Updated February 2020
Some of the bottom part of this post is a paste of a message I sent to Steam support following the seemingly-bullying actions of a Steam forum moderator who has been falsely telling people that Steam rents / leases games through their service and doesn't sell them, and who was intolerant of anybody telling them they're wrong. That moderator liked to do things like delete posts and lock any threads where people demonstrated otherwise.
To be clear, that Steam Discussions moderator's assertion is wrong, and top courts covering a sizeable amount of the world's population have ruled that they're wrong, and Valve themselves have also explicitly stated that they sell, not rent or lease, games to those people who purchase them through their Steam service (I've included that information in the second-half of this post). So, here is...
Software licenses and purchasing and owning software 101:
- A license is a right to use a property or intellectual property that belongs to somebody else. When you read "this software is licensed, not sold" in a software EULA, whether it's for Windows 10 or a game or an application, "this software" refers to the software Intellectual Property and not the copy of that intellectual property that you've purchased via a software license. Software licenses and the instances of a software's intellectual property that they represent are indeed and obviously sold. Both of the following phrases are simultaneously true: This software (IP) is licensed, not sold; This software (instance / license) is sold, not licensed or leased.
- All the mass-produced items you've bought, including your clothing, your vehicles, your TV, your computer hardware, are licensed instances of the intellectual property (IP) for those things. When you purchase any of those things, you aren't purchasing the intellectual property (IP) and so you don't become entitled to mass-produce, to market, to receive profits from the first-sale of any of those things, and you don't gain any ownership of the patents for the patented technology in those things. But, you are purchasing a one-off copy of the IP of those things, and upon the point of sale of the instances of those IPs there is a transfer of ownership over those instances and you become the sole owner of that instance of that IP. This is exactly the same with software as it is with physical goods - you own your instance and have full property rights over it.
- In law, there are Goods and there are Services, and every thing you pay for is classified into one of these two categories. A service is a temporal and transient action (like a car wash, meal delivery, movie streaming) that may or may not deliver a good. A good, by definition, is an item that undergoes a transfer of ownership upon its point of sale, from the seller to the buyer, granting the buyer full property rights over that purchased item, and removing all rights from the seller over the item which they sold. As of February 2020, there are 88 countries signatory to the Nice Agreement treaty. The Nice Agreement (called such because it was signed in Nice, France, in 1957), is a multinational treaty that contains the International Classification of Goods and Services (also known as the Nice Classification), and that treaty assigns the classification of goods and services for its signatory countries under the jurisdiction and authority of the World Intellectual Property Organization (WIPO). The World Intellectual Property Organization classifies all software as Class 9 goods. An elaborate look at what goods are under law is in this post.
- There are perpetual software licenses and there are subscription software licenses. A perpetual license is non-exhaustive, meaning that the right it grants is eternal, forever-lasting, and never expires. A subscription license is a duration-limited right to access a software or service. All the most common software including games, OSes, and programs are perpetual licenses. Some games that are sold via perpetual licenses, like MMOs, require an additional service subscription to use the base software with a publisher's own servers, with the software not being functional on its own due to the servers handling the game world's AI and other systems. Steam itself is a subscription service, but the games sold through Steam are perpetual licensed software and goods.The Steam service is used to purchase and deliver goods.
- A perpetual license is a product and good, and whenever a perpetual license is sold it undergoes transfer of ownership upon the point of sale. Whoever owns a perpetual license owns the instance of software it grants a right to use the intellectual property (IP) of. After the transfer of ownership of a perpetual licensed software, the seller of the license no longer holds any rightful say over anything regarding that non-reproduceable instance of software represented by its perpetual license. This legal fact is not always honoured by perpetual license software sellers (for example, Microsoft with Windows 10 automatic updates and data-harvesting) and it can take lawsuits to force software companies to comply with their legal and moral obligations and to respect the property of others and not violate that property, including software, system, and data property.
