Microsoft’s long-running legal battle with UK reseller ValueLicensing has reopened at the Competition Appeal Tribunal, and this time the dispute centres not just on alleged anti-competitive conduct but on a provocative legal contention from Microsoft: that reselling pre‑owned copies of Office and Windows may be unlawful because copyright in non‑program elements of the software (for example, graphical user interfaces) places those elements outside the Software Directive’s exhaustion rule and therefore outside the usual EU regime that has historically permitted resale of used software licences.
The ValueLicensing claim began as a classic competition‑law complaint: ValueLicensing alleges Microsoft deliberately suppressed the supply of perpetual (non‑subscription) licences by designing commercial incentives — discounts on subscriptions and contractual clauses — that encouraged customers to surrender or forfeit perpetual licences, thereby shrinking the pool of licences available to the secondary market. ValueLicensing says those practices cost it roughly £270 million in lost profits and seeks compensation and injunctive relief. (theregister.com)
Procedurally the case has been managed closely by the CAT for several years; the Tribunal has issued multiple procedural rulings, and a preliminary issues trial (PI Trial) was listed for early September 2025 to determine discrete copyright questions Microsoft has raised as part of its defence. The CAT has already considered — and rejected — an argument from Microsoft that the Tribunal lacks jurisdiction to decide matters that turn on copyright law; the CAT held its competition jurisdiction is broad enough to encompass incidental copyright issues that are central to a properly pleaded competition claim. (hoganlovells.com)
[*]Broad victory for Microsoft — secondary market materially restricted: A sweeping ruling excluding a wide swath of Microsoft’s products from exhaustion would dramatically reduce second‑hand availability, increase pressure on pricing and procurement, and likely trigger regulatory responses across the EU and the UK. The commercial effect would be immediate for resellers and would empower claimants in the Wolfson/Stasi class actions. This is the most disruptive outcome and therefore the one courts may treat with the most caution. (theregister.com)
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Community debate and practical action — from procurement teams re‑examining contract boilerplate to small resellers reconsidering inventory strategies — will be the immediate consequence of whatever the CAT decides at the PI Trial and in subsequent hearings. Forum discussions have already picked up steam as the legal calendar has evolved and new rulings and disclosures emerged.
That question will be resolved not in a vacuum but against the twin precedents of UsedSoft and Tom Kabinet, the detailed factual record emerging from discovery, and the wider constellation of parallel claims and regulator interest. For resellers, purchasers, and the vendor community, the prudent course is immediate preparedness: audit, preserve, and plan for multiple legal and commercial futures. The Tribunal’s rulings over the coming months will shape how Europe — and by influence, other jurisdictions — balances copyright protection against the economic freedoms of secondary markets for software. (acr.amsterdam, Microsoft software reselling dispute heads back to UK court
Background
The ValueLicensing claim began as a classic competition‑law complaint: ValueLicensing alleges Microsoft deliberately suppressed the supply of perpetual (non‑subscription) licences by designing commercial incentives — discounts on subscriptions and contractual clauses — that encouraged customers to surrender or forfeit perpetual licences, thereby shrinking the pool of licences available to the secondary market. ValueLicensing says those practices cost it roughly £270 million in lost profits and seeks compensation and injunctive relief. (theregister.com)Procedurally the case has been managed closely by the CAT for several years; the Tribunal has issued multiple procedural rulings, and a preliminary issues trial (PI Trial) was listed for early September 2025 to determine discrete copyright questions Microsoft has raised as part of its defence. The CAT has already considered — and rejected — an argument from Microsoft that the Tribunal lacks jurisdiction to decide matters that turn on copyright law; the CAT held its competition jurisdiction is broad enough to encompass incidental copyright issues that are central to a properly pleaded competition claim. (hoganlovells.com)
Why this is legally and commercially significant
