Oracle (and everyone else) Cannot Block EU Software Reselling…What Does it Mean for IBM i?

Here’s the money quote that may soon effect every software purchaser in Europe, the US, and around the world.

Downloaded software can be resold just like software on physical media can, the Court of Justice of the European Union has said in a ruling that shreds the distinction between software and license sales

Good article by ZDNet on this issue. Read it here by clicking here.

There’s also a nice analysis on this issue by Ray ‘R’ Wang of Constellation Research at Forbes.

Among the consequences of this ruling and the possible ramifications for companies selling software in the European Union only (not the rest of the world, including the US…yet) and their customers, are the following:

  • Exclusive rights for software distribution are now exhausted (run out) after the first sale. The purchaser now has those rights in the EU
  • Rights transfer apply to software purchased on physical media AND downloaded from the Internet
  • Software publishers can no longer oppose the resale of a copy of software that was purchased legally
  • Software licenses cannot be divided and sold to more than one user. The entire license must remain intact in a transfer.

This doesn’t affect the US, just the EU. But it’s got to have some repercussions as the EU is now driving software publisher changes, which will probably ripple across the pond.

This might also have some signficant effects on the IBM i marketplace in Europe. Here are some things I’m wondering about.

  1. What does this mean for IBM i operating system licenses? When you purchase an IBM i, it’s always been a question who owns the operating system licenses. This can be a function of who sells you the machine and whether the machine is leased or bought. If there’s now free and clear transfer between vendor and purchaser after the first sale, that just makes owning the licenses more valuable.
  2. What about third-party software licenses for IBM i?  Every time I upgrade an IBM i to a new box with a different serial number, there are always some IBM i vendors who want to charge me a transfer fee because the software is licensed to the box, not to the user. In Europe, if the software is now owned by the user, can the vendors charge transfer fees anymore?
  3. As a US consumer of many vendor products (including Oracle JDE), will vendors start raising fees in the US to compensate for expenses/sales lost in the EU? Could this be similar to the pharmaceutical industry where cheap prescriptions in Canada (single-buyer system) are subsidized by higher prices in the US and other countries?

This could be a very big deal in the software world. More news as it develops.

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About Joe Hertvik

Joe is the owner of Hertvik Business Services, a service company providing written white papers, case studies, and other marketing content to computer industry companies. He is also a contributing editor for IT Jungle and has written the Admin Alert column for the past ten years.

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