UK tribunal says reselling Microsoft licenses is A-OK

Microsoft's attempt to claim that its software can't be resold has hit a wall at the UK Competition Appeal Tribunal, which decided that Office having clipart does not mean customers can't sell their licenses on.

The judgment follows UK reseller ValueLicensing lodging a 2021 claim against the Windows giant over clauses in contracts allegedly aimed at stopping customers from reselling perpetual licenses. The Derby-based reseller sued Microsoft for £270 million in damages over claims of lost business.

The dispute rumbled back and forth until Microsoft made a surprising pivot. Instead of denying wrongdoing, Microsoft argued that reselling perpetual licenses infringed its copyright. It also claimed that the practice of companies selling only a portion of their licenses was not permitted.

The Competition Appeal Tribunal pondered the software giant's claims and disagreed. According to the judgment, there was nothing preventing the subdivision and resale of Windows and Office licenses acquired under Microsoft's Enterprise Agreements, nor was there anything wrong with the resale of licenses.

Had the judgment found in Microsoft's favor, there could have been profound implications. ValueLicensing contended that reselling perpetual licenses was perfectly legal, and covered by a European ruling in the UsedSoft case, which found that software licenses could be resold. Microsoft, on the other hand, stated that since Office contained resources such as icons, fonts, and help files, it qualified as a creative work, and so was covered by the Copyright and Information Society Directive.

In a unanimous judgment, the Competition Appeal Tribunal sided with ValueLicensing and what The Register has heard described as Microsoft's "Hail Mary" appears not to have worked.

Jonathan Horley, managing director of ValueLicensing, told The Register: "ValueLicensing has always believed it was running a legitimate business underpinned by the principles of the European Software Directive and the UsedSoft judgment at the ECJ.

"This judgment confirms these principles, which legitimately allowed ValueLicensing to save its customers money on used Microsoft software. Now these preliminary issues have been decided, we look forward to continuing the claim against Microsoft."

A Microsoft spokesperson told El Reg: "We disagree with the decision and intend to appeal it."

Redmond is facing a similar class action issued by Alexander Wolfson that could result in a multibillion-pound payout for UK customers. At the time, a spokesperson said: "This new collective action is based on the same unsubstantiated claims regarding second-hand software licensing that have been litigated for several years in another case."

We hesitate to call it "precedent," but Microsoft's pivot and the ensuing judgment haven't helped its cause.

There's plenty of road left, but pending the inevitable appeal, Microsoft may have just blown its own toes off. ®