JJH Enterprises v Microsoft is a claim for damages under competition law. It was brought in England by JJH Enterprises Limited, which trades as ValueLicensing (“VL”) and resold pre-owned licences for Microsoft software, against three Microsoft companies. VL alleges that Microsoft restricted the supply of second-hand perpetual licences for Windows and Office while moving customers to subscriptions, in breach of Articles 101 and 102 of the Treaty on the Functioning of the European Union and the equivalent UK provisions. Microsoft denies the allegations.[7]
As of 2026-09-30 the claim has not been tried on liability. The Competition Appeal Tribunal (CAT) decided two preliminary copyright issues in VL’s favour in November 2025, and the Court of Appeal dismissed Microsoft’s appeals in July 2026. The proceedings are largely stayed while Microsoft seeks permission to appeal to the Supreme Court.[9]
Background
VL started proceedings in the Commercial Court in April 2021. Picken J dismissed Microsoft’s jurisdiction challenges and a strike-out application concerning the UK defendant in April 2022.[2] On 16 November 2022 Foxton J transferred the claim to the CAT.[3] The claim covers the UK and the whole of the EEA, for the period 1 January 2014 to 31 December 2022.[7]
The resale market at issue rests on the CJEU’s 2012 judgment in UsedSoft v Oracle. That judgment held that the distribution right in a downloaded program sold with a perpetual licence is exhausted on first sale in the EU.[6] The CAT’s findings describe how Microsoft Enterprise Agreement customers obtain the products. An initial order must include at least 500 licences in a product pool. Licences become perpetual after three years once fully paid. Transfers with Microsoft’s consent use a Perpetual License Transfer Form, and clause 4(c) of the Enterprise Agreement states that nothing in it “prohibits the transfer of Software to the extent allowed under applicable law if the distribution right has been exhausted”.[6]
The dispute
VL’s allegations
VL alleges that from about 2011 Microsoft moved customers from perpetual licences to Microsoft 365. It alleges that Microsoft “stifled the supply of pre-owned licences” by offering discounts on the subscription service in return for customers surrendering, or keeping, the perpetual licences they no longer needed.[6] According to VL’s pleaded case, Microsoft agreed “custom anti-resale terms” with some large customers. VL also points to a later change in Microsoft’s global licensing terms that required enterprise customers receiving discounted Microsoft 365 subscriptions after migrating from perpetual licences to keep those licences. These are the terms the CAT calls the “Impugned Terms”.[6] VL claims damages for lost sales.
Microsoft’s position
Microsoft denies that its conduct was a campaign to stifle sales of pre-owned licences.[6] Microsoft has said that one of the terms in issue is no longer in force and that the other applied only to a very limited subset of customers.[2] It also pleads “alternative defences”: exemption under Article 101(3), objective justification, and that any anti-competitive effects were outweighed by pro-competitive benefits. It relies in part on the argument that the conditions for exhaustion were not met, so that the resales VL relied on would have infringed its copyright.[6] It was common ground that if Microsoft’s copyright arguments succeeded, VL’s claim would fail.[7]
Decisions to date
Summary judgment (2024)
On 28 November 2024 the CAT dismissed VL’s application for summary judgment on, or strike-out of, Microsoft’s alternative defences. The CAT found them sufficiently pleaded to go to trial and made no findings on their merits.[4]
Jurisdiction (2025)
Microsoft argued that the copyright questions had to be decided by the High Court. On 23 May 2025 the CAT Chair ruled that the Tribunal “does have jurisdiction to hear all aspects of this claim for breach of competition law including copyright disputes insofar as they arise in the context of this claim”.[5]
Preliminary issues (2025)
The CAT tried two preliminary issues on 9 and 10 September 2025. The first was whether Windows and Office bought in bulk by enterprise customers could be divided and resold in portions to different buyers. The second was whether resale was barred altogether because the products also contain non-program works, such as the graphical user interface, clip art, help files and fonts.[6]
In a unanimous judgment of 12 November 2025 the CAT held as follows:[6]
- On Issue 1, on the facts of the sample transactions, “the distribution right and reproduction right enjoyed by Microsoft in the Products does not prevent the subdivision and resale of the user right obtained by the first acquirer”. The Tribunal saw “no sound basis” for treating an Enterprise Agreement as a single licence for many devices rather than as a contract for multiple licences. It added that if a first acquirer fails to make its own copies unusable after resale, “then it may infringe”, but that “does not affect the validity of what was purchased by the purchaser”.
- On Issue 2, the online first sale of Windows and Office exhausts the rights under Article 4(2) of the Software Directive “in all of the works that are supplied and inevitably downloaded by a purchaser as part of Windows and Office”, to the extent they are used in accordance with the purpose for which the products were first sold.
