Volume Software Licensing - A Landmark CJEU Decision

UsedSoft GmbH v. Oracle International Corp. European Court of Justice, Case -128/11, 3 July 2012

An industry has grown up around the sale of second-hand software as a result of re-sellers seeking to acquire full or partial multi-user software licences from the original licensee and to "on-sell" those licenses to customers. There has been substantial debate in Europe as to whether or not this practice is valid on the basis that the exhaustion principle in European copyright law was only thought to apply to the distribution right where software was distributed on a tangible medium. This decision of the CJEU has been keenly awaited by an industry seeking to clarify the position and will change the way in which software is licensed and maintained.

Essentially, the CJEU has held that where licensed software is distributed by non-tangible means (for example by download over the Internet) then, subject to certain pre-requisites, this equates to a "first sale" for the purposes of the exhaustion principle and the copyright owner is not entitled to control...