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Software company says it can still resell Microsoft licences

Despite attempts to stop the practice

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The founder of a company set up to re-sell Microsoft software licences claims he will still be able to do so, despite changes made by Microsoft to its software licences which appear to be designed to stop the re-sale.

Discount-Licensing.com has been in business since 2005 and buys used licences, often from company liquidations, and re-sells them to other companies.

In September of last year, though, Microsoft changed the terms of licences in its small and medium sized company licensing scheme, the Open scheme, and its large organisation scheme, called Select.

The Open licences now say that "the resale of Licenses is expressly prohibited", while the Select scheme orders that customers do not engage in "transferring licences for resale to unaffiliated third parties".

Noel Unwin of Discount Licensing says his firm is still able to facilitate re-sale while staying within Microsoft's licensing terms.

Unwin said the new Open licence terms now prohibit the resale of licences, but do not stop Discount Licensing from acting as a broker between a selling and a buying company.

"Though it restricts the way you can buy and transfer pre-owned licence agreements it doesn't prohibit the re-sale of Open licence agreements," he said.

"The terminology in the notice of transfer and the licence agreement said you're not allowed to resell the licences on to a third party for resale," said Unwin. "In other words, we couldn't buy the licences from an insolvency practitioner and then sell them on. However it is perfectly legal to organise the transfer and sale of an Open licence agreement from an insolvent company directly to a private sector company and take a commission just like any broker would."[7.36]

For Select licences, which are designed for very large organisations of hundreds or thousands of users, Discount Licensing has devised a process by which a shelf company is sold from the licence holder to the organisation that wants to buy the licences. He says this creates a situation in which licences can be transferred without breaking the terms of the licences.

"You can transfer the licences, or reassign a certain number of licences, within the Select agreement just in connection with the divestiture of the affiliate," said Unwin. "So what we do is create the affiliate or shelf company for the supplier, we create the sale using our sales contract, sell the shelf company and then we can effect the transfer of the Select licences directly from the supplier to the end customer."

OUT-LAW.COM sought a response from Microsoft about whether it thinks that the processes are compliant with its licences but the company did not respond. OUT-LAW.COM has seen an email from Microsoft's legal department to Discount Licensing, though, which neither accepts nor rejects the processes.

Copyright © 2008, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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