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When a software "licence" becomes a "sale" - a new market for secondhand software

1 August 2012

Call me a pedant if you will but when someone says they’re “buying” a software licence, its always sounded wrong to me – if only because of the distinction between “buying” and “licensing”.

Yet as far as the ECJ is concerned  a perpetual licence of software should be treated as equivalent to a “sale” for the purposes of legislation concerning the exhaustion of rights – meaning that a licensor may not prevent a licensee from licensing to others in the EU and clauses in licences that seek to prevent assignment or sublicensing will not be effective, provided the licensee gives up its own rights.

This decision potentially creates a new market for “secondhand” software and, I suspect, will challenge “authorised” resellers – particularly if others join Usedsoft in supplying discounted licences of existing software. It may also accelerate the move towards cloud computing, as providers move towards a subscription, rather than a traditional licensing model, to prevent the onwards distribution of licences.

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Richard Nicholas

Richard Nicholas

Partner and Responsible for In House Lawyers

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