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UK Software Reseller Sues Microsoft For $370 Million (ft.com) 57

A British company is suing Microsoft for $370m in damages [Editor's note: the link may be paywalled; alternative source] in the English High Court, alleging that the US company is trying to crush a multibillion-dollar market in second-hand versions of its software. From a report: ValueLicensing buys pre-owned Microsoft software licences from companies that upgrade their IT or become insolvent, and then resells them across the UK and Europe. It claims on its website that its customers can save up to 70 per cent by buying used software, and points to one NHS Trust that allegedly saved $1.37 m by using Microsoft Office 2019, rather than the latest version of the office tools suite. Jonathan Horley, ValueLicensing's founder, accused Microsoft of harming competition in the used software market by persuading companies to relinquish their perpetual licences, often in exchange for discounts on Microsoft's cloud-based software, such as Office 365. "Microsoft has an incentive to move to its new cloud-based model and remove the old licences from the market so customers have no choice but to move to its subscription model," said Mr Horley, in an interview with the Financial Times.
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UK Software Reseller Sues Microsoft For $370 Million

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  • Itâ(TM)s shitty (Score:3, Insightful)

    by saloomy ( 2817221 ) on Thursday April 08, 2021 @12:16PM (#61251424)
    But is he asking the high court to rule that Microsoft cant buy back their licenses, lowering the cost to him? If he offers those businesses more money for their licenses than Microsoft is willing to give them, he would win those licenses back. This is just free market dynamics.
    • by AmiMoJo ( 196126 )

      They seem to be arguing that cloud based apps are making their business model redundant.

      Kinda like buggy whip manufacturers suing Ford for making the horse and carriage obsolete.

      • TFS suggests he is upset Microsoft is giving discounts (value) to cloud services in exchange for licenses it previously sold. This makes it hard for him to acquire them at a price lower than the relative value.
  • History repeats. (Score:5, Informative)

    by Ostracus ( 1354233 ) on Thursday April 08, 2021 @12:17PM (#61251432) Journal

    Singer use to do the same thing. [smithsonianmag.com]

    Singer Co. also became active in buying up used sewing machines and tamping down secondary markets of used sewing machines. Like the latest iPhone today, Singer would roll out a new sewing machine model and encourage consumers to replace their old one.

  • Well ... (Score:4, Insightful)

    by RitchCraft ( 6454710 ) on Thursday April 08, 2021 @12:18PM (#61251438)
    I'm not sure how ValueLicensing can claim harm. It's a second-hand market relying on a used product. If Microsoft wants to give customers a deal in exchange for trading in their licenses then why shouldn't they be able to do that. I'm no fan of M$ and it's many dirty tactics over the years but I see no foul here. Why can't we all just migrate to Linux and be done with all of this? :-)
    • Indeed. It seems like a business model fundamentally flawed by the fact that it's trying to insert itself into a market that it has no contractual role in. If I, as a licensee, can sell back my license to the original licensor for discounts on future purchases, then why should I be restricted in that activity so some old license reseller can make some money. If this company is serious, then it should market themselves to license holders; "Hey we'll buy your old Windows and Office licenses for $x per seat",

      • by maorb ( 2578043 )

        Not familiar with English law, in the US I'd expect this not to succeed, but I could at least imagine a legal angle for anti-competitive behavior in some situations.

        IE, MS want to sell a license for $350 for product 'x', which second-hand resellers often purchase for $50 and sell at $100. They set the price to $450 and offer a $100 trade-in on the old product it replaces. That $100 is more than the old product could be sold for second-hand which cuts out the possibility of a second-hand market MS doesn't ha

        • This wouldn't seem to have a legitimate business justification on the surface, only serving to hamper competition.

          This falls apart in that there's no legal basis to call the second hand resale of your own products "competition". Additionally by hampering the first sale of the product by raising its price it's hard to call this anticompetitive unless you can sue yourself for making your own product more expensive :-)

          • by maorb ( 2578043 )

            This falls apart in that there's no legal basis to call the second hand resale of your own products "competition".

            I suspect that is the case as well which is the main reason I think this would fail in the states. That said it might be something the court needs to decide on one way or the other before they could either proceed or dismiss with this hypothetical case.

