Businesses should assess whether second hand software meets their needs, says expert

Intellectual property law specialist Iain Connor of Pinsent Masons, the law firm behind Out-Law.com, said that although the second hand software industry may have been provided with a fillip following a European Court of Justice (ECJ) ruling earlier this year, the ruling provided scope for software developers to protect their works in a way that licensees may also find attractive.

Connor was commenting after news agency Bloomberg reported that UsedSoft, a company that contested the right to resell downloadable software developed by US software giant Oracle at the ECJ, had seen demand for second hand software triple since the ECJ's ruling on the matter.

The company's chief executive said the ruling would "make the market explode," according to the report.

In July the ECJ ruled that software owners exhaust their rights to control the resale of their copyrighted products after they have sold them within the EU, regardless of whether the sale concerns a physical product or one downloaded from the internet. It said that, as a result, the original purchaser of the software can sell on 'used' copies of the software to others but that they must delete any copy they have made for their own use at the when they make that sale.

However, the Court said that the original purchaser cannot divide up the number of licenses for the software they buy from the copyright owner and then sell on the right to use those licences that they do not need.

Intellectual property law specialist Iain Connor said that, despite the ECJ's ruling, developers can still provide attractive reasons for businesses to invest in original copies of their software and protect themselves by the way they word their software licences.

"While there might be an increasing market in second hand software, developers can protect themselves by ensuring that the software licences are clear and provide for the sale of additional services alongside the use of the software itself," Connor said.

"In the UsedSoft case the fact that Oracle's software licence agreement permitted perpetual use of the software by a purchaser was key in the ECJ finding that Oracle had exhausted its right to control distribution of the software after it had sold a copy to an original purchaser," he added.

"If a developer is licensing software equivalent to 'commercial off the shelf' (COTS) meaning that it is ready to use and will not require upgrading or maintenance throughout its use, then the findings in the UsedSoft case will mean developers cannot control the onward distribution of copies that they have already sold," Connor said. 

"With this in mind businesses should carefully assess their needs before embarking on a software refresh using second hand software," he added. "Companies may often be reliant on software upgrades, for example, to ensure that it is compatible with new platforms as their needs change over time."