigi Inc.</i> US District Court case concerning copyright infringement

Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640 , is a case from the United States District Court for the Southern District of New York concerning copyright infringement of digital music. In ReDigi, record label Capitol Records claimed copyright infringement against ReDigi, a service that allows resale of digital music tracks originally purchased from the iTunes Store. Capitol Records' motion for a preliminary injunction against ReDigi was denied, and oral arguments were given on October 5, 2012.

References

  1. "Digital Goods". Webopedia. 3 April 2008. Retrieved 23 March 2013.
  2. "GOG.com End-User License Agreement | Glaiza Gaspar - Academia.edu".
  3. Walker, John (2012-02-01). "Thought: Do We Own Our Steam Games?". Rock, Paper, Shotgun . Retrieved 2014-12-27. I asked gamer lawyer Jas Purewal about this a short while back, not specifically about Valve, and he explained that the matter is still unresolved. "In fact," he says, "it's never been completely resolved for software generally[...]
  4. Jas Purewal. "The legality of second hand software sales in the EU". gamerlaw.co.uk. (mirror on gamasutra.com)
  5. hg/mz (AFP, dpa) (2012-07-03). "Oracle loses court fight over software resale rules". dw.de . Retrieved 2014-12-30. A European court has ruled that it's permissible to resell software licenses even if the package has been downloaded directly from the Internet. It sided with a German firm in its legal battle with US giant Oracle.
  6. Voakes, Greg (2012-07-03). "European Courts Rule In Favor Of Consumers Reselling Downloaded Games". forbes.com . Retrieved 2014-12-30.
  7. "JUDGMENT OF THE COURT (Grand Chamber)". InfoCuria - Case-law of the Court of Justice. 2012-07-03. Retrieved 2014-12-30. (Legal protection of computer programs — Marketing of used licences for computer programs downloaded from the internet — Directive 2009/24/EC — Articles 4(2) and 5(1) — Exhaustion of the distribution right — Concept of lawful acquirer)
  8. Timothy B. Lee (2012-07-03). "Top EU court upholds right to resell downloaded software". Ars Technica.
  9. "EU Court OKs Resale of Software Licenses". AP.
  10. Fowler, Geoffrey A. (July 30, 2009). "Lawsuit: Amazon Ate My Homework". The Wall Street Journal . Archived from the original on July 26, 2018. Retrieved August 4, 2017.
  11. B2B, Christopher Dring Head of Games (2023-12-21). "PlayStation will not delete Discovery TV shows after all". GamesIndustry.biz. Retrieved 2024-09-26.{{cite web}}: CS1 maint: numeric names: authors list (link)
  12. Editor, Danielle Partis News (2022-07-07). "Sony removing purchased Studio Canal content from PlayStation libraries". GamesIndustry.biz. Retrieved 2024-09-26.{{cite web}}: |last= has generic name (help)
  13. Reilly, Luke (April 22, 2024). "Delisting The Crew Makes Sense, Preventing It From Ever Being Played Again Does Not". IGN . Retrieved April 23, 2024.
  14. Roth, Emma (2024-09-26). "California's new law forces digital stores to admit you're just licensing content, not buying it". The Verge. Retrieved 2024-09-26.
  15. Belanger, Ashley (2024-09-26). "Sony, Ubisoft scandals prompt Calif. ban on deceptive sales of digital goods". Ars Technica. Retrieved 2024-09-26.