Is selling Pokemon legal or illegal?

Selling Pokemon on eBay or your own website is a tricky business. It's important to check your national or state law to make sure it is legal to sell virtual items. Make sure you take care of your taxes and everything is registered.

When it comes to eBay, I can be short. I used to sell on eBay for quite a while. That is until they started removing my ads:

"Your listing has been removed: Digitally Delivered Goods

Hello ********,

After reviewing your eBay account, we've taken the following action:

- Violating listings have been removed. A list of items that were removed can be viewed at the bottom of this message.
- We have credited all associated fees except for the final value fee for your listing(s).
Due to copyright concerns, sales of digitally delivered items are restricted on eBay."

eBay does not allow the sale of Pokemon. It seems that they don't remove every Pokemon ad, but I would say that it is a matter of time before you will find out that some of your best selling ads are targeted. 

Selling on your own webiste, is quite a bit more complicated. Blizzard, creators of World of Warcraft, make it very clear in their Terms of Service that selling in-game items or currency for real life money is not allowed. At best, they can ban you. That is not a legal issue. While the Pokemon games do have such a Terms of Service, it is practically impossible to ban any player from the games. Copyright law is where things get interesting. You're not selling a copy of the game. That would clearly be infringement, because the code (and all other works like story, images, and 3D models) are original works created by Gamefreak. But what exactly are you selling? Perhaps you can see it as selling data, uniquely created by the game's Pokemon creation system. That uniquely created Pokemon, which depends on the player's input (nicknames, OT, ID, SID, etc.), is something that didn't already exist. So who has the copyright? The creator of the systems (Gamefreak), or the creator of the newly generated content (the player)? Honestly, I don't know.

There was a case a while ago where someone sold a Bulbasaur inspired planter on the 3D printing website Shapeways. The Pokemon Company issued a cease and desist and asked for all the profits the seller made. It appears that the 3D model was similar enough to the Bulbasaur to infringe on their copyright. Only The Pokemon Company (and other rights holders) have the right to sell merchendise with their copyrighted designs. That includes the likeness of a Bulbasaue. As such, they could easily take down many fan made t-shirt designs for instance. They simply choose not to do so as it would take a lot of effort and antagonize the fans.Regardless, the product itself, if seen as a piece of data, is not an image and is not copyrighted in the same way.

You could also see it as providing a trade service. The people pay for an in-game trade, not necessarily the Pokemon itself. It's like paying for a competitive battle. In this case you would be selling a service and not a product. That cannot be copyright protected. Trademarks get even weirder. According to the Trademark Electronic Search System, Bulbasaur and Charmeleon are trademarked; however those trademarks expired. On the other hand, Torchic and Florges are not trademarked at all. From what I could find, the closest trademark registrations for "Pokemon" and "Pokémon" in goods and services are: "computer game software, electronic game programs, video game cartridges, video game software [ and video tapes containing children's entertainment ]" and "providing a web site featuring entertainment information in the fields of electronic game programs, electronic game products, and other entertainment topics related to electronic game programs and products.". Neither of those fully describe the service we offer, although it might close enough to be trademark infringement. The problem is that these descriptions are vague enough to apply in a number of ways. "providing a web site featuring entertainment information in the fields of electronic game programs". I'm not sure if Serebii.net is monetized, but if it is it would be infringing the Pokemon trademark as it provides entertainment information in regards to Pokemon. It most certainly has copyright infringement all over the place, since only the Pokemon rights holders are legally allowed to display Pokemon images in the public space. Simply hosting the Pokedex and all its sprites is copyright infringement on Serebii.net's part.

Let's talk about Terms of Services for a second. The Nintendo 3DS EULA states:

"The Nintendo 3DS Code of Conduct prohibits all harmful, illegal or otherwise offensive conduct, including, but not limited to the following:
Engaging in any commercial activity using the Nintendo 3DS System or any other activity that disrupts, diminishes the quality of, interferes with the performance of, or impairs the functionality of a Nintendo 3DS System, including the Nintendo 3DS Services or networks connected to the Nintendo 3DS Services."

The Pokemon games' Terms of Services state a similar prohibition. This is of course just about the User Agreement and EULA, which is not illegal to break. At best, Nintendo and Gamefreak could stop providing their products and services to you; however, that is pretty impossible in practice.

The first sale doctrine is probably the best defense. Section 109(a) of the Copyright Act states:

“ Notwithstanding the provisions of section 106(3) (which grants copyright owners the exclusive right to distribute copies or phonorecords of a work), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."

That is why you are allowed to resell your old video games and DVDs. Section 109(b) states:

"The owner of a particular copy of a computer program or a particular phonorecord of a sound recording may not rent, lease or lend that copy or phonorecord for the purpose of direct or indirect commercial advantage."

So you can't rent out your Pokemon games. Fair enough, we're talking about selling anyway. After a trade, the Pokemon is truly deleted from the computer program (or game in this case). There is still one problem though. More often than not, the User Agreement states that you are merely buying a license to use the game, not a copy of the game itself. By that logic, a licensee is not allowed to resell the software (Section 109). The Pokemon Omega Ruby manual states:

"This software (including any digital content or documentation you download or use in connection with this software) is licensed by Nintendo only for personal and non-commercial use on your Nintendo 3DS System."

Yes, you read it right. It basically says, this software is licensed by Nintendo only for personal use. That doesn't sound like a proper sentence, nor does it state that you own a personal license. It says that Nintendo holds the license for personal use. Very strange. That's pretty much all it says about licenses.

Lastly, many courts have recharacterized a software publisher's shrinkwrap licensing agreement as a sale when the publisher distributes its software through retail channels. Other courts have taken the opposite position, however, holding that a copy of software obtained through a license is not subject to the first sale doctrine or other benefits of "ownership." In other words, it differs per court. I would think that we fall under the first category (as long as you use a physical copy). We are essentially selling the game in parts (one Pokemon at a time). Like selling a DVD boxset in singular DVDs,  instead of the whole set. In that sense, our selling falls under legitimate reselling of the first sale doctrine. On the other hand, if the court disagrees (in that you only have a license and you are not the owner) then every single person that resells a Pokemon cartridge is committing copyright infringement. It's still legally light gray, but it seems like copyright law is on our side. Still, it would be easy for The Pokemon Company to catch any seller on a technicality, like using a trademarked term or having a Pokeball design somewhere on the website.

In short, if you are a buyer, you have nothing to fear. If you are a seller, just be aware of the legal ambiguity of the situation as there is no clear yes or no answer to the question "is selling Pokemon illegal?". I am certainly not the biggest provider for this service so it would be interesting to see if and how The Pokemon Company reacts should the big trading services grow even bigger.