- EULAs are not laws but are subject to laws. And corporations do not possess law-making powers. Many EULAs are not written by legal experts but by people who just see the formats of previous EULAs and make assumptions from seeing those about what the nature of an EULA is, and then just copy and paste the terms they like the sound of from other EULAs. And many EULAs even from large companies like Microsoft (for example, the Windows 10 EULA) contain made-up and non legally-enforceable stuff in them. Considering that it is even unreasonable to expect people to read EULAs, there is a question of how could an EULA-based argument pass the "reasonable person" or "the man on the Clapham omnibus" legal tests. An EULA can often be nothing more than an extremely long-winded and self-aggrandizing equivalent of printing a © symbol, with the parts of one that reach beyond the meaning of a © symbol being invalid.
- EULAs are also used as a tool of manipulation to psychologically ward off potential challenges and to provoke the type of customer behaviour a publisher wishes there to be, by claiming, or, by phrasing things (without outright saying them) in a way that suggests publisher rights and powers beyond what actually exist. There are countless examples of this, but one very familiar one is "this software is licensed, not sold", which plays on the semantics of "software".
- Ownership over a thing is what establishes one's decision-making authority over the thing. To sell something is to relinquish it as one's property and to relinquish all of one's decision-making authority over that thing and to transfer decision-making authority over that thing to the person who bought the thing. Anything sold via a perpetual (meaning non-exhausting, eternal, lasting-forever) license is a product that becomes the sole possession of whoever purchases it, and upon its purchase all property rights including all decision-making authority transfer from the seller to the purchaser. And then the seller no longer has any rightful say over anything regarding that non-reproduceable instance of software represented by its perpetual license.
- The European Union's highest court, the Court of Justice, has ruled that software, whether sold via a license and whether physically or digitally-distributed, represents a good rather than a service, and that any purchaser of a perpetually-licensed software becomes the exclusive owner over that instance of the software, just as when they purchase any physical good. Most, if not all of the European Union's countries (including the UK) are also signatories to the Nice Agreement, making software in those countries goods. The EU Court of Justice has specifically ruled, "the copyright holder transfers the right of ownership of the copy of the computer program to his customer".
- In a 2016 Australian case regarding Valve's refund policy for Steam, Australia's High Court carefully examined whether computer games sold through Steam are goods (and therefore property and consumer rights apply to them) or services (and therefore no property rights or services apply to them), and concluded that they are fully goods, and that Valve doesn't merely sell a license to use the software, but in-fact sells the software itself, and that whoever buys a game from Steam becomes owner of the software that they purchased. Australia's High Court concluded: "Each of Valve’s challenges to the applicability of the Australian Consumer Law fails. The conflict of laws provisions in the Australian Consumer Law did not essentially carve out an exception for conduct by foreign corporations like Valve governed by a different contractual proper law. Valve supplied goods (which are defined as including computer software)."
- In Canada, pre-2019, the government of Canada declared as goods in its Goods and Services Manual (2018 edition), "all computer programs and software regardless of recording media or means of dissemination, that is, software recorded on magnetic media or downloaded from a remote computer network". As of 2019 (to take effect June 17, 2019), Canada has become another signatory to the Nice Agreement, putting its classification of goods and services under the administration of the World Intellectual Property Organization. As a good, software is therefore a private property that is sold and purchased, and which is owned by its purchasers. In 2016, Canada's Federal Court ruled that software licenses are property that transfers to the purchaser at the time of purchase.
About software ownership in the USA:
I am giving this a section of its own because the US has a bit of a messy history on the topic of software ownership and because there's a lot of information about the US and this topic.
- A specific matter of software ownership has never gone to the USA's Supreme Court and it's likely that software publishers would prefer that it doesn't, because in all likeliness the verdict will be the same as it was in the EU and in Australia. Because this matter has never gone to the USA's Supreme Court and because regional court verdicts have conflicted with each other in their conclusions, it is baseless for anyone to claim that people in the USA don't own their purchased software. That said, there are plenty of other rulings in the US which give strong support to the view software ownership and rulings which seemingly shut down the main arguments against software ownership.
