1709 Blog: for all the copyright community

Monday, 21 February 2011

usedSoft case on sale of "second hand" software downloads for ECJ

Via Huťko´s IT & IP legal blog comes this story about a freshly referred case from the First Senate of the German Bundesgerichtshof in Oracle v usedSoft (I ZR 129/08). This reference deals with the resale of downloaded software and the ECJ has been asked to clarify the legal position of software which has been sold not physically but online. There is no attached number or any mention on Curia's website so far.


According to an English-language press release from usedSoft,
"...the ECJ will now decide, presumably within one or two years, whether software which was transmitted to the buyer online may also be traded as used. ...
However, the future decision by the ECJ will have little impact on the trade with used software because the legal circumstances regarding trade with “used” software are largely clarified. As the BGH declared in its press release today: “According to Art. 5(1) of  directive 2009/24/EC [on the legal protection of computer programs], the reproduction of a computer program does not, in the absence of specific contractual provisions, require the authorisation of the rightholder ” 
Sabine Leutheusser-Schnarrenberger, German Federal Minister of Justice, also confirmed in September 2010 that trade with “used” software is essentially legal. Legal uncertainty exists only with respect to software which has been sold online. Courts in Munich and Hamburg have handed down similar decisions in recent years. The RC Munich, for example, ruled in April 2008 “that the sale or vending of single Microsoft software licences previously granted within the framework of volume licence agreements is fundamentally possible as an effective transaction even without the consent of Microsoft.” ".
The 1709 Blog will watch future developments with interest.

2 comments:

Tim Roberts said...

..and see http://www.ipo.gov.uk/pro-policy/policy-information/ecj/ecj-2011.htm . The IPO requests any comments by 19 May (this Thursday!).

Dominik said...

Jeremy,

you might be interested in some comments on the decision of the German "BGH" from a German perspective:

Kind regards
Dominik Eickemeier

Resale of used software forbidden in Germany? Still no legal certainty for resellers and software owners

In July 2008 the Higher District Court Munich (OLG Munich) held that plaintiff Oracle has the right to forbid the resale of its “used”software undertaken by the company UsedSoft. Oracle had laid down in its license agreements with its licensees, that the right to use the software can not be assigned to third parties. As Oracle’s software is downloaded from Oracle servers and is not distributed to costumers by CDs or other embodiments of the works, OLG Munich held that the principle of exhaustion, laid down in the European software copyright law, does not apply, as exhaustion according to section 69d subsection 1 UrhG (German Copyright Act) requires an embodied works such as a CD, but not a software downloaded from servers of the licensor. Thus, the licensees are bound by the provisions of the license agreement, and particularly by the prohibition to assign the rights to use the software to third parties.

However, it is also clear that there is a high commercial need and desire for such an assignment of used software to third parties, e.g. for a licensee, who purchased a new software, or who does no longer need all licenses once acquired, anymore.

After the OLG Munich the German Federal Court of Justice (BGH) was asked to decide this question. However, there is no answer yet, as the BGH decided to present certain questions regarding software rights to the European Court of Justice (ECJ), who is competent to rule on all those provisions of German copyright law which might interfere with the European Software Directive 2009/24/EC (BGH, ruling of 3 February, 2011, file No. I ZR 129/08 “UsedSoft”). The ECJ takes care of a unionwide identical interpretation of the directives of the European Union.

It is not absolutely clear from the BGH’s press release of 3 February, 2011, if Germany’s highest court for civil law matters intends to uphold the Munich decision or not. However, the BGH seems to be of the opinion that a legitimate right (of the acquiring third party) to use the software requires the right to download the software from the Oracle servers. However, the question yet to answer is if the buyers of “used software” are legitimate buyers under the Software Directive. This might be the case, if licensor’s right to distribute the software was exhausted, because licensor allowed the download of its software by its licensees.

Does the BGH tend to apply the principle of exhaustion even in cases of downloads of software and not only in cases of the sale of embodiments of the works? The idea behind that could be that it seems to be a bit formalistic, to differentiate between software licensing by providing a CD on one side and allowing the licensee to download the software on the other side. A decision of the ECJ can be expected in twelve to eighteen months. Until then, the judgement of the OLG Munich is still in place and can be enforced. For the time being, resellers of software must be aware that German courts might forbid their business model.

Dominik Eickemeier
Rechtsanwalt and Partner of Heuking Kühn Lüer Wojtek, Cologne, Germany
Certified Specialist Lawyer in Intellectual Property Law (Fachanwalt für gewerblichen Rechtsschutz)