Judge dismisses Microsoft's challenges: ValueLicensing case to proceed in Britain

UK High Court beckons for Windows vendor and reseller amid claims of on-prem software license skulduggery

The ValueLicensing case against Microsoft is set to proceed in the UK after a judge dismissed the Windows vendor's jurisdictional challenge and strike-out application.

Microsoft had hoped to have its UK arm struck off from the claim and suggested that Ireland would be a better place for the claim to be heard, particularly if the company was successful in getting its UK offshoot removed.

Mr Justice Picken disagreed and dismissed Microsoft's challenges, meaning that the damages claim (and Microsoft's defense) will be heard in the High Court in England and Wales.

As for the case itself, it revolves around the reselling of surplus licenses for Microsoft software, and the tech giant's alleged habit of tempting customers with attractive (and time-limited) subscription deals in return for surrendering perpetual licenses.

The complaint goes back to the year 2016 [PDF], according to the particulars of claim, from when it alleges Microsoft imposed contractual prohibitions to stop UK and European Economic Area (EEA) customers from selling on their licenses in return for Office 365 discounts.

ValueLicensing alleges the practice cost the company a total of $352 million (£270 million) in lost gross profit. After it filed its claim in April 2021, Microsoft removed the requirement that customers retained legacy licenses as part of its June 2021 product terms.

The claim focuses on Windows and Office products, but ValueLicensing estimated that Microsoft had removed licenses with a cumulative value of between $30 billion and $53.5 billion (£23 billion to £41 billion) when taking into account the likes of Azure services.

A Microsoft spokesperson told The Register: "This is a procedural ruling that has nothing to do with the substance of the case. ValueLicensing’s core complaint is that we gave customers the option to apply the value of their licenses for older products to new cloud subscriptions rather than selling them to third parties."

"We believe that was both legal and the right thing to do," the spokesperson went on, "Helping our customers move to the cloud improves productivity and security."

ValueLicensing appears to be looking forward to its day in court. Jonathan Horley, founder and managing Director of the company said in a statement sent to The Reg: "We are pleased that the High Court has dismissed Microsoft's meritless delaying tactics.

"As Microsoft benefited from extending its market share, it has likely come at a cost to the UK taxpayer as well as businesses like ValueLicensing."

Microsoft is coming under increasing fire for its licensing practices, which are alleged by some companies to be anti-competitive.

France's OVHCloud fired off an EU antitrust complaint in March over the increased cost in running Microsoft's wares in clouds other than Azure, and EU open source cloud vendor Nextcloud took exception to Microsoft's habit of bundling its operating system with online services.

In a report by Bloomberg, company President, Brad Smith, said: "There definitely are some valid concerns," and "It's very important for us to learn more and then make some changes."

Smith's remarks were welcomed by CISPE (Cloud Infrastructure Services in Europe) who, unsurprisingly, called for regulators to continue investigations until Microsoft amended its ways.

The clock appears to be very much ticking, with Microsoft's price increases and seeming intransigence around licensing starting to seem like it might cause snowballing legal problems for the tech giant. ®