Dealing in so-called "used" software - or the resale of software licenses to third parties - is illegal, according to a ruling by the District Court of Munich, Germany on January 19, 2006 (case no. 7 O 23237/05).
The court found that usedSoft GmbH's practice of selling "used" software licenses to third parties had infringed upon copyrights held by Oracle Corporation (NASDAQ:ORCL) subsidiary, Oracle International Corporation.
"This is an important decision for a young and fast growing industry," said Oracle General Counsel Daniel Cooperman. "We will continue to vigorously defend our intellectual property rights around the world."
The court's ruling ends a growing industry designed to broker "used" software. usedSoft and several other companies have developed businesses to illegally re-market software licenses by transferring license rights to third parties without the copyright owner's consent and thereby cause the third party to either create new copies via online downloads or install existing programs on additional workstations.
usedSoft claimed that the German Federal Supreme Court permitted this type of business activity under a previous ruling. In that July 2000 ruling, the Court held that a manufacturer's "first sale" of a license for software on a tangible media (such as a CD-rom) subsequently limits the manufacturer's right to restrict the resale of the media with the software under certain preconditions. The judgment by the Federal Supreme Court, however, was limited to the resale of the tangible media.
The Munich District Court recognized a distinction between distribution of the originally received physical copy (tangible media) and the illegal production of additional copies, and has now established an important precedent for the industry.