UsedSoft GmbH v Oracle International Corp (Case C-128/11) is a judgment of the Grand Chamber of the Court of Justice of the European Union (CJEU), delivered on 3 July 2012, on the resale of “used” licences for computer programs that were downloaded from the internet. The Court held that when a copyright holder makes a copy of a program available for download and grants, for a fee, a right to use that copy for an unlimited period, the transaction is a “first sale” that exhausts the distribution right in that copy under Article 4(2) of Directive 2009/24/EC. A later acquirer of the licence is then a “lawful acquirer” who may download and use the copy.[1]
The ruling is the leading EU authority on the second-hand market for perpetual software licences. Courts in the United Kingdom applied it in 2025 and 2026 in the dispute between ValueLicensing and Microsoft.[5]
Background
Oracle develops and markets software and holds the copyright in the programs at issue. According to the order for reference, Oracle distributed the database software concerned by internet download in 85% of cases. The software was client-server software. The licence let the customer store a copy permanently on a server and let a set number of users access it. Under a separate maintenance agreement, customers could download updates and patches.[1] Oracle sold group licences for a minimum of 25 users, so a business that needed 27 users had to buy two licences.[1]
Under the heading “Grant of rights”, Oracle’s licence agreements granted the customer a “non-exclusive non-transferable user right” for an unlimited period, exclusively for its internal business purposes.[1]
UsedSoft bought user licences, or parts of them, from Oracle customers whose original licences covered more users than they needed. It then resold them. In October 2005 it advertised “already used” Oracle licences as “current”, meaning the original holder’s maintenance agreement was still in force. UsedSoft’s customers who did not yet have the software downloaded it directly from Oracle’s website.[1]
The dispute
Oracle sued UsedSoft in the Landgericht München I (Regional Court, Munich I) for an order to stop these practices. The court granted the order and UsedSoft’s appeal was dismissed. UsedSoft then appealed on a point of law to the Bundesgerichtshof (Federal Court of Justice).[1] The Bundesgerichtshof took the view that the conduct infringed Oracle’s reproduction right unless UsedSoft’s customers could rely on the “lawful acquirer” exception in Article 5(1) of the directive. It referred three questions to the CJEU. In summary, it asked whether someone relying on exhaustion is a lawful acquirer; whether the distribution right is exhausted when the acquirer made the copy by downloading it with the rightholder’s consent; and whether a buyer of a used licence can rely on exhaustion if the first acquirer has erased its copy or no longer uses it.[1]
Oracle’s position before the Court, as recorded in the judgment, was that it did not sell copies of its programs. It said it made a copy available for download free of charge and granted a separate, non-transferable user right, and that neither step transferred ownership of a copy.[1] Oracle and the European Commission also argued that making a program available on a website is a “making available to the public” under Directive 2001/29/EC, which cannot give rise to exhaustion. Oracle, several governments and the Commission argued that exhaustion applies only to tangible copies. Oracle further argued that a maintenance agreement prevents exhaustion, because the copy passed on is no longer the copy originally downloaded.[1]
Decision
Download plus perpetual licence is a sale
The Court treated downloading a copy and concluding a user licence for it as “an indivisible whole”. A customer who pays a fee for the right to use a copy for an unlimited period receives the right of ownership in that copy. It made no difference whether the copy was supplied by download or on a CD-ROM or DVD.[1] The Court added that “sale” must be read broadly. Otherwise “suppliers would merely have to call the contract a ‘licence’ rather than a ‘sale’ in order to circumvent the rule of exhaustion”.[1]
Intangible copies
The Court held that Directive 2009/24 is a lex specialis in relation to Directive 2001/29. It said the directive makes “no distinction according to the tangible or intangible form of the copy in question”. Exhaustion therefore covers copies downloaded from the internet at their first sale.[1]
Maintenance and updates
Exhaustion does not extend to service contracts such as maintenance agreements. However, the functionality corrected, altered or added under such an agreement becomes an integral part of the copy originally downloaded. The acquirer can use it for an unlimited period even if the maintenance agreement is not renewed. Exhaustion therefore covers the copy “as corrected and updated by the copyright holder”.[1]
Limits
