EU Court allows resale of downloaded software
16 July 2012
In a judgment that has significant implications for the software
and digital media industries in Europe, the European Court has
ruled that, in principle, the owner of copyright in software cannot
stop someone who has purchased and downloaded that software
online from reselling it. In
UsedSoft GmbH v Oracle International Corp, the Court
held that a copyright owner's exclusive distribution right in
respect of a computer program is exhausted on its first sale,
whether that is made online or on a physical medium.
The ruling is of potentially huge
significance not just to the software industry but to any digital
business that makes copyright material such as music, e-books, or
games available for download.
It is therefore a significant step towards a single EU market in
digitally available content.
questions remain, the ruling does not herald a
The Court recognised that the original licensee must make his copy
unusable at the time of resale. A copyright owner is
entitled, in the event of such resale, to use technical protective
measures such as product keys to ensure that the copy is made
unusable. This preserves copyright owners' exclusive right of
It should also be noted that the ruling applies only to downloaded
material; online services, to which the distribution right and
exhaustion do not apply, are unaffected. This therefore
raises the question of whether we will see still faster migration
of software licensing models to 'the cloud', since software owners
in Europe are not exposed to the exhaustion doctrine in relation to
online services / software 'rental' models. There is also
scope, of course, for copyright owners to explore other licensing
models that do not involve the 'sale' of software copies, whether
online or on physical media.
Another question left by the
ruling is whether it remains open to copyright owners to use
digital rights management techniques to physically prevent the
resale of software or other copyright material.
In summary, this is a significant decision.
Copyright owners should review their licensing models and the
technological and contractual protections they have in place if
they wish to minimise their exposure to this ruling. On the
flip side, those who wish to build resale businesses may find that
there are now materially better opportunities to do so. In
either case, the ruling is likely to have a material impact for all
players in the European software industry and everyone should now
be considering their next moves with great care.