It’s just before Christmas and with the holiday spirit in mind, I want to let you know that “Software” Santa is alive and well – but only in Europe!

So what’s this about? Many organizations have considered selling software licences that they are no longer using due to buying too many licenses or converting to a different software. But in North America you can’t resell your unused – but paid for – software licences. In Europe, you can legally do it!

Last year in July, Europe’s highest court, the European Court of Justice, ruled against Oracle, stating that the exclusive right of distribution of a copy of a software is “exhausted” on its first sale (see here for more information). Copyright “exhaustion” refers to the concept that once you sold something, you gave up your right to control it. This means that the selling and/or trading of used software licenses is legal in Europe and that the issuer of such software cannot oppose any resale.

Last month, this was further strengthened by a German (Hamburg Regional) court that ruled that SAP’s terms and conditions are anti-competitive. Among other things, those clauses required written permission from SAP for the resale of SAP licenses. The ruling means that SAP software can now be resold in Germany without the vendor’s permission.

And what’s happening in North America? Have the European rulings created a debate? Has any media covered it? The best I could find is a story about an appeals court ruling in the US that when dealing with software, as long as the provider calls what it sells “a license” rather than a “sale,” the provider (e.g. Oracle or SAP) keeps the resale rights.

It is interesting that there is no debate on the subject in North America when a similar ruling would benefit many organizations, as most have unused software licences that they could sell, allowing the resale of software licences. This would help the organization purchasing the used software licences, as the buyers would get these at a fraction of the cost. It would also create a resale market for used software licences. It would be just like cars – some people will only buy used cars, while others want new ones with the latest features.

In the new world of software licencing, North American vendors will find that they are at a disadvantage when they compete for business in Europe, unless they offer their products to the new and used market. They will probably change their licencing terms to allow the flexibility of the reselling feature in Europe, but not in North America as there is no pressure to do so.

What do you think – should the reselling of software licences be allowed?

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  • John Stewart

    If licenses can be resold I would expect that software vendors would stop selling perpetual licenses and instead only offer licenses good for a specific time period. The latter ensures that the vendor gets more revenue everytime a customer needs to renew the license.