Buying used software licences legally

Used software sounds like a grey area, but it was settled years ago. In the EU you may buy and sell used software licences. The price often sits well below new. What matters is that the transfer is clean and that you can prove it if anyone asks.

What used software licences are

A software licence is the right to use a program. When a company buys more licences than it needs, or switches to a different product, some are often left over. Those unused licences can be resold. The buyer then receives the same right of use that the first buyer had, only at a lower price.

So used software does not mean the software is worn out or old. The file is identical to the new one. Only the licence is used, because it has had an owner before. Typical examples are operating systems, office suites, databases and server software that free up through mergers, insolvencies or migrations.

The legal basis: CJEU, UsedSoft and Oracle

For a long time vendors and traders argued over whether software could be resold at all. In 2012 the Court of Justice of the European Union decided the question. In UsedSoft v Oracle (case reference C-128/11) it ruled clearly in favour of resale. That judgment is still the foundation of the entire market.

At its heart lies the exhaustion principle. When a rightholder sells a copy of a program for the first time within the EU with their consent, their distribution right in that particular copy is exhausted. In plain terms: they have had their money and can no longer forbid the onward sale. What made the ruling notable was that the CJEU applied it to downloaded software too, not only to programs on CD or DVD. The route of distribution does not matter.

For the resale to be clean, though, two conditions have to be met. First, the original licence must have been granted for an unlimited period, in return for a one-off payment that reflects the value of the copy. Second, the seller must make their own copy unusable, meaning they delete or deactivate it. Nobody may use the same right twice. That is exactly the point on which a purchase stands or falls.

Where the limits are

As clear as the basic principle is, there are subtleties. The CJEU has refined later questions, and not every arrangement is allowed.

The most important point concerns volume licences. When a company buys a package covering fifty or a hundred seats, the obvious idea is to resell twenty of them. Under the case law that generally does not work. A bulk or volume agreement is usually treated as a single unit. It can be transferred as a whole, but not carved up into individual licences at will. So if you buy a volume licence, check carefully what the seller is actually entitled to hand over.

Second point: the seller must genuinely be the rightful holder and the chain must be unbroken. If a licence has already changed hands several times, each step needs to be documented. Miss a link and the whole purchase becomes attackable. And third, exhaustion only applies to a genuine sale. Pure rental, trial or special OEM models can follow different rules.

Why used software is worth it

The obvious reason is price. Depending on the product and the market, used licences often cost considerably less than new ones, for an identical feature set. With expensive server or database software the saving adds up fast. And if you want to keep running an older version, you will often find it second-hand more easily than from the vendor, who dropped it from the catalogue long ago.

The second reason gets overlooked: sustainability in a broader sense. A licence that would otherwise lapse gets used again instead of being wasted. Companies that release their own stock turn a dead asset back into money. There is also value in independence from the subscription treadmill. If you own a perpetual licence, you decide when to switch, rather than paying again every year.

How to buy safely

The difference between a clean purchase and a risky one is not the price, it is the paperwork. A reputable supplier can show at any time where the licence came from and that the previous owner no longer uses it. If those proofs are missing, walk away, however cheap the offer looks.

• An unbroken chain of title from the first buyer to you
• A copy of the original invoice or licence agreement
• Written confirmation that the seller has deleted their copy
• Confirmation that the licence is perpetual
• Evidence that the licence is transferred as a whole
• A written transfer agreement with a clear product description

Keep all of these documents, even after the purchase. In a software audit the vendor will not ask whether you bought honestly. They ask for evidence. Anyone who can produce the chain is on safe ground. Anyone with only an email and a product key has a problem.

Which software fits

Used software suits anywhere that classic, perpetual licences exist. Operating systems, office suites in older purchased editions, databases, server and developer tools are typical candidates. Specialist software for engineering, accounting or graphics is traded too, as long as it was originally sold as a perpetual licence.

What does not fit is anything that only exists as a service. Pure SaaS offerings, cloud subscriptions and software billed per month or year fall outside the exhaustion principle. Here you are not buying a right to a copy, only time-limited access to a service. Stop paying and the use ends. Resale is therefore ruled out. The line runs not between old and new, but between buying and renting.

In practice many companies mix the two. Stable base systems run on used perpetual licences, while fast-moving or heavily connected applications stay on subscription. Planning that mix cleanly is what saves the most. A tidy licence management setup shows you where a used licence makes sense and where it does not.

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