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Court decides that licensing software is tantamount to selling it

The European Court has made an interesting decision in regard to software licensing. Generally, any software currently purchased is sold under license for use, for example, on the buyer’s computer only or perhaps on a defined limited number of computers. This may also give the buyer access to software updates and to download the software from the manufacturer’s servers. However, reselling the license has been prohibited and this recent case brought matters to a head when Oracle International – designers and suppliers of well-known database software – argued that UsedSoft, a software reseller, had infringed its license agreement by selling its software on.

Oracle lost, as the European Court decided that the license agreement was so close to giving general rights to the buyer that it actually amounted to a sale. Under European law, this means that Oracle, the licensor of the software, could not stop the resale of its software so long as the original buyer rendered the software unusable on their computers when reselling.

It is advised to keep in touch with a local accountancy for contractors when considering the replacement of any computers and software. It is not yet certain how this ruling will affect other software reselling but certainly licensees will want to exploit it, if possible, by selling their software on when replacing IT instead of throwing it away with the hardware.
Contractors should look carefully at their license agreements, since – like UsedSoft – as long as the software is made unusable on their computers, contractors may have the right to re-sell it and recover some of the original cost.

Posted by Peter
December 3, 2012
Research & Statistics

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