Microsoft Software for Sale, Slightly Used

Alsee writes "The Register reports that recent UK business Discount-Licensing.com has been having booming growth reselling pre-owned Microsoft software licenses 20-50% below retail, after spotting the opportunity in Microsoft's licensing terms and Britain's insolvency laws for insolvent and downsizing businesses. Sorry, no discount personal OS resales, corporate bulk resales only."

Comments

What a crazy idea!

[IntelliAdmin]

What a crazy idea - the thought that you actually can do what you want with something you purchased. I wonder how long it is before the BSA finds some way of shutting these people down.

Re:What a crazy idea!

[ehrichweiss]

There's really absolutely nothing extraordinary about this at all. At least here in the States, "shrinkwrap licensing" doesn't hold water in the higher courts and the only real way to keep someone from selling their software is by signed agreement.

SGI has for years sold software under a license where you physically sign an agreement to purchase, and the license forbids resale of the software without express permission of Silicon Graphics. The thing is, they have the attitude toward their media that most of us wish that the record/movie companies had toward CD/DVD's..if it gets damaged, lost, stolen, etc. then they replace it for free...usually overnight Fedex. But that was back in the day, I'm unsure if they still do this now.

Anyway, I'm glad to see someone do this with the corporate licenses; it's about damn time.

Re:What a crazy idea!

[DavidTC]

While it is perfectly valid to point out that they're trying to charge the terms after the point of sale on purchased-in-stores software, this article is about business licenses, which, I assure you, are licenses. The company sits down with MS and hammers out an agreement, and then they both sign it.

No one walked into a store and out with a box, it's not an install EULA, or even a shrinkwrap license, and I have no problem with MS trying to keep people from reselling them. They are almost always company or site licenses, or at the leaat have deep discounts. MS has no problem getting paid half price for each license if you'll go ahead and buy 50 at a time. Letting companies break those apart and sell each one is rightly objected to.

OTOH, bankruptcy laws apparently allow this, so I don't see what MS can do. Instead of objecting to this practice entirely, I suggest they object to any alteration of the terms. If it was a site license for 50 computers, by god it's still a site license for 50 computer. You can't break it up or use it at more sites.

No, this isn't the same thing as OEM licenses, which can be resold, no matter what MS says. Yes, they are bought at a discount, but the important thing there is that they are then sold to individuals who didn't agree to any special terms during the purchase, and thus the Right of First Sale is in effect. (Because EULAs are complete gibberish, and it's even more gibberish than usual to try to apply them when people aren't running the software.)

Of course, MS is free to ban reselling OEM licenses to end users, but that makes no sense.

Re:What a crazy idea!

[Bogtha]

Whether you think i's a good idea for society or not, they sell licenses.

When you walk into a shop, pick a box off the shelf and pay for it, does it say "Windows" on it, or does it say "A license for Windows" on it? When you see adverts for computers in magazines, does it say that they come with Windows, or does it say that they come with a license for Windows?

If Microsoft aren't selling Windows, then millions of people around the world have not got what they legitimately paid for and have been defrauded.

If you bought a television set, brought it home, and then found out you weren't allowed to resell it because Sony didn't actually sell you the TV set, but merely permission to use it, then you'd think that was nonsense, wouldn't you? There is no difference here. Copyright is not property, it's a temporary restriction on some types of unauthorised copying. That copy of Windows you bought is your property, not Microsoft's, the fact that Microsoft hold the copyright on Windows doesn't change that. There is no reason why you shouldn't be able to sell it.

Re:What a crazy idea!

[Sparr0]

Let me direct you to one of my favorite Sale vs License rulings, Adobe v Softman. Relevant excerpts follow:

A number of courts have held that the sale of software is the sale of a good within the meaning of Uniform Commercial Code. Advent Sys. Ltd. v. Unisys Corp., 925 F.2d 670, 676 (3d Cir. 1991); Step-Saver, 929 F.2d at 99-100; Downriver Internists v. Harris Corp., 929 F.2d 1147, 1150 (6th Cir. 1991). It is well-settled that in determining whether a transaction is a sale, a lease, or a license, courts look to the economic realities of the exchange. ...

Other courts have reached the same conclusion: software is sold and not licensed. See, e.g., RRX Indus., Inc. v. Lab-Con Inc., 772 F.2d 543, 546 (9th Cir. 1985); Applied Info. Mgmt., Inc, v. Icart, 976 Supp. 149, 155 (E.D.N.Y. 1997) finding that whether a transaction denominated a "license" was in act a sale conveying ownership was a disputed question of fact); Novell, Inc. v. CPU Distrib., Inc., 2000 U.S. Dist. Lexis 9975 (S.D. Tex. 2000). In Novell, a software manufacturer was pursuing a discount retailer for copyright infringement. Like Adobe, CPU argued that it purchased the software from an authorized source, and was entitled to resell it under the first sale doctrine. Novell claimed that it did not sell software but merely licensed it to distribution partners. The court held that these transactions constituted sales and not a license, and therefore that the first sale doctrine applied. 2000 U.S. Dist. Lexis 9975 at *18. ...

