European Court validates pre-owned, gives nod to digital resale

Publisher’s hopes of illegalising the sale of pre-owned software have been dashed after the European Court of Justice ruled that the practice is legitimate.

It has also ruled that consumers have the right to re-sell their digital purchases,

The ruling is not binding but is designed to be used for reference when such matters arrive in the courts of EU countries. It dictates the direction of European law.

The Court’s decision was reached after it concluded that the exclusive right of distribution of a copy of a computer program covered by a licence [that prohibits the resale of software] is exhausted on its first sale”.

Under that directive, the first sale in the EU of a copy of a computer program by the copyright holder or with his consent exhausts the right of distribution of that copy in the EU,” it added.

A rightholder who has marketed a copy in the territory of a Member State of the EU thus loses the right to rely on his monopoly of exploitation in order to oppose the resale of that copy.”

Perhaps more importantly for consumers, the decision also says consumers have the right to sell on software that they have downloaded, as well as those they have purchased on disc.

The principle of exhaustion of the distribution right applies not only where the copyright holder markets copies of his software on a material medium (CD-ROM or DVD) but also where he distributes them by means of downloads from his website,” the ruling continues.

Where the copyright holder makes available to his customer a copy – tangible or intangible – and at the same time concludes, in return form payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right.

Such a transaction involves a transfer of the right of ownership of the copy. Therefore, even if the licence agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.”

The ruling comes as part of a dispute between Oracle and UsedSoft in the German courts.

UPDATED: Altered the headline and added a new second paragraph to increase emphasis on the digital implications.