UsedSoft GmbH v. Oracle International Corp

“Once lawfully sold, software licenses may be resold — exhaustion applies even in the digital world.”

Short Description

This crucial EU case addressed whether a purchaser of a software license could resell the “used” copy, especially when downloaded digitally rather than provided on physical media. Oracle argued that software downloaded online was licensed, not sold, and therefore not subject to exhaustion. The court had to determine whether digital transactions trigger the same rights as physical copies.

Facts

Oracle distributed software through downloadable licenses that allowed customers to install and use the program indefinitely. UsedSoft acquired such licenses from Oracle’s customers and resold them to new buyers. Oracle sued, claiming exhaustion does not apply to digital downloads and that licenses cannot be resold. UsedSoft maintained that Oracle’s perpetual licenses are effectively sales, making resale lawful.

Findings / Reasoning

The CJEU held that when a software producer grants a perpetual license for a downloadable program, it constitutes a “sale,” triggering the exhaustion of distribution rights. Therefore, the initial purchaser may resell the license, provided they delete their copy. The court emphasized functional equivalence between physical and digital distribution.

Suggestions / Observations

The ruling promotes balance between consumer rights and software distribution models. It encourages transparent licensing terms and prevents software vendors from restricting resale unfairly. However, businesses must enforce deletion requirements and track compliance to prevent unauthorized multiplication of software copies.

Judgment & Date

The CJEU ruled in favor of UsedSoft, recognizing the resale rights of lawful purchasers of downloaded software.

Judgment Date : 2012 (CJEU)