Is Second Hand Software Legal? Two Judgments, One Answer

Yes, reselling software is lawful in the European Union, and it rests on two judgments rather than one. The Court of Justice decided the principle in 2012 and clarified its edges in 2016. The interesting part is not the yes. It is the short list of things those two rulings put outside the line, because that is where nearly every questionable offer sits.

Both cases appear below by name and number, with what was actually decided. Not a summary of a summary: the texts were read on EUR-Lex on 8 August 2026.

Two judgments, not one

The first is UsedSoft GmbH v Oracle International Corp, Case C-128/11, decided by the Grand Chamber on 3 July 2012 (ECLI:EU:C:2012:407). The German Bundesgerichtshof referred the questions by decision of 3 February 2011, which is why you will find both years quoted online. The referral is from 2011; the judgment is from 2012.

The second is Ranks and Vasiļevičs, Case C-166/15, decided by the Third Chamber on 12 October 2016. That one was not a commercial dispute but a criminal prosecution in Latvia against two men who had sold copies of Microsoft Windows and Microsoft Office through an online marketplace between 2001 and 2004. Microsoft was a party to the proceedings.

Can you legally resell a software licence?

Yes, provided the licence is perpetual. The mechanism is Article 4(2) of Directive 2009/24/EC: the rightholder’s distribution right is exhausted on the first sale in the Union. Oracle argued this applied only to discs and that downloading is not a sale. The Court held otherwise. Where a right of use for an unlimited period has been granted against a fee corresponding to the economic value of the copy, the distribution right is exhausted for the downloaded copy too.

Judgment	Core holding	What it gives you
UsedSoft v Oracle, C-128/11, 3 July 2012	The distribution right is exhausted, including for a downloaded copy carrying an unlimited right of use	A perpetual licence can be resold, with or without a disc
UsedSoft, same judgment	The first acquirer must make their own copy unusable when reselling	Two people must never run the same licence at once
UsedSoft, same judgment	Exhaustion gives no right to split a licence covering more users and sell off part of it	Individual keys carved from a volume agreement fall outside the protection
Ranks and Vasiļevičs, C-166/15, 12 October 2016	The first acquirer may resell the copy and its licence, but where the original medium is damaged, destroyed or lost, may not hand over their backup copy without consent	The licence transfers. A home burned backup disc does not

Why the second judgment matters so much

UsedSoft is quoted everywhere and Ranks almost nowhere, which is a shame, because Ranks is about exactly the situation Windows and Office buyers find themselves in.

The question there was whether someone whose original disc had been lost or damaged could still resell the software on a disc they had made themselves. The Court said no. A backup copy may be made and used only to meet the needs of the lawful user, and that user may not use it to resell the program second hand to a third party, even where the original medium has been damaged, destroyed or lost.

The same judgment also says something more generous, and this half gets overlooked. Losing the original medium does not, by itself, strip you of the right to resell the copy, because that would deprive the exhaustion rule of its useful effect. So it was never about the plastic. It is about the right, and about whether you have genuinely given up yours.

The four cases that fall outside

Lay the two judgments side by side and a sharp list emerges of what is not covered. This is the part worth memorising, because all the murkiness around “grey” keys lives here.

• Subscriptions. Exhaustion requires a right of use unlimited in time. An annual subscription has an end date, so it is out. Microsoft 365 cannot be resold; Office 2021 Professional Plus, being perpetual, can.
• Split volume licences. The Court says expressly that exhaustion confers no right to divide a licence covering more users. One agreement paid for and a hundred keys sold is not resale.
• Keys from outside the Union. Exhaustion is triggered by the first sale in the Union. What was placed on the market elsewhere does not automatically qualify.
• Backup copies. Ranks, above. You may pass on your licence. You may not pass on the disc you burned.

Notice what is absent from that list: the price. A low price proves nothing in either direction. A properly transferred second hand licence and a carved up volume key both cost a few euro. That thread is followed further in buying Windows 11 Pro for less.

You are allowed to keep a backup

To avoid the wrong impression, since the paragraphs above sound stricter than the position actually is: making a backup copy is permitted. The directive goes further and provides that a lawful user cannot be deprived of that right by contract, so long as the copy is necessary for using the program.

