European jurisdiction leaves room for interpretation on used software verdict

Peter Wesche August 13, 2012

While there was some press noise around the July 3rd decision of the European High Court, ruling a dispute between Oracle and usedsoft about reselling licenses, many questions remain open. But the verdict contains a number of new ideas that can help user organizations escape the dilemma of unused licenses. If the licenses considered have been bought under a perpetual licensing agreement, the following principles apply:

  1. Downloaded programs (‘immaterial’) are no longer discriminated from programs delivered on physical data carrier. Even more, download versions retain the access to the latest version by the legitimate buyer of the used license.
  2. If program copies are removed at the time of re-selling, the buyer has full fresh rights to the software in the same scope as the original transaction. This includes warranty and rights to enter into a software maintenance agreement.
  3. If the original license was a multi-pack, like a 25-user or 4 processor-pack, such licenses can only be resold in total and cannot be split into smaller parts for resale.

As a consequence, all software that follows the formal definitions of the verdict can be freely re-distributed without asking permission from the vendor, even if the licensing agreement contains clauses that reserve the rights for re-distribution to the vendor. Such clauses are not compliant with European free trade principles. As a further consequence, the vendor cannot continue to ask the first licencee to continue to pay maintenance for licenses re-sold, or ‘on shelf’ for resale, if the related copies have been removed.

What the verdict does not clarify, needs to be applied with common sense, at the risk of subsequent court-ruling if the vendor objects. Among these unresolved items are:

  • How can surplus licenses by re-sold from a license agreement that has no item-level pricing. Is this an indication for a multi-pack?
  • If the nature of the software is client-server/server-installed for all licenses depending on such server programs, is it possible to consider re-selling partial licenses when they are not part of a multi-pack licensing transaction?

Leave a Reply

Your email address will not be published. Required fields are marked *