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Created on Wednesday, 09 May 2007 01:00

Last Updated on Friday, 28 December 2012 18:38

Saving Money with Second Hand Licenses?

It often happens in bigger companies that a branch or a department is closed due to restructuring of the company. But what to do with the software licenses not needed anymore? A good idea is to sell them. The purchaser will be happy to have a legal copy and not have to pay the full price. Not always does a license permit a further sale and not always is this prohibition legal. This article will show some pitfalls and how to avoid them.

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This article is based on the judgment of the OLG Munich (re 6 U 1818/016) reporting on the ruling in the case of the German company Usedsoft. Whenever trying to determine the legal situation and a contract is involved. Read the contract! The judges of the Higher Regional Court decided on the general rules of selling second hand software.

It is unlawful to sell used software, when it is expressly prohibited in the sales/development contract or license agreement. As a consumer, you will find the license agreement usually on the CD’s cover. Such ban is common and often found in license agreements and by all means legal. This exclusion from further sale is even valid if it is “only” determined in the company’s standard terms.

The other requirement for a valid prohibition of sale is that it is exclusively for the right of using the software – the software itself. It is allowed to sell used software that is on a CD or DVD. What’s the difference? Simple to explain. When selling licenses, you are selling a right, a legal claim to an intangible item. In other words, if you download software from the company’s website and further sale is not allowed, you will be in for trouble when you sell it. Selling a CD or DVD with software is allowed. It is comparable of selling a book after having read it.

What happens if you do and get caught? You will be held liable for damages. Supposing you opened a business on selling used software, you will also be admonished to forbear further distribution. Damages can quickly become expensive. The amount of damages will be determined how much you earned through selling.