Is the resale of used software licenses lawful?
The resale of used licenses for computer programs is lawful. This was established in the CJEU’s case-law (the landmark UsedSoft GmbH v. Oracle International Corp., C-128/11 as well as Aleksandrs Ranks и Jurijs Vasiļevičs v. Microsoft Corp., C-166/15) back in 2012 regarding a preliminary ruling on provisions of Directive 2009/24/ЕC on the legal protection of computer programs.
CJEU has found that the resale of used software licenses is lawful for the following reasons:
- The first sale in the EU of a copy of a program by the rightholder (Oracle in the case, or Microsoft, for example) or with their consent exhausts the distribution right within the EU of that copy, where a ‘first sale’ is the transfer of the copy of a computer program, accompanied by the conclusion between the copyright holder and a customer (who might be a reseller) of a user licence agreement.
- The original acquirer – the first buyer of the copy, who is a reseller and initiates a resale of a computer program on a material medium (a CD-ROM or DVD-ROM) or of an intangible copy (via downloading from the Internet), as well as every subsequent acquirer (a customer of the original), are lawful acquirers. The new acquirer of the license (the reseller’s customer) can in their capacity as a lawful acquirer of a copy (including an updated one) download this copy from the website of the author of the respective software.
- An original acquirer who resells a tangible or intangible copy of a computer program for which the copyright holder’s right of distribution is exhausted, in order to avoid infringing the exclusive right of reproduction of a computer program which belongs to its author, must make their own copy unusable at the time of its resale.
- Notwithstanding the existence of contractual terms prohibiting a further transfer, the rightholder (the software author) can no longer oppose the resale of that copy.
Thus, even if the buyer of a copy of software is an original acquirer but does not make their own copy unusable at the time of its resale, the resale in question shall not be deemed lawful and the copyright holder’s right of reproduction of the software shall be breached. The software license resale shall also be unlawful when its object constitutes a pirate copy of a computer program or copies that are subject to or means of crimes under the Penal Code – for example, hacked credit cards. In such cases, criminal liability pursuant to Art. 172a et seq. of the Penal Code may be invoked.
Based on the legal overview above, when doing business that involves used software licences purchase and subsequent resale the following steps are recommended:
1. Status check of vendors/partners/resellers:
А. Purchase software copies only from tried, tested and trusted vendors who provide you with guarantees of legitimacy. This means that they are capable of proving that they have acquired the used licences in question on a legitimate ground.
B. Guarantees of legitimacy can be established by means of documents certifying that, for instance, the said vendors/resellers participate in the copyright holder’s partnership networks like Microsoft Partner Nеtwork, identification number and/or entry in a designated official register, etc. Average market prices of the software licences in question could also serve as a guide in assessing offers made by your potential vendors and thus checking their legitimacy and reliability.
C. The commercial risk increases and you should exercise caution when a potential vendor offers you a software licence at a suspiciously low price compared to the respective average market price of the same product. It is then advisable to turn down such an offer and to look for a more trusted partner who is capable of providing you with guarantees of legitimacy. Purchase due diligence aimed at minimising the commercial risk involves a thorough status check, including but not limited to company history check, information about official registers maintained by the company, customers’ reviews about their products, etc.
2. Consumer Protection
Consumers’ rights enshrined in the Consumer Protection Act and the Act on Supply of Digital Content and Digital Services and Sale of Goods should be safeguarded, namely:
If for some reason the consumer cannot access the product they have purchased, they are entitled to a commercial guarantee, that is to say to receive a product with no defects as well as access to the purchased product (for example, if after entering the access code, they receive a message that the said code is already in use, or otherwise cannot access the product).
Right of withdrawal
In conclusion, although the used software licences resale is lawful, as a person dealing with computer programs by occupation, you should mind the commercial risks involved in such an activity as well as the higher standard of due care required of you in relations with your customers and business partners. It is recommended that other participants in your business, namely the vendors of the licences in question, also meet the same high standard and are able to demonstrate that they hold the licences on legitimate grounds within the meaning of the CJEU case-law as analyzed above.
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