Oracle loses software resale case
The Court of Justice of the EU ruled against Oracle in their attempt to stop resale of their software by the German firm UsedSoft. The court said that a company loses its exclusive right to distribution of software upon the first sale, and cannot inhibit resale of the software, whether that is on physical discs or through downloads. This applies even if the license agreement has language that prohibits further transference of the software. The IP owner “cannot oppose the resale of the copy or to copies of the program that are later updated by the software author.”
This ruling by Europe’s highest court may have tremendous effects on software sales. We could see a considerable upsurge in sales of “pre-used” software licenses.
The court ruling was not entirely against Oracle’s interests however. They ruled that licenses could not be split up and sold partially, and they ruled that once a license is sold, the original buyer must disable the software on their computer.
You can read about this ruling at Managing Copyright.
1 Comments on Oracle loses software resale case
- Posts: 1
- Posted on: 05 Jul 12 14:07
This ruling specifically refers to an Oracle ‘licence’ blocks (of 25 CALs) i.e.: a company that purchased 100 blocks (2500) CALs can sell off those 100 blocks to 100 different customers but it cannot break down the individual licence blocks e.g.: a ‘licence’ block cannot be broken down into 5 x 5 user licences. Similarly, with Microsoft Volume LA’s (Select / Enterprise), such LA’s can also be broken down to licence level e.g.: an LA containing 1000 x Office 2010 PRO can be broken down and sold off in smaller quantities but you cannot break down at the individual Office 2010 PRO licence level and then sell off as individual components (Word, Excel, PowerPoint, Access etc). Another Microsoft product example would be the Windows SBS CALs, which could be purchased in licence blocks of 5 or 20 – a company may purchase a 2 licences, 1 containing 20 CALs + the other containing 5 CALs – if the ECJ ruling is applied here, you cannot break down the licence block of 20 and sell off to two different customers in smaller quantities such as 10 + 10 CALs but you can sell the 2 licence blocks to 2 different customers.
In any case, this court ruling puts a long awaited dent in the FUD (Fear, Uncertainty & Doubt) tactics employed by the software vendors. However, worth noting that Usedsoft's use of a Notary (in part, to hide where the licences came from) was deemed illegal by the German courts and Usedsoft is now also going through insolvency proceedings. There are other secondary software licence suppliers whom adopt more transparent business models that do not rely on the Exhaustion Principle.
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