- What happened: On October 13, the UK Court of Appeal refused Microsoft permission to appeal to the UK Supreme Court in its litigation with ValueLicensing.
- Why it matters: The Court of Appeal's ruling rejecting Microsoft's argument that reselling used Windows and Office infringes copyright now stands.
- What to watch: Whether Microsoft applies directly to the Supreme Court for permission, and the explanation and disclosure of internal documents due at the end of October and the end of November.
On October 13, 2026, the UK Court of Appeal refused Microsoft permission to appeal to the UK Supreme Court in its litigation with used-software seller ValueLicensing. JJH Enterprises, which operates ValueLicensing, published the Court of Appeal's order on the 15th. As a result, the Court of Appeal's July ruling, which rejected Microsoft's argument that reselling used Windows and Office is copyright infringement, remains in place. However, the central question in the case, whether restrictions on the supply of used licenses violated competition law, has not yet been decided. Going forward, disclosure of Microsoft's internal documents will proceed, and the actual state of the supply restrictions and the internal understanding behind them will be at issue.
Refusal of permission to appeal is not a finding of competition law violation
The original order dated October 13 states that Microsoft's application is refused, but gives no reasons. The order concerns only whether to grant permission to appeal the Court of Appeal's July 7 judgment to the Supreme Court. It is not a finding that Microsoft violated competition law or is liable for damages. To understand this distinction, it is necessary to separate what the Competition Appeal Tribunal (CAT) and the Court of Appeal each decided.
Based on paragraphs 1–6 of the July 7 Court of Appeal judgment, paragraph 1 of the CAT's July 21 stay order, paragraph 12 of the CAT's September 14 consent order, and the latest order, the proceedings so far can be summarized as follows:
| Decision / procedure | Source document | What was decided / what remains |
|---|---|---|
| Permission to appeal to the Supreme Court | Court of Appeal order of October 13 | Court of Appeal refused permission. The route of applying to the Supreme Court itself remains open |
| Jurisdiction and preliminary copyright issues | Court of Appeal judgment of July 7 | Upheld the CAT's rulings on jurisdiction and resale; Microsoft's appeal dismissed |
| Competition law liability and damages | CAT stay order of July 21 | Trial of the main claim is stayed. Unlawfulness and liability for damages remain undecided |
| Specified disclosure | CAT consent order of September 14 | As an exception to the stay, requests for information, document searches and further disclosure will proceed |
A preliminary issue here means a point that must be decided before reaching a conclusion on the merits of the case. Microsoft had argued that if the resale of the used software at issue was itself unlawful, ValueLicensing's claim that it was prevented from obtaining supply could not succeed. The Court of Appeal rejected this argument, so the question going forward is whether the supply restrictions violated competition law.
That said, Microsoft's path to contest the matter in the Supreme Court is not completely closed. According to the UK Supreme Court's practice directions, a party refused permission to appeal by a lower court may apply to the Supreme Court itself. The deadline is normally 28 days from the date of the refusal order. Whether the Supreme Court grants permission depends on whether the case raises an arguable point of law of general public importance that the Supreme Court ought to consider at that time. The order does not indicate whether Microsoft will use this procedure.
Independent copies can be resold in parts after a bulk purchase
A key basis for the July Court of Appeal judgment was the 2012 EU Court of Justice decision in UsedSoft v Oracle. That decision held that where a rights holder receives payment and sells software with a right to use it for an unlimited period, the copyright distribution right in that copy is "exhausted." In other words, the rights holder can no longer rely on copyright to restrict resale of that copy. The principle also applies to software supplied by download: once the first purchaser stops using it, it can be resold to a third party as a used product.
Microsoft argued that Windows and Office contain not only computer programs but also other works, such as icons and on-screen graphics. Because different copyright provisions apply to these, it contended, the UsedSoft principle should not be applied as is. The Court of Appeal, however, upheld the CAT's finding that the substance of the purchased product is a computer program and that works such as icons are ancillary to it. It did not accept the interpretation that merely including icons and similar elements in a program can restrict used resale under UsedSoft.
