For many years clauses inside software licences – for publishers such as Microsoft, Oracle & SAP software – that stated “you are granted a perpetual non-transferable right” were accepted without question, however in 2012 The Court of Justice of the EU (“CJEU”) made a ruling that underlined the right of software owners to sell unused software licenses onto a third party.
This issue was underwritten in the case of UsedSoft v Oracle International Corp.
Before this case it had been assumed that the doctrine of “exhaustion of rights”, a legal principle under which the owner of an article cannot control a downstream secondary-market in that article, did not apply to software.
However, the EU Court judgment established that under Article 4(2) of the Software Directive, the right to distribute a copy of a computer program is exhausted if the rights holder permitted a right to use that copy for an unlimited period of time, which is what a Perpetual Right is.
Additionally it is very unlikely that a rights grant for very very long period, which is out of alignment with the expected useful lifetime of the software, would successfully challenge that position.
Consequently, individuals and businesses are now able to sell unused software licenses subject to some minimal conditions.
For those looking to sell, this has presented an opportunity for those who, due to downsizing, transformations, migrations etc. have significant volumes of unused software licences.
It is also an opportunity for businesses that have either identified shortfalls in their software estate or do not need to purchase the latest versions/editions of software are able to meet their software needs by purchasing versions earlier than those currently available at a significant discount on current version prices.
If you are looking to buy surplus licenses skip to the last paragraph!
For Sellers of Surplus Software
What’s the Process?
How is Entitlement Validated?
You can check if you are entitled to sell unused software licenses in three ways.
- Check on an online portal such as VLSC
- Read through the original contract
- Confirm the original PO and annual support is paid
Which Versions Can be Sold?
You can sell the latest version for which the support has been paid.
For example, if version 2013 has been bought as a base licence and the annual support has been paid until version 2019 was released then the version that can be sold is version 2019.
Can Volume Licenses be Split?
If you are a large organisation, you may have volume licenses of which you only use a certain percentage. You may wish to split these licenses and sell the unused portion to make the most out of this exercise.
Thankfully, a volume licence can be split up into many smaller purchases, greatly increasing the sale opportunities for large customers.
Can Suite Licenses be Split?
The licence that grants the IP rights is a suite licence and, unfortunately, cannot be split to its constituent parts.
For example, an MS Office licence cannot be split to Word, Excel, PowerPoint etc.
Can Public Sector or Education Licenses be Sold?
Absolutely, if you are a public sector or educational organisation you can still sell your licences.
What is Needed in Transfer Letter?
The Transfer Letter must include the following information:
- Confirmation of ownership
- SKU / volume of the licenses sold
- Confirmation that the license has been paid for
- Confirmation that the license is unused
For Buyers of Surplus Software
What’s the Process?
Very simple, let SAMGarde know what your needs are and we will advise you
If you still have questions relating to selling unused software licenses, or would like external support to identify and sell unused software licenses, contact SAMGarde today. To understand more about how SAMGarde can help with selling unused software licenses, take a look at this infographic.