Are Used Software Licences Legal in the EU? CJEU C-128/11 Explained

Direct Answer: The secondary transfer of pre-owned software licences within the European Union (EU) and European Economic Area (EEA) is legal under specific, conditional statutory circumstances established by EU Directive 2009/24/EC (incorporated into the EEA Agreement via EEA Joint Committee Decision No 39/2011 of 1 April 2011) and interpreted by the Court of Justice of the European Union (CJEU) in Case C-128/11 (UsedSoft v Oracle). Software resale is not unconditionally legal in every scenario; legality depends strictly on verifying factual criteria identified in CJEU case law.

Disclaimer: This article provides general information for corporate IT and procurement teams and does not constitute formal legal advice.

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1. The Legal Foundation: EU Directive 2009/24/EC & Copyright Exhaustion

To understand secondary software transfers in Europe, enterprise buyers look to Directive 2009/24/EC of the European Parliament and of the Council on the legal protection of computer programs (applicable across all EU member states and incorporated into the EEA Agreement). Article 4(2) of the Directive codifies the fundamental principle of copyright exhaustion (also known as the rule of first sale):

“The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rentals of the program or a copy thereof.”

Under EU statutory law, once a software vendor sells a copy of its program within the EU or EEA with its consent, its exclusive right to control the further distribution of that specific copy is exhausted.

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2. CJEU Case C-128/11 (UsedSoft v Oracle) Breakdown

The landmark judgment of the Court of Justice of the European Union on July 3, 2012, in Case C-128/11 (UsedSoft GmbH v Oracle International Corp.), established binding legal principles across EU and EEA member states regarding digital software downloads and secondary transfers.

Core Legal Rulings of C-128/11:

1. Equivalence of Digital Downloads and Physical Media: The CJEU ruled that the rule of exhaustion applies equally to software downloaded digitally from the vendor’s website and software supplied on physical media (CD-ROM/DVD). Downloading a copy combined with a perpetual licence agreement constitutes a “first sale” under Article 4(2) of Directive 2009/24/EC.
2. Right of Use Granted for an Unlimited Period: Exhaustion applies whenever a copyright owner grants a client a right to use a copy of a program for an unlimited (perpetual) period in return for payment of a fee designed to enable the rightholder to obtain remuneration corresponding to the economic value of the copy.
3. Contractual Resale Restrictions: The Court ruled that where the statutory conditions of exhaustion are fulfilled, the rightholder cannot rely on a contractual prohibition on further transfer contained in an End User Licence Agreement (EULA) to oppose the resale of that copy.
4. Mandatory Deinstallation by the Original Acquirer: The Court emphasized that a seller who resells a perpetual software licence must render their own copy unusable at the time of resale to avoid infringing the copyright owner’s exclusive reproduction right (Article 4(1)(a)).
5. Volume Licence Splitting Limits: The CJEU held that if a client acquires a single volume licence covering an indivisible block of user seats under one operational contract, the client cannot split that single licence block into separate individual seat bundles for resale to multiple different buyers unless the licence contract legally permits independent assignment.

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3. CJEU Case C-166/15 (Ranks & Vasiļevičs) — Backup Copies & Physical Media

To understand the boundaries of secondary software duplication, CJEU case law must be read alongside Case C-166/15 (Aleksandrs Ranks and Jurijs Vasiļevičs) of October 12, 2016.

Key Clarifications in C-166/15:

• Resale Restrictions on Backup Copies: The CJEU clarified that Case C-128/11 does not permit the resale of a backup copy of a program in place of a lost, damaged, or destroyed original physical medium (CD-ROM/DVD) without the authorization of the rightholder.
• Reproduction Rights vs Distribution Rights: While the distribution right to the initial copy is exhausted after first sale, the right to create backup copies (Article 5(2) of Directive 2009/24/EC) is intended solely for the person having the right to use the computer program. Reselling a backup copy without proving the lawful transfer or destruction of the original medium breaches reproduction rights under Article 4(1)(a).

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4. Legal Conditions Identified in CJEU Case Law vs Practical Due Diligence

Corporate SAM leads must distinguish between the statutory conditions established by CJEU case law and the practical documentation used to evidence those facts.

A. Legal Conditions Identified in CJEU Case Law:

1. Initial EEA Distribution: The software copy was originally placed on the market within the EU/EEA by the copyright holder or with their explicit consent.
2. Perpetual Licence Grant: The software licence was granted for an unlimited (perpetual) duration in return for a fee paying its economic value.
3. Irrevocable Deinstallation: The original acquirer (and any intermediate owner) has completely uninstalled and rendered unusable their local copy at the time of resale.

