In July 2012 the Court of Justice of the EU delivered its controversial judgment in the Usedsoft case, concluding that that a software copyright owner does not have the right to prevent re-sale of an original copy of software, once it has been sold. 18 months on, as the European Commission consults on a review of EU copyright law, it is time to reconsider this judgment.
Exhaustion of rights and Usedsoft
The principle of exhaustion of rights is well-established in European intellectual property law: if I buy a physical product in the EU which contains copyright-protected material, such as a book or a CD-Rom, the copyright owner cannot stop me re-selling the product to somebody else. In the Usedsoft case, the key question was whether this principle extends to a perpetual licence of downloaded software.
The Court ruled that downloaded software with a perpetual licence was the "functional equivalent" of a physical product. It held that a software licensor's distribution right will be exhausted where the transaction between licensor and customer amounts to a ‘sale of a copy' of the program. The effect of Usedsoft is that a ‘sale of a copy' includes all situations in which there is a grant of a right to use a copy of a computer program for an unlimited period in return for a fee. Further, even if the licence agreement prohibits further transfer, the licensor cannot oppose the resale of that copy.
And yet software licensors do not seem to have been brought to their knees by the explosion of a second-hand software market. This can in part be attributed to the limitations to the scope of the decision:
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