Sale of ‘second-hand’ software licences legal, rules European court

By Graeme Burton
03 Jul 2012 View Comments
Sale sign in window

The European Court of Justice (ECJ) has ruled today that the trading of second-hand software licences is legal, regardless of what is written in the end-user licence agreement (EULA).

The ruling applies to both enterprise and personal software, and to CDs, DVDs and downloaded software. It could also be applied to the trading of ebooks and other forms of digital content.

Further reading

The case in the ECJ follows a legal battle launched by computer giant Oracle against UsedSoft, a German company that buys and sells used software. The German Federal Court of Justice had referred the case to the ECJ to rule on the 1991 European Union Directive on the Legal Protection of Computer Programs.

Under that directive, the sale of a licence does not allow the copyright holder to prohibit subsequent sales. Oracle, though, had argued that the directive only applied to physical copies, such as DVDs, not online downloads.

The court, though, ruled against Oracle. However, the ECJ ruling does prevent resellers from breaking up licences and selling parts of them should they purchase more licences than they ultimately require.

In a summary judgment, it wrote:

"The principle of exhaustion of the distribution right applies not only where the copyright holder markets copies of his software on a material medium (CD-ROM or DVD) but also where he distributes them by means of downloads from his website.

"Where the copyright holder makes available to his customer a copy – tangible or intangible – and at the same time concludes, in return from payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and, thus, exhausts his exclusive distribution right.

"Such a transaction involves a transfer of the right of ownership of the copy. Therefore, even if the licence agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy."

While the judgment is not binding on the German Federal Court, it will form the basis for its final judgment.

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