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EU court rules resale of used software licenses is

legal -- even online
In the case involving Oracle the court found that software vendors have no rights to
block resale

By Jennifer Baker
Brussels correspondent, IDG News Service | JUL 3, 2012 10:40 AM PST

Europe's highest court ruled on Tuesday that the trading of "used"

software licenses is legal and that the author of such software cannot
oppose any resale.

The exclusive right of distribution of a copy of a computer program

covered by such a licence is exhausted on its first sale, said the European
Court of Justice (ECJ). This applies to downloaded software as well as that
bought on CD or DVD. This ruling sets a precedent for trading of used
software licenses throughout the European Union and could potentially
impact ebooks and computer games as well.

The court also ruled that any patches or upgrades made to the software
through a service agreement also form part of the used software that can
be sold on. However it said that the reseller must make the copy
downloaded onto his own computer "unusable" at the time of resale.

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The German Federal Court of Justice referred the question to the ECJ
following a legal battle between Oracle and UsedSoft, a company that
buys and sells used software. Oracle launched the case after UsedSoft
offered "pre-used" Oracle software licenses online in October 2005.

Oracle customers can download a copy of the program directly onto their
computer from Oracle's website. The user right for such a program, which
is granted by a license agreement, includes the right to store a copy of the
program permanently on a server and to allow up to 25 users to access it
by downloading it to the main memory of their workstation computers.

In a small victory for Oracle, the ECJ ruling prevents resellers from
breaking up a license and selling only part of it if they have purchased
licenses for more users than they need.

UsedSoft customers download the resold software directly from Oracle's

website after acquiring a 'used' license. Oracle argued that the principle of
exhaustion does not apply to user licenses for computer programs
downloaded from the Internet. However the ECJ firmly rejected this
argument.

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The German Regional Court originally ruled in favor of Oracle, but

following UsedSoft's appeal, the federal court decided to refer the matter
to the ECJ. The final judgement must still be made by the German federal
court, but given the ECJ ruling will form a large basis of the decision,
Oracle looks likely to lose the case.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments

to jennifer_baker@idg.com.

Related: IT Leadership Software Regulation

Jennifer Baker reports on the European Union: Commission, Parliament,

technology policy, regulation, and competition.

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