How Oracle's 2012 court defeat became the heart of £270 million lawsuit against Microsoft

In 2012, Oracle walked into the European Court of Justice trying to shut down the second-hand software market and walked out having done the opposite. The court ruled that once a perpetual software licence is sold, the original seller loses the right to control what happens to it next. The buyer can resell it. That judgment, known as UsedSoft, was Oracle's defeat. Fourteen years later, it has become Microsoft's problem.

Microsoft is now fighting a £270 million lawsuit in London brought by UK software reseller ValueLicensing, and it has lost twice. It is now asking the UK Supreme Court for permission to try again.

What the case is actually about


The dispute began in 2021, and its origins were not about copyright at all.

ValueLicensing alleged that Microsoft had inserted contractual terms designed to steer customers towards its Microsoft 365 subscription service while simultaneously blocking them from reselling their existing perpetual licences. The effect, ValueLicensing argued, was that surplus Office licences were being squeezed out of the market, harming resellers like itself.

Microsoft initially contested those claims, then changed course mid-case and argued that the act of reselling and subdividing its on-premise licences was itself a copyright infringement. It was a significant shift in strategy, and it did not work.

The Competition Appeal Tribunal ruled in 2025 that reselling and subdividing Microsoft's licences did not infringe its copyright. Microsoft appealed. On 7 July 2026, it lost that too.

What the courts have said, and why it matters

The Court of Appeal's judgment was pointed in its criticism of Microsoft's position. It said the approach "would produce odd results," highlighting a logical inconsistency at the heart of Microsoft's argument.

Under Microsoft's reading of copyright law, a company that bought software on a physical CD-ROM could resell it freely because Microsoft had no digital control over the disc. But the same software downloaded or delivered digitally would be locked to the original buyer forever. The court found that distinction difficult to justify.

The judgment also noted something more damaging: under Microsoft's logic, any software company could sidestep the UsedSoft ruling entirely by simply bundling minor extras, something as trivial as icons or clip art, into a programme. That, the court implied, could not be what copyright law was intended to allow.

This is where the Oracle connection becomes central. UsedSoft established a principle that courts have now applied twice against Microsoft: sell someone a perpetual licence, and you sell them the right to do with it as they please, including passing it on. Microsoft's argument effectively asked courts to undo that principle. Both the tribunal and the Court of Appeal refused.

The used software market Microsoft wanted to contain

To understand why Microsoft pushed back so hard, it helps to understand what the used licence market actually threatens for the company.

When businesses upgrade, consolidate, or move to cloud services, they often hold surplus perpetual licences for software they no longer need, things like older versions of Microsoft Office or Windows Server. Resellers like ValueLicensing buy those surplus licences and sell them on at a discount.

For Microsoft, this creates a direct problem. A business that can buy a legitimate used Office licence cheaply has less reason to pay for a Microsoft 365 subscription. The subscription model, which generates recurring revenue, is central to how Microsoft has repositioned itself over the past decade. The used licence market cuts against that.

ValueLicensing's claim is essentially that Microsoft understood this tension and tried to resolve it not through competition but through contractual restriction, blocking the supply of used licences so customers had no choice but to subscribe.

Where the case stands now

Microsoft has applied to the UK Supreme Court for permission to appeal. On 21 July 2026, the Competition Appeal Tribunal granted a partial stay while that application is prepared, but declined to freeze the entire case.

Tribunal chair Justin Turner KC described it as a middle ground, weighing the cost of wasted work against the risk of further delay, and noted that ValueLicensing had already won at both first instance and on appeal.

ValueLicensing's Jonathan Horley said the company was pleased a full stay was refused and that it intends to push towards a liability trial as quickly as possible. Microsoft has not commented publicly.

The £270 million figure, significant as it is, may not be the bigger concern for Microsoft. A separate class action over similar claims, represented by Alexander Wolfson, could run into billions of pounds. The ValueLicensing case was never just about one reseller. It is a test of whether Microsoft's entire approach to perpetual licence resale holds up in court.

So far, it has not.

(With TOI inputs)