Legal issues related to the acquisition and resale of used software licenses

Acquiring a used software license may seem surprising, especially when the product is completely intangible. It is in fact difficult to consider buying a product that does not have a second-hand physical medium, since the second-hand product is completely identical to the new product.

However, the rules of exhaustion of rights have allowed, since a judgment of the Court of Justice of the European Union on 3 July 2012 (C-128-11 UsedSoft c/ Oracle), to resell used software, whether it has a physical medium or not.

This solution, although logical, was not a foregone conclusion since it opposes the protection of the copyright of software publishers to the interests of users and free trade on the Community market. It affects the profits of publishers but has the effect of liberalizing the software sales market.

Acquiring used software is a strategy that can be particularly advantageous from an economic point of view but requires in-depth thinking about the management of a company's software assets, in particular by implementing software asset management.

Is the resale of used software licenses allowed?

The Court of Justice of the European Union indicates that the principle of exhaustion of distribution rights applies both to the sale of software on hardware support, but also to dematerialized distribution by downloading on the Internet.

The right of exhaustion is a concept of European law according to which the first marketing of a product on Community territory exhausts the right to distribute the product in the Union.

In practice, this means that the company that markets the product can only take advantage of its monopoly of exploitation at the time of the first sale. It is then possible for a third party to resell the product, outside the control of the original distributor, without infringing any intellectual property right.

Historically, this concept was more applicable in the area of trademark law, design law or patent law, for tangible products that could be circulated from hand to hand.

With this decision, the Court of Justice of the European Union extends this right to computer programs, without the presence of any physical medium.

As a result, it is possible to resell software that has been purchased by download. The download is thus considered to be a first sale, which involves the exhaustion of rights.

Publishers can therefore no longer oppose it. As a result, the resale prohibition clauses that appear in software licenses are now de facto invalid.

How to secure the acquisition of used software licenses?

However, the acquisition of used software can often mean a drop in orders from software publishers.

This drop in orders may have multiple consequences, especially in terms of commercial negotiations.

Initially, preferential rates linked to the volume of purchase from software publishers may be less favorable in the event of future orders. Publishers logically do not want to favor customers who limit their purchase volume.

Secondly, publishers will not hesitate to implement the software audit clauses that appear in their licenses, to ensure that licenses purchased second-hand are properly used in a compliant manner. It is therefore necessary, before choosing the occasion, to ensure that they will be used according to the rules of the art and to be ready to undergo a software compliance audit.

It is also important to check with the retailer that the first copy is no longer used. In practice, license resale platforms work through certificates: the seller undertakes to uninstall and no longer use the licenses, and the platform undertakes to provide a usable license to the buyer.

What are the pros and cons of used software?

In practice, used licenses are sold at very competitive rates compared to licenses sold directly by the publisher.

It is a good Alternative to free software for businesses that want to remain in a proprietary ecosystem, out of habit or due to specific needs.

In addition, software publishers are required to treat users of used licenses as” legitimate purchasers ”: this means that they have access to corrective maintenance under the legal guarantee against hidden defects in the same way as the purchasers of the original license, and can download the software corresponding to their licenses purchased second-hand on the publisher's site.

It must also allow access to contractual maintenance, but maintains freedom as to the applicable rates.

However, the most recent software is generally not available in used cases. It is therefore interesting to turn to this type of platform for old versions but much less for up-to-date software.

In order to smooth out the company's computer equipment, it may also be interesting to resell unused licenses to used software resale platforms, for example following the acquisition of new licenses.

Before making the choice to acquire used licenses, it is therefore important to make sure you are ready to manage the consequences, especially in terms of relationships with publishers. However, the financial advantages can quickly make this software asset management policy relevant.