European Court of Justice, has untied the hands of  consumers, providing them the right to resell their old used software

The European Court of Justice (ECJ) in a landmark ruling has decreed that the resale of software is lawful under European Law.

Jennifer Baker reported the details of the ruling in a Macworld.co.uk article

The exclusive right of distribution of a copy of a computer program covered by such a license is exhausted on its first sale, said the European Court of Justice (ECJ). This applies to downloaded software as well as that bought on CD or DVD. This ruling sets a precedent for trading of used software licenses throughout the European Union and could potentially impact e-books and computer games as well.

The court also ruled that any patches or upgrades made to the software through a service agreement also form part of the used software that can be sold on. However it said that the reseller must make the copy downloaded onto his own computer "unusable" at the time of resale.

The German Federal Court of Justice referred the question to the ECJ following a legal battle between Oracle and UsedSoft, a company that buys and sells used software. Oracle launched the case after UsedSoft offered "pre-used" Oracle software licences online in October 2005.

Oracle customers can download a copy of the program directly onto their computer from Oracle's website. The user right for such a program, which is granted by a licence agreement, includes the right to store a copy of the program permanently on a server and to allow up to 25 users to access it by downloading it to the main memory of their workstation computers.

In a small victory for Oracle, the ECJ ruling prevents resellers from breaking up a licence and selling only part of it if they have purchased licences for more users than they need.

UsedSoft customers download the resold software directly from Oracle's website after acquiring a 'used' licence. Oracle argued that the principle of exhaustion does not apply to user licences for computer programs downloaded from the internet. However the ECJ firmly rejected this argument.

A Win for the Consumer ?

It's easy to see the straight forward ways that this would benefit the consumer. Take for example people on lower incomes, or students who want to have access to software applications for the purpose of education. Being able to buy the software product at a used copy price, will certainly appeal. Of interest here is the fact that the software does not degrade or tarnish, particularly where it is an internet software product its condition remains pristine.

This has other implications too. How might the new App Store and E-book market be impacted by this president in EU law ?

How might this change the way that DRM legislation is made effective, on such products ?

BitCoin - An internet / digital currency experiment uses an embedded transactional data store to record every transfer of the currency from one person to another. Could such a model be employed to enable a record of transfer to be employed in an emerging Software resale market.

The Digital Car Boot ?

This will be scaring the pants off the big software corporations, whose business model is dependent upon monopolising the consumer and market. Microsoft for example up holds a policy of non transference of its Windows operating system, and indeed since Windows XP has utilised digital signing of the hardware in an attempt to ensure that multiple copies of a license are not in existence.

Another example is hardware software bundling. Buy any PC today and it will almost always come with a version on Windows pre-installed. If the purchaser did not want to use Windows, perhaps opting for a Free Software operating system such as GNU/Linux, they could now simply resell their Windows license on the open market.

Need a better mouse trap

Of course it is unlikely that software manufacturers will take this lying down, as this new ECJ ruling creates a significant threat to their business models. This will be seen by them as simply fueling the fire of copyright theft. The counter argument is that policing the active use of licensed and unlicensed software is currently impossible with the current mechanisms. Corporations will need to extend their reach, to enable them to track license transfer, and it will interesting to see how this is achieved, and how such tracking interacts with e-privacy law.

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