Another major issue was whether part of a bulk-purchased batch of software can be separated and resold. In paragraph 9 of its judgment, the Court of Appeal gave the example of a company that buys 1,000 copies of software, sells 500, and keeps using the other 500. If each copy can be used independently, the idea is that splitting the resale cannot be prohibited merely because the copies were bought in bulk.
By contrast, the Oracle product at issue in UsedSoft worked by having multiple users access a copy located on a single server. Selling part of the user allowance while continuing to use the copy on the server is treated differently in law from splitting a set of independent copies for resale. The Court of Appeal explained this difference from paragraph 92 onward, and held that whether a contract says "single license" cannot alone determine whether split resale is permitted. What matters is not the contractual label but what copies were actually sold and how they are used.
Paragraph 100 of the judgment states clearly that exhaustion of rights arises by operation of law. Once exhaustion under copyright law is established, contract terms cannot prevent its effect, and Microsoft's consent is not required for resale. The fact that ValueLicensing did not use Microsoft's prescribed license transfer form was also not a reason to prohibit resale.
However, the fact that resale of used software is permitted does not mean the seller may keep and continue using the copy. The original purchaser is obliged to render the resold copy unusable. If they keep using it after the sale, that use becomes unauthorized. On the other hand, the Court of Appeal held that a breach by the original purchaser does not impair the next purchaser's right to use, and that proof of deletion is not an essential condition for exhaustion to arise.
The claim period in this case runs from January 2014 to December 2022, and the territory covers the UK and the European Economic Area (EEA). On appeal, the parties had agreed to apply the EU law in force during the relevant period. The ruling therefore cannot be generalized to software resale in Japan, to the legality of every used product key, or to transfers of Microsoft 365 contracts.
Disclosure of Microsoft's internal documents proceeds during the stay
Separately from the copyright rulings, disclosure aimed at investigating whether competition law was violated is also moving forward. The consent order issued by the CAT on September 14 requires inquiries into relevant internal documents on whether Microsoft knew that customers could sell used licenses when moving to subscription-based services, or intended to prevent them from doing so. This is a procedure to examine the intent and understanding under which sales terms were set, not merely the interpretation of copyright.
Of particular note is an internal document created in June 2013, the "Second-Hand Software Presentation." According to the preamble of the September order, Microsoft disclosed this document on December 22, 2025. So it is not material being submitted for the first time. The question is why the document was not found and disclosed earlier.
By 4 p.m. on October 31, Microsoft must file a witness statement from Kenny Henderson explaining when, where and by whom the document was discovered. It is also required to explain why it was not identified and disclosed earlier as a document adverse to its own case, and when Microsoft and its legal department became aware of its existence. However, the order does not reproduce the text of the document, and neither its content nor the delay in disclosure has been found to establish a competition law violation or deliberate concealment.
The deadline for the results of the inquiries and disclosure of specified additional documents is set for 4 p.m. on November 30. Microsoft is required to make reasonable efforts to contact former executives, and to search the mailboxes, SharePoint and other repositories of designated individuals. The search period runs from July 3, 2012 to June 1, 2020, and search criteria combining terms related to used software with terms relating to supply, sales and competition law have also been set.
Strict conditions also apply to confidentiality designations. Paragraph 6 of the order requires that the portions treated as confidential be limited document by document, with specific reasons given for each. Blanket confidentiality over entire documents is not allowed, with the aim of clarifying the scope of information the parties can review. That said, disclosure proceeding is not the same as all the documents being made public.
The September consent order maintains the stay of the trial on the merits while allowing only the specified disclosure to proceed as an exception. In the witness statement due at the end of October and the additional disclosure at the end of November, what will matter is how Microsoft viewed the used software market and how that was reflected in actual sales terms and supply restrictions. What the Court of Appeal has decided is the copyright law question on resale of used software, not a conclusion that competition law was violated. The focus now shifts to whether evidence will emerge to show the actual state of the supply restrictions alleged by ValueLicensing and to support their unlawfulness.