Selling used software licenses?

No doubt you have heard something about the Court of Justice's landmark ruling on UsedSoft's sale of used licenses. Does this ruling really mean that purchased software licenses may (always) be resold?

If you buy a book, it goes without saying that you may gift or resell it to another person. Once the book is sold, the book enters free circulation, where it may be traded and thus read by others. We call this phenomenon "exhaustion" of the author's rights.

That exhaustion rule also applies to software, but here a problem arises. The right to use software is separated by the supplier from the product itself (the software). The software is made available via download or on a carrier, such as a DVD. Only if you purchase a license (right to use) from the supplier can you use the software. So in effect, you are not buying the software, but a right to use it.

Right to use or buy?

Without a right of use, the copy of the software is not worth much. The Court of Justice has now devised a (legally not uncontroversial) construction that makes the combination of the software made available and the right of use equivalent to a purchase in certain cases. According to the Court, this situation arises when the customer, upon payment of a (one-time) price, obtains a right of use that is unlimited in time. Moreover, that price must be such that it enables the supplier to obtain a remuneration corresponding to the economic value of the copy of the software. The Court's construction applies to both downloadable software and software made available on a carrier. Features updated or supplemented pursuant to an agreement with the supplier for updates are also part of the initial copy and can be used by the acquirer. However, the service agreement itself, which can be separated from the purchase, does not transfer with it. The Court ruled in this ruling that too many purchased licenses bought as a single package may not be split up to sell only part of them. They may only be resold as a bundle.

Impact on trade in second-hand licenses

Although the Court's ruling allows more room for a secondhand market in software licenses, exhaustion only applies if the conditions discussed here are met. Suppliers are now devising other constructions to get out from under the consequences of this ruling. For example, only the license is limited in time, or the price due must be paid in monthly installments. Technical measures, such as encryption of codes or being able to activate only once, are also means that can hinder free trade in software licenses. Software is also made available via the cloud, for example, rather than on a carrier or via download.

All these situations are different and each raise their own questions, which the UsedSoft ruling has not yet answered. Thus, before entering the used software license market, it is important to take a closer look at the licenses first. Should you have any questions on this topic, please contact.