Discount-Licensing.com has been in business since 2005 and buys
used licences, often from company liquidations, and re-sells
them to other companies.
In September of last year, though, Microsoft changed the terms
of licences in its small and medium sized company licensing scheme,
the Open scheme, and its large organisation scheme, called
Select.
The Open licences now say that "the resale of Licenses is
expressly prohibited", while the Select scheme orders that
customers do not engage in " transferring licences for resale to
unaffiliated 3rd parties”.
Noel Unwin of Discount Licensing says that his firm is still
able to facilitate re-sale while staying within Microsoft's
licensing terms.
Unwin said that the new Open licence terms now prohibit the
resale of licences, but do not stop Discount Licensing from acting
as a broker between a selling and a buying company.
"Though it restricts the way you can buy and transfer pre-owned
licence agreements it doesn't prohibit the re-sale of Open licence
agreements," said Unwin.
"The terminology in the notice of transfer and the licence
agreement said you're not allowed to resell the licences on to a
third party for resale," said Unwin. "In other words, we couldn't
buy the licences from an insolvency practitioner and then sell them
on. However it is perfectly legal to organise the transfer and sale
of an Open licence agreement from an insolvent company directly to
a private sector company and take a commission just like any broker
would."[7.36]
For Select licences, which are designed for very large
organisations of hundreds or thousands of users, Discount Licensing
has devised a process by which a shelf company is sold from the
licence holder to the organisation that wants to buy the licences.
He says this creates a situation in which licences can be
transferred without breaking the terms of the licences.
"You can transfer the licences, or reassign a certain number of
licences, within the Select agreement just in connection with the
divestiture of the affiliate," said Unwin. "So what we do is create
the affiliate or shelf company for the supplier, we create the sale
using our sales contract, sell the shelf company and then we can
effect the transfer of the Select licences directly from the
supplier to the end customer."
OUT-LAW.COM sought a response from Microsoft about whether it
thinks that the processes are compliant with its licences but the
company did not respond. OUT-LAW.COM has seen an email from
Microsoft's legal department to Discount Licensing, though, which
neither accepts nor rejects the processes.
The changes to Microsoft's licences cannot affect software sold
before October 2007, since the terms and conditions cannot be
backdated, meaning that Discount Licensing's previous arrangements
for the transfer of older software still stand, said Unwin.
