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  • Writer's picturemec. Rafał Stach

Is it allowed to resell a purchased software?

In order to answer the question thus asked, it is necessary to explain the concept of copyright exhaustion, which is defined as the loss of the right to authorise the distribution of a copy (an original or a copy) of a work after it has been released into the European Economic Area (a free trade area comprising the European Union, Norway, Iceland and Liechtenstein), which is expressed directly in Article 53(3) of the Act on Copyright and Related Rights. In other words, a copy of a work after it has been released to the market becomes "free" and its further distribution, whether paid or free of charge, does not require the authorization of the holder of the copyright [1].


Placing on the market should be understood as making the original or a copy of a work available to the public by way of transferring their ownership, and thus also the resale of a "used" copy. Pursuant to the definition provided in Article 6, paragraph 1 of the Act on Copyright and Related Rights, such marketing must, however, be lawful, i.e. made by the entitled person or with the right holder's hereby consent. Thus, making a work available on the Internet by an unauthorized entity due to, for example, data leakage does not exhaust copyright.


An analogous regulation applies to the EU market, including computer software - pursuant to Article 4(2) of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs, the first sale in the territory of the Community of a copy of a computer software by the rightholder or with his consent exhausts the right of distribution in the territory of the EU of this copy, with the exception of the right to control further lending of the software or its copy. The above solution is intended to support free movement of goods and services within the common market, however it should be noted that exhaustion of the right - both under Polish and EU regulations - does not include rental or lending of the medium on which the work was recorded. Such a solution should be explained by the protection of the interests of the subjects of author's economic rights. Otherwise, profits from paid rental of a copy of a work would accrue only to the owner of the copy and not to the author of the work [2].


Exhaustion of copyright of the computer software in the European Economic Area and in the United States


In the aforementioned judgment, the CJEU analyzed a factual situation in which a customer, upon payment of a sum of money, was granted access via the Internet to software, the ability to download files and to load them on the hard drive of his computer. Of relevance was the fact that, once the customer had paid a one-off sum, access to the software was granted 'forever', i.e., without time limitation. Consequently, when assessing the functional nature of this service, it was considered to have effects like a contract for the sale of goods. In doing so, it does not matter what the name of the contract is used by the supplier - the CJEU considered the purpose of the contract to be relevant. Thus, the purchaser of an electronic copy of a work may sell that copy to a third party, if he simultaneously deletes it from his computer.


The requirement that the programme be 'deleted' by the transferor is intended to preclude the transferor from continuing to dispose of the programme, thus resulting in the reproduction of a copy of the work, i.e., the use of the work in a field of exploitation not permitted by most license agreements. In addition, the CJEU held that even if a computer program is acquired under a license agreement prohibiting the transfer of the license, the rights holder is not entitled to rescind the agreement concluded between the transferor and the third party. Furthermore, according to the CJEU, a downstream purchaser of a copy of a computer program becomes entitled to use (download and install) software updates covered by the license agreement between the rights holder and the first purchaser. However, this includes only those updates that were available prior to the further sale of the computer program.


Significantly, there is a contrary regulation in the United States, according to which exhaustion of copyright does not apply to those who have taken possession of a copy of a work by lease, rental, loan or otherwise, without acquiring ownership (17 U.S.C. § 109 (d)). Thus, a US licensee - which is the case for the vast majority of computer software users - cannot effectively transfer a license to a third party under US copyright law.


Resale of computer software licenses and circumvention of US copyright law


Following the CJEU judgment of 3 July 2012 in UsedSoft GmbH v Oracle International Corp. above, doubts have arisen as to whether a license to a computer program divested by a licensee to a third party established in the European Economic Area - which, according to the CJEU judgment cited above, is fully effective - can then be effectively transferred to an entity established in the United States.


While the US Supreme Court has not considered a case with such facts, it may be useful to refer to the Kirtsaeng v. John Wiley & Sons, Inc. decision of 19 March 2013 [5]. In the case in question, Supap Kirtsaeng - a Thai-born student in the United States - was in the business of importing and reselling in the United States low-cost English-language editions of foreign textbooks for exclusive sale abroad, which the publisher, John Wiley & Sons, Inc. sought to stop. After reviewing the case, the Supreme Court pointed out that the concept of copyright exhaustion under US regulation is not territorially limited, and therefore copies of a work legally marketed in third countries can be effectively sold in the United States.


However, the above US Supreme Court ruling does not resolve all doubts, as US copyright law expressly prohibits the application of the institution of copyright exhaustion to those using a computer software under license. In the absence of such a precedent, a software importer in the United States would have to prove the effectiveness of the agreement transferring the license before a US court.


Contractual liability


The transfer of a license to use a computer program to an entity established in the European Economic Area will be fully effective despite a contractual provision prohibiting the transfer of licenses. Thus, the above effect cannot be excluded in the license agreement. However, the effectiveness of such a transfer cannot be prejudged in the case of an agreement transferring a license to an entity established in the United States. In both cases, any provisions restricting the transfer of the license to a third party will be relevant between the parties to the license agreement. The licensor may thus assert claims for non-performance or improper performance of the license agreement.


Endnote:

[1] J. Barta, R. Markiewicz [w:] Prawo autorskie [...], red. J. Barta, R. Markiewicz, 2011, s. 358; J. Szyjewska-Bagińska [w:] Ustawa o prawie autorskim [...], red. E. Ferenc-Szydełko, 2014, s. 382;

[2] E. Traple, Prawo wprowadzania do obrotu, s. 115;

[3] Wyrok Sądu Apelacyjnego w Warszawie z dnia 30 czerwca 2011 r., VI ACa 1160/10, niepubl.;

[4] ECLI:EU:C:2012:407;

[5] 568 U.S. 519 (2013).

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