“Losers” lose: transfer of a back-up copy of software, unless authorized, is not allowed

The European Court of Justice (“ECJ”), in the Aleksandrs Ranks and Jurijs Vasilevics case (C-166/15), held that although in applying the UsedSoft case (C-128/11) “the initial acquirer of a copy of a computer program accompanied by an unlimited user licence is entitled to resell that copy and his licence to a new acquirer”, this does not allow him to transfer his back-up copy of the same program to that new acquirer without the authorization of the rightholder when the original material medium (such as a CD) of the copy that was initially delivered to him has been damaged, destroyed or lost. The ECJ, opening the door with the much-criticized UsedSoft case, now appears to have partially closed that same door with equally legally polluted reasoning.

Aleksandrs Ranks and Jurijs Vasilevics, between 2001 and 2004, illegally sold more than 3,000 copies of copyright-protected computer programs published by Microsoft. In the first instance, they were charged with and convicted of several criminal offences. The case, however, was returned by the Criminal Law Division of the Riga Regional Court and was then moved up to the Supreme Court of Latvia, which set aside the latter judgment, and referred the case back to the Criminal Law Division of the Riga Regional Court. This court decided to stay its proceedings and refer several questions to the ECJ for a preliminary ruling.

M. Ranks and M. Vasilevics submitted before the ECJ that the principle of exhaustion should also apply to the resale of a back-up copy of a computer program stored on a non-original medium, when the original medium has been damaged, if the conditions of the UsedSoft case are met. The transfer of a (back-up) copy of a computer program stored on a non-original medium should then be possible if the initial acquirer of the copy of that same program on an original medium has obtained an unlimited licence,  and has made any copy in his possession unusable.

The ECJ did not agree with this observation. Its reasoning is straightforward. Article 5(2) of the Software Directive (91/250) provides a copyright exception under which a back-up copy of a computer program can only be made (i) if it is made by a person having the right to use the program and (ii) if the making of a back-up copy is necessary for that use. This exception must be interpreted strictly, allowing the person having the right to use the program to make a back-up copy for “his needs only”, and thus not allowing the reselling of a back-up copy of the computer program to a third party.   

Once you lose the copy you originally acquired from the right holder, you lose your right to transfer… 

Alexis Hallemans, Associate Partner, alexis.hallemans@cms-db.com

Simon-Pierre Pype, Junior Associate, simonpierre.pype@cms-db.com