- In the USA, there have been some inconsistent lower court rulings on software licenses. But, they have not all been in agreement with each other and lower court rulings don't apply to all of the USA but only to the specific districts that the rulings were made in. Ninth Circuit rulings, for example, apply only to west-coast USA, representing around just 20% of the US' total population.
- The 2010 Ninth Circuit appeals court ruling that many people are familiar with didn't actually conclude that people within its jurisdiction don't own their software, but instead proposed a strange and extremely ambiguous litmus test for people to gauge whether they own a particular software item or not. That litmus test appears to me to based in ignorance of a lot of things, and so I think the Ninth Circuit appeals court was technically-illiterate in 2010 and had their ignorance and confusion exploited by the Autodesk lawyers who took the court for a ride in making them think a software license was some sort of new technology and mechanism that was outside of all existing precedence. But it wasn't. Also, the Ninth Circuit ruling was superseded by a 2013 ruling by the US Supreme Court and so is no more applicable.
- On March 19, 2013, the USA's Supreme Court ruled that people in the USA and elsewhere are entitled to resell their copyrighted goods, whether those goods are acquired from a domestic or foreign market, without needing the copyright-holder's permission, in accordance with the first-sale doctrine which states that a seller retains no decision-making authority over a product once they have sold it to someone else. The 2013 Supreme Court ruling supersedes the 2010 Autodesk vs Vernor ruling, as well as any other conflicting lower court ruling in the US. Therefore, any claim in an EULA that a license is non-transferable between people is deemed invalid in the USA just as it is in Europe.
- While giving the Supreme Court's reasoning for their judgment in the 2013 case, the judge specifically mentioned software as an example of something that the first-sale doctrine necessarily applies to: "A geographical interpretation would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software. Yet there is no reason to believe that foreign auto manufacturers regularly obtain this kind of permission from their software component suppliers, and Wiley did not indicate to the contrary when asked. See Tr. of Oral Arg. 29–30. Without that permission a foreign car owner could not sell his or her used car." And also: "For example, the Court observes that a car might be programmed with diverse forms of software, the copyrights to which might be owned by individuals or entities other than the manufacturer of the car. Ibid. Must a car owner, the Court asks, obtain permission from all of these various copyright owners before reselling her car?"
- Despite the confusion suggested by the US' lower court rulings on software, the US, likewise to Canada, Australia, New Zealand, the United Kingdom, Germany, Austria, France, and I think the rest of the Western world, is signatory to the Nice Agreement, which is a multinational treaty that contains the International Classification of Goods and Services (also known as the Nice Classification) which puts the classification of goods and services for those countries under the jurisdiction and authority of the World Intellectual Property Organization (WIPO). The World Intellectual Property Organization classifies all forms of software as Class 9 goods, including:
090829 - computer game software, downloadable
090670 - computer game software, recorded
090589 - computer operating programs, recorded
090658 - computer programs, downloadable
090373 - computer programs, recorded
090802 - computer screen saver software, recorded or downloadable
090717 - computer software applications, downloadable
090791 - computer software platforms, recorded or downloadable
090591 - computer software, recorded
Correspondingly, the US Patent and Trademark Office also classifies all software as goods.
So, in the US, people do definitively own their software. And, since software in the US are goods, this powerful 2017 US Supreme Court verdict in a case that was against printer company Lexmark might also apply to software, and could say something against a claimed authority of EULAs:
"A patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose. As a result, even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell. Pp. 5–13. (a) The Patent Act grants patentees the “right to exclude others from making, using, offering for sale, or selling [their] invention.” 35 U. S. C. §154(a). For over 160 years, the doctrine of patent exhaustion has imposed a limit on that right to exclude: When a patentee sells an item, that product “is no longer within the limits of the [patent] monopoly” and instead becomes the “private, individual property” of the purchaser."
"Once a patentee sells an item, it has secured that reward, and the patent laws provide no basis for restraining the use and enjoyment of the product."
