Microsoft shifts strategy to assert copyright in ValueLicensing legal battle

The ongoing legal battle between ValueLicensing and Microsoft regarding software license resale has intensified. This conflict began in 2021 when ValueLicensing alleged that Microsoft imposed restrictive clauses in customer contracts, limiting the resale of perpetual licenses in exchange for discounts. Such actions, according to ValueLicensing, have hindered market competition.

Key Developments in the Legal Battle

ValueLicensing has filed a suit claiming £270 million in lost profits. In response, Microsoft refutes these allegations and has shifted its defense strategy. Earlier this year, the tech giant argued that the resale of perpetual licenses infringes its copyright.

Legal Arguments Presented

• ValueLicensing maintains that reselling perpetual licenses is legal.
• The company cites the 2012 European ruling in the UsedSoft case, which permits the sale of used software licenses.
• Microsoft argues that its Office software is subject to copyright laws, distinguishing it from the Software Directive that allows resale.

According to Microsoft, because Office contains creative elements like icons and help files, it should be classified as a creative work. This interpretation could reshape the legal landscape for reselling software.

Recent Statements from Industry Leaders

In September, Jonathan Horley, CEO of ValueLicensing, criticized Microsoft’s defense strategy. He noted a significant shift from denying wrongdoing to arguing against the existence of the secondary market for licenses. This pivot has caught the attention of legal experts.

During the Preliminary Issues trial at the UK Competition Appeal Tribunal, Justin Turner KC highlighted the recent change in Microsoft’s legal approach. Horley emphasized the trial’s significance for understanding the legality of the pre-owned software market, particularly in light of the UsedSoft decision.

Potential Outcomes and Implications

The outcome of this legal dispute holds potential ramifications for Microsoft and the broader software resale market. A ruling in favor of Microsoft could undermine the resale of software licenses. Conversely, a decision against the tech giant could result in substantial financial penalties.

Broader Context of the Lawsuit

• The Wolfson class action lawsuit seeks to address alleged market dominance and restrictive licensing practices by Microsoft.
• A loss in the ValueLicensing case could lead to multibillion-pound payouts for Microsoft.

This legal battle continues to evolve, spotlighting critical issues surrounding software licensing and copyright. The Competition Appeal Tribunal now faces the task of adjudicating the matter at hand, which has far-reaching implications for the software industry.