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Resale of software In a judgment of July 3, 2012, the Court of Justice of the European Union unambiguously recognized the legality of the resale of second-hand software licenses  distributed  by download from a website. During the first sale of a copy of software, the rights holder exhausts his right of distribution in the EU and thus loses the possibility of invoking his exploitation monopoly to prevent the first purchaser from reselling his copy.

The Court of Justice of the European Union confirms the legality of the resale of second-hand software licenses distributed by download: –

In this case, Oracle wanted to oppose the resale of its used software licenses by the German UsedSoft. This distributor has purchased software from Oracle customers. And the new acquirer downloaded the software from the Oracle site, after acquiring the license.

Oracle argued that the principle of exhaustion  of  distribution rights, provided for by the European Software Protection Directive, does not apply to licenses to use programs downloaded from the Internet. Whatever the mode of dissemination, the Court considers, the principle of the exhaustion of rights applies to online or physical marketing. Limiting the application of this principle to the distribution of software on physical media, adds the Court, would allow rights holders to control the online resale of copies and to demand, on the occasion of each resale, new remuneration whereas the first would have already allowed him to be properly remunerated.

Oracle’s arguments are rejected: the court confirms the principle of exhaustion of distribution rights for online software sales: –

The publisher also invoked the fact that it was not selling software but was granting a fixed-term, non-exclusive and non-transferable right of use. The Court rejected this argument by declaring that the transfer by the holder of the rights to a copy of the program to a customer accompanied by the conclusion of a user license agreement constitutes “a first sale of a copy of a program computing”, within the meaning of the meaning of the directive. Like the Advocate General, it considers that a restrictive interpretation of the term sale would have the effect of compromising the useful effect of the principle of exhaustion. Publishers could thus circumvent this rule by qualifying the contract as a license and not as a sale.

The software was released in a corrected and updated version. Oracle believed that the exhaustion of distribution rights could not extend to the maintenance contract entered into by the original purchaser. However, the Court considers that the exhaustion of rights relates to the copy of the program sold corrected and updated by the holder of the rights. However, it recalls that the initial customer who had acquired a license for a determined number of users cannot split it and resell it in part. The Court nevertheless concedes to Oracle that its customer must render the copy on its computer unusable at the time of resale.

Due to the exhaustion of Oracle’s distribution rights, UsedSoft, a used software reseller, can therefore be considered a “legitimate acquirer”, in the same way as any subsequent acquirer. As such, he may download the copy constituting the necessary reproduction of a computer program allowing the new purchaser to use it in accordance with its destination, the downloading of the copy and the license agreement forming an inseparable whole.