Pre-owned Software

Understanding Pre-Owned software licenses

Unlike physical products such as cars or computers, software is an intellectual property protected by copyright laws. The owner of the software grants others the right to use it through a license agreement. While the content and scope of the license can vary, there are a few standard forms commonly used. For example, the End User Licensing Agreement (EULA) allows for internal use but prohibits resale, while the Original Equipment Manufacturer (OEM) license allows software to be bundled with a computer and sold together.

In a landmark case (C-128/11) in the European Court of Justice, it was ruled that software licenses that allow perpetual use after a one-time payment can be resold to third parties. This means that second-hand software licenses are legal and can be a cost-effective solution for organizations.

Types of licenses: choosing the right one

When considering pre-owned software licenses for your organization, it's important to understand the different types available. One popular option is the Open License Program (OLP) licenses, which provide scalability and the ability to use the licenses indefinitely. To qualify for the OLP, a minimum purchase of five licensing units of Microsoft products is required. The number of licenses needed will depend on the number of employees who will be using the software.

When selecting a license, pay attention to the software's features. For example, an SNGL license indicates that the software can only be installed in one language. It's important to note that the scope of second-hand software licenses is the same as that of new software, limited to the license conditions set by the software owner. However, it's worth mentioning that second-hand Microsoft software cannot be included in Microsoft's Volume Licensing Service Center (VLSC), although this registration is not mandatory unless the VLSC is used as a license management portal.

Requirements for Pre-Owned licenses

To be eligible for sale, a pre-owned software license must meet certain requirements:

1. Introduction into the trade: The used license must have been introduced into the market of a European Union country with the permission of the software owner.
2. Indefinite license: The license must have been obtained indefinitely, allowing perpetual use.
3. No additional charges: There should be no additional charges for using the pre-owned license.
4. Unused at the time of sale: The license should not be in use at the time of sale.
5. Complete and unaltered: The license should not be split or otherwise incomplete.

It's worth noting that even if a copyright holder includes provisions in their licensing agreements that restrict resale, these provisions are not binding as long as the above requirements are met. The European Court of Justice has made it clear that contractual provisions cannot block the legal right of exhaustion.

Contractual arrangements and audits

Microsoft has been accused of stifling the supply of pre-owned Microsoft licenses by imposing anti-competitive contractual clauses. ValueLicensing, a second user software license reseller, has filed a claim against Microsoft in the High Court in London, alleging abuse of dominance and restrictive contractual practices. According to ValueLicensing, Microsoft's actions have resulted in higher prices and limited choices for customers, forcing them into cloud-based subscriptions like Office365 and Azure.

It's important to note that audits for pre-owned software licenses have shown that they can be used without any issues. Customers who have purchased second-hand licenses have successfully passed audits, providing reassurance that there is no need to worry about audits when using pre-owned Microsoft licenses.

The benefits of Pre-Owned software licenses: saving on expenses

One of the main advantages of opting for pre-owned Microsoft software licenses is the significant cost savings they offer. SMEs, in particular, can benefit from these savings, allowing them to allocate their budget to other critical areas of their business. By purchasing pre-owned licenses, companies can save up to 70% compared to buying new licenses directly from Microsoft.

Another benefit of pre-owned licenses is their scalability. With the OLP licenses, organizations have the flexibility to add more licenses as their business grows, ensuring that they have the necessary software resources to support their operations.

In conclusion, pre-owned Microsoft software licenses provide organizations with an opportunity to save on their software expenses while still enjoying the benefits of using licensed software. With the legality of these licenses established by the European Court of Justice, companies can confidently explore this cost-effective alternative. By understanding the requirements, types of licenses available, and the potential benefits, organizations can make an informed decision that aligns with their budget and business needs.

Note: The information provided in this article is for informational purposes only and should not be considered legal advice. Organizations should consult with professionals to ensure compliance with applicable laws and regulations.