Civil Law and Software Licensing Litigation in Europe

1. Introduction

Software licensing litigation concerns disputes over the legal rights and obligations connected with using computer programs.

Unlike the sale of an ordinary physical product, software is normally supplied through a licence. The licence may determine:

who may use the software;

number of authorised users;

duration of use;

geographical territory;

permitted devices;

copying rights;

modification rights;

reverse engineering;

sublicensing;

assignment;

resale;

updates and maintenance;

cloud access;

termination;

payment and royalties.

European software disputes therefore sit at the intersection of contract law, copyright law, intellectual-property law, consumer law, competition law and civil liability.

The most important EU legislation includes the Software Directive 2009/24/EC, copyright legislation, enforcement rules, GDPR where software processes personal data, and national contract and civil-law rules.

2. Nature of a Software Licence

A software licence normally gives the customer a right to use software without transferring ownership of the underlying copyright.

For example:

Company A owns the copyright in accounting software.
Company B pays €20,000 for a five-year licence.

Company B normally does not become the copyright owner.

Instead, it receives contractual and statutory rights to use the program within the permitted scope.

This creates two different legal layers:

Contractual layer

The licence agreement may regulate:

payment;

users;

permitted uses;

maintenance;

confidentiality;

termination;

warranties;

service levels.

Copyright layer

Copyright law regulates:

reproduction;

adaptation;

distribution;

copying;

modification;

decompilation;

transfer of rights.

A single dispute may involve both.

3. Main Types of Software Licensing Litigation

Common disputes include:

Unauthorised copying

Excessive number of users

Unauthorised modification

Reverse engineering

Software resale

Licence transfer

Sublicensing

Licence termination

Maintenance disputes

Cloud/SaaS access disputes

Open-source licence violations

Source-code ownership

Software escrow

Royalty disputes

Software piracy

Contractual restrictions

Interoperability

Updates and security patches

AI-generated software

Software-as-a-Service contractual failure

4. European Legal Framework

The most important instrument is:

Directive 2009/24/EC

It provides special copyright protection for computer programs.

Important concepts include:

reproduction;

adaptation;

distribution;

lawful acquirer;

decompilation;

necessary acts of use;

correction of errors.

A major principle is that the rights of the copyright owner cannot simply be defined exclusively by the wording of a licence contract. Mandatory statutory rights may also protect the lawful user.

5. Case 1 — UsedSoft GmbH v Oracle International Corp.

CJEU, Case C-128/11, 3 July 2012

This is the leading European software-licensing case.

Oracle distributed software online. Customers received licences described as non-transferable.

UsedSoft purchased and resold "used" Oracle licences.

Oracle argued that the licences could not legally be transferred.

The CJEU disagreed in important circumstances.

It held that where the copyright owner:

allows a copy of software to be downloaded;

grants a right to use that copy for an unlimited period;

receives payment corresponding to the economic value of the copy,

the distribution right in that copy can become exhausted. A subsequent purchaser can therefore rely on the exhaustion principle. (EUR-Lex)

Importance

This case fundamentally changed European thinking about digitally supplied software.

Key principle

A software licence is not automatically immune from exhaustion merely because the software was downloaded rather than supplied on a physical disc.

Conditions

The Court's reasoning was particularly connected with:

unlimited duration;

payment representing the economic value;

transfer of the relevant licence/copy;

the first acquirer ceasing to use the copy when transferring it.

Exam keyword

UsedSoft = software download + licence + exhaustion + resale.

6. Case 2 — SAS Institute Inc. v World Programming Ltd

CJEU, Case C-406/10, 2 May 2012

SAS developed software used for data processing and analysis.

World Programming developed software capable of performing similar functions and sought to reproduce the functionality of SAS programs.

The CJEU distinguished between:

copyright-protected expression, and

ideas, principles and functionality.

The functionality of a computer program, programming language and certain program interfaces are not protected by copyright merely because they form part of the software's functional operation. (EUR-Lex)

Importance

A licence holder cannot necessarily be prevented from studying how software works simply because the licensor owns copyright.

Principle

Copyright protects software expression, not the underlying ideas and functionality as such.

Litigation significance

This is particularly important for:

competing software;

interoperability;

reverse engineering;

migration from one system to another;

independent development.

7. Case 3 — Bezpečnostní softwarová asociace v Ministerstvo kultury

CJEU, Case C-393/09, 22 December 2010

The dispute concerned the scope of copyright protection for computer programs and graphical user interfaces.

The CJEU examined whether a graphical user interface constituted a form of expression protected under the Software Directive.

The Court distinguished the computer program itself from the visual interface and emphasised that copyright protection requires an expression of the author's own intellectual creation.

Importance

The case helps establish that software litigation requires careful identification of what exactly is being protected.

