How to recognize legal used software licenses

Used software licenses are software licenses purchased by the original owner from the manufacturer's distribution network and transferred to a third party. Although the licensing agreements of some software manufacturers may prohibit this, it is a legal practice on the territory of the European Union (and the EEA), as in these cases a so-called exhaustion of the author's right to control further distribution is applied.

Most sellers (e-shops, auction portals, etc.) talk about used software licenses, although they themselves usually do not even acknowledge what a license represents. To assess whether an offer on a specific website may be legal or not, it is firstly necessary to understand what is and what is not a license.

The license is the right to use the software. The license is not an activation key, CoA label, or installation media provided by the supplier.

In order for a licensed entity to transfer its license to a third party, the conditions set out in legislation and case law should be met and verified. The current licensee must be able to prove this fulfillment in the case of a software audit, otherwise it is subjected to a fine towards the copyright holder, reimbursement of the costs of the software audit and the need to purchase a new license.

Conditions for license transfer:

Licenses were purchased with the consent of the copyright holder and were paid in full.
Licenses have been marketed in the EU, EEC or Switzerland.
The original holder will ensure that the licenses are uninstalled and prevent their use (in the future).
Licenses are not limited in time (perpetual).
Licenses are not subject to any third party rights.

Therefore, in order to assess whether a license is legal or not, it is important to always require written evidence of compliance with the above conditions, such as:

1. Identification of the original purchaser and proof that the licenses were purchased from official distribution. In the case of volume licenses, it is necessary to identify the license by its identificational number and to identify the volume license agreement and the program through which the license was initially purchased. For retail versions (OEM, FPP, ESD, etc.), for example, a receipt for the purchase of a license from a distributor or an invoice for a PC unit with software can serve as proof of purchase.

2. If the license was owned by more than one company or customer, the full identification of the chain of ownership must be provided.

3. The license must always be marketed/sold for the first time on the territory of EU (EEC) with the right holder's consent - if the initial owner is an American or for example Chinese company, there is a high probability that the used software license with such an origin can be illegal to use on the territory of EU/EEA. Further confirmations of legal transfer of ownership towards a EU/EEA entity should be provided.

4. Always insist and ask for the original purchaser declaration (and everyone else in the chain of previous owners) declaring that all licenses sold are uninstalled, unused, and that future use is prohibited.

Risks of used software licenses

In any case, it is advisable to avoid all "resellers" who sell activation codes & product keys, CoA labels or backup media. This is the first sign that they do not understand the problematic themselves and will probably not be able to prove that any conditions for the legal transfer of licenses have been met when requested. A large number of different vendors directly admit that they sell a "label", a "product key" or an "activation key" as "electronic delivery" (ESD). ESD distribution does exist for a selected range of products, but never in the way that the customer receives just an activation key in the mail.

Another warning sign is that the price is too low is on auction portals, you can easily come across offers like: "Windows for 2 €" or "Office for 8 €". Would a rightful license holder really sell the license at such a low price that it could make a profit for those resellers?

The user is always responsible for the rightful usage of the license. Therefore, the claims of "sellers" about "legal guarantees" or "assumption of liability" must also be taken with caution. The paper can handle everything, right? First and foremost, it is always the user who pays the obligations arising from the illegal use of the software. Only then is it possible to claim damages from the seller. Usually, similar cases take several years in court if the seller still exists at the time of the dispute.

Related legislation and case law

License without risk

In order to prove to our customers that used software can be purchased without risk, we are completely transparent to them. We provide complete documentation and we also provide qualified licensing consulting services. We are also direct license buyers and we also work with auditors. Ready to try? Contact us.