Up-to-Date Information on the Legal Situation: Buy and Sell Used Software in a Legally Compliant Manner

With PREO, you are on the safe side from a legal perspective. This is important for you to know. While the European Court of Justice (CJEU) and later the German Federal Court of Justice (BGH) have ruled in 2012/13 in favour of the resale of used standard software, it is only lawful under certain conditions. In order not to get into unexpected difficulties during audits, it is very important to rely on reputable and legitimate offers.

When buying used software, it is important to check the dealer's transfer processes: What documents do you receive as a customer? And what additional safeguards are offered to ensure that you can pass the next audit without any problems?

The purpose of this section is to provide you with up-to-date information on the legal situation with respect to used software. You will also learn everything about the security benefits of relying on our expertise when buying or selling your used software licenses.

Having an understanding of the current legal situation will help you to identify your prospects of buying or selling used standard software more effectively. In many cases, you can achieve significant IT cost savings by buying or selling used software.

Years ago, the CJEU and the BGH have established a clear legal basis for trading in used software. It has since worked very well across Europe. The principle of exhaustion applies also in Switzerland, where the legal situation is similar.

Cjeu's Ruling in 2012: Legality of Second-Hand Software Reaffirmed (Case C-128/11)

On 3 July 2012, the European Court of Justice reaffirmed the legality of reselling second-hand software. The EUCJ ruled that the principle of exhaustion of the distribution right applies not only where the copyright holder sells copies of their software on data carriers (CD-ROM or DVD), but also when they sell such copies by downloading them from their website. The making available of a tangible or intangible copy and the transfer of the right to use that copy for an unlimited period in return for a fee is to be regarded as a sale because it involves the transfer of the right of ownership of this copy.

“Even if the original licence agreement prohibited reselling, the copyright holder could no longer oppose the resale of the copy placed on the market with their consent.”

2013 Federal Court of Justice Judgement: Confirmation of the European Court of Justice Judgement (Ref: I ZR 129/08)

On 17 July 2013, the Federal Court of Justice fully recognised the European Court of Justice’s statements. They therefore confirmed that the sale of used software licences was admissible. According to the Federal Court of Justice, however, the person who claims exhaustion has to present and, if necessary, prove that the conditions for exhaustion have been met. The exhaustion of a copyright holder’s right of distribution depends on certain conditions. The Federal Court of Justice’s press office stated:

“Among other things, this includes the copyright holder granting the first acquirer the right to use this copy without any time limit. Furthermore, the subsequent buyer of a copy of the computer program can only successfully claim exhaustion of the right of distribution to this copy if the original buyer has made their copy unusable.”

(Source: Press release 126/2013 of 18/07/2013)

2014 Federal Court of Justice Judgement: Volume Licences Can Be Split up (Ref: I ZR 8/13)

The Federal Court of Justice cleared up the remaining legal uncertainties on 11/11/2014. The court confirmed that volume licences can be split up if the rights of use are individual rights of use. As an example, this is the case if several Microsoft Office licences are sold under one contract number. The Federal Court of Justice judges stated:

“If the original buyer(...) has bought a licence that allows the use of several independent copies of the computer program (‘volume licence’), they are entitled to resell the right to use the program in question to a number of users specified by them and for the remaining number of users to continue use. Single licences have their own independent rights of use, which can be transferred independently.”

When a company makes an acquisition, the company usually has the right to sell the investment whenever and to whomever. This principle applies to machines or office equipment or even standard software. However, due to the intangibility and ease of copying, some special conditions apply when selling software.

According to the Federal Court of Justice’s case law, the following is required for a change of ownership to be legal:

1. When first sold, the software was placed on the market in the EU or in another signatory state of the European Economic Area (EEA) with the manufacturer’s consent.
2. The licence must not have a time limit.
3. If the buyer of the used software downloads the program from the manufacturer’s range of data after purchasing the used licences, and the program already contains improvements and updates, this must be covered by a maintenance contract concluded between the copyright holder and the first acquirer. The new buyer has the right to use the last version available under the maintenance contract and to receive security patches and updates.
4. All previous owners of used software licences must have permanently deleted their respective copies on their computers.

We believe that structuring our used software transactions to ensure they are legally compliant is one of our core services. From our perspective, the judgements of the CJEU and the BGH, therefore, only represent the minimum requirements.

In fact, buyers of used software get more security and transparency with every transaction completed with PREO.

This additional compliance security will strengthen your position in all types of licence or compliance audits and makes PREO the recognised professional partner for medium-sized companies and large corporations.

1. Internal approval about lawfulness: When buying used software, further approvals usually have to be obtained internally. You can quickly resolve all legal questions by referring to the “Safe3-System” and PREO's third-party liability insurance.
2. Reduce the workload of your legal department: Your lawyers can contact our legal advisor for quick, reliable and satisfactory answers to their questions.
3. No problems with missing documents during audits: As we are completely transparent and provide you with all the supporting documentation, you will have no problem presenting the requested documents promptly during audits, instead of having to wait for them to be supplied by a third party.
4. The built-in insurance cover the worst-case scenario: Any potential financial losses caused by errors are covered – this is further proof of our professional approach.
5. Later resale possible without complications: If you have legally become the owner of used software and can prove that it was legally acquired, you are entitled to resell the licences, whether directly or indirectly.