SHS (second-hand software/used software) legislation and case law

The business with used licenses is built on the basis of the so-called exhaustion of the author’s right to control the resale of these licenses after he has sold them once and received payment for them. This completely logical reasoning was introduced into the EU legal order as early as 1991 and is therefore not a legal novelty.

Legislative anchoring in international and European law

Berne Convention for the Protection of Literary and Artistic Works of 1886

An international treaty that laid the foundation for a modern understanding of the term copyright and its au-tomatic origin without the need for registration.
Article 2 lists the various types of publishing or artistic activities to which the protection afforded by the Con-vention is linked.

WIPO Copyright Treaty of 20. 12. 1996

Article 4 of the World Intellectual Property Organization provides on copyright: “Computer programs are pro-tected as literary works within the meaning of Article 2 of the Berne Convention.” And thus adds them to other works protected by the Convention.

Directive 91/250 / EEC of 14 5. 1991, on the legal protection of computer programs

Article 4, point (C) provides that: “The first sale in the Community of a copy of a computer program by or with the permission of the rightholder shall constitute an exhaustion of the right to distribute that copy within the Community, except for the right to control further rental of the computer program or copies thereof.”

Directive 2001/29 / EC of 22 5. 2001, on the harmonization of certain aspects of copyright

In the preamble, in paragraph 28, the European Parliament and the Council of the EU define the need to re-emphasize the institution of exhaustion: “The first sale of the original work or copies thereof by the copyright holder in the Community or with his consent shall exhaust the right to control resale of that object in the Community.”
The intra-community exhaustion is also emphasized here – the author’s right to control resale outside the EU still persists.
In a negative way, it then codifies exhaustion in Article 4, paragraph 2.

Directive 2009/24 / EC of 23 4. 2009, on the legal protection of computer programs, Article 4:

The lex specialis to Directive 2001/29 deals exclusively with computer programs.

It replaces Directive 91/250 / EEC, but retains the complete wording concerning the exhaustion of the right to control resale.

    Article 4 (2): “The first sale in the Community of a copy of a computer program by or with the permission of the rightholder shall constitute an exhaustion of the right to distribute that copy within the Community, except for the right to control further rental of the computer program or copies thereof.”

In the preamble, the legislator also lists other important aspects, such as the inability of the author to contractually prevent the acquisition of a copy by an authorized transferee:

    Paragraph 13): The exclusive right of the author to prevent the unauthorized reproduction of his work should be subject, in relation to computer programs, to a limited exception allowing the reproduction of a technically necessary copy for the use of the program by the authorized transferee. This means that the acts of recording and operating necessary to use a legitimately acquired copy of the program or to correct errors in the copy may not be contractually prohibited.

Another important note is the absolute invalidity of such provisions in contracts, which would make it impossible to apply the protection provided by the Directive or exceptions to protection, eg for the creation of a backup copy. In our legal opinion, this also covers situations where the very pillars of the European Community, such as the free movement of goods and capital, need to be protected.

    Paragraph 16: The protection of computer programs under copyright law must not prevent the application of other forms of protection where necessary. Any other contractual provisions which are in conflict with the provisions of this Directive on decomposition or with the exceptions provided for in the Directive on reproduction or observation, study or testing of the operation of the program must therefore be considered void from the outset.

Legislative anchoring in national law

Even in the Czech Republic, the exhaustion of the right to further distribution is nothing new. Already in the new wording of the Copyright Act (Act No. 121/2000 Coll.), This institute was present, although the law applied exclusively to the territory of the Czech Republic (it was therefore a national concept of exhaustion). Together with the entry of the Czech Republic to the European Union, the institute of exhaustion has expanded its scope to the entire territory of the EU – forming the single European market.

Act No. 121/2000 Coll., On copyright law

§ 14, paragraph 2): ‘The first sale or other first transfer of ownership of an original or a reproduction of a work in material form by the author or with his consent in the territory of one of the Member States of the European Union or of one of the States forming the European Economic Area shall apply to such original. or a copy of the work, the author’s right of distribution for the territory of the Member States of the European Union and of the States forming the European Economic Area has been exhausted;”

Case law of the Court of Justice of the European Union (CJEU)

Judgment of the Court of Justice of the EU from 3. 7. 2012, in Case C-128/11 (UsedSoft GmbH / Oracle International Corp.)

The decision, which is often referred to as a “breakthrough”, actually only confirms the rules in force since 1991.
However, it complements them with the independence of the existence of a physical copy – exhaustion also applies to copies downloaded from the Internet.
“Article 4 (2) of Directive 2009/24 / EC of the European Parliament and of the Council (…) shall be interpreted as meaning that the right to distribute a copy of a computer program is exhausted if the copyright holder who granted the authorization, even if the copy is downloaded free of charge, from the Internet to a data carrier, he also granted, in exchange for payment of a price intended to provide him with a remuneration corresponding to the economic value of the copy of the work he owns, a right of use for that copy without a time limit.
‘Articles 4 (2) and 5 (1) must be interpreted as meaning that, in the case of resale of a user license which also means resale of a copy of a computer program downloaded from the copyright holder’s website, the other licensee shall: (…) as well as any subsequent acquirer, may invoke the exhaustion of the distribution right provided for in Article 4 (2) of this Directive and may therefore be deemed to have been granted. that they are the legitimate acquirers of a copy of a computer program within the meaning of Article 5 (1) of that directive and that they have the right to make a copy provided for in the latter provision.