Possible protected subject matter may include:

source code;

object code;

particular original elements.

But not every functional or visual aspect automatically receives software copyright protection.

Principle

Identify the protected expression before determining infringement.

8. Case 4 — Top System SA v Belgian State

CJEU, Case C-13/20, 6 October 2021

Top System developed software for the Belgian public administration.

The dispute concerned modification of software and the correction of errors.

The CJEU considered the rights of a lawful acquirer under Directive 2009/24/EC.

It confirmed important statutory rights concerning acts necessary to use a computer program, including correction of errors under the conditions established by EU law.

Importance

A software licence cannot necessarily prohibit every form of modification.

Certain acts may be legally necessary for:

use;

correction;

maintenance;

interoperability.

Principle

Mandatory statutory rights of a lawful acquirer can restrict the copyright owner's ability to rely exclusively on contractual prohibitions.

9. Case 5 — IT Development SAS v Free Mobile SAS

CJEU, Case C-666/18, 18 March 2021

This is another major software licence case.

IT Development licensed its ClickOnSite software to Free Mobile.

Free Mobile allegedly modified the software beyond the limits permitted by the licence.

IT Development brought proceedings based on copyright infringement.

The dispute raised an important question:

When a licensee breaches a software licence, is the matter purely contractual, or can the copyright owner also rely upon copyright infringement?

The CJEU held that EU law does not prevent an action for copyright infringement being brought in circumstances where the relevant conduct also constitutes breach of a licence agreement, subject to the applicable national rules. (EUR-Lex)

Importance

The case demonstrates that software disputes may have dual contractual and copyright dimensions.

Example

If a licence states:

"The licensee shall not modify the software."

and the licensee nevertheless modifies it, the dispute may involve:

breach of contract + intellectual-property infringement.

10. Case 6 — Ranks of Computer Software / Nintendo v PC Box

CJEU, Case C-355/12, 23 January 2014

The dispute involved technological protection measures used by Nintendo to protect its video games and consoles.

The CJEU considered the relationship between copyright protection and technological measures.

The Court examined whether protection measures must be proportionate to the legitimate objective of preventing unauthorised acts.

Importance

The case is relevant to software licensing because modern licences often use:

activation keys;

DRM;

licence servers;

authentication;

device restrictions;

access controls.

Principle

Technological protection measures must be assessed in light of copyright objectives and proportionality.

11. Case 7 — UsedSoft: Important Limits

UsedSoft does not mean:

"Every software licence can be resold."

The judgment must be carefully applied.

Important questions include:

Was the licence granted for an unlimited period?

Was there payment corresponding to economic value?

Was a copy supplied?

Has the original user stopped using the copy?

Is the arrangement actually a licence for software or another type of service?

Is the transaction genuinely a transfer of the relevant rights?

This distinction is particularly important for modern SaaS/cloud arrangements.

12. Software Licence vs SaaS

Traditional software:

Download → install → use locally.

SaaS:

Provider's server → customer remotely accesses functionality.

This creates an important legal distinction.

A SaaS agreement may contain:

subscription;

hosting;

maintenance;

support;

storage;

security;

continuous updates.

The customer may never receive a permanent copy.

Therefore, UsedSoft's exhaustion principle cannot simply be applied to every SaaS subscription.

13. Software Licensing and Contract Law

Software licensing is fundamentally contractual.

The court may interpret:

licence scope;

payment provisions;

renewal;

termination;

warranties;

service levels;

maintenance;

indemnities;

limitation clauses;

audit rights.

The general civil-law principles of:

good faith;

contractual interpretation;

proportionality;

mitigation;

causation;

damages

may become important.

14. Licence Scope Disputes

A common dispute is:

"The customer purchased a licence for 100 users but allowed 150 employees to use the software."

The licensor may claim:

additional licence fees;

damages;

injunction;

termination.

The licensee may argue:

the licence was ambiguous;

users were temporary;

the additional access was technically necessary;

the licensor accepted the practice;

the conduct was permitted by statutory rights.

The court must interpret both the contract and applicable mandatory copyright rules.

15. Unauthorised Copying

Software is particularly vulnerable to copying.

Examples:

copying source code;

cloning executable software;

installing software on unauthorised computers;

copying databases where protected;

duplicating software for subsidiaries;

creating unauthorised backup copies.

Copyright infringement may arise if the relevant reproduction falls within the copyright owner's exclusive rights and is not covered by an applicable exception.

16. Backup Copies

Software law recognises certain rights of a lawful acquirer.

A backup copy may be permitted where it is:

necessary;

required for use;

consistent with applicable statutory provisions.

The licence cannot always eliminate mandatory statutory protections.

This is one reason Top System and SAS Institute are important.

17. Error Correction

A software product may contain bugs.

