UsedSoft II is the German Federal Court of Justice (Bundesgerichtshof, BGH) judgment of 17 July 2013 in the case Oracle brought against UsedSoft, a dealer in used software licences. The BGH had asked the CJEU for guidance in 2011; after the CJEU answered in UsedSoft v Oracle, the BGH applied the answers. It set aside the Munich appeal court’s judgment, which had treated Oracle’s rights as not exhausted, and sent the case back with a list of conditions that decide whether the buyer of a used licence may copy the program.[1]
Background
Oracle develops database software and said it sold it in 85% of cases by download, either as a perpetual licence for a one-off payment or, less often, as a fixed-term licence. The licence contract gave a right that was “unbefristetes, nicht ausschließliches, nicht abtretbares” (unlimited, non-exclusive, non-assignable). UsedSoft traded in used licences. In October 2005 it advertised an “ORACLE SONDERAKTION” (special offer) of already-used licences, said all licences were current because maintenance still ran, and said that a notary’s certificate confirmed the legality of the sale. The certificate said the original licensee had confirmed that it was the lawful holder, no longer used the licences and had paid the price in full.[1]
Oracle claimed copyright infringement, because buyers were prompted to copy the software; trade mark infringement, because of the use of the name ORACLE; and misleading advertising. The Munich Regional Court and the Higher Regional Court granted the injunction. On 3 February 2011 the BGH referred three questions to the CJEU, which answered on 3 July 2012.[1]
Decision or outcome
The BGH’s headnotes set out the following points.[1]
- Right to copy. If the right holder agreed to the download of a copy from the internet, the second and each further acquirer of a licence may copy the program under section 69d(1) of the Copyright Act, if the distribution right is exhausted and the resale of the licence is tied to the resale of the copy downloaded from the right holder’s website.
- Conditions for exhaustion. The right holder must have agreed for a fee that lets it obtain remuneration matching the copy’s economic value; it must have granted the first buyer a right to use the copy without time limit; improvements and updates that the second buyer downloads must be covered by a maintenance contract between right holder and first buyer; and the first buyer must have made its copy unusable.
- No data carrier needed. The second buyer need not receive a disc; downloading the copy from the right holder’s website is enough.
- Burden of proof. A party relying on the exception in section 69d(1) must set out and prove that its conditions are met.
- Contract terms. The second buyer’s right to use the exhausted copy cannot be excluded by terms that reserve it for the first buyer. What counts as intended use follows from the licence contract between the right holder and the first buyer.
- Meaning of “resale of the licence”. The BGH read this as the buyers acquiring the exhausted copy and with it the statutory right to use it, not as a transfer of the contractual right, because Oracle’s contract made that right non-assignable.
The BGH set aside the Munich judgment and sent the case back for a new hearing, including on the costs of the appeal on points of law. It left open facts that the lower court still had to decide, so the judgment does not itself say whether Oracle ultimately won or lost.[1]
Significance for software licensing and SAM practice
UsedSoft II is the German step that turned the CJEU’s answers into a checklist. It shows that a lawful second-hand licence is not just a paper transfer: the buyer needs a copy that was itself exhausted, the old copy must be made unusable, and maintenance must cover any updates. The same court later applied these conditions to Adobe volume licences in UsedSoft III and to a product key in Green-IT. Disputes over how many licences were really transferred in a chain therefore turn on documents about deletion and maintenance.[1]
Lessons learned
- Keep proof that the first user stopped. The conditions include that the first buyer made its copy unusable, and the party relying on the exception bears the burden of proof.[1]
- Check maintenance coverage. A second buyer can use updates only to the extent the first buyer’s maintenance contract covers them.[1]
- Non-assignable clauses do not decide the question. The right to use an exhausted copy comes from statute and cannot be reserved to the first buyer by contract.[1]
- Download copies count. The second buyer may obtain the copy by download from the vendor’s site.[1]