Judgment handed down in JJH Enterprises Limited v Microsoft Corporation & Ors
Judgment was handed down by the Court of Appeal yesterday (7th July) in Microsoft’s appeal from two rulings of the Competition Appeal Tribunal (CAT) in JJH Enterprises Ltd v Microsoft Corp & Ors, where Matthew Lavy KC acted for the Respondent, JJH Enterprises (trading as ValueLicensing).
ValueLicensing claims that Microsoft stifled the supply of second-hand computer programs and software licences by placing restrictions in the relevant contracts and moving customers from the use of perpetual licences onto a subscription-based model. Microsoft argued that ValueLicensing had no right to resell second-hand computer programs because the relevant copyright in the computer programs had not been exhausted.
Microsoft challenged the jurisdiction of the CAT to determine the copyright issues on the basis that they in substance comprised non-competition law causes of action for which the CAT has no jurisdiction. In May 2025 the CAT ruled that it did have jurisdiction to hear copyright issues when they arose in the context of a competition claim ([2025] CAT 33). The Court of Appeal agreed.
At a trial of preliminary issues Microsoft argued that Windows and Office fall outside the EU’s copyright exhaustion rules for computer programs, which allow the resale of perpetual software licenses, because of the inclusion of literary and artistic works including fonts and clip art. Microsoft also argued that a purchaser of multiple user rights originally sold under its Enterprise Program was not entitled to sub-divide and resell those user rights in smaller quantities than originally purchased by the first acquirer.
In November 2025 the CAT found for ValueLicensing on all substantive issues ([2025] CAT 75). The CAT ruled that exhaustion under Article 4(2) of the Software Directive is not limited by contractual terms in Microsoft’s Enterprise Agreements, and that the distribution and reproduction rights enjoyed by Microsoft does not prevent the subdivision and resale of licences obtained by the first acquirer. The Tribunal also ruled that the first online sale of Windows and Office exhausts the distribution and/or reproduction right under Article 4(2) of the Software Directive to the extent those works are distributed, downloaded and copied in accordance with the intended purpose for which Microsoft Windows and Microsoft Office were first sold. The Court of Appeal has upheld the CAT’s decision.
The case has been widely reported in the media, including Global Competition Review, Law360, MSN News and The Register. The full judgment can be read here.
Matthew was instructed by Ghaffari Fussell LLP, working with Michael Hicks of Hogarth Chambers, Henry Edwards of 8 New Square and Mark Wilden of 3PB.
View the full judgment here.
