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EU rejects Oracle secondhand software licence grab

Oracle internet argument rebuffed

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An attempt by Oracle to stop the sale of secondhand licences on software downloaded over the internet was rejected today by the community's highest court.

European Union Flag

The court's ruling hinges on the EU
directive on the legal protection OF
of computer programs.
Image by Dimitar Nikolov

In its judgment today, the Court of Justice of the European Union decided that the author of software "cannot oppose the resale of his ‘used’ licences allowing the use of his programs downloaded from the internet. The exclusive right of distribution of a copy of a computer program covered by such a licence is exhausted on its first sale".

The ruling comes in proceedings brought by Oracle against a German company called UsedSoft, which, in contravention of licence agreements, resold licences acquired from Oracle customers. Oracle gives the customer a "non-transferable user right for an unlimited period, exclusively for his internal business purpose," The Court of Justice writes.

The court's ruling hinges on the EU directive on the legal protection of computer programs, which introduces the principle of exhaustion of distribution right after first sale. Oracle argued that this does not apply to user licences downloaded from the internet.

The Court rejected this claim, judging that the principle of exhaustion holds good for downloads as well as for copies distributed by CD-ROM or DVD. As with physical media, the owners of downloaded software must destroy their copies after selling to a third party, the Court ruled. Also, owners are not allowed to split multi-seat licences for resale in smaller units

This is a sensible judgment, but does not have major ramifications for the software industry. The Court is merely reinforcing the right to sell secondhand software licences within the EU. ®

Court of Justice press release

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