I think they have a fairly good Fair Use defense for the procedure, but IANAL. *shrug*

I believe you are right that they somehow ensure that you can't re-obtain for free from the iTunes store (though I am not sure, I think they must to have any chance of success in court). The trouble is the copy-first, delete-second process. The first copy is not covered under first-sale and if the subsequent delete is leaky as a system, then the first-sale doctrine doesn't cover the entirety of the process. If you could ensure that the media was well and truly gone except for someone deliberately deceiving the system, then one could argue that while the initial copying is not covered, the process as a whole is fine and thus the individual components are fine as well. The trouble is with DRM-free, it's very hard to show that you actually deleted all copies of the relevant material. For instance I may have multiple computers and devices - maybe not all of them have the ReDigi or iTunes software, not because I'm dishonest, but because I simply don't have them on the other devices. ReDigi as part of the transfer process cannot ensure they have deleted all relevant media ... and that is different from not being able to ensure I haven't ripped a CD before selling it because ReDigi themselves must copy and delete during the transfer. That's what the record company is arguing and the judge seems to think that they have a good case that process is well and truly different from that which is covered under first-sale. ReDigi may yet win. We'll see.

We'll see how it goes. It's an interesting case and I hope they win. I don't think they have to prove that they deleted ALL copies, just the copies that they know about. Which if you have synched devices or a program that lists devices you synch, then that should be enough of a good-faith effort on their end.

Even if it was DRM'd, that wouldn't make a difference due to the number of cracks available for all and sundry.

Not to belabor the point but with DRM and cracks you have to actively be dishonest and subvert the system to allow you to keep a game that you resell - the reseller only has to verify de-authorization and authorization have taken place for good faith. You have to have prior to this cracked the DRM material which you aren't supposed to do. With DRM-free though, it's not clear (especially legally) what constitutes good faith on the deletion front and whether the initial copying part of the transfer of ownership process itself is covered by first-sale in the context of the whole process. Sadly I can see a strong and reasonable argument being made and winning in court that current first-sale laws don't allow for this. But none know what the future holds - least of all me! :) (it also might be good is someone with more legal knowledge than I commented - the briefs can be found in the wired article here)

You called? ;-P

As this case is very interesting, I'm of course following this closely. I can't really say anything about this case, because I don't know the laws. But I can say that this (very probably) wouldn't fly in Germany. We also have this "first-sale doctrine" or at least something very similar. Yet, there is a small technicality. This covers the "passing on" of a copy of a copyright protected material. Wasn't very difficult with physical media, as those could be passed on. But, as you also said, digital "goods" can't be "passed on". They get duplicated and (the original) deleted. And before anybody says "but that is a mere technicality", no it isn't. There aren't "mere technicalities" when it comes to proper law application. The only possibility would be to use this norm "analogos". But this would require (among others) an "unwanted hole/miss" in the law. But as the legislative recently passed quite a couple of laws and changes of the relevant law text that explicitly cover the area of digital sales and expressis verbi include this "first-sale doctrine" as possible to dissallow by the right holder, it would be very hard to argue this "unwanted hole" in the legal text. Therefore an analogus application would not be possible. And as a direct application is also impossible, due to the fact that nothing gets "passed on", the "first sales doctrine" can't be used to "legalize" this bussiness model.

That said and done, remember, this is only German law. It might be very different in the US, but I have my doubts. In fact, if somebody came to me for legal advise and asking if he could make such a firm, I would (have to) detain him from doing that. I thought I share that.

Interesting analysis as always, thanks! My (limited) understanding is that the arguments your presenting are indeed what the record company is arguing and that your analysis is probably accurate for the US as well (crjgreen or another US lawyer GOGer might know for sure).

How did you like my arguments concerning DRM'ed materials though? Essentially I argued that the transfer of ownership (or whatever you want to call it) of material protected by DRM does not involve the copy-delete process but a true passing on of authorization? Do you think that argument would fly? I realize part of that would hinge on the validity of any EULA stipulating my inability to do so (if the material in question had one and further one that stipulated I couldn't), but in general, would you agree that with account based DRM you could make an excellent case that you have passed on ownership in the same sense as physical media and *could* be covered under first-sale?

That is a very interesting Idea. If you think of a service like Onlive(I never used iTunes so I'm missing the reference) where you can only use/listen to your software/music as long as you are connected to a central "authorisation node" this might (with a very big maybe) work. As you would directly move the license and not the copy with attached license. However, now we come to the next tecnicallity problem. The german "first sales doctrin" explicitly attached the right of transfer to a copy (the law was made with books and pictures in mind). So, while your example eleminates the problem of the "moving" it opens the new problem of the "copy" ;-).

Yet in this case you could argue for an analogus interpretation of the law, because an "always online" DRM is something fairly new. I would have to read up on this, but not tonight ;-).

This would, however, not fly well with consumers I guess. That would make the fear of all the Steamphobics reality. You wouldn't "own" the game but only "rent" them. (Disclaimer: While you, of course, don't "own" games now, you are basically protected like you would have bought a "normal" copy. That would change, think Onlive). Hence I don't think that would be a success, even with the benefit of selling "used games".

The law maker eventually came around with movies and music, so they might just make some changes especially for game, maybe 2060 ;-).

I wasn't thinking that you always had to be connected as in UbiDRM or streaming as in OnLive, but rather like Steam and iTunes (for non-music) operate now which is authorization of the computer whenever you do connect to the server, which doesn't have to be continuous and is often only when you first start using the client/game/movie and all have an offline mode - for Steam one has to go into offline mode, while iTunes 'FairPlay' DRM I think it's called allows offline play automatically.

