EU Court Answers: When Can You Re-sell Software?

Author:Mr Philip Nolan, Jeanne Kelly and Lisa Taylor
Profession:Mason Hayes & Curran
 
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The initial acquirer of a copy of software, in some circumstances, may resell that copy and his licence to a new acquirer. We examine a recent EU court decision on whether the right to resell extends to the resale of backup copies of software programs.

The law

The principle of exhaustion of rights is long established in IP law. The exhaustion principle is reflected in Article 4(2) of the Software Directive, which provides that:

"The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rental of the program or a copy thereof."

The UsedSoft case

The main authority in this area, as regards software, was the decision of the Court of Justice of European Union ("CJEU") in the UsedSoft case. This concerned a battle between a seller of "second hand" software, UsedSoft, and Oracle. In the case, the CJEU found that the transfer of a computer program by a copyright holder to a customer of a copy, along with a user licence agreement, constituted a "first sale" within the meaning of Article 4(2). As a result, the rights were thereby exhausted.

After UsedSoft, selling "used" software was not viewed as infringing the owner's right, provided that the originally downloaded copy (the "first sale copy") was deleted or rendered unusable. 

Ranks and Vasijevics

In the Ranks and Vasijevics case, the CJEU had a further opportunity to consider the doctrine of exhaustion in the context of software. Mr. Ranks and Mr. Vasilevics were Latvians charged with crimes for the resale of software copies. The software involved were Microsoft products, the Office suite, and Windows. The CJEU was asked to determine whether the resale of used copies of computer programmes carried out by Mr. Ranks and Mr. Vasilevics was lawful.

The defendants argued that the principle of exhaustion of the distribution right permitted them to re-sell a copy of a program on a non-original material such...

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