In 2012 and in the context of the well-known decision UsedSoft, the European Court of Justice (CJEU) decided on the sale of used software that has been purchased online via a download (3 July 2012, C‑128/11). There the CJEU clarified that the same rules and in particular the principle of exhaustion apply to software regardless of the way the software has been sold – material copy or digital online download. However, the latest decision by the CJEU demonstrates that there are still open questions when it comes to selling used software within the EU/EEC. On 12 October 2016, the court stated that it is an infringement of copyright to sell a copy of software if the copy is made by the user on a material medium other than the original material medium (a so called backup copy). This rule even applies in circumstances where the original material medium is damaged or unusable (12 October 2016, C‑166/15).
The sale of copyright protected works and their copies is addressed in the InfoSoc directive 2001/29 and includes the principle of exhaustion in Art. 4 (2). According to this principle, the right of distribution is “exhausted” in case the original work or a copy has been sold within the EU/EEC with the consent of the right owner. After the first sale the buyer can sell the (used) work without obtaining the right owner´s permission. In the special case of software, the principle of exhaustion is laid down in Art. 4 (2) of the software directive 2009/24. In the decision UsedSoft, the CJEU applied the principle also to software that has been purchased via download and not on a material medium like a CD.
The starting point for the current judgment is a criminal proceeding, which is rare for copyright infringements before the CJEU. The two defendants sold more than 3,000 backup copies of software protected by copyright on an online sales platform. According to the prosecution, the defendants hereby infringed the right of distribution. The question of infringement of that right has been submitted to the CJEU.
The European Court of Justice states that selling a backup copy of software without the right owner´s consent constitutes a copyright infringement. The right to make a backup copy is laid down in Art. 5 (2) of the software directive and cannot be circumvented by contractual agreements. However, the provision is an exception to the exclusive reproduction right and therefore has to be interpreted strictly. There are two conditions for making such a backup copy: (1) the copy must be made by a person having a right to use the software and (2) the copy must be necessary for that use. This means that a “back-up copy of a computer program may be made and used only to meet the sole needs of the person having the right to use that program and that, accordingly, that person cannot — even though he may have damaged, destroyed or lost the original material medium — use that copy in order to resell that program to a third party”.
The decision by the CJEU is welcomed and clarifies another aspect of selling used software. As already proposed by the Advocate General in his opinion, this outcome is in line with the copyright system. If a paper printed book is so badly damaged that you cannot read it anymore, it does not mean that you can make and sell a copy of that book either. This should not be different with software.
The decision explicitly only covers the case of making and selling a copy of software that has been purchased on a material medium. Still, it is very likely that this rule also applies for backup copies that are made of software that has been downloaded.