However, a new market in ‘used’ business software has developed since the Court Of Justice ruling in the UsedSoft[1] case.

Software is a major expense for many organisations; pressures on them derive not only from immediate business needs but also a continuing anxiety that they might be under-licensed and thereby possibly infringing copyright.

Many bodies will have:

• Redundant or shelved software – software packages which were once used but no longer or where user numbers have decreased;

• Unused software: packages bought on a precautionary basis or for a project that never materialised;
• Surplus software: software still in use but where processor or user numbers have decreased;
• Software acquired as part of a settlement following a software audit where there was no need for the software but the vendor pressed for a settlement (for other under-licensing) on the basis of new software purchases.

Receivers of insolvent businesses, in particular, can readily divest themselves of their enterprise software under these rules: often it is clear that all software use has been ceased and so this scenario is particularly germane to resale of the software, obtaining considerable and unexpected recoveries for the receivers or administrators.

The terms and conditions of such licenses are extensive but always contain restrictions in that the software usage is:

• personal to the named customer;
• for use by them alone, save where there is a group company addendum permitting other members of the same group to use the software;
• non-assignable; and
• with no right to sub-licence.

The license may also be limited by territory and occasionally limited in other ways eg for use by educational or not-for-profit bodies only.

It follows therefore that, on its face, the vendors’ standard license terms mean that:

• any attempted resale by purporting to assign the relevant license may be of no effect;
• it may render the existing license void;
• any subsequent use by the new ‘buyer’ will be of software for which they have no license (storage and running are restricted acts) and the buyer will be infringing copyright; and
• The seller too will possibly be liable to the vendor for authorising another to carry out those restricted acts, without permission.

1. Sale relates to a ‘computer program’                            
2. The first sale took place within the European Union
3. License originally granted for an unlimited period      
4. License grant was in return for payment of commercial fee   
5. The copy still in the hands of the reseller is made unusable;   and
6. The licence has not been divided

Neither the UsedSoft case nor the applicable directives have any application outside the EU. The case concerned only the interpretation of the EU Software Directive.

Accordingly, no weight can be given from these principles in any litigation or transaction involving software usage outside the EU. Indeed, within the USA, the United States District Court for the Southern District of New York has expressly rejected the possibility of exhaustion for digital products (in this case, music downloads) under the Re-Digi case[2].

Potential buyers, within the EU, should have some regard to the fact that jurisdictions outside Europe have not followed the UsedSoft case in cases where:

• On-premise software is to be hosted by or for the buyer on servers outside the EU;
• Users may be based outside the EU, but accessing the software remotely; and/or
• Back-up or disaster recovery is outside the EU.

These last two elements may not be fatal but place of actual deployment of software (particularly across networks) will need to be examined for any territorial ramifications.