            Additionally by hampering the first sale of the product by raising its price it's hard to call this anticompetitive unless you can sue yourself for making your own product more expensive :-)

            This doesn't really follow. If anything this would be a strike against MS in this hypothetical, they would have taken an action against their own business interests for the purpose of causing relatively greater harm to a 3rd party company to prevent them from

    • Realistically this company is likely on the verge of going out of business anyways and this is just a hail-Mary to attempt to get some money for themselves before the lights go out. Like a wounded animal that is cornered desperately lashing out.

    • by lsllll ( 830002 )
      Indeed. When I go to buy a new car, I have the option of doing a trade-in on my old car, or selling my car on my own and using the proceeds to buy the new car. If the dealer can sweeten the deal on my old car more than I can get on my own (which usually doesn't happen in the U.S.), then that just makes my decision easier.
  • I don't know the rules in the UK but it seems to me that ValueLicensing has built a business model on someone else's intellectual property.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Every second-hand bookstore builds its business model on someone else's intellectual property.

    • It's not even that. They built their business model based on selling contractual rights that they are probably not entitled to resell. It's been long since I last read any M$ license but I think it's usually written in there that the licence rights are non-transferrable.

      • Re: (Score:2, Informative)

        by Anonymous Coward

        The European Court of Justice ruled years ago that people have the legal right to resell "used" software licenses, this is long established. Whatever Microsoft or any other organisation puts in their EULA doesn't override your legal rights under the law.

        • Is that the first sale doctrine? I thought that went away when the software no longer became physical?
          • In the past, at least (about ten years ago) the company I worked for bought the inventory of the company it took over from; including computers and licenses. I went to MS's eOpen site and transferred the licenses from the old organization to the new one. These were persistent licenses (volume licenses for Microsoft Server, Exchange and a bunch of MS Office licenses). So, at least at the time, MS did have a means for transferring volume licenses. And we did buy those licenses as part of the purchase of inven

  • How Microsoft helped imprison a man for ‘counterfeiting’ software it gives away for free

    https://techcrunch.com/2018/04... [techcrunch.com]

    • He was selling software he didn’t have a license for. It’s a pretty cut and dry case.

      • No he wasn't. He was selling a physical media conversion service. The software that he provided is publically available. The license is still something you need to come up with yourself.

        Here you go: Go commit your own cut and dry case: https://www.microsoft.com/en-u... [microsoft.com]

        • by DRJlaw ( 946416 )

          No he wasn't. He was selling a physical media conversion service. The software that he provided is publically available. The license is still something you need to come up with yourself.

          Whether its publicly available or not, what you can do with it is limited by copyright. "Physical media conversion service" is simply your disingenuous attempt to say "created a physical copy that did not exist before," which is one of the copyright owner's exclusive rights. Microsoft can do it. Microsoft can license you t

          • You're simply attempting an ends-justify-the-means defense

            No I'm attempting a "this is fucking absurd" defence. Which it is. Effectively what you're saying is that a user can go online and download a file and burn it onto a CD. That is the entire purpose of the distribution of the software. But if the user doesn't have a CD burner and goes to a friends place and says "bro, here's $5 for your trouble, can you burn this onto CD for me" GO TO FUCKING JAIL YOU FILTHY COPYRIGHT INFRINGING CRIMINAL.

            It bears remembering that the *singular purpose* of the software in ques

            • by DRJlaw ( 946416 )

              But if the user doesn't have a CD burner and goes to a friends place and says "bro, here's $5 for your trouble, can you burn this onto CD for me" GO TO FUCKING JAIL YOU FILTHY COPYRIGHT INFRINGING CRIMINAL.

              You skipped the whole "and does it by the thousands," "and mocks up the CD and packaging to duplicate a Dell restoration CD," and "and intends to to sell them to refurbishers and consumers with the false connotation that they're genuine" parts.

              Don't pretend that the situations are remotely equivalent. Th

        • My knowledge of this case is based on the linked TechCrunch article, and a Microsoft blog post linked from it, but just from that "Physical media conversion service" is a stretch. This wasn't a guy burning recovery CDs and writing "Windows Recovery CD" on them in Sharpie to sell at the local PC shop. He went to great lengths to make them look like "official" recovery CDs and sold them on as such. That's a No No.

