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30th Sep 2016

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No ban on second-hand software, says EU court

  • EU law allows second-hand software sale, says a preliminary ruling by the ECJ (Photo: eurocontrol)

EU copyright law does not ban the re-sale of computer programme licences, according to a ruling on Wednesday (25 April) by the Luxembourg-based European Court of Justice.

The judgement by the EU court follows a dispute between German second-hand software shop UsedSoft, which sells pre-owned software licenses to businesses who then use the licenses to download programmes made by US software company Oracle. Oracle had originally taken the case to the German Federal Court, who then called on the ECJ for an opinion, arguing that under the terms of the EU Computer Programmes Directive its licenses were non-transferable.

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The case rests on the legal definition of the 'principle of exhaustion' which states that once a product has been sold, the owner of the intellectual property rights cannot stop the buyer from re-selling it on. In its legal submission, Oracle had claimed that it does not sell software, instead selling licences which are then used to download software.

In response, Advocate General Yves Bot described this as a "somewhat artificial distinction" adding that to him "the assignment of a right of use over a copy of a computer programme does indeed constitute a sale."

In his legal opinion which, though not legally binding is expected to form the basis of future legal judgements by the Court, Bot ruled that while UsedSoft was guilty of allowing its customers to copy rather than re-use Oracle's software, EU copyright law did not permit Oracle to prevent the resale of used copies of software, downloaded by their own customers from the internet, “given that their exclusive right of distribution relating to those copies is ‘exhausted’.”

Under the terms of the Computer Programmes Directive, re-sellers do not require the consent of the software producer provided that reproduction is "necessary for the use of the computer programme by the lawful acquirer in accordance with its intended purpose".

Advocate Bot stated that "in the event of resale of the right to use the copy of a computer programme, the second acquirer cannot rely on exhaustion of the right to distribute that copy in order to reproduce the programme by creating a new copy even if the first acquirer has erased his copy or no longer uses it."

In a statement following the decision, Karl Cox, Oracle’s vice president for public policy welcoming the ruling saying that it would “create a precedent that protects software developers of all sizes and protects innovation in the technology industry,”

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