The distinction lies in what you then do with it. Keeping a copy for yourself is fine. Handing that same copy to a buyer is not, even when your original is broken. That is the line Ranks draws, and it makes sense the moment you see it: the right to use something is not the right to distribute it.

How would anyone check that the previous owner stopped?

That is the weak point of the whole arrangement, and the Court named it. Oracle argued that verifying whether a copy has truly been made unusable is difficult. The Court accepted the difficulty but pointed out that a rightholder distributing discs faces exactly the same problem, since there is no practical way of knowing whether the first buyer kept a copy.

What it added is that the rightholder may use whatever technical means are available to satisfy itself that the seller’s remaining copy has been made unusable. That is not an abstract remark. It is the reason activation servers exist, and the reason a key appearing on too many machines eventually stops working.

For a buyer that translates into something unglamorous: the protection is real, but it is administrative. It rests entirely on whether the party who sold you the licence made the previous owner stop. If your seller cannot show that, you do not have a legal problem so much as a technical one that surfaces sooner or later.

What this means when you buy

You do not need to be a lawyer. You need two things about the seller.

First: where do the licences come from? A seller who takes over whole licences from companies winding down can simply say so. Someone splitting volume keys cannot, and will steer around the question with reassuring noises about “genuine licences” while never naming a source.

Second: what do you get in writing? An invoice in your name with a company behind it is not just proof of purchase, it is all that remains of the transaction if the key is questioned in two years. On a larger purchase, ask for the transfer record as well, meaning confirmation that the previous holder relinquished the licence.

What happens if it goes wrong?

For a private buyer, very little in legal terms. Both judgments concern sellers, not the people who bought from them. In Ranks it was the two sellers who were prosecuted, not their customers, which makes sense: a buyer has no way of seeing what happened to the licence before it reached them.

That changes the moment you resell. Sell an old PC with Windows on it, or pass a licence to a colleague, and you are the first acquirer the judgment describes, bound by its conditions: the whole licence, nothing held back, your own copy made unusable. For a private person that is rarely a problem, provided you genuinely wipe the machine.

What you can lose in practice is function. A key drawn from a volume agreement may be deactivated months later, leaving you with a seller who no longer exists. That is not a legal risk but an operational one, and it is by far the most common outcome.

For companies the emphasis shifts

As soon as an organisation is behind the purchase, the centre of gravity moves from the key to the paperwork. A licence review does not ask for codes, it asks for documents.

Record, per purchase: the invoice, which licences and how many, and for second hand purchases the confirmation that the previous holder made their copy unusable. That chain is exactly why serious dealers keep records you never see as a buyer. Without them you have a working computer and no account of it, which is an unpleasant thing to discover mid audit. If a letter arrives from an organisation auditing on behalf of software vendors, read carefully what is being asked before sending anything; we have set that out in receiving a BSA letter, and the wider case for buying properly is in why businesses choose legal software.

Why vendors rarely litigate this

A fair question: if the position is this clear, why does everything online read as though it were a grey area? You will find forum threads full of confident warnings, none of which cite a case number, and vendor pages that describe transfer as impossible without mentioning that a court has already ruled on the point.

Because the incentives diverge. Vendors earn on new licences and on subscriptions, and a healthy resale market presses on both. Their licence terms accordingly tend to forbid transfer. The Court looked straight at that in UsedSoft and left little room: once the distribution right has been exhausted, the rightholder can no longer oppose resale of that copy, and the judgment adds that this holds regardless of contractual terms prohibiting further transfer.

That is not a blanket endorsement of anything cheap, and it is not meant as one. It means the argument is not about whether resale is allowed. It is about whether this particular licence was passed on properly, which is a question about records and provenance rather than principle.

Which produces the practical advice this piece lands on. Do not judge an offer by its price, and do not judge it by soothing phrases like “100% legal” either, since those cost a seller nothing to type. Judge it by whether anyone can tell you who owned the licence before you. A seller who can has the judgments above behind them. A seller who deflects knows why.