How to buy used software without getting screwed

Used software offers an opportunity for both the seller and the buyer to operate more cost effectively–an important consideration given the state of the economy. However, while every penny counts and saving money seems like a no-brainer, it is imperative that the buyer of used software fully understand the licensing and legal issues involved in transferring “ownership” of the software.

With the economy the way it is, it makes sense that companies might look to recover as much of their initial investment as possible by reselling software they no longer need. Likewise, IT departments on tightly limited budgets have a vested interest in finding a bargain by purchasing used software rather than paying full retail for brand new software if the opportunity exists. However, if not done properly, purchasing used software may lead to an expensive lesson in licensing agreements.

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Aspera, a company that specializes in software license management, is in the business of helping customers navigate the legal intricacies of software license agreements. Aspera helps companies reduce costs by lowering new license purchases and instead utilizing shelf-ware (idle licenses), or transferring ownership of the unused licenses to cost centres that have a need for the software. Aspera also works with managers to help them understand the product use rights in regards to license re-use and transfer restrictions (for example, the license may not be transferable from the United States to Europe or vice versa).

Kacey Weinberg, a spokesperson for Aspera commented via e-mail to explain “Our customers have asked about investing in used software for applications that have been discontinued and can no longer be purchased new, such as Windows XP and Office 97. They have also looked into buying used software because it is more attractive than its newer counterpart if the license terms and conditions have been changed unfavorably for the licensee (for instance changes in license metrics for certain server software has made the cost of licensing go up).”

Weinberg continued “The problem is most companies, though aware of the cost savings, are unfamiliar with the risks associated with purchasing used software. Our customers were confused about legality; however, there have been various court decisions throughout the United States and Europe in favor of selling used software. The US District Court for the Western District of Washington backed an eBay retailer who was selling legitimate but used copies of Autodesk software in his eBay store. The court cited the First Sale Doctrine, which ensures the right to re-sell used copies of copyrighted works.”

That is all well and good, however some enterprise software solutions require a valid maintenance contract in addition to the software licenses. It is also possible that a company may have the legal right to sell ownership of the license agreement for the software, but that the agreement may specify that the original owner is the only one legally authorized to use the software–regardless of who owns the licenses.

It can be a painful lesson to learn that the bargain used software is useless due to legal restrictions and licensing limitations. Purchasing unusable used software, followed by paying full price to purchase new licenses of the same software, is an expensive way to get a “deal”.

Weinberg cautions “Any capable IT purchase manager knows that he should require complete documentation of the license chain back to the publisher/vendor, ask for the license certificate, and require documentation of deleting all installations by previous owners. But, none of our customers considered the special precautions they needed to take when purchasing used “site” licenses and enterprise software (e.g. ERP, database, CRM applications, etc.). These licenses usually come with strict clauses regarding transferability and maintenance.”

By all means, do your best to find a good deal and save some money by purchasing used software when possible. It’s not like there is any wear and tear that will make it run any different than it did when it was new. However, make sure you put in the due diligence as well to understand the licensing issues and potential legal ramifications before that bargain becomes a money pit.

Tony Bradley is co-author of Unified Communications for Dummies. He tweets as @Tony_BradleyPCW . You can follow him on his Facebook page,or contact him by email at [email protected].

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