Judgment of the Court of Justice of the European Union of 12 10. 2016, in Case C-166/15, Aleksandrs Ranks and Jurijs Vasilevičs

The decision confirms the conclusions of case C-128/11 and deals with the possibility of making and selling back-up copies.
However, in paragraph 54, it reveals an essential argument which gives the purchasers of so-called used software the certainty of the possibility of using the purchased software: ‘As Microsoft acknowledged in its written answer to the questions put by the Court, the licensee is entitled to unlimited use of the copy of the computer program used. must be able to download this program from the copyright holder’s website, since that download constitutes a necessary reproduction of a computer program enabling the new transferee to use that program in the manner for which it is intended (…).’

Case law of EU member states

Given that all Member States have an obligation to transpose the text of the Directive into their legal systems, it is understandable that the legal framework for the institution of exhaustion is the same in all EU Member States and that national courts should therefore reach the same conclusions as the courts. in other EU member states. Both the case law of the ECJ and the BGH are final and supreme court decisions. This confirms the “lawfulness of the trade with used software”.

Decision of the German Vergabekammer Münster of 1. 3. 2016, Az. VK 1-02 / 16

The Public Procurement Supervision Chamber (Vergabekammer) supervises above-limit public procurement.

In the decision of 1. 3. 2016 ruled, inter alia, that:

    Procurement with reference to a specific type of contract (eg SelectPlus) is not possible as it is in direct conflict with the requirements of transparency and equal treatment.
    The software must be specified as product neutral, ie without specifying specific manufacturers and products (let alone discount levels or contract types).
    In general, “new licenses” cannot be demanded either, as this is a definition that is unjustified and leads to a restriction of competition.
    New licenses and “used” licenses are identical in terms of functions and rights.
    In case of doubt about the scope of the licenses, the contracting authority must make sure that it obtains an objective overview of the solution requested and positively defines what it needs – not by rejecting the secondary licenses as a whole.
    Proofs of uninstallation and origin of the license should be provided as conditions in the award of the public contract.
    The benefits of “new software” as a single product key or online license management portal are to be defined directly in the procurement procedure, exclusively in a product-neutral way.
    Nor can a supply of a certain type of Microsoft partner (eg LSP) be required in a tendering procedure, as this restricts competition and the principle of open procedure and the principle of equal treatment.
    As there is no possible regressive claim of the manufacturer, it is not possible to argue for a “risk” in the acquisition of secondary software, especially if these “risks” are resolved by the highest courts.

Judgment of the German Federal Court of Justice of 17 7. 2013, Case I ZR 129/08

The court between UsedSoft and Oracle was the subject of a reference for a preliminary ruling to the Court of Justice of the European Union, culminating in Decision C-128/11.
The decision then rules, inter alia, that the buyer of a “used” software license must be regarded as an “eligible licensee” who is entitled to acquire a copy of the software.
The case was returned to verify compliance with all the requirements for the transfer of licenses to the Court of Appeal.

Judgment of the German Federal Court of Justice of 11. 12. 2014, Case I ZR 8/13

Litigation between spol. UsedSoft and Adobe regarding volume licensing.
The Federal Court of Justice has ruled that the exhaustion of the right to control resale of copies also applies to volume licenses, provided that they allow division into several independent copies of the software.
The court also addressed the “risk” of using secondary licenses. The manufacturer cannot hinder the use of the software or the reproduction or control the transfer to third parties, as the manufacturer could unacceptably hinder the free movement of goods (interpretation according to VK 1-02 / 16).
The legal consequence is that the manufacturer cannot be entitled to an abstention from the buyer of the secondary license or to compensation for damages (interpretation according to VK 1-02 / 16).

Judgment of the German Federal Court of 6. 7. 2000, Case I ZR 244/97

The decision mainly concerns the exhaustion of the right to control resale of OEM licenses
The software manufacturer cannot assert its interest in the fact that the software version offered at a favorable price is only sold together with the new computer by granting from the outset only the right of use limited to this distribution channel.
If a version of the program has been marketed by the manufacturer or with his consent, the retransmission is free due to the exhaustion of the right to distribute copyright, regardless of the restrictions on the content of the granted right of use.

Additional documents related to transfer of licenses

/ EXCLUSIVELY / Opinion of law company Havel & Partners on licenses from free market 15. 3. 2019

“Under certain conditions, the sale of used software is possible on the basis of the so-called exhaustion of the right to distribute this software.”
“Assumptions that the right to the Used SW has actually been exhausted and the SW was usable after the transfer must be objectively demonstrated.”
Opinion of Havel & Partners
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Opinion of spol. Microsoft to the secondary software of 26. 4. 2017

Microsoft Reactive SHS Letter to EU Customers-Partners is a document by which Microsoft has informed its partners and customers how the case law has evolved and what conditions must be met for the legal transfer of licenses on the free market.
The origin and terms of the software offered as used must be carefully examined so that the exhaustion requirements set by the CJEU are actually met and can be demonstrated when exhaustion is applied.
Microsoft Opinion on Secondary Software
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