Downloaded software can be resold, says top EU lawyer

Downloaded software can be resold just as software on physical media can, the advocate-general of the Court of Justice of the European Union has said in a legal opinion.

Yves Bot gave his opinion on Tuesday morning, in relation to a case between Oracle and a German second-hand software retailer called UsedSoft. Oracle had sued UsedSoft in Germany because it was reselling licences that it had bought from Oracle customers, and the federal supreme court there asked the Court of Justice for its verdict on the matter.

The problem centres on the so-called 'principle of exhaustion', a term in intellectual property law that refers to the fact that, once something has been sold, the rights holder cannot then stop the buyer from selling it on.

Oracle, as with most software companies, argued that it does not sell its software, but rather that it grants licences to use that software. Therefore, it said, its terms forbidding resale are valid and legal.

UsedSoft sells pre-owned licences to businesses that then use those licences to download and employ Oracle's software, or to copy that software to the desktops of additional users. Bot's opinion actually came down against UsedSoft, because he said the firm's customers were copying rather than reusing Oracle's software.

However, the opinion also demolished Oracle's argument that it does not sell software. Bot pointed out that Oracle must either be selling or renting its software, and as it lets customers download the software on a permanent basis it must be selling it.

"Even where, as Oracle does, the rights holder draws a somewhat artificial distinction between the making available of the copy of the computer program and the grant of the right to use it, the assignment of a right of use over a copy of a computer program does indeed constitute a sale," Bot said.

Bot said the principle of exhaustion that applies to the distribution of software cannot be extended to the duplication of that software, as that would affect "the very substance of the copyright".

Bot's opinion will now inform the future decision of the Court of Justice, and is not in itself binding.