#softwareprotection

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Second-Hand Software Licence: A lack of legal protection for software licensor?

Since the sale of used software licence was legally permitted by the decision of the Court of Justice of the European Union (the “Court”) (UsedSoft GmbH v Oracle International Corp, C-128/11), consumers have markedly benefited from this alternative of buying second-hand software at the cheaper price. On the contrary, many software licensors are questioning whether this ruling deteriorated the right of copyright owners as the competing price between brand-new software and used software which, owing to its nature, are similar in the qualification can cause a sharp decrease in their income.

Is the fact that the Court considered the licensing of software, which is an intangible copy and made available via direct download on the website, to be the same concept with the sale of tangible intellectual property, i.e. books, can be assumed that the Court neglect the protection of rights owner by allowing consumers’ right superseded the software licensor counterpart? Let go through the Court’s landmark decision to perceive what extent the resale of software licence will be legitimate under the Software Directive (2009/24/EC).

In principle, the copyright holders exhaust its distribution right over that copyrighted work after the first sale thereof as the copyright holders have already gained profit from their work. Thus, the purchaser of the copyrighted work is eligible to resell it as the lawful owner. This exhaustion of right upon the first sale applies to the licensing of software via the direct downloading on website providing that software is licensed for (i) perpetual licence with; (ii) one-off payment. In this regard, the purchaser of second-hand software will be a lawful owner from this eligible software resale even if there is a non-transferrable restriction imposed by software licensor.

In addition, the Court posed that resale of software licence will be eligible only if it is not a partial re-licensing and the licensee makes such software unusable for their own usage after the resale. This means that there is only one person using the software at a time which unlikely to affect the software licensor as the lump sum fee paid thereto already included the use of software for unlimited time.

The second-hand software market does not only bring about benefit to consumers as a cost saving option, but also possibly prompt a growth in turnover of software licensed of the licensors since people may tend to make their decision easily to license software if they know that they can resell it thereafter. Moreover, the ability to resell the used software promotes value of software, especially both unused software and shelfware. Not to mention that the second-hand software market can accelerate the development of software for the competitive software market.

In light of the above-mentioned positive impacts, could this landmark decision demonstrate the intention to maintain balance between the right of software licensors and the right of consumers in order to eventually be advantageous for public interest as a whole?