The Court finds that the circumstances surrounding the transaction strongly suggests that the transaction is in fact a sale rather than a license. For example, the purchaser commonly obtains a single copy of the software, with documentation, for a single price, which the purchaser pays at the time of the transaction, and which constitutes the entire payment for the "license." The license runs for an indefinite term without provisions for renewal. In light of these indicia, many courts and commentators conclude that a "shrinkwrap license" transaction is a sale of goods rather than a license.12 ...

The reality of the business environment also suggests that Adobe sells its software to distributors. Adobe transfers large amounts of merchandise to distributors. The distributors pay full value for the merchandise and accept the risk that the software may be damaged or lost.13 The distributors also accept the risk that they will be unable to resell the product.14 The distributors then resell the product to other distributors in the secondary market. The secondary market and the ultimate consumer also pay full value for the product, and accept the risk that the product may be lost or damaged. This evidence suggests a transfer of title in the good. The transfer of a product for consideration with a transfer of title and risk of loss generally constitutes a sale. VWP of Am., Inc. v. United States, 175 F.3d 1327, 1338-39 (Fed. Cir. 1999). ...

[signed]
DEAN D. PREGERSON
United States District Judge

Re:This probably won't last for very long.

[mjmartin_uk]

Ahhh but you forget that UK law would prohibit this (the forceable non-resale of a licence agreement). In the UK you can legally resell your copy of Windows, with the licence agreement, even if it is an OEM copy and was intended to be used (as Microsoft says) 'only on new computers'.

Re:This probably won't last for very long.

[LewsTherinKinslayer]

Microsoft didn't "lose" any money on this sale, neither did they "make" any money.

You're right, Microsoft didn't lose money per se. However, Microsoft did lose a fairly substantial potential business because of this.

This is similar to me buying the Monopoly(tm) board game at a garage sale. Parker Brothers neither lost nor made any money on the deal.

Perhaps Parker Brothers should put some kind of license agreement in their board games that prohibits resale of Monopoly. This is of course, the move Microsoft is going to be making soon. (And already has, as in the case of OEM licenses.)

Personally I think the idea of a license agreement forcing non-resale is ridiculous. Its similiar to DRM: some company telling me what I can and can't do with something once I've purchased it. Feh.

Re:Here's how they will "fix" this

[ajs318]

Three words: "Exhaustion of Rights".

In the UK at least, once you sell something -- even something nebulous like a licence to do something the Law of the Land already gives you the right to do -- then it is no longer your property and you lose control of it.

They can put a clause in the licence that apparently forbids transfer of licences; but UK law gives you the right to transfer licences. And a promise not to exercise a statutory right is worthless, so invoking the "severability" clause found in almost every EULA. If there is no severability clause, then the whole EULA is null and void.

Re:How's that work?

[ajs318]

Presumably when the buyers get the software, they have to phone in to get an activation number. Can't Microsoft just refuse?

If you bothered to read the article, you would see that, so far, they are only dealing with bulk licences -- not individual ones. No activation number involved. This makes sense on two levels; one, there'd be nothing to stop a company that was going out of business from passing on a bulk licence through some unofficial channel anyway, so it might as well be officialised; and two, companies are more likely to be in a position to defend themselves if it goes T.U. {although, don't forget, this is happening in the UK; loser pays all costs and no cash changes hands until a verdict is delivered}.

Second question. When you buy a used computer already loaded with software, what are your rights?

If the software was correctly licenced {discounting any licence terms which invoke the severability clause by contradicting the Law of the Land} then your rights are the same as any other licenced user. If the software was not correctly licenced, although you bought it in good faith, then your rights are limited to your statutory rights of fair dealing under copyright law {i.e. you may make copies only as deemed necessary to the task of using the software for its Rightful Purpose}. If the software was not correctly licenced and you had reason to believe that this was the case, then you may be an accessary to copyright infringement.

Re:Necrodupe?

[jamie]

That's not a dupe.

First story, November 2005: "Disclic, through discount-licensing.com, this week began offering secondhand software licenses..."

Today's story, April 2006: "Sales of second-hand Microsoft software licences have doubled month-on-month since the market was opened in November 2005..."

A dupe is when we post the same story twice with no new news between the two stories. This is a followup -- thanks for bringing it to our attention, and I've added the November story to our Related Links section.

Principle of First Sale

[Anonymous Coward]

This is what permits and governs the reselling of used books, LPs, CDs, and cassettes. If you bought it, you can sell it. It was established by the US Supreme Court about a hunnert years ago (forgot exact date). In the mid 1800s, books used to have a license agreement prohibiting transfer. I'm a book collector. Software license agreements are nothing new.

Retail software licenses are treated the same way by the court. Commercial agreements can be almost anything, though, that's why there is so much non-transferable fund raising software. Just try selling your unwanted copy of Sage50 published by Best Software.