I’m writing this blog following recent news of a dispute between Microsoft and second-hand licensing specialist Discount Licensing.
In particular, I’m keen to publish an independent message in light of the nonsense being stated by FAST in the press over the last few days.
I’ve covered the common questions that crop up when discussing second-hand software – if you have any others or have anything to correct or add please give me a shout.
Q. Can I sell my surplus software licenses?
Yes, but conditions apply:
- You can’t resell OEM licenses (because they are tied to a specific machine). Although you can usually sell the whole machine!
- You can’t resell subscriptions (because they relate to a specific term)
- You can’t break up bundles
- It must be uninstalled
- This is a EU ruling and only applies to licenses purchased within the EU. Similar disputes in the USA are as yet unresolved.
Q. Has this always been the case?
No. Some landmark cases have cracked open and validated the second use market:
- The German second-hand software specialist UsedSoft took on Oracle in the EU court and won. (See the EU judgement here. See our original article on the news back in 2012 here.)
- SAP then tried to take on Susensoftware in 2013, and lost.
- There is also an ongoing battle between Microsoft and Preo Software AG. The court in Hamburg issued an injunction to insist that Microsoft stop sending silly letters to confuse customers over licensing.
Since these rulings other traders in this area have sprung up. E.g. ‘The Enterprise Strikes Back; Trading platform launched for buying and selling surplus licensing featuring i-CLX.
Business Week, quoting Ray Wang, estimated the German market to be around 100 million Euros in 2011. I have no firm figures to validate the market but estimate that revenues have grown considerably since the ECJ ruling.
“In 2012, the Financial Times wrote that the UsedSoft decision had the potential to create a multimillion dollar market. Attempts by the software publishers to put up a smokescreen of legal uncertainty is doomed to failure. European companies are fast becoming aware that their right to buy and sell second-hand software licences is as legally certain as the free movement of goods”.
Q. Why hasn’t my software reseller or software publisher told me about this?
Why on earth would they?
What business wants to encourage other competitive sources of supply that offer enormous discounts and eats into their bottom line? Don’t expect any public statements or encouragement from traditional channels. However, legally, you should expect full cooperation as per EU law.
Q. Is it risky?
No. But you need to follow the appropriate channels.
- You need to validate that the license can actually be transferred.
- The legal transfer of ownership needs to be verified by the software publisher (albeit begrudgingly).
Traders and resellers specialising in second-hand software assist with both parts of this process (usually for a slice of license value), they also offer the professional indemnity to cover the end user organizations in case of error too.
Q. What are the downsides?
You might not receive a Christmas card from your account manager at your software publisher.
Q. How much do I stand to save by buying second hand?
Some sample pricing from NearlyNewSoftware:
- 25 * AutoCAD LT 2013 for Mac (34% Saving) via NearlyNewSoftware
- 2000 * Microsoft Windows Server 2012 Remote Desktop Services CAL *(35% Saving) via NearlyNewSoftware
Q. Why was Microsoft vs. Discount Licensing in the news?
Discount Licensing and Microsoft reached a settlement when it was found that Discount Licensing had mistakenly tried to sell USA based volume licenses into the EU (which is not permitted as per the restrictions above).
As a result, The Federation Against Software Theft (FAST) kicked out Discount Licensing from its membership program.
Speaking of the second-hand software market Julian Heathcote-Hobbins stated in an article with CRN:
“FAST believes that current case law is insufficient to be able to categorically state that certain second-hand software transactions are or are not legal,”
The smoke and mirrors continues…
“FAST is yet to come across any appropriately qualified legal adviser that can give a 100 per cent assurance that second-hand software is completely infringement-risk free. The position remains buyer beware.”
Perhaps Julian has not been looking hard enough?
“Resellers should therefore think “very carefully” and seek sound legal advice before jumping into the market, he added, saying that it was difficult to anticipate where the law would finally settle.”
It should be noted that Julian is secretariat for FAST Lawyers Group (FLAG). A group of lawyers whose businesses profit from the ambiguity around intellectual property law. Far from acting as the voice of the software industry, FAST are supporting large software vendors (who are also FAST members) in seeding uncertainty in this market. As Rory Canavan stated in his comment on the CRN article, it’s a bit of an own goal.
To support further clarity in this market and overall clear licensing relationships for both software publishers and customers – please join the campaign at www.clearlicensing.org .
Finally, a good video from Simonetta Vezzoso with an explanation of Copyright concepts and the exhaustion principle – on which the Oracle vs. Usedsoft case was decided.
Second-hand Digital Goods – Creative Destruction in Copyright Law: Simonetta Vezzoso
Note: This is not professional advice, just my opinion and interpretation. We hope to be able to publish definitive statements and further resources as part of the Campaign for Clear Licensing.