ValueLicensing, a UK-based software reseller, has initiated legal action against Microsoft, asking the Competition Appeal Tribunal (CAT) to dismiss parts of Microsoft's defense in an ongoing lawsuit. ValueLicensing has accused Microsoft of anticompetitive practices related to the resale of perpetual licenses and is seeking £270 million (approximately $342 million) in damages.
The Core of the Dispute
The plaintiff alleges that Microsoft has undermined the supply of pre-owned perpetual licenses, which are licenses that allow customers to use a version of software indefinitely, by incentivizing customers to convert to subscription-based models such as Office 365 and Azure. ValueLicensing argues that Microsoft's actions have led to elevated prices and diminished options for consumers who might prefer to use or resell older, perpetual licenses. Microsoft, on the other hand, maintains that offering clients the option to shift from older licenses to new cloud subscriptions is both legal and beneficial for enhancing productivity and security.
Microsoft has presented a two-part defense: first, claiming that the contractual terms are necessary and reasonable; and second, asserting the benefits provided by their strategy offset any potential anticompetitive effects. ValueLicensing contests these defenses, stating that Microsoft has failed to adequately substantiate these claims. Furthermore, it opposes Microsoft's desire to introduce foreign law into the proceedings, arguing the case should be exclusively governed by English law up to the Brexit date of December 31, 2020; post-Brexit damages should adhere to the laws of the market concerned.
Proceedings and Implications
The case continues to evolve with pre-trial developments, including a debate over whether to include Jonathan Horley, founder and managing director of ValueLicensing, within the confidentiality ring – a group granted access to sensitive information in the case. An application for summary judgment is expected to be reviewed by the full Tribunal between March and June 2024, with the trial scheduled for 2025. This lawsuit underscores the complex landscape of software licensing and resale, an area of increasing legal scrutiny as the balance of power between tech corporations and their customers continues to evolve in the cloud-driven digital economy.