The Court set two limits. First, if the licence acquired by the first acquirer covers more users than it needs, the acquirer “is not authorised by the effect of the exhaustion of the distribution right… to divide the licence and resell only the user right” for a number of users of its choosing (paragraph 69). Second, an original acquirer who resells a copy must make its own copy unusable at the time of resale. The rightholder may use technical protective measures such as product keys to make sure this happens.[1]
Operative part
The Court ruled that the distribution right in a copy of a program is exhausted if the rightholder who authorised the download, “even free of charge”, also conferred a right to use that copy for an unlimited period in return for a fee “intended to enable him to obtain a remuneration corresponding to the economic value of the copy”. It further ruled that a second or any later acquirer of such a licence may rely on that exhaustion. That acquirer is a lawful acquirer under Article 5(1) and may make the reproduction needed to use the program.[1] The Court’s press release summarised the result as meaning that “an author of software cannot oppose the resale of his ‘used’ licences allowing the use of his programs downloaded from the internet”.[2]
The Court left costs to the national court, since the reference was a step in proceedings still pending before the Bundesgerichtshof.[1]
Later proceedings and interpretation
The case then returned to the Bundesgerichtshof. The UK Competition Appeal Tribunal refers to that follow-up judgment of 17 July 2013 (I ZR 129/08) as “UsedSoft 2”. It also refers to a separate Bundesgerichtshof judgment of 11 December 2014 (I ZR 8/13, “UsedSoft 3”), which concerned Adobe software rather than Oracle software.[4]
In Ranks and Vasiļevičs (C-166/15, 2016) the CJEU restated the UsedSoft definition of a “sale”. It held that exhaustion concerns the copy and the accompanying licence, not the physical medium. It also held that a back-up copy may not be passed to a new acquirer without the rightholder’s authorisation.[3]
In JJH Enterprises v Microsoft (2026), the Court of Appeal of England and Wales read paragraph 69 of UsedSoft as tied to the client-server facts of that case. It said this was not a general ban on splitting volume purchases of independently used copies. It also held that exhaustion operates by law “notwithstanding contract terms which might purport to prevent or undermine it”.[5]
Significance for software licensing and SAM practice
- Perpetual licences can be resold in the EU despite non-transfer clauses. Under the ruling, once a rightholder has sold a copy in the EU with an unlimited right of use, it “can no longer oppose the resale of that copy” even where the contract prohibits transfer.[1] The executed contract still matters for other terms, and the ruling does not address subscription or term licences.
- The seller must stop using its copy. The judgment makes the first acquirer’s resale conditional on making its own copy unusable, and it allows vendors to use product keys and other technical measures to check this.[1] For an effective license position, a resold entitlement leaves the seller’s estate at the moment of resale.
- Evidence of lawful acquisition. In the later Ranks judgment the Court said the acquirer of a used licence who downloads the program must establish “by any available evidence” that it acquired the licence lawfully.[3] Records of the original purchase and of the transfer chain are therefore the documents a buyer relies on.
- Maintenance is a separate contract. The Court separated the service contract from the sale. The used copy carries the updates installed before resale, but the maintenance agreement itself is not exhausted.[1]
- Splitting licences is contested. Paragraph 69 on dividing a licence has been read narrowly by the Bundesgerichtshof in UsedSoft 3 and by the UK courts in the ValueLicensing litigation.[5] Whether a given volume purchase can be split depends on how the software is used and on the court applying the rule.
The ValueLicensing litigation against Microsoft applies this ruling to enterprise volume licences, and Ranks and Vasiļevičs applies it to copies first sold on physical media.
Lessons learned
- Non-transfer clauses do not stop resale. Once a copy has been sold in the EU with an unlimited right of use, the rightholder can no longer oppose its resale even where the contract prohibits transfer.[1] The ruling does not address subscription or term licences.
- The seller gives up its copy. A reseller must make its own copy unusable at the time of resale, and vendors may use product keys to check this.[1] Resold entitlements should leave the seller’s effective license position when they are sold.
- Keep proof of lawful acquisition. In Ranks the Court said the acquirer of a used licence must establish “by any available evidence” that it acquired the licence lawfully.[3] Purchase records and the transfer chain are the documents a buyer relies on.
- Maintenance is separate. The used copy carries updates installed before resale, but the maintenance agreement itself is not exhausted and does not transfer with the licence.[1]