The encyclopedia · Strategy & Leadership · Strategic decision · 2012
UsedSoft won resale rights by arguing a download is a sale
UsedSoft argued that a paid-for software download is economically a sale, and the EU's top court agreed, legalizing resale of used licenses.
UsedSoft GmbH
the move
Under EU and most national copyright law, a purchaser of a physical good like a book or a CD can resell it freely under the "exhaustion" (or first-sale) doctrine — once the rightsholder is paid on the first sale, their distribution right over that specific copy is exhausted, and they can't control what happens to it afterward. Software vendors including Oracle avoided this by structuring every transaction as a license rather than a sale: Oracle's agreements granted, in exchange for payment, "a non-exclusive, non-transferable user right" — language designed specifically to keep exhaustion from
Starting in 2005, German company UsedSoft built a business trading in used Oracle software licenses: buying licenses from companies that no longer needed all their seats and reselling them to new customers, who would then download the software directly from Oracle's own website using the resold credentials. Oracle sued to shut the practice down, arguing its license terms made resale contractually impossible regardless of what happened to the underlying copy.
why it works
- Exhaustion doctrine applies to sales, not licenses, so Oracle labeled transactions as licenses to avoid it.
- UsedSoft reframed the transaction by its economic substance: a one-time fee for permanent use is a sale.
- The court looked past the contractual label to the actual economic character of the deal.
- The ruling restored resale rights because the rightsholder had already been compensated once.
what transfers
When a rule turns on a label, argue the economic substance of the deal to the authority that applies the rule.
what came after
The CJEU ruled July 3, 2012 that paying to download software exhausts the distribution right just like a physical sale, legalizing resale. The UsedSoft ruling became one of the most cited EU copyright decisions on digital exhaustion, establishing that a downloaded copy sold for a one-time fee triggers the same resale rights as a physical good across the EU, and it directly shaped how software vendors across Europe structure their licensing terms and subscription models in the years since.
references
- UsedSoft and the principle of exhaustion: CJEU ruling published today
- UsedSoft GmbH v Oracle International Corp (C-128/11) EU:C:2012:407
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