Suppose a licence says:

"The customer may not modify the software under any circumstances."

The customer discovers a serious defect preventing operation.

European software law recognises circumstances in which a lawful acquirer may make acts necessary for the intended use or correction of errors.

Therefore:

Contractual restriction ≠ automatic elimination of mandatory statutory rights.

18. Reverse Engineering

Reverse engineering can involve:

analysing software;

decompiling object code;

examining interfaces;

identifying functionality;

developing interoperable software.

European law contains specific rules governing decompilation for interoperability.

The rights are not unlimited.

The user must remain within the statutory conditions.

SAS Institute is particularly important because it distinguishes protected expression from functionality.

19. Interoperability

Interoperability means:

One software system can work with another system.

Examples:

accounting software communicating with banking software;

hospital software communicating with medical devices;

ERP software communicating with warehouse systems;

government software communicating with tax systems.

A licensor cannot necessarily use copyright law to prevent every attempt to achieve interoperability.

This is one of the major lessons of European software jurisprudence.

20. Software Maintenance Litigation

Software licences frequently include maintenance.

Maintenance can involve:

bug fixing;

updates;

patches;

security fixes;

version upgrades;

technical support.

A dispute may arise where:

Customer pays annual maintenance fees, but the supplier stops providing security updates.

Potential claims include:

breach of contract;

failure to perform;

damages;

termination;

service-level violations.

21. Software Licence Termination

A licence may terminate because of:

non-payment;

insolvency;

material breach;

unauthorised copying;

exceeding user limits;

unauthorised modification;

expiration.

The consequences may include:

immediate loss of access;

deletion of software;

return of materials;

destruction of copies;

payment of outstanding fees.

However, the legality of termination depends on:

contract;

mandatory national law;

EU copyright rules;

good faith;

consumer protection where applicable.

22. Software Licence and Damages

Possible damages include:

Direct loss

unpaid licence fees;

costs of remediation;

replacement software.

Lost profits

Where causation can be proved.

Intellectual-property damages

For unauthorised reproduction or use.

Contractual damages

Where the licence contains a valid damages clause.

Injunction

The court may order the defendant to:

stop unauthorised use;

delete copies;

stop distribution.

23. Limitation-of-Liability Clauses

Software agreements frequently contain clauses such as:

"The supplier's liability shall not exceed the licence fees paid during the previous 12 months."

Such provisions may become controversial where there is:

fraud;

intentional misconduct;

gross negligence;

infringement;

personal injury;

mandatory statutory liability.

The validity and scope of such clauses are determined largely by national contract law, subject to applicable EU rules.

24. Open-Source Software Licensing

Open-source software creates another major category of litigation.

Examples include licences requiring:

attribution;

disclosure of source code under specified conditions;

preservation of licence notices;

compliance with redistribution requirements.

A company may combine open-source components with proprietary software.

Failure to comply can create:

contractual disputes;

copyright claims;

injunctions;

distribution restrictions.

Open-source litigation is particularly difficult because the licence may operate through standardised public terms rather than individually negotiated contracts.

25. Software Licence and Competition Law

A software licence can also raise competition-law questions.

For example:

A dominant software company requires customers to use only its compatible products.

Potential concerns include:

tying;

exclusive licensing;

refusal to supply;

interoperability restrictions;

discriminatory licensing;

excessive royalties.

Therefore, software licensing can involve both:

IP rights + competition law.

26. Software Licensing and Cloud Computing

Modern software contracts increasingly involve:

cloud platforms;

SaaS;

APIs;

platform licences;

subscription models;

digital twins;

AI software;

blockchain software.

The traditional question:

"Who owns the copy?"

may become less important.

Instead, disputes may concern:

"Who has continuing access to the service?"

27. Software Licence and Cybersecurity

A software supplier may have contractual obligations concerning:

security updates;

vulnerability management;

breach notification;

secure development;

patching.

Failure to provide security updates can potentially produce:

contractual liability;

data-protection liability;

negligence claims;

regulatory consequences.

This becomes particularly important for:

banking software;

healthcare systems;

government software;

industrial control systems.

28. Software Licence and Personal Data

If software processes personal data, the licence relationship may overlap with GDPR.

For example:

A hospital licences AI software that processes patient records.

A defect could potentially produce:

contractual liability;

software liability;

GDPR consequences;

professional liability.

The software supplier and customer may have different roles under data-protection law.

29. Software Licence and AI

AI creates new software licensing disputes involving:

training software;

AI models;

model weights;

APIs;

inference licences;

open-source AI models;

proprietary models.

A licence may specify:

whether commercial use is permitted;

whether model modification is permitted;

whether redistribution is permitted;

whether outputs can be commercialised.

Future European litigation is likely to focus increasingly on the relationship between software copyright, AI models and contractual licences.

