British licence reseller adjusts to MS changes

Resale model altered after Redmond clamps down

A UK reseller of Microsoft software licences says it will be able to continue making second-hand licences available, despite changes to Microsoft's licence terms that expressly forbid licence resale.

Since 2005, has been supplying companies with second-hand Select Licences for enterprises and Open Licences for small and medium-sized businesses. The company buys from companies going into liquidation or those which simply have unused licences.

In September, Microsoft tried to halt resale when it changed the language of both licence types. However, now says it has come up with a scheme that allows it to continue its operations, acting as a broker rather than a pure reseller.

The company believes the market is huge and mostly untapped. "We estimate there are hundreds of millions of pounds' worth of disused Select licences that are simply not being realised," says Discount-Licensing director Noel Unwin.

A paragraph inserted into the Open Licence terms states expressly that "the resale of Licences is expressly prohibited", although customers "may transfer Licences to an Affiliate and to third parties in connection with a divestiture, merger or consolidation."

A new clause in the Select Licence forbids "transferring licences for resale to unaffiliated third parties".

However, Unwin told UK technology website that's new business model overcomes the Microsoft alterations. "The changes do not stop businesses from using brokers to transfer or reassign licences directly from a supplier company to an end customer," he says.

After lining up a buyer and a seller, Discount-Licensing sets up a shelf company, wholly owned by the licence seller, which is then transferred to the buying company, along with the licences.

Microsoft has not directly commented on the legality of the process, but has seen an email from a member of Microsoft's legal team which notes that the process "is one that is used in insolvency-related transactions to transfer assets" and which "is not novel".

The new terms apply only to licences purchased after September 2007, Discount-Licensing says.