In fact I was thinking OnLive would be quite different since you never have a local copy and you really could be said to be getting a service, not a product. Rather than pertaining to that, this is an effort to expand the consumer rights we get for a Steam-like or other account-based DRM purchase. It does not also preclude the existence of DRM-free media, but like streaming, the reselling of DRM-free digital products would not be covered (explicitly or by exclusion) under my proposal. So in summary:

DRM'ed digital products - your access is controlled, but your ownership is transferable. Access to legally bought digital materials cannot be blocked. If the company goes belly-up or stops offering authorization for that product on its server, you then receive DRM-free copies of that product or are allowed to transfer your account to another DRM store offering that product. There really important point is that if you buy a product with account-based DRM, like a game on Steam, the company has the right to authorize your access and force you to authorize a computer to use the product, but you have the right to transfer ownership and you have the right to be authorized as long as you haven't committed fraud with that product (with access guaranteed for a reasonable time for the product when one cannot connect to authorization servers). They could kill your access to the store however, since that is a true service (see below), but not your ability to authorize material you already bought on said store.

DRM-free digital products - you have unfettered rights to do whatever you want to the product, except to transfer (or copy obviously) ownership unless the rights holder deems it okay.

Streaming (like OnLive or Hulu) or products needing monthly payment (like MMORPGs) is considered a straight service and your rights are determined by the company offering the service (obviously in exception when they commit fraud or something similar) and your rights to access streamed materials can be canceled.

So this would be similar to what we have today, but with expanded rights for consumers when buying DRM'ed products. What do you think? Almost makes me want to set up one of those wiki-Bill sites where you get to frame legislation and people can comment and add to it (they used it for the OPEN Act). :)

This is a question that wouldn't be answered through 'general principles' of law (actually, most can't), but rather through the application of a specific statute. In the UK, it might be the Sale of Goods Act, though I'm not sure whether it covers digital goods as well.

I understood that point, but unfortunately I only know the general principles most of the time :) - I just don't know exactly how our (U.S.) first-sale laws cover this particular case but from my understanding of reading what people have written it seems like it doesn't protect ReDigi. But I'm just not sure what they'd say about it. What does the Sale of Goods Act say and how would you apply it if this were a UK case?

It was a long time ago that I covered that and we definitely didn't discuss digital goods, so I'm not going to be of much use here. There's likely to be jurisprudence on the issue, but I'm currently revising for other things so really cannot be bothered to dig around in Halisbury's! :P
In the US, it is quite likely that laws might be different in different states. It is a federal jurisdiction after all.

Fair enough :) - it should be interesting to see how it all pans out though

My example was actually going to be Steam, but I'm still not sure how to "package" it legally to the customer to work like you want. Onlive was a perfect example, because you don't really "stream" like with hulu (I know you stream technically, but bear with me). Whenever you watch a video on youtube or on hulu (or internetradio) you also always make a temporary copy on your harddrive. (That made watching illegal streams in Germany a crime. Piracy laws, go figure...). Therefore you again, like with Steam, have the problem of that "copy" which usually is the "container of the license" whenever you want to use that "first sales doctrine" to transfer your license. And we back at the start, no "passage" of the copy, no first sales benefits, so to say. ( As you can see by this, the main problem is that most legislation always exspects a physical medium for the copy. The digital age really fucked this up.)

Your idea is the "sanest" version from a business point of view. Legally however, that would be very tricky. Either you are a subscriber service that rents digitally or you are a digital distributor that sells the "game". You are trying to fuse this into one taking the best of both worlds ;-). I would love to see how GMG is doing it. My guess is that they don't "resell" a license and only use the instore credit as incentive to "give back" games. With other words, they are just like Steam but use their "trade in" as a premium model. I don't think they can actually "take back" a license and then resell it to somebody else.

Legally a "digital ebay" for game licenses shouldn't be a problem at all, wouldn't the EULAs explicitly prohibit such a thing. Selling licenses is legally perfectly possible, but the right holder is protected an can therefore prohibed the unwanted sale of his work. Aditionally, there was another problem that ebay showed. Selling to much will make you lose your "consumer status". Again, I don't know how it is in the US, but the german status "Verbraucher" is lost rather quick if do to much business on ebay (Something along 30 sales -per year-). And once you are out of that sweet spot, you are no longer protected in regards to TOS, etc heck, even the EULA wouldn't bind you anymore as you might just not be an "end user" anymore but a "trader" . And that would mean that you aquired the license illegally to start with and are open for litigation that would make you bleed from areas that belong in that other thread. (Officially, many of the purchases we make explicitly state that they are ment only for a user. We usually don't have to bother, because we use them. But try buying a couple of thousand cheap game copies in russia of any game and resell them in the US. There is a reason those CD-Key sites usually aren't in the US or any other country with strong IP protection laws/courts.

Meh, it's getting late over her (2 AM) and my head is spinning. I hope this makes sense. I was considering (for like 2 seconds) writing my thesis in this subject. But this is changing to much and to fast at the moment. I'm going to bed now. Take care!
Bah, maybe in your common law (more like "magical law" ;-P) countries. We here on the sane part of the world have proper laws! ;-)

I look forward to continuing the discussion tomorrow then when we solve all of the world's problems and break to solve the problem of digital commerce for fun. :)

Sorry muggle!