OSAKA — The Osaka High Court on Thursday overturned an October 1999 Osaka District Court order barring chain store Act Inc. in Okayama Prefecture from selling secondhand computer games, a decision that echoes a Tokyo High Court ruling rendered Tuesday.

The overturned ruling also applied to one of Act’s franchise shop owners in Hyogo Prefecture.

The ban had been sought by six software developers — Konami Co., Capcom Co., Square Co., Sega Enterprises Ltd., Sony Computer Entertainment Inc. and Namco Ltd. — on grounds that game software is a theatrical product for which they are guaranteed the right to control distribution under the Copyright Law.

Sega Enterprises is Sega Corp.’s predecessor, while Sony Computer Entertainment is a fully owned subsidiary of Sony Corp.

Presiding Judge Kenji Torigoe acknowledged software manufacturers are guaranteed such an exclusive right, but said they surrender that right once they sell their products on the open market.

The high court judge added that if the manufacturer’s right to distribution is maintained in a resale market like that of game software, where a massive volume of products are traded, it would hamper the growth of a free market.

Act had appealed the October 1999 district court ruling, which said the Copyright Law contains no provisions on whether manufacturers would lose their right to distribution.

Act President Yuji Shintani welcomed Thursday’s ruling, calling it a victory for users and sellers.

The Association of Copyright for Computer Software, representing software makers, issued a statement saying the ruling is regrettable and “if such a court judgment is repeated, it could slow down the evolution of game software.”

The makers are planning to appeal the ruling to the Supreme Court, industry sources said.

Software developers and retailers have remained at odds over sales of used game software amid their battle for control of the lucrative market worth an estimated 700 billion yen.

The developers complained they would not be able to pay off investments in new titles if the sales of secondhand copies exceeded newly purchased copies in a few months. One maker said it costs 1 billion yen to develop a new, popular software game.

Retailers argued they could not make enough profits without selling used software. The profit margin for a new software product stands at 15 percent, while that for a used product is 40 percent, they said.

The suit was filed after talks held by the defendants and the plaintiffs in 1997 proved unsuccessful.

In a separate case, the Tokyo High Court upheld a 1999 Tokyo District Court ruling that allowed a retailer to sell secondhand video games without being restricted by the manufacturer’s demand for copyright protection.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.