On September 17, 2019, the Tribunal de Grande Instance of Paris (first degree civil jurisdiction) ruled against VALVE, following a lawsuit initiated in 2015 by the consumer association “UFC-Que Choisir”.
The Court judged that several clauses in the terms and conditions of the Stream platform managed by VALVE were unfair. In addition to clauses regularly declared void in the digital economy (jurisdiction clause, clause relating to reprehensible behavior of users or provisions relating to the protection of personal data), the Court also voided a clause prohibiting the resale of the user account and/or video games acquired on the online sales platform.
For the Tribunal de Grande Instance, this clause is against the principle of exhaustion of rights laid down by the 2001 Copyright Directive and the 2009 Software Directive. Under this principle, the holder of intellectual property rights on a product exhausts his exclusive distribution right when it is first put into circulation in the European Union and cannot oppose the free movement of the product.
Indeed, for the Court, even if the transposition of this principle into French law in the Intellectual Property Code makes it conditional upon the existence of a material copy, the exhaustion of the distribution right under the European Union law is not conditioned to the existence of a physical medium.
As the exhaustion of the distribution right can only occur in the case of a sale, the Court stated that in this matter the transaction qualifies as a sale. As a matter of fact, the Court considered that, despite the use of the term "subscription" in VALVE's terms and conditions, the sale is characterized since the video game is made available to the user for an unlimited period, at a price determined in advance and paid in a single installment.
Therefore, the Court declared null and void the specific clause prohibiting the resale of video games. Indeed, VALVE has exhausted its distribution right at the time of the sale, even if the sale is dematerialized, and cannot therefore prohibit their subsequent resale.
This decision is an important step towards the creation of a second-hand market for dematerialized video games, especially since UFC has announced, following this decision, that it intends to extend its action to other video game platforms.
However, this matter is not definitively closed because this decision is not accompanied by provisional enforcement and VALVE has announced its intention to appeal.
The final outcome could also be further delayed if VALVE were to require a preliminary ruling from the European Court of Justice.
If confirmed, this decision would have a significant impact on the video game sector since both platforms and publishers would then have to deal with a parallel market for dematerialized second-hand digital video games which was not legally existing and recognized until now.