A look into second hand licensing
Following a 2012 CJEU decision, there's been a growing business in selling second hand software. So why is there still a reluctance to take up this opportunity?
Published on 27th April 2015
A 2012 decision of the European Court of Justice reaffirmed that the practice of second hand licence sales was, in fact, legal. Since then we have seen a growing business in selling second hand software. But there remains a reluctance in the industry around both the selling of surplus licensing as well as the purchasing thereof. And as software manufacturers certainly don’t want the impact on their new licence sales – they will be and have been on the defence, finding ways to prevent second hand licence sales. We have certainly seen the industry leaning quite heavily in the cloud ‘subscription’ offering since the ruling.
However, Noel Unwin, MD at Discount-Licensing has this to say “It is clear that the software vendors are working hard to move businesses to subscription based software; however, the medium to large corporates are resisting with only 5% of Microsoft’s total revenue accounting for Cloud / Subscription based software. Whilst the markets are realigning, perpetual on-premises software is not going away as there is ‘no one solution fits all’ in the world of software – hybrid IT is now the buzz word, which suits the secondary software market”.
Second hand licence sales have certainly peaked my curiosity and I can’t help but wonder whether this might be an expiring coupon that may, just may, be a way to rectify areas of poor licence management in the past and/or a chance to free up some much needed funds. So I managed to get some of my questions answered with the help of Discount-Licensing Limited – and thought I would share them with you all:
What sort of licences are eligible for resale?
Focus in this industry is primarily around Microsoft products. Now although other Microsoft products would be considered, the main products of interest would be:
- Office 2010 or newer
- Project 2010 or newer
- Visio 2010 or newer
- Windows Server 2008 R2 or newer
- Exchange Server 2010 or newer
- SQL Server 2008 R2 or newer
- Windows 7 or newer
The key dependencies here are that they are:
- Volume licences (from Open, Select or Enterprise Agreements)
- Fully paid for before sale
- Transacted under a once-off payment for resale
- Perpetual licences
- Originally purchased within Europe and the European Economic Area
Do I need to get Microsoft’s permission?
Technically no, according to the EU Software Directive 2009 – you do not require the vendor’s permission. Do be very careful that the software you are intending to sell has been totally removed from your network though. If it hasn’t, an audit from Microsoft may very well result in you repurchasing the licences at full cost.
How much can I expect to receive/pay for second hand licences?
As you can imagine this largely varies depending on the licence type, quantity, model, version etc. However, if you are curious – an evaluation will cost you nothing. The findings are confidential and you are under no obligation to sell/buy. Noel Unwin explains, “Typically, sales discounts start at 20% for the most recent versions such as Office 2013, rising past 50% for the previous version and volume demand.”
What proof will I have of ownership?
The company transacting the software licence resale should provide you not only with the original ownership documents, but a letter of authority (to divest/reassign licences) and a supplier invoice for your records. As Phil Hibbitt, Operations Director at Discount-Licensing explains “any credible secondary supplier will have completed the necessary due diligence to ensure the software is valid for resale, in accordance with the Software Directive / ECJ ruling of 2012.”
I am sure many of you might have other questions and I’m looking forward to hearing what they are. Or on the other foot, perhaps some of you have second hand licence sales/purchase stories that you are willing to share. ‘Til next time!
Written by
May Turnbull
Director
