FAST FUD leaves bad taste for Discount-Licensing

Preloved software sales are legitimate, according to rival legal advice

Anti-piracy group the Federation Against Software Theft (FAST) has slammed the second-hand software sales industry despite reseller advice that the business can be legitimate.

FAST revoked the membership of reseller Discount-Licensing on Friday after learning it had settled a claim for copyright infringement brought against the reseller by Microsoft, issuing a press statement saying that buyers should beware of second-hand software generally.

However, Discount-Licensing has slammed the claim, arguing that legal advice has indicated that its resale of Microsoft software licences sourced from within the European Union or European Economic Area is permitted.

"FAST's recent press statement is, in Discount-Licensing's opinion, typical of the fear, uncertainty and doubt (FUD) that secondary software businesses have to deal with from the software vendors and their representatives," the reseller said.

"The European Court of Justice made a definitive decision in July 2012, which means that Discount-Licensing's core business of sourcing and selling Microsoft volume software licences from the EU region remains unaffected and is protected under the EU Software Directive 2009."

Furthermore, according to a statement provided to ChannelWeb yesterday by Discount-Licensing's managing director Noel Unwin following consultation with the company's legal counsel, the legalities of second-hand software are no longer a developing area of law within the EU, and the European Court of Justice's decision is not in danger of being overturned by comments from FAST or software vendors.

In the court case in question, Microsoft did not attack Discount-Licensing's core EU business, and the proceedings related only to Microsoft perpetual volume software licences from an organisation in the US, it said.

"Discount-Licensing is disappointed by what it sees as the hypocritical way that FAST has reacted to recent news stories, especially when other FAST members have been exposed to considerably higher levels of negative press coverage including huge fines from the European Commission, yet still remain FAST members," it added.

FAST, which states its role is to protect software publishers' rights and has a range of organisations as members, confirmed in its statement that Discount-Licensing is the first company whose membership has been revoked since FAST was founded in 1984.

Julian Heathcote-Hobbins, general counsel for FAST, said "practical challenges, the European Court's view and the conflicting interpretation taken by the US courts on the same issues" had created uncertainty.

"FAST believes that current case law is insufficient to be able to categorically state that certain second-hand software transactions are or are not legal," Heathcote-Hobbins said.

"FAST is yet to come across any appropriately qualified legal adviser that can give a 100 per cent assurance that second-hand software is completely infringement-risk free. The position remains buyer beware."

Resellers should therefore think "very carefully" and seek sound legal advice before jumping into the market, he added, saying that it was difficult to anticipate where the law would finally settle.

FAST was not convinced by "assurances that software vendors will not take legal action against organisations in regard to second-hand software", he concluded.

However, Unwin said that Discount-Licensing has received quality, ongoing legal advice, from an intellectual property specialist who is also a Queen's Counsel, regarding its business model.

"That advice took into consideration the EU Software Directive 2009 and the precedent set by the European Court of Justice in July 2012 in the matter of Oracle v Usedsoft. The QC advised that it would be very difficult to envisage any credible legal challenge that could be made by Microsoft to the business," he said.

He claimed the industry would benefit by seeing more independent advisory organisations such as the Campaign for Clear Licensing emerging.

He also noted that outside of the annual membership payment, Discount-Licensing had not had to go through any screening process - so it was difficult to see how it had violated its FAST membership.