The Court of Justice of the European Union (CJEU), the highest judicial body of the European Union, ruled:
- The re-sale of used software licences is legitimate
- A software vendor cannot prohibit any resale within the EEA
“An author of software cannot oppose the resale of his ‘used’ licenses allowing the use of his programs downloaded from the internet.” (from the press release no. 94/12 by the CJEU in relation to C-128/11).
The Court Judgement of the CJEU (Case C-128/11 – 3rd July 2012) upheld the principle of exhaustion which was first laid out in Article 4.2 of the EC Directive “on the legal protection of computer programs”.
- The right holder’s right of distribution is exhausted on its first sale
- A ‘lawful acquirer’ is free to resell their licence
- Only applies to a fully paid perpetual licence
- A licence agreement with a limited term such as a rental or subscription agreement cannot be resold
The CJEU ruling provides legal certainty throughout the European Economic Area and reaffirms the legality of the European market in pre-owned software licences.
“The Exclusive right of distribution of a copy of a computer program covered by such a licence is exhausted on its first sale” (from the press release no. 94/12 by the CJEU in relation to C-128/11).
The transfer provisions stated on my licence agreement prohibit any transfer or re-sale. Can I still sell my licences?
The following extract from the CJEU ruling states… 77. … “It follows that, by virtue of that provision and notwithstanding the existence of contractual terms prohibiting a further transfer, the rightholder in question can no longer oppose the resale of that copy.” Therefore, even if the licence agreement restricts or prohibits the resale / transfer of licences a software vendor can no longer oppose that resale or transfer. In effect the EU Software directive overrides any prohibitive transfer clauses that may be found within a software licence agreement.
Do Microsoft send any confirmation of the transfer?
Microsoft do not provide any licence transfer confirmations. As the transfer is between the previous owner and the transferee, this is not necessary. ValueLicensing will supply all the necessary documentation required to prove legal ownership of the licences in the event of a SAM (Software Asset Management) Audit. We also send a copy of the signed perpetual licence transfer form to Microsoft to notify them of the change of ownership.
Can Microsoft reject the transfer?
As per the CJEU ruling, a right holder such as Microsoft cannot oppose the resale of their ‘used’ licences where the original licences were legitimately first acquired in the European Economic Area. Therefore Microsoft do not have the legal authority to reject any transfer / resale within the European Economic Area.