Yesterday, the European Court of Justice (ECJ) rendered a landmark decision in Oracle v. Usedsoft on the sale of used software licenses. Granted, it is a substantive judgment in an IT matter and you might ask why it is covered in this blog – well, it originated in the German courts, and the referring court was the Federal Supreme Court (Bundesgerichtshof). And I view it as yet another illustration of Germany’s popularity for international IP disputes. The question before the ECJ was whether purchasers could resell, without limitation in time, licensed software even if purchased via download. Yes, said the ECJ.
The judges found that the exclusive right to distribute copies of programs is exhausted at the first sale, even if the initial purchaser obtains the program copies via download. A licensee can validly transfer title (property rights) to the software, irrespective of provisions to the contrary in the licensing contract. The exhaustion of distribution rights extends even to copies of programs that have subsequently been improved and/or updated by the copyright owners.
However, in narrowing the scope of its decision, the ECJ requires that the original purchaser stops using its original copy at the time of resale. Moreover, the reseller is not allowed to split a multi-access licence into different parts that are subsequently being resold individually. The decision does neither stop software producers from technically preventing the resale, neither. No doubt, the decision lead to an arms race, as producers will ramp up both software code and contract terms to minimize the impact of the ruling.