B. Evidence and Practical Due Diligence Used to Establish Factual Eligibility:

• Documented Chain of Title: Purchasing invoices and transfer agreements establishing the sequence of ownership from the original licensee.
• Seller Deinstallation Declaration: Signed legal declarations confirming complete removal of local installations.
• Licence Key & Contract Records: Verification of key quantities and contract numbers to confirm the licence was not part of an indivisible volume block.

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5. Secondary Transfer Eligibility & Risk Assessment Decision Matrix

Transaction Scenario	Potential Secondary Transfer Eligibility	Compliance & Legal Rationale
Legacy Perpetual Licence (EEA initial sale, fully paid, seller uninstalls copy)	High Transfer Eligibility	Aligns with CJEU C-128/11 exhaustion criteria. Distribution right is exhausted.
Active Term Subscription / SaaS Access (Monthly or Annual Contract)	Ineligible for Transfer	Term subscriptions are limited-period service contracts, not perpetual initial sales under C-128/11.
Seller Retains Active Installed Copies after Sale	Major Legal Violation	Infringes Article 4(1)(a) reproduction rights. Unlawful duplication constitutes copyright infringement.
Missing Acquisition Documentation / Unverified Seller	High Documentation Risk	Vendor audits require verifiable factual evidence of initial EEA sale and deinstallation.
Backup Copy Resale Replacing Damaged Original Physical Media	Special C-166/15 Issue	Subject to strict CJEU C-166/15 limitations regarding backup copy distribution.

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6. What the UsedSoft Judgment Does NOT Mean

To maintain rigorous compliance standards, Software Asset Managers should recognize what CJEU Case C-128/11 does not imply:

• It does NOT mean all pre-owned software is automatically compliant without proof: Buyers bear the burden of proving that a specific licence batch fulfills CJEU exhaustion criteria during a compliance review.
• It does NOT force vendors to provide free maintenance or upgrades: While the right to use the perpetual software copy is transferred, ongoing maintenance, support contracts, or cloud-connected services remain subject to the vendor’s commercial terms.
• It does NOT legalize software key generators or unverified digital keys: Secondary software must consist of legitimate vendor software assets transferred with verifiable provenance.
• It does NOT permit splitting non-divisible volume licence keys: Unbundling multi-user enterprise agreements into standalone retail seats is restricted if the original contract structure treats the grant as an indivisible volume unit.

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7. Documentation for Vendor Software Audits

During vendor software audits (e.g. BSA reviews or vendor compliance reviews), documentation serves to demonstrate provenance and factual eligibility. Document requirements vary depending on the vendor, contract terms, and specific legal context, but typically include:

• Written evidence of initial EEA purchase by the first owner.
• Invoice records documenting the chain of title down to your enterprise.
• Signed seller deinstallation declarations confirming local copies were rendered unusable.
• Verification that licence seat counts match deployed workstation installations.

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8. Frequently Asked Questions

Can a software vendor rely on EULA resale bans to oppose secondary transfers in the EU?

Under CJEU Case C-128/11, where the statutory conditions of exhaustion are fulfilled, the copyright holder cannot rely on a contractual prohibition on further transfer to oppose the resale of that copy.

Does secondary software include rights to vendor software updates?

If the original acquirer purchased perpetual updates or maintenance patches that became an integral part of the licence prior to resale, the secondary acquirer is entitled to use those patches. However, vendors are not obligated to offer new support or update contracts to secondary buyers.

Are US-distributed software licences eligible for secondary transfer in the EU?

No. Copyright exhaustion under Directive 2009/24/EC applies specifically to copies first distributed within the European Union or European Economic Area with the copyright owner’s consent. Software initially sold outside the EEA does not exhaust EU distribution rights.

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Primary Sources & Further Legal Reading

1. Court of Justice of the European Union (CJEU): Judgment in Case C-128/11, UsedSoft GmbH v Oracle International Corp., July 3, 2012.
2. European Parliament & Council: Directive 2009/24/EC of 23 April 2009 on the legal protection of computer programs.
3. Court of Justice of the European Union (CJEU): Judgment in Case C-166/15, Aleksandrs Ranks and Jurijs Vasiļevičs, October 12, 2016.
4. EEA Joint Committee: Decision No 39/2011 of 1 April 2011 incorporating Directive 2009/24/EC into Annex XVII (Intellectual Property) of the EEA Agreement.

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Need Assistance Reviewing Software Licence Documentation?

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• Explore Secondary CAD/CAM Licence Options
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• Request an Individual Eligibility Assessment: Contact our licensing team at a.stasz@innosfera.eu.