Court of Appeal (2026)
The Court of Appeal heard Microsoft’s appeals against the jurisdiction ruling and the preliminary issues judgment on 28 and 29 April 2026. Alexander Wolfson, the proposed class representative in separate collective proceedings, intervened in support of VL on the jurisdiction appeal.[7] In its judgment of 7 July 2026 the court dismissed both appeals:[7]
- Jurisdiction. “Any issue which it is necessary to decide in order to resolve a claim for an alleged infringement of competition law falls within the CAT’s jurisdiction”.
- Subdivision. The court read the bar on dividing a licence in paragraph 69 of UsedSoft as concerned with Oracle’s client-server arrangement, in which the unsold user rights keep accessing a single server copy. It held that the bar does not extend to “a collection of equivalent copies of the software, each one used independently”. It found support for this reading in the Bundesgerichtshof’s judgment known as UsedSoft 3 (I ZR 8/13).
- Contract terms. “Exhaustion of rights takes place by operation of law notwithstanding contract terms which might purport to prevent or undermine it.” Because resale of exhausted copies did not need Microsoft’s consent, VL’s failure to use Microsoft’s Perpetual License Transfer Forms was irrelevant.
- Burden of proof. Whether the first acquirer deleted its copy is not an essential element of exhaustion. If the first acquirer keeps using a retained copy, “it is the retained copy which is unlicensed”, and that does not undermine the second acquirer’s right. The court declined to decide an argument based on the technical-measures provisions of the InfoSoc Directive, which it described as unpleaded.
Current status
The CAT stayed the proceedings on 6 February 2026 pending the appeals. In doing so it noted the parties’ agreed position that a judgment on the first preliminary issue “may be dispositive of the proceedings in their entirety”.[8] After the Court of Appeal judgment, Microsoft told the Tribunal that it intended to apply for permission to appeal to the Supreme Court. On 21 July 2026 the CAT extended the stay pending that application, except for VL’s outstanding disclosure and confidentiality applications.[9] Those applications were resolved by a consent order of 14 September 2026, which sets further disclosure deadlines in November 2026 and confirms that the stay otherwise continues.[10] No liability findings have been made.
A separate application for opt-out collective proceedings, Alexander Wolfson v Microsoft (CAT 1731/7/7/25), alleges a course of conduct that limited the supply of pre-owned perpetual licences for Windows, Office and client access licences. It is brought on behalf of UK purchasers for 1 October 2015 to 12 May 2025. As of its case page, a first case management conference took place on 15 September 2026, and no collective proceedings order is listed.[11]
Significance for software licensing and SAM practice
- Resale of volume-licensed perpetual licences. On the judgments so far, a UK/EU enterprise customer’s perpetual Windows and Office licences acquired under an Enterprise Agreement can be resold in smaller quantities than were bought. This holds where each copy is used independently and not through a shared server copy.[7] These are rulings on preliminary issues under the EU law in force during the claim period, and they may still be appealed.
- Transfer forms and contract clauses. The Court of Appeal held that a resale of exhausted copies did not need Microsoft’s consent. It also held that contract terms cannot override exhaustion.[7] The judgments do not address subscription licences such as Microsoft 365, which are not sold for an unlimited period.
- The seller’s estate. Both tribunals put the risk of infringement on a first acquirer that keeps using copies after resale.[6] In an effective license position, resold licences should be removed from the seller’s entitlements and the matching installations deactivated. Evidence of this is the seller’s main defence in a later software license audit.
- Bundled non-program content. The CAT held that icons, fonts and other content inevitably downloaded with the programs do not prevent exhaustion of the product as a whole, and the Court of Appeal dismissed the appeal on that issue.[6]
- Competition questions remain open. Whether the terms VL challenges were anti-competitive, and whether VL suffered loss, have not been decided.[9]
Proceedings are tracked on the Tribunal’s case page.[1]
Lessons learned
- Volume purchases can be split. The Court of Appeal held that the bar on dividing a licence in UsedSoft does not extend to a collection of equivalent copies each used independently.[7] Enterprise Agreement customers in the UK and EU may therefore resell part of a perpetual volume purchase.
- Contract terms do not override exhaustion. Exhaustion operates by law notwithstanding contrary contract terms, and resale of exhausted copies did not need Microsoft’s consent or its transfer forms.[7]
- Clean up the seller’s estate. Both tribunals placed the infringement risk on a first acquirer that keeps using copies after resale.[6] Resold licences should be removed from entitlements and the matching installations deactivated, with evidence kept for any later audit.
- The outcome is not final. The rulings concern preliminary issues, Microsoft is seeking permission to appeal to the Supreme Court, and whether the challenged terms were anti-competitive has not been decided.[9]