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UK suit over reselling surplus Microsoft licenses rolls on

In the meantime, Windows giant eliminates 'challenged restriction'

Microsoft's attempts to have a 2021 lawsuit's claims regarding anti-competitive practices struck out were this week contested in UK courts.

During the hearing on March 30-31, counsel for ValueLicensing requested Microsoft's applications be dismissed. While the software giant appeared to accept that there were issues around competition law to be tried against its US and Ireland operations, its lawyers reckoned there weren't reasonable grounds for a claim against its UK tentacle.

According to legal website Law360, Microsoft's lawyers said in court that its UK tentacle just marketed the licenses and "nothing else."

"How is that capable of being an abuse?" Robert O'Donoghue QC reportedly asked the court. "How is contacting for payments an abuse?"

At stake is a £270m ($353m) lawsuit by British software reseller ValueLicensing, alleging that Microsoft had effectively extinguished the market for reselling perpetual licenses by tempting customers to surrender those licenses in exchange for a time-limited software-as-a-service subscription.

ValueLicensing's anti-competition lawsuit alleged that Microsoft's actions restricted the supply of pre-owned licenses and distorted the market.

Microsoft's latest assertion is that its UK arm was only involved in the marketing of the licenses and only a small number acquired by ValueLicensing between October 2018 and August 2020 came from companies in the UK.

As far as ValueLicensing is concerned, that is the point. "As a result of Microsoft's conduct, [ValueLicensing's] ability to acquire licenses has been radically reduced," it responded in a skeleton argument seen by The Register.

As for Microsoft UK, the software giant has claimed that ValueLicensing should have alleged that that particular arm of the company was liable for infringing competition rules "rather than by the single undertaking of which VL says it is a part."

Not so, ValueLicensing responded. "Microsoft UK is part of the same economic entity (i.e. undertaking) as Microsoft US and Microsoft Ireland." Furthermore, "all three Microsoft Defendants are jointly and severally liable," according to the license reseller.

Also under scrutiny was whether an English court was even the right place to hear the claim, particularly if Microsoft succeeds in getting its UK offshoot struck off the claim.

Ireland would, according to Microsoft, be the "obvious" forum seeing as Microsoft Ireland is the entity through which the company grants licenses in the UK and EEA.

ValueLicensing's argument rejects this, pointing out that "the UK is a key affected market" and "the majority of VL's claims are governed by English law."

The case appears set to rumble on a while yet. ValueLicensing had no comment to make while the judge was considering matters.

Microsoft also did not wish to comment on ongoing legal matters, but in relation to the license restriction in question, a spokesperson told The Register: "The challenged restriction supported some customers moving to the cloud by allowing them to apply the value of their old licenses to a new cloud subscription.

"We have eliminated the restriction but continue to offer the discount on cloud subscriptions, which we believe will benefit our customers in their adoption of cloud technologies." ®

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