By: Luis A. Velez, The IP Trend™ Blog
The first part of this article presented the current disparity between users of video games and copyright owners. The thin line separating the state of mind of both parties is the First Sale Doctrine (hereinafter “FSD”). With the digital era taking over, in this second part of the article we have to focus on the future issues that could face the copyright world while adjusting to the digital era.
The video game industry and their copyright protection have been visibly affected during the past couple of years due to the digitalization of games. Video game companies are facing turmoil with all the newly imposed Digital Rights Management (“DRM”) limitations towards consumers. Users are losing the ability to own legally purchased works and copyright owners are increasing their ability to control those works. For users, it seems that game studios or console companies are finding a way to circumvent the law, creating DRMs to negate compliance with the FSD and destroy the secondary market for used games. But for copyright owners, the FSD does not apply to digital works, thus their DRM limitations are legally constructed. Their belief is that the establishment of an FSD for digital works would have a negative impact on protection and the market itself.
The Digital Millennium Copyright Act (DMCA) committee follows the copyright owners’ idea stating that the FSD was meant for “hard copies” and not for digital works. In a gaming environment, FSD will continue to protect the secondary market of used video games as long as games are distributed in hard copies (i.e. CD’s). Once digital video games become the norm, there would be no more protection through the current FSD.
The FSD was created to protect only the distribution rights of those who legally obtained a copy to the extent that they did not interfere with the reproduction rights. The copyright owner exclusively holds the reproduction rights of the work. Every time we download a digital file, the computer or console saves a copy. Every time it saves a copy, it results in the reproduction of the file we downloaded. This is exactly what copyright owners intend to protect, the illegal and limitless reproduction of digital video games through digital distribution.
“Physical copies of works degrade with time and use, making used copies less desirable than new ones. Digital information does not degrade, and can be reproduced perfectly on a recipient’s computer. The used copy is just as desirable as (in fact, is indistinguishable from) a new copy of the same work. Time, space, effort and cost no longer act as barriers to the movement of copies, since digital copies can be transmitted nearly instantaneously anywhere in the world with minimal effort and negligible cost.”
In a complete digital world, consumers would be able to purchase only the use (i.e. license) and not a copy of a video game. With the advancement in technology, the legal logic is that copyright owners are even more reluctant to transfer digital copies. The logic behind it is that if a digital FSD applies, transfers of digital copies would jeopardize their reproduction rights. It is understandable that copyright owners, intending to fight piracy and to defend their position in the market, would prefer to sell a controlled use of their works than a free transfer of their ownership. The same rationale applied to the music, film and software industries. The only difference between these industries and the video game industry is that gamers vocally intend to maintain the video game market in its status quo, defending their purchased access to technology. They promptly protested before the video game companies had any chance to change the market from an uncontrolled offline-CD play everywhere experience to a fully digital file and always-online controlled experience. Gamers once again gave the secondary market an opportunity to breath…for now.
 Keith Stuart, Xbox One DRM restrictions dropped after gamer outcry, The Guardian, http://www.theguardian.com/technology/2013/jun/19/xbox-one-drm-second-hand-restrictions-abandoned.
 See Mark C. Humphrey, Article: Digital Domino Effect: The Erosion of First Sale Protection for Video Games and the Implications for Ownership of Copies and Phonorecords, 42 Sw. L. Rev. 441, 445 (2013) citing David A. Costa, Vernor v. Autodesk: An Erosion of First Sale Rights, 38 Rutgers L. Rec. 213, 224 (2010-11). See also The National Telecommunications and Information Administration (NTIA), Report to Congress: Study Examining 17 U.S.C. Sections 109 and 117 Pursuant to Section 104 of the Digital Millennium Copyright Act, 6 (Mar. 21, 2001), available at http://www.ntia.doc.gov/report/2001/report-congress-study-examining-17-usc-sections-109-and-117-pursuant-section-104-digital..
 See id.
 See U.S. Copyright Office, DMCA Section 104 Report, 91 (2001), available at http://www.copyright.gov/reports/studies/dmca/sec-104-report-vol-1.pdf. See also NTIA, supra note 2 at 5; see Humphrey, supra note 2 at 448.
 See NTIA, supra note 2 at 5. See also U.S. Copyright Office, supra note 4, 80-83.
 See Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908). See also U.S. Copyright Office, supra note 4 at 80.
 See id.
 See U.S. Copyright Office, supra note 4 at 79-80, 87. See also Humphrey, supra note 2 at 471-73.
 U.S. Copyright Office, supra note 4 at 82.
 See U.S. Copyright Office, supra note 4 at 79. “The ultimate product of one of these digital transmissions is a new copy in the possession of a new person. Unlike the traditional circumstances of a first sale transfer, the recipient obtains a new copy, not the same one with which the sender began. Indeed, absent human or technological intervention, the sender retains the source copy. This copying implicates the copyright owner’s reproduction right as well as the distribution right.”
 See, e.g., Vernor v. Autodesk, 621 F.3d 1102 (9th Cir. 2010) (software licensing); see also A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001) (music sharing).
 See Stuart, supra note 1.
 See id.