At Novakeyshub LLC we believe customers should have access to software at fair, competitive prices. European law provides an established framework for the distribution, use and – under certain conditions – the resale of software licences.
Central to this is the judgment of the Court of Justice of the European Union (CJEU) in the case UsedSoft GmbH v Oracle International Corp. (C-128/11) of 3 July 2012. It confirmed important principles on the exhaustion of the distribution right for certain software licences, including for software made available by download.
What is a software licence?
Anyone who acquires software usually receives a right of use under the respective licence terms and not ownership of the underlying intellectual property rights. Depending on the type of licence, its duration, the way it is provided and the applicable law, different rights and restrictions apply. This is particularly important for perpetual licences and the European rules on exhaustion of the distribution right.
The landmark judgment: UsedSoft v Oracle
Case C-128/11 concerned the resale of licences for Oracle software that customers had downloaded from the internet. Oracle considered the rights under its licence agreements to be non-transferable and objected to the resale.
The CJEU established an important principle of European copyright law: if the conditions are met, the rightholder’s distribution right in a copy of a programme is exhausted with the first sale of that copy in the EU or the EEA with its consent. This principle can also apply to software made available by download, not just to data carriers.
Key statements of the judgment
1. Exhaustion of the distribution right
If the legal conditions are met, the first authorised sale of a copy of a programme in the EU/EEA can exhaust the distribution right in that copy. The rightholder can then no longer rely on its distribution right across the board to prevent every further transfer.
2. Digital software is also covered
The CJEU expressly considered software made available by internet download and made clear that the principle is not limited to physical data carriers.
3. Particular importance of perpetual licences
The judgment concerned licences granted for an unlimited period in return for a fee corresponding to the economic value of the software. It is therefore mainly relevant to the transferability of perpetual licences. It cannot be understood across the board to mean that every subscription, every account, every SaaS service or every time-limited licence would be transferable.
4. Conditions remain
Exhaustion is not an unrestricted right to resell software in all circumstances. Among other things, it depends on
- whether the software was lawfully placed on the market in the EU/EEA,
- whether the relevant rights are exhausted,
- whether the licence is perpetual or time-limited,
- whether the transaction concerns a licence covered by the legal framework,
- whether the original licensee actually no longer uses the copy or licence, where required, and
- whether contractual, copyright and other legal requirements are met.
That is why each transaction must be assessed on the basis of the characteristics of the specific software licence.
Case law after UsedSoft
The principles of the judgment were also taken up by national courts in Europe. For example, the German Federal Court of Justice continued the exhaustion principles for software in its later UsedSoft decisions, such as the judgment of 17 July 2013 (I ZR 129/08, UsedSoft II) and the judgment of 11 December 2014 (I ZR 8/13, UsedSoft III). They show that the UsedSoft principles remain significant within the European legal framework.
What does this mean for software customers?
The European legal framework forms an important basis for competition and access in the software market. If a licence meets the conditions for transfer or resale, customers can under certain circumstances acquire software rights considerably more cheaply than directly from the manufacturer. This can bring advantages:
- lower software costs for individuals and companies,
- better access to software for small businesses, self-employed people and other users,
- reuse of existing licences instead of unnecessary double purchases,
- a more competitive software market,
- more transparency about the legal status and origin of licences.
Novakeyshub: transparency and customer benefit
Our aim is to make software accessible while providing transparent information about products and licence terms. Customers should know what they are buying, how the licence may be used and which restrictions apply.
If a product is subject to special licence terms – for example restrictions to personal or educational use, on activation, on duration or on transfer – these should be communicated clearly before purchase. How the legal position looks in an individual case depends on the licence, the transaction, the territory and the applicable law.
Our commitment
Transparent licence information, fair prices and responsible distribution.
This information is for general guidance and does not constitute legal advice. Whether the European exhaustion rules apply depends on the specific software, the licence, the transaction, the territory and the circumstances.
