Key selling: Why video games are not simply software

Written on 30 Aug 2016

The practice of key selling continues to be a controversial topic in the games industry. Some confusion has arisen following a recent decision of Germany’s highest civil court, the Federal Court of Justice (Bundesgerichtshof; “BGH”). In its “Green IT” decision, the court ruled that product keys for antivirus software could legally be sold separately from the physical media under certain circumstances. The case has prompted some commentators in the media to con-clude that that key selling was thereby (also) legalized.

This understanding of the decision is, however, misleading (to say the least). For legal reasons alone, the BGH ruling does not apply to video games. But even if it did, the decision reiterates very strict requirements for the sale of digital licenses that the prominent video game key selling websites cannot feasibly fulfil in practice.

To begin with: Key selling is not the honest progressive business practice that some published commentary would have the reader believe. Key selling hurts all parties involved. Not only do developers and publishers suffer considerable sales losses (which in the case of Indie developers can threaten the very existence of the company). For players, the business model is also risky: In the last couple of months, an increasing number of cases has been reported where key selling was used for money laundering and other forms of fraud, all at the expense of purchasers who ultimately found their digital game copies deactivated.

How is this related to the “Green IT” decision? In this case, the BGH ruled that keys for antivirus software can be sold without the physical media. A carte blanche for key selling?

Definitely not! Under European copyright law, a video game is not only considered as “just another piece of software”, but as a hybrid work enjoying special protection: Video games are not only code, they are works of art. Movie sequences, carefully chosen music, interesting characters, a fascinating story – it would be legally and factually wrong to diminish their role and treat a game as pure software. This argument was put forward by the European Court of Justice in its Nintendo decision which grants games a higher protection than other software programs. The protection applies not only to the sum of the different parts of a game, but the creative mix as a whole – hence the term hybrid work.

So when the German BGH rules on the sale of license keys for computer programs, this is still far from being transposable to games. Quite the opposite: Special rules apply to computer games that can render the digital distribution of keys legal under certain circumstances. These exceptions however do not apply to other creative works – as for example games.

The Regional Court of Berlin came to the same conclusion in a 2014 ruling, in which it sent a strong message against key selling for games. It confirmed this position in an unpublished decision in 2015, and other courts have also followed this precedent.

Even if the BGH’s reasoning was applicable to games, the business model of key selling would fail in practice. The decision requires sellers to document in detail the provenance of their keys as the exception for software keys only applies if the original was brought into circulation inside the European Union. The used software market is already highly problematic. The required efforts often exceed the margin, particularly as keys from non-European markets promise higher profits. The sale of these lucrative keys is illegal either way. What’s more: The key seller would have to prove that the keys were properly paid for. This alone is in practice often an unsolvable problem for key sellers, as the increasing rate of fraud cases shows.

The legal situation for key selling is not as simple as it might seem on first glance. What applies to a piece of software, does not necessarily apply to games.