Legal alert

UsedSoft v Oracle opens up market for second-hand software licences

July 6, 2012
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Legal alert

The Court of Justice of the European Union (the “CJ”) handed down a landmark decision on 3 July 2012 in the case of software licence reseller UsedSoft v Oracle that opens up the market for second-hand software licences.

The Court of Justice of the European Union (the “CJ“) handed down a landmark decision on 3 July 2012 in the case of software licence reseller UsedSoft v Oracle that opens up the market for second-hand software licences.

 

Oracle’s business model is not to “sell” software but to provide an intangible copy of its software, which can be downloaded from its website, and to grant a perpetual licence for this intangible copy. The licence terms prohibit the customer from transferring the licence to third parties. This system prevents a market for second-hand software licences. Based on this licensing model, Oracle opposed the resale of “used” Oracle licences by UsedSoft, a reseller of second-hand software. UsedSoft argued that under EU copyright law a software supplier who sells a copy of a software program cannot oppose the further sale of such copy based on his copyright (the “exhaustion doctrine”). Oracle argued that the exhaustion doctrine does not apply to intangible copies which are licensed rather than sold. The CJ now concluded that when a copyright holder makes available to his customer a copy – tangible or intangible – and at the same time concludes a perpetual licence agreement in lieu of payment of a fee this equals a “sale” of the software and the copyright holder exhausts its exclusive distribution rights.

 

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