Computer Software Licence Can Be Acquired “Second-Hand”

Triniti

The World Intellectual Property Organization Copyright Treaty provides that computer programs are protected in the same way as literary works. Such protection applies to computer programs expressed in any manner or form.

Long-awaited decision of the ECJ

This summer the EU Court of Justice (hereinafter referred to as the ECJ) has adopted a long-awaited preliminary ruling in the case, stating that legally acquired computer software licenses can be freely resold to another user. This ruling is of particular importance to those who have acquired expensive software licenses that have become obsolete, for example, after a software company had discontinued its operations.

This decision elaborated on the provisions of Directive 2009/24/EC, where was no direct regulation of transfer of a “second-hand” license to a third party; therefore, when UsedSoft GmbH (hereinafter referred to as UsedSoft) has brought “Oracle special offers” by which it has proposed a purchase of “second-hand” Oracle International Corporation (hereinafter referred to as Oracle) computer software licenses, which have been the object in the main proceedings, the issue was brought against the ECJ to rule on the legality of such action.

In the ruling of the ECJ the German company Oracle, which has lost the case against the software company Used Soft, stated that it is only possible to sell a “second-hand” computer software license provided it is still valid (i.e. a license period is not expired); in addition, all the software fixes and updates under the maintenance agreement should be considered an integral part of the software and therefore they must be resold together with the software, even if a new maintenance agreement is not entered into by the buyer. The ECJ also held that even where reselling of a “second-hand” license is prohibited under a license agreement, a user is nevertheless entitled to resell “second-hand” computer software.

Restrictions on transfer of a license

On the other hand, the ECJ noted, that if a license acquired by the initial buyer is valid in respect of a greater number of users than required, the said buyer is not entitled, on the basis of exhaustion of the distribution right under Article 4(2) of the Directive 2009/24, to split this license and resell a right for use of the computer software corresponding to a particular number of eligible users i.e., a user who has acquired a computer program license for 10 jobs, but in fact is using it for 7 jobs only, would not be allowed to split the license and sell the license for remaining unused jobs.

It should be noted that in order to take advantage of a possibility of selling a “second-hand” license, it is important that the original buyer of the computer software would cease from using this computer software and have it deleted or otherwise removed from his computers.

That decision of the ECJ has opened new possibilities in the market of computer software: a user was granted the right to choose between purchasing a “new” software license directly from the manufacturer or the official distributor and acquiring a “second-hand”-one from another user. This option might have a significant impact on the exceedingly high prices of “new” computer software licenses.

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