Can a reseller of second-hand software licences take on Microsoft and win? On 7 July 2026 the Court of Appeal said the "grey market" in used software licences can keep trading, dismissing Microsoft's appeal on every point. In JJH Enterprises Ltd (t/a ValueLicensing) v Microsoft Corporation [2026] EWCA Civ 872, the Court upheld the Competition Appeal Tribunal's rulings that Microsoft's copyright in its software had been exhausted, clearing the way for ValueLicensing's underlying competition law claim to proceed.
What the case was about
ValueLicensing buys and resells second-hand Microsoft software licences — for Windows and Office among others — that customers no longer need. It claims Microsoft breached UK and EU competition law by restricting resale in its licence terms and pushing customers from one-off "perpetual" licences onto subscriptions, and is suing the CAT for damages. Microsoft's defence turns on copyright: it says the licences were never validly resold, so ValueLicensing has been infringing Microsoft's copyright all along — and if that is right, there can be no competition law claim to answer.
The CAT ruled on two preliminary points before the substantive case: first, whether it even had jurisdiction to decide the copyright questions, given they are, strictly, questions of copyright rather than competition law; and second, whether "exhaustion" — the principle, established by the CJEU in UsedSoft v Oracle [2012] 3 CMLR 44, that a copyright owner loses the right to control further sales of software once lawfully sold — covers both the non-program elements of software (on-screen graphics and icons) and the subdivision of bulk licences bought in blocks of hundreds or thousands. The CAT ruled for ValueLicensing on jurisdiction ([2025] CAT 33) and, after trial of the preliminary issues, on the substance too ([2025] CAT 75). Microsoft appealed both rulings.
What the Court of Appeal decided
The Chancellor of the High Court, giving the judgment of the Court (with which Lord Justice Green and Lord Justice Phillips agreed), dismissed both appeals. On jurisdiction, the Court held that section 47A of the Competition Act 1998 gives the CAT power to decide any issue — including a genuine copyright dispute — necessary to determine a competition law claim, even though Microsoft is not itself suing for copyright infringement in these proceedings (paras 21–29).
On the substance, the Court traced the exhaustion doctrine back to Betts v Willmott (1870-71) LR 6 Ch App 239 and its EU free-movement roots, before applying UsedSoft to reject Microsoft's arguments (paras 30–33, 112). It agreed with the CAT that exhaustion is not confined to the "computer program" copyright in software but extends to accompanying works such as icons and interface graphics, and that a customer's bulk licence can lawfully be split up and resold in smaller quantities to different buyers, provided the reseller has not exceeded the number of licences originally acquired.
Why it matters
- The used-software resale market gets a green light. Software vendors cannot rely on licence-splitting restrictions to prevent lawful resale once UsedSoft exhaustion has occurred — a significant point for the second-hand and "grey market" software trade generally, not just this dispute.
- Copyright disputes can hide inside CAT competition claims. Where a copyright question is logically necessary to resolve a Chapter I/II claim, the CAT does not need to hive it off to the High Court — useful for anyone structuring competition litigation with an IP dimension.
- The real fight starts now. This was only a preliminary skirmish. With Microsoft's copyright defence rejected, ValueLicensing's underlying abuse and restrictive-practices claims — covering the UK and EEA from 2014 — can proceed to trial.
Explore the underlying law on Search the Law: exhaustion of rights and UsedSoft · CAT jurisdiction under section 47A.
Read the full judgment: JJH Enterprises Ltd (t/a ValueLicensing) v Microsoft Corporation [2026] EWCA Civ 872 (The National Archives).