Microsoft lost two appeals in the ValueLicensing case. It has not lost the competition claim

Today's hearing is about the route to trial

ValueLicensing and Microsoft returned to the Competition Appeal Tribunal at 10:30 this morning for a one-day case-management conference. The hearing follows a stay and two Court of Appeal losses for Microsoft. It is easy to turn that sequence into a verdict that has not happened.

ValueLicensing alleges that Microsoft restricted the supply of second-hand perpetual Windows and Office licences and moved customers towards subscription products in breach of UK and European competition law. Microsoft denies the allegations. The damages claim covers conduct alleged between 1 January 2014 and 31 December 2022.

The Court of Appeal decided preliminary legal questions. It held that the CAT can determine copyright issues arising inside a competition damages claim and upheld the tribunal's conclusions on exhaustion and the subdivision of the licences at issue. It did not decide whether Microsoft abused a dominant position, entered an unlawful agreement, caused ValueLicensing loss or owes damages.

The case turns a digital licence into a resale question

Copyright exhaustion means that after a rightsholder first sells a copy in qualifying circumstances, its distribution right over that copy can be exhausted. The Court of Justice's UsedSoft decision established that the principle can apply to downloaded computer programs, not only software supplied on a physical disc.

Microsoft argued that Windows and Office also contain protected graphics, icons and user interfaces that fall outside the special software copyright regime. The Court of Appeal agreed with the CAT that the products were, viewed as a whole, computer programs and those other works were incidental or accessory. It rejected a rule under which adding icons or artwork could prevent the software exhaustion principle from operating.

The second dispute concerned volume licences. Think of a business that bought 1,000 independent Office licences, later needed 500, disabled the unused copies and sold 500. Microsoft argued that UsedSoft prohibited splitting a bulk licence. The court distinguished that situation from a client-server product in which many user rights depend on one server copy that the original customer continues using. On the facts identified in this case, independent copies could be subdivided, provided the total number in circulation does not exceed the number originally licensed.

What has been decided and what the merits case must still establish.

Question	Current answer	What it does not prove
Can the CAT decide the copyright questions?	Yes, when they arise within this competition damages claim	That ValueLicensing wins the competition claim
Do ancillary graphics prevent software exhaustion here?	No, the product is treated as a computer program as a whole	That every digital product is freely resellable
Can the relevant volume licences be subdivided?	The preliminary ruling permits subdivision of independent copies on these facts	That extra copies may remain in circulation
Did Microsoft breach competition law?	Undecided	The appeal result is not a liability judgment

Why procurement teams should watch

A functioning secondary market changes the economics of perpetual software. An organisation can recover value from licences it no longer needs, and another buyer can acquire legitimate capacity below the vendor's current price. That can compete with a move to subscriptions, where the right ends when payments stop and there is no asset to resell.

The legal right does not remove the buyer's verification burden. A reseller should be able to show the original acquisition, the chain of title, which copies were made unusable by the first customer and that the quantity resold does not exceed the original entitlement. A cheap activation key without that evidence is a different proposition from a documented exhausted licence.

The case also affects software publishers. Contract design cannot be assessed only as copyright language if the practical effect may restrict supply in a secondary market. The merits trial will still need evidence about market power, conduct, effect, causation and loss.

The procedural path

The major steps leading to today's case-management conference.

Date	Event	Meaning
16 Nov 2022	High Court transferred the claim to the CAT	The competition tribunal took conduct of the case
23 May 2025	CAT jurisdiction ruling	CAT held it could decide copyright questions within the claim
12 Nov 2025	Preliminary issues judgment	CAT decided the disputed copyright issues in ValueLicensing's favour
6 Feb 2026	Proceedings stayed	The case paused while Microsoft pursued both appeals
7 Jul 2026	Court of Appeal dismissed both appeals	The preliminary rulings survived; liability remained open
14 Sep 2026	Case-management conference	The tribunal considers how the merits case proceeds

The P.K. view

This case is larger than a fight over discounted Office licences. It tests whether the commercial value attached to a perpetual software purchase can survive after the vendor would prefer the customer to move to a subscription.

The preliminary answer favours the possibility of a documented resale market. It also contains a limit: exhaustion does not authorise duplicate use. The first buyer cannot keep an operational copy while selling the same entitlement again.

The next reporting discipline is simple. Watch the CAT docket for the directions that follow today's hearing, then separate procedural wins from the eventual evidence on competition liability. Microsoft has lost important legal arguments. ValueLicensing has not yet proved its damages case. Both statements belong in the same headline.