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Pre-owned software reseller ValueLicensing has filed a claim in the High Court in London against Microsoft, alleging that the software supplier abused its dominant market position and used restrictive contractual practices.
The crux of the complaint is that Microsoft used its dominant position in the market to make it difficult for anyone to sell pre-owned software licences in the UK and the European Economic Area (EEA). ValueLicensing has pointed to contractual clauses that prevent the resale of a perpetual licence as a condition of a discount. The case is that this behaviour is anti-competitive under European Union laws.
The reseller’s claim covers perpetual licences for desktop software, including Windows and Office, and is seeking damages of £270m for the loss of sales in the UK and European Union (EU) from 2016 onwards. ValueLicensing states that the losses are ongoing and it reserves the right to change that figure to reflect the scope of the claim.
The channel player argues that customers have also been hit by the practices because it has forced them to pay higher prices and many have been steered into choosing Office 365 subscriptions. It believes that relinquishment and retention of licences condition clauses plus non-disclosure agreements have removed most pre-owned licences from the market.
“Microsoft’s illegal behaviour has impacted almost every organisation that provides desktop software for its workforce in the UK and the EEA. ValueLicensing is not the only victim. In purchasing software, public and private sector organisations presently have little option but to move to subscriptions offered by Microsoft because there are so few pre-owned perpetual licences available now, as a result of Microsoft’s campaign to almost entirely drain the market,” said Jonathan Horley, founder and managing director of ValueLicensing.
Jonathan Horley, ValueLicensing
“Microsoft is an unavoidable partner. Its software is integral to virtually all organisations. Its position of economic strength enables it to prevent effective competition being maintained for pre-owned perpetual licences because it has the power to behave to an appreciable extent independently of its competitors and taxpayer-funded public sector organisations and private sector businesses of all sizes,” he added.
ValueLicensing is not only seeking financial compensation for lost sales, but is also demanding that Microsoft stops its policy of preventing the resale of perpertual licences and an end to non-disclosure agreements and discount agreements that keep the practice in place.
Microsoft has been contacted for a response.
ValueLicensing has made reference to existing legal precedents to back its case.
It has referred to some of the previous legal decisions made around pre-owned perpetual licences, including the European Court’s 2012 decision in UsedSoft GmbH v Oracle International Corp. In that case, the court was asked to rule on when a software copyright holder’s distribution right in software which it had licensed in perpetuity became exhausted under the 2009 EU Software Directive.
The court found that such licences can be legally resold as long as they are for an unlimited period, that they are fully bought and paid for, and were first placed on the market within the European Economic Area.