30. Civil Liability Structure

A software dispute can therefore be analysed through five layers:

Layer 1 — Contract

Was the licence breached?

Layer 2 — Copyright

Was protected software reproduced, modified or distributed unlawfully?

Layer 3 — Statutory software rights

Did the lawful user possess a mandatory right under Directive 2009/24?

Layer 4 — Data protection

Did the software process personal data unlawfully?

Layer 5 — Competition law

Did licensing conduct distort competition?

31. Important Difference: Licence vs Ownership

One of the most important exam distinctions is:

Ownership

The copyright owner controls the intellectual property.

Licence

The licensee receives permission to perform specified acts.

Therefore:

Buying software does not normally mean buying the copyright.

However, UsedSoft demonstrates that some transactions described as licences can have consequences similar to a sale for the exhaustion doctrine.

32. Six Core Cases to Remember

These cases form a strong foundation for European software-licensing litigation.

33. Practical Example

Assume:

Company A licences ERP software to Company B for 500 employees.

The licence says:

500 users;

no modification;

no transfer;

annual maintenance;

no reverse engineering.

Company B:

allows 700 employees to use the software;

modifies the source code;

creates an interoperability tool;

stops paying maintenance fees;

sells the modified system to its subsidiary.

A court may have to examine five separate questions:

Issue 1 — Excess users

Possible contractual breach.

Issue 2 — Modification

Potential contractual and copyright issues.

Issue 3 — Interoperability

Statutory software-law rights may become relevant.

Issue 4 — Maintenance

Contractual breach by either party may be relevant.

Issue 5 — Transfer

UsedSoft may become relevant, but its specific conditions must be satisfied.

Thus, software litigation cannot be solved merely by reading the licence agreement.

34. European Legal Test for Software Licence Litigation

A court can systematically ask:

Step 1

What exactly was licensed?

Step 2

Who owns the copyright?

Step 3

What rights did the customer receive?

Step 4

Was the software downloaded, physically supplied or provided as SaaS?

Step 5

Was the licence limited or unlimited in duration?

Step 6

Was the software copied?

Step 7

Was it modified?

Step 8

Was reverse engineering performed?

Step 9

Is there a mandatory statutory right protecting the lawful acquirer?

Step 10

Has the distribution right been exhausted?

Step 11

Was the licence transferred?

Step 12

Did the customer breach contractual restrictions?

Step 13

Did the supplier breach maintenance/support obligations?

Step 14

Did either party suffer legally recoverable damage?

Step 15

Do data protection or competition rules additionally apply?

35. Key Principles

Principle 1

Software is protected by copyright, but protection does not extend automatically to every idea or function.

Principle 2

A software licence creates contractual rights and obligations.

Principle 3

Mandatory statutory rights can override certain contractual restrictions.

Principle 4

A lawful acquirer may have rights to perform acts necessary for use of software.

Principle 5

European law recognises exhaustion for certain downloaded software transactions, as established by UsedSoft. (EUR-Lex)

Principle 6

Software functionality is not automatically protected by copyright, as demonstrated by SAS Institute.

Principle 7

A licence breach may also constitute copyright infringement, as illustrated by IT Development.

Principle 8

Technological protection measures must be assessed against legitimate copyright objectives and proportionality.

Principle 9

Modern SaaS arrangements must be distinguished from permanent software transfers.

Principle 10

Software disputes increasingly overlap with GDPR, cybersecurity, AI and competition law.

36. Conclusion

Software licensing litigation in Europe is a complex area of civil and intellectual-property law. The central dispute is usually not simply whether a customer "owns" the software, but what legal rights the customer acquired and what restrictions are legally enforceable.

The European approach balances:

Copyright owner's rights
↓
Contractual licence conditions
↓
Mandatory rights of lawful users
↓
Interoperability and technological development
↓
Consumer/data/competition protection

The most important case is UsedSoft v Oracle, because it established that, under specified circumstances, a paid, unlimited-duration licence accompanying a downloaded software copy can trigger exhaustion of the distribution right and permit resale. (EUR-Lex)

SAS Institute protects the distinction between software expression and functionality; Top System protects certain rights of lawful acquirers; IT Development demonstrates the interaction between contract and copyright; Nintendo v PC Box addresses technological protection measures; and Bezpečnostní softwarová asociace helps define the scope of copyright protection.

Exam Keywords

Software licence – copyright – computer program – lawful acquirer – exhaustion – UsedSoft – resale – licence transfer – SaaS – subscription – source code – object code – reverse engineering – interoperability – modification – backup copy – error correction – maintenance – termination – licence breach – copyright infringement – DRM – technological protection measures – open source – cloud computing – AI software – GDPR – competition law – damages – injunction – contractual liability.