          • My knowledge of this case is based on the linked TechCrunch article, and a Microsoft blog post linked from it, but just from that "Physical media conversion service" is a stretch. This wasn't a guy burning recovery CDs and writing "Windows Recovery CD" on them in Sharpie to sell at the local PC shop. He went to great lengths to make them look like "official" recovery CDs and sold them on as such. That's a No No.

            Yeah I know, but that's not what he went to jail for. That's the whole absurdity of it. He pleaded guilty to counterfeiting the product to make it look like a Dell service CD, and that crime carries a significantly lower punishment than what he got. It's not ultimately why he went to jail.

            Microsoft somehow successfully argued that every copy of the software available as a free download on their website, one which comes without activation or a license key was somehow a lost Windows 7 Home edition (including

            • Microsoft owns the rights. It doesn’t matter if they give something away or sell it. Only Microsoft can legally distribute it.

        • I'm working from the assumption that you are ignorant of the details of this case.

          The software he "provided" was copies of Dell OEM recovery disk images that were cracked to work on additional models and with cracked activation logic. He specifically made the disks look like original restore media complete with the Dell and Microsoft trademark logos and copyright information so purchasers wouldn't know they were getting cracked copies of Windows. He even went so far as to copy the anti-counterfeiting measu

    • Yeah, I followed this case when it was happening. Microsoft threw this guy under the bus knowing damn well the judges were completely ignorant to what was really going on. Lundgren was only guilty of making discs look like they were coming from Dell through the use of deceptive copied labels, which he admitted to. Microsoft decided to keep the licensing system of their products murky instead of clarifying the difference between a license and software. Microsoft was definitely an a$$hole in this case.
  • When cars go all electric will the people who refurbish ICE car parts sue them for killing off their business model due as a side effect of moving to the market overall?
    • Close. This would be like the original manufacturer (Ford in your case) going directly the people who own Ford vehicles and convincing them to buy a new vehicle (Ford of course), then destorying the old car so a used car dealer can't resell it.

      • Well tesla is pretty much already doing this. Autopilot etc is not tied to the car, its your own personal license it seems so the next owner will have to buy everything again if they dont want a brick with only on/off button
      • Cash for clunkers. It killed the cheap 90s used car market.

    • I am I buggy whil manufcturer, you insensitive clod!

  • by brunes69 ( 86786 ) <`gro.daetsriek' `ta' `todhsals'> on Thursday April 08, 2021 @12:30PM (#61251510)

    Maybe the true GME business plan is for Gamestop to sue Sony, Microsoft, and Nintendo for pushing into digital sales?

    Maybe HMV and Sam Goody should sue Apple and Spotify and Google for killing the CD market?

    This is ridiculous. Business models can and will be disrupted. No company is entitled to a business model. Adapt or die.

    • Considering these are software licenses which may in some cases have some pretty iffy transfer of license terminology buried in the EULA, I would think this is at best a rather risky business model.

  • by xack ( 5304745 ) on Thursday April 08, 2021 @01:18PM (#61251750)
    Used keys are everywhere, they even buy sponsorships on big YouTube channels. Microsoft tolerates this because it stops people moving to Linux.
  • I'm pretty sure I just read this same article on Slashdot, only it was a different company and talking about copies of Windows 95.

    Get offa mah lawn!

  • some one got 15 months in prison for something like this (they called it counterfeiting)
    We really need right of 1st sale rights and FULL REFUNDS for EULA changes.
    https://techcrunch.com/2018/04... [techcrunch.com]

    • The article you linked is about a guy who made thousands of recovery CDs, went to great lengths to make them look like "official" Dell recovery CDs, and then sold them on as such. That's pretty significantly different.
  • Microsoft offers something of value - a discount on the latest incarnation of M-365 - software and services - in exchange for the license to the aging stand-alone product. EOL 2023-2025. Seems fair enough.
  • ...a "market" that doesn't exist, since the terms of MSFT EULAs all state you aren't entitled to resell it - ergo there is no "secondary market"
    Basically, the court is going to have to rule on whether that license clause is impermissible under UK law.

  • Offering incentives to switch to subscription models is legitimate business.

    MS offers both both perpetual and subscription based licensing. Obviously they prefer the latter (and therefore offer incentives to switch), still they give customers the choice for a lot of their products.

    This is unlike a lot of other vendors who have switched purely to subscription models (e.g. Adobe) - giving their customers no choice.

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