At stake in the PI Trial is more than one reseller’s balance sheet. If Microsoft’s legal construction prevails, it could undermine the legal foundation of the European secondary market for certain software licences. ValueLicensing and a host of resellers and buyers treat the sale and purchase of perpetual licences as legitimate and governed by the European Software Directive and ECJ precedent allowing resale of software where the right of distribution has been exhausted. If key Microsoft products were reclassified — because parts of Office and Windows are treated as protected works outside the Software Directive’s exhaustion rule — the effect could be to substantially restrict or prohibit resale of many pre‑owned licences across Europe. ValueLicensing warns that the entire resale market could be threatened if Microsoft is right. (theregister.com, acr.amsterdam, catribunal.org.uk, stewartslaw.com, theregister.com, catribunal.org.uk, hoganlovells.com, op.europa.eu, acr.amsterdam, theregister.com)[*]Broad victory for Microsoft — secondary market materially restricted: A sweeping ruling excluding a wide swath of Microsoft’s products from exhaustion would dramatically reduce second‑hand availability, increase pressure on pricing and procurement, and likely trigger regulatory responses across the EU and the UK. The commercial effect would be immediate for resellers and would empower claimants in the Wolfson/Stasi class actions. This is the most disruptive outcome and therefore the one courts may treat with the most caution. (theregister.com)
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Risks beyond the courtroom
- Regulatory intervention. If courts shrink the resale market, competition authorities may step in to craft remedies for the primary market or to police unfair contract terms. The CMA and the EU’s competition authorities are already focused on cloud and platform dynamics; judicial findings can catalyse regulatory action. (hoganlovells.com)
- Fragmentation of precedent. Divergent decisions across member‑state courts or between courts and regulators could produce a patchwork of rules, effectively forcing resellers to operate under country‑specific compliance regimes.
- Commercial displacement. Rapid shifts to subscription models and cloud platforms are already changing how software is consumed. Legal uncertainty may accelerate vendor capture of customers into subscription ecosystems, with knock‑on effects for software pricing, public budgets, and smaller ISVs. (reuters.com)
How the industry should prepare — a short, operational checklist
- Audit and catalogue all licence holdings and resale contracts immediately.
- Preserve all communications with vendors, especially where discounts were exchanged for surrender of perpetual licences.
- Place sensitive documents in secure legal holds and consult competition counsel about disclosure obligations.
- Reassess pricing models and cash reserves for resellers that may face prolonged litigation risk.
- Monitor CAT hearings and rulings closely — outcomes will influence procurement strategy and contract drafting. (valuelicensing.com)
Why this matters to WindowsForum readers
This litigation is not an abstruse copyright puzzle; it strikes at everyday realities: how organisations license Office and Windows, the viability of cost‑saving second‑hand licences, and the balance between copyright owners’ control and the functioning of downstream markets. A decision for Microsoft could reduce options for cost‑conscious buyers and accelerate subscription lock‑in. A decision for ValueLicensing could vindicate the long‑standing market practice that permitted resale and put licensing behaviour under tighter competition law scrutiny.Community debate and practical action — from procurement teams re‑examining contract boilerplate to small resellers reconsidering inventory strategies — will be the immediate consequence of whatever the CAT decides at the PI Trial and in subsequent hearings. Forum discussions have already picked up steam as the legal calendar has evolved and new rulings and disclosures emerged.
Conclusion
The ValueLicensing dispute presents a high‑stakes collision between EU copyright doctrine, competition law, and commercial licensing practice. The CAT’s decision to hear preliminary copyright issues keeps the entire matter inside one tribunal and accelerates an answer to a question that is both doctrinally thorny and commercially consequential: can Microsoft lawfully assert copyright over parts of its software in a way that defeats the Software Directive’s exhaustion regime and effectively prohibits resale?That question will be resolved not in a vacuum but against the twin precedents of UsedSoft and Tom Kabinet, the detailed factual record emerging from discovery, and the wider constellation of parallel claims and regulator interest. For resellers, purchasers, and the vendor community, the prudent course is immediate preparedness: audit, preserve, and plan for multiple legal and commercial futures. The Tribunal’s rulings over the coming months will shape how Europe — and by influence, other jurisdictions — balances copyright protection against the economic freedoms of secondary markets for software. (acr.amsterdam, Microsoft software reselling dispute heads back to UK court
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