Spain investigating Microsoft for alleged license breaches

A software reseller has claimed that Microsoft unjustifiably prevents resale of licenses to its applications

Spain's National Competition Commission is investigating whether Microsoft has unjustifiably prevented or limited resale of software licenses, in breach of Spanish and European Union competition laws, the Commission announced Tuesday.

The investigation of Microsoft Iberia and Microsoft Ireland Operations began on Sept. 15, according to an online database of Commission activities.

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The Commission has already found information suggesting that Microsoft breached articles 1 and 2 of the Spanish Competition Act, and articles 101 and 102 of the Treaty on the Functioning of the E.U., the Commission said. The investigation could go on for up to 18 months, it said.

The investigation was triggered by a complaint filed on Jan. 3 by Spanish company Elegant Business, operator of a website specializing in reselling software licenses, www.softbrocker.com.

On that site, Elegant Business notes that it has the right to resell software licenses under the E.U.'s 2001 directive on the harmonization of certain aspects of copyright and related rights in the information society.

Article 28 of that directive limits copyright holders' ability to control sales of their works within the E.U. to the first sale only.

Microsoft maintains that software licenses are different however: In a January 2010 news release aimed at the Spanish market, it said that the transfer of software licenses is subject to the consent of the copyright holder, and that transfers can only legally be made in very specific cases, such as when two companies merge or when a company splits up.

However, the license terms for Microsoft Office 2010 published on Microsoft's website do not forbid transfer of the license, and the restrictions imposed on such transfers appear primarily to prevent the first party from retaining use of the application when transferring title to a third party.

If found guilty of breaking Spanish competition laws, Microsoft faces a fine of up to 10 percent of the offending business unit's revenue in the preceding year. In practice, the fine would be calculated as a percentage of the sales volume affected by the violation, a Commission spokesman said.

Microsoft didn't immediately respond to a request for comment.

Peter Sayer covers open source software, European intellectual property legislation and general technology breaking news for IDG News Service. Send comments and news tips to Peter at peter_sayer@idg.com.

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