EU allows resale of used computer programs
On 3 July 2012 the Court of Justice of the European Union (the Court) has decided that the exclusive right of distribution of a copy of a computer program covered by licence is exhausted on its first sale (Case C-128/11, UsedSoft GmbH v Oracle International Corp. (the Case)).
Under Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs, the first sale in the EU of a copy of a computer program by the copyright holder or with his consent exhausts the right of distribution of that copy in the EU. A right holder who has marketed a copy in the territory of a Member State of the EU thus loses the right to rely on his monopoly of exploitation in order to oppose the resale of that copy. In the Case Oracle claimed that the principle of exhaustion laid down by the directive does not apply to user licences for computer programs downloaded from the internet.
The Court determined that 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 for payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that right holder 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 right holder can no longer oppose the resale of that copy.
If the licence acquired by the first acquirer relates to a greater number of users than he needs, that acquirer is not authorised by the effect of the exhaustion of the distribution right to divide the licence and resell only part of it.
The Court has stated that an original acquirer of a tangible or intangible copy of a computer program for which the copyright holder’s right of distribution is exhausted must make the copy downloaded onto his own computer unusable at the time of resale. If he continued to use it, he would infringe the copyright holder’s exclusive right of reproduction of his computer program. In contrast to the exclusive right of distribution, the exclusive right of reproduction is not exhausted by the first sale. However, the directive authorises any reproduction that is necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose. Such reproduction may not be prohibited by contract.