For me, this raises important questions about the Ninth Circuit Autodesk vs Vernor case and increases my impression that the judges of the Ninth Circuit court were simply outside of their of zone of comfort and familiarity when they made their ruling. The questions I have about that case are:
Did WIPO simply not yet have software added to their goods classification at the time of the appeals case in 2009 and 2010? The Nice Agreement has existed since 1957, but the oldest WIPO classification document on their website is from 2013, and WIPO had already classified all forms of software as Class 9 goods by then.
Or, was the topic of software ownership and digital technology in general at that time simply so foreign to courts and lawyers that they didn't realize this was already established in multinational treaties that the US is signatory to, and so and it just slipped by everyone's awareness?
Whatever was the case, the Autodesk vs. Vernor case is clearly an anomaly and outdated following the 2013 US Supreme Court ruling. And I expect that if the information about the US' participation in the Nice Agreement and WIPOs classification of software had been available and known by at the time of the Autodesk vs Vernor appeals case, that the outcome of that appeals case would not have been in Autodesk's favour.
Now, here is a slightly-edited presentation of some excepted content from my message to Steam support proving that games are sold through Steam and not rented or leased, and that Valve has officially accepted in court that they sell games and that the games they sell are the owned property of those who purchase them through Steam, with all property rights for games sold through Steam belonging to Valve's customers and not Valve.
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Here's the message that the Australian court has required Valve to display for 12 months following the loss of Valve's appeal of a ruling against the company concerning Valve's refund policy for Australians:
And here's that message still on the Steam website (archived version). The message presented on Steam says “When you buy video games from Valve Corporation”, which clearly states that people buy games from Valve through Steam, which means that people don’t rent or lease those games - they buy and therefore own them.
Here's the full verdict from the Australian court: http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2016/2016fca0196#_Ref445465996
The verdict carefully examines whether games sold through Steam are goods and concludes that the games sold through Steam are goods and not services, and that property laws apply to the goods (games) sold through Steam, and that the property rights rest with the purchaser of the games who is not Valve but is whichever of Steam's service subscribers have bought games through Steam.
Here are some excerpts from the High Court's verdict:
“The second issue is whether there was a “supply of goods” by Valve. Valve accepted that if “goods” were provided by it to consumers then the goods had been “supplied” (ts 218).”
“The legal meaning of “goods” can be analogised to the strict definition of “property” which is “a description of a legal relationship with a thing”: Yanner v Eaton  HCA 53; (1999) 201 CLR 351, 365-366  (Gleeson CJ, Gaudron, Kirby, and Hayne JJ describing the word “property”).”
“137 Valve supplied consumers with a good.”
"340" ... "Each of Valve’s challenges to the applicability of the Australian Consumer Law fails." ... "Valve supplied goods (which are defined as including computer software)."
As a result of the Australian case's verdict, Valve has explicitly accepted and acknowledged on their website that games sold through Steam are goods (not services), AKA products to which property rights apply, and that Steam customers who purchase games through Steam are the sole owners of those games.
The European Union's top court has also ruled on the matter for over half a billion people that software licenses are property and goods that are sold and therefore bought, and that property rights over the instances of software that software licenses represent therefore belong to the purchasers of those licenses:
The EU court also verified that EULAs are not laws, but are subject to laws. If what a publisher writes in an EULA is unreasonable, it risks invalidating the entire EULA.
A German court has also ruled that games bought through Steam are the properties of those who purchased them through Steam – but has also ruled that Valve as a private company is not obligated to build into their system’s design facilitation for people to transfer their games out of their Steam accounts and into other people’s accounts for the purpose of reselling them.
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I hope that all software owners become aware of the fact that they personally own the software they've purchased licenses for and that claims they do not are baseless and urban myth at best, and at worst are deliberate malicious disinformation and corporate propaganda.
A lot of the abuses and software vandalism that software owners have experienced and are currently experiencing at the hands of publishers like Microsoft have only come about because software owners were ignorant and naive of the fact that they do own their software just like you own yours. So, if you want those publisher abuses to stop, then use this information to stamp out any misguided disinformation claims of people not owning their software anywhere you see such claims appearing.
Here's an excellent video by Accursed Farms that's filled with meticulously-researched information and powerful arguments. It's well worth watching if this topic interests you: