2012 UsedSoft judgement changed previously prevailing view that the wording of software licence agreements was paramount, so what does this mean for reselling now?

22. 12. 2016


The UsedSoft case[1] (European Court of Justice) is of considerable importance to users of software – either because they are over-licensed and wish to secure some value for such licenses – or as a buyer wishing to acquire licenses from another business rather than direct from the vendor.

Until 2012, the prevailing view was that the wording of the software license agreements was paramount: it would always state that any license granted for software was personal to the buyer ie non-assignable. And if the user did attempt to assign the rights to another company or business, that very act would automatically void the license making the attempted transfer futile.

The 2012 UsedSoft judgment changed this: the court declared that the grant of perpetual software licenses should be regarded in a similar way to the sale of physical items. In other words, like buying a car or a book, the item could always be passed on if the original buyer no longer needed it or wanted to sell it – the seller’s rights were ‘exhausted’ the moment the first sale was made and they could not then control any further resale.

The judgment legitimised a market for second-hand software subject to certain conditions.  But there remained one problem: what if there had been a volume purchase and the licensee simply wanted to transfer on some of the license rights? If they had acquired 100 processor perpetual licenses, could they organise a sale of just 30 to another keen buyer?

The European Court seemed to say no – ‘It should be pointed out, however, that if the licence acquired by the first acquirer relates to a greater number of users than he needs, ….. the acquirer is not authorised by the effect of the exhaustion of the distribution right …………….to divide the licence and resell only the user right for the computer program concerned corresponding to a number of users determined by him.’

That seemed unequivocal. But a German court decision has refined the position by interpreting a volume license as essentially X individual licenses rather than one license for X users. A decision of the District Court of Frankfurt am Main[2] addressed a challenge to the onward sale of two licenses from a bundled license of 40 of Adobe Creative Suite 4 Web Premium.  The court said that, yes, this was permissible – even if the software vendor objected and even if there werre only one license key. A key point here was the possibility for the Adobe programs to be installed on 40 separate work stations as opposed to the situation in the European Court case where the Oracle software was installed on a single server.

The German case is not binding in the UK but it does open the possibility for desktop – and even some sever – licenses to be separated out and sold even if part of a single bundled purchase and even if there were only one unique key for installation.

Robin Fry

© 2016

[1] UsedSoft GmbH v Oracle International Corp (C-128/11)

[2] OLG Frankfurt am Main Judgment of 18 December 2012 · Az. 11 U 68/11  http://openjur.de/u/589715.html

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