"Used Software": Secondary Exploitation of Software Licenses

On Monday, 23 Nov 2009, another "Forum IT Law" took place at the Institute for Legal Informatics (IRI) of Leibniz Universität Hannover. This time, the forum was about "Used Software", meaning trade with pre-owned software licenses. The legal questions are very current ones, there has been some recent jurisdiction and one case has just been accepted by the German Federal Supreme Court (BGH) for appeal.

Benno Barnitzke, who is Alumnus of IRI's masters programme EULISP and presented the forum, gave a short introduction to the legal issues: Secondary Exploitation is mainly a question of exhaustion of copyright, and this again depends on the way the software is distributed: For software distrubuted on a physical medium, the distribution right of the coyright holder clearly exhausts. But disputes start when it comes to volume licenses that are distributed with "master media" and later re-bundled by the secondary distrubutor, and how to deal with software that is distributed without any physical media by internet download is again another question.

Dr Reiner Hirschberg, who is CTO and head of license management of UsedSoft AG, presented the view of a secondary distributor and their business model. He showed that his company buys software licenses that are not needed any longer by other companies, mainly due to insolvency, dismissals, mergers, and technical or organisational restructuring. Usedsoft's customers again can safe money not only on the license fees, but also on hardware and training, especially if older software is used that is not on sale by the publisher any longer (such as Windows 2000, Office 2003...).

Andreas Kammholz, attorney-at-law in Berlin and specialised on intellectutal property and competition law, and mandated by UsedSoft, presented his point of view on the exhaustion of distribution rights in respect to distribution without physical media. He admitted that the wording of § 69c UrhG (German copyright act) is clear and requires distribution of physical media for exhaustion. But he sees room for an anology, as the legislator had not taken distribution by download into consideration, and the relation of interests of the first purchaser and the primary distributor/copyright holder are the same, especially considering that exhaustion limits the copyright holders' control over distribution, which is an interest of the first purchaser and alsoa common interest, as merchantibility of pre-owned software licenses is an economic benefit.

Dr Andreas Wiebe, Professor on a chair for intellectual propery and competition law at Georg August Universität Göttingen, presented his view and took a counter-position. Wiebe argued that, de lege lata,  the legislator did consider this form of distribution, which was visible in the reasons of some EC directives. Furthermore, the interests were not the same as for physical distribution, as the interest of the copyright holder were more in danger.

Thomas Feil, who is attorney-at-law in Hannover and specialised on IT law, showed the relevance of the issues for the consultation practice of lawyers. The legal obstacles and uncertainties prevent careful companies from using the business model to sell unused licenses aswell as to buy pre-owned licenses, Feil reported. He also mentioned that major software labels make use of this uncertainties to take legal actions against secondary distributors, in order to intimidate them.

After the presentation, a lively debate with the audience came up. If there was a common point, it was probably that there is a lack of clear legislation or jurisdiction in this field. The legislator should clearify the situation of pre-owned licenses without physical media soon, in the one or other direction.