Are used software licenses legal? Five myths checked

Are used software licenses legal? This question has followed the trade in used licenses for years, and several myths surround it. We test five of them against the judgment of the Court of Justice of the European Union in Case C-128/11 (UsedSoft, 3 July 2012) and the statutory rule in section 69c no. 3 of the German Copyright Act (UrhG). The benchmark is always the wording of these sources. Where they say nothing, we assert nothing.

Myth 1: Used software is illegal

The opposite is true. According to the Court, the distribution right in a program copy is exhausted where the rights holder has made it available against payment with a right of use for an unlimited period. The second and any further acquirer can rely on this. It makes no difference whether the copy was downloaded or delivered on a data carrier: the Court treats both alike (paragraphs 47 and 61). German copyright law provides in section 69c no. 3 UrhG that the distribution right is exhausted once a copy has been sold in the EU or EEA with the rights holder's consent.

Myth 2: Microsoft can forbid resale

The rights holder cannot object to the resale of a program copy for which its distribution right is exhausted. The second and any further acquirer is therefore a lawful acquirer (CJEU, paragraph 80). The Court also rejected the argument that only someone who contracted directly with the rights holder is a lawful acquirer (paragraph 82). The manufacturer may, however, use technical means to ensure that the seller's copy is made unusable (paragraph 87).

Myth 3: Used software only exists on physical media

Downloaded software can be resold as well. The CJEU ruled that it makes no difference whether the rights holder provides the copy as a download from its website or on a physical medium such as a CD-ROM or DVD (paragraph 47). Both routes are economically comparable, and online transmission is the functional equivalent of handing over a physical medium (paragraph 61). What matters is not the delivery route but that the license was granted for a fee and without a time limit.

Myth 4: Without documents there is no problem

The documents are what matters. On resale, the first acquirer must make their own copy unusable (paragraph 70). The manufacturer may use technical protection measures such as product keys for control (paragraph 79). The buyer should be able to prove this, along with the first placing on the market in the EEA and the complete chain of acquirers. Without this evidence, exhaustion is hard to demonstrate. We therefore supply it with every license.

Myth 5: Subscriptions and maintenance contracts can also be bought used

Exhaustion rests on a right of use for an unlimited period, as the operative part of the judgment states. A fixed-term subscription does not fall under it. The Court expressly excludes maintenance contracts: exhaustion does not extend to service contracts that can be separated from the sale (paragraph 66). For Exchange Server and SharePoint Server Subscription Edition, Microsoft additionally requires active Software Assurance or a subscription. A perpetual license alone is not enough there.

What this means for your purchase

Used perpetual licenses are legal where the conditions are met. Check these points before buying:

• The license was granted to the first acquirer without a time limit.
• The first sale took place in the EEA with the rights holder's consent.
• The previous holder has made their own copy unusable.

The article on volume or individual licenses explains which license types exist and how they differ. For preparing an audit, see license audit preparation. We sell perpetual licenses only and supply the evidence with them. This article does not replace legal advice in an individual case.

Read more: Is used software legal? and used software licenses at a glance.