ValueLicensing tries to smack down Microsoft defenses in license reselling spat

UK software reseller alleges 'no real prospect of success' of Windows giant's arguments

Microsoft's tussle with ValueLicensing over perpetual licensing terms has taken another turn after the software reseller asked the Competition Appeal Tribunal (CAT) to strike out parts of Redmond's amended defense.

ValueLicensing is suing Microsoft for £270 million ($342 million) in damages for alleged anticompetitive behavior and abuse of dominance. Specifically, it claims Microsoft choked off the supply of pre-owned perpetual licenses by allegedly offering customers discounts on subscriptions in return for not selling on these perpetual licenses.

The reseller alleges that the "net result has been higher prices and less choice for customers, who have been steered into cloud-based Office365 and Azure subscriptions."

Microsoft denies suppressing competition or abusing its dominance but also put forward two alternative defenses: first, asserting that the contractual terms in question were necessary and reasonable, and second, a claim that the benefits provided by its alleged moves outweighed anything anticompetitive.

ValueLicensing is trying to get the CAT to strike out those parts of Microsoft's defense.

In its filing, the reseller argues that these specific defenses have "no real prospect of success," claiming Microsoft hasn't properly explained why they should apply.

The software reseller is also seeking for the CAT to make an order striking down Microsoft's desire to plead foreign law, arguing that its claim is governed by English law until December 31, 2020, and the advent of Brexit. Damage after Brexit is up to the law of the country of the market concerned.

Jonathan Horley, founder and managing director of ValueLicensing, said: "Microsoft has had ample time and opportunity to come forward with the specific factual information required to underpin its objective justification defense, its efficiency defense, and its case on foreign law."

The application for summary judgment – by the full Tribunal – could be determined between March and June 2024. The trial is set for 2025.

A Microsoft spokesperson told The Register: "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. Helping our customers move to the cloud improves productivity and security."

The case was initially filed in the UK's High Court in April 2021 before being transferred to the CAT in November 2022. It has ground on ever since, with Microsoft recently objecting to including Horley in the "confidentiality ring" – a group of people permitted to view confidential information pertaining to the case. ®

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