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This commentsays

Most of the “windows 10 license keys” on eBay are illegitimate. Downvoted

I quibble with "most", and believe to be an all or none issue.

More importantly, it is a jurisdictional issue. For some reason, people tend to believe that the majority of us come from the USA, which is not the case, so maybe that is the source of the comment(?).

Obviously, we cannot have another worldwide answer, but, can we have some generalizations (even specifics) on the theme of "Most of the “windows 10 license keys” on eBay are illegitimate"? USA, Europe, other jurisdictions ...

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All Licenses are granted in the shape of contracts. Contracts contain clauses that allow or disallow their transferability.

The typical way a License for a software is obtained is to buy a key that acts as proof of purchase, and then agreeing to an EULA. For example the Win10 one. very typical clauses from the Win10 EULA explicitly forbid to transfer of the license without the device it was installed on:

  1. Installation and Use Rights.

a. License. The software is licensed, not sold. Under this agreement, we grant you the right to install and run one instance of the software on your device (the licensed device), for use by one person at a time, so long as you comply with all the terms of this agreement. Updating or upgrading from non-genuine software with software from Microsoft or authorized sources does not make your original version or the updated/upgraded version genuine, and in that situation, you do not have a license to use the software. c. Restrictions. The device manufacturer or installer and Microsoft reserve all rights (such as rights under intellectual property laws) not expressly granted in this agreement. For example, this license does not give you any right to, and you may not:

(iii) transfer the software (except as permitted by this agreement);

  1. Transfer. The provisions of this section do not apply if you acquired the software in Germany or in any of the countries listed on this site (aka.ms/transfer), in which case any transfer of the software to a third party, and the right to use it, must comply with applicable law.

a. Software preinstalled on device. If you acquired the software preinstalled on a device (and also if you upgraded from software preinstalled on a device), you may transfer the license to use the software directly to another user, only with the licensed device. The transfer must include the software and, if provided with the device, an authentic Windows label including the product key. Before any permitted transfer, the other party must agree that this agreement applies to the transfer and use of the software.

b. Stand-alone software. If you acquired the software as stand-alone software (and also if you upgraded from software you acquired as stand-alone software), you may transfer the software to another device that belongs to you. You may also transfer the software to a device owned by someone else if (i) you are the first licensed user of the software and (ii) the new user agrees to the terms of this agreement. You may use the backup copy we allow you to make or the media that the software came on to transfer the software. Every time you transfer the software to a new device, you must remove the software from the prior device. You may not transfer the software to share licenses between devices

Cincom Systems, Inc v Novelis Corp., 581 F.3d 431 (6th Cir. Sept 2009) held that you can not transfer software that was merely licensed, even as the part of your company that uses the software becomes part of another company through a merger. The licensor had put express language that forbids the transfer of the license by licensee into the contract:

When Alcan Ohio merged with Alcan Texas, the license granted by Cincom solely to Alcan Ohio transferred to the surviving corporation, now known as Novelis. Because Novelis did not abide by the express terms of Cincom's license and gain Cincom's prior written approval, Novelis infringed Cincom's copyright.

Likewise, the court in Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640 (S.D.N.Y. 2013) held that you can not re-sell an (installed) digital item as you create a new copy without the license for this.

In a similar fashion, Disney recently changed the Terms of Service and contract on the digital codes that come with DVDs. The new terms explicitly forbid unbundling the code from the disk and forbid transferring the disk after using the code. This was what allowed Disney to gain an injunction in the case of Disney v RedBox. The end result is not out yet.

In the EU, the ruling in one case fell different: UsedSoft GmbH v. Oracle International Corp. held in 2012 that there is possibly a right to resell your used license... as long as it is a license forever (emphasis mine):

in the event of the resale of a user licence entailing the resale of a copy of a computer program downloaded from the copyright holder’s website, that licence having originally been granted by that rightholder to the first acquirer for an unlimited period in return for payment of a fee intended to enable the rightholder to obtain a remuneration corresponding to the economic value of that copy of his work, the second acquirer of the licence, as well as any subsequent acquirer of it, will be able to rely on the exhaustion of the distribution right under Article 4(2) of that directive

As a result software licenses adapted and started to expressly sell the license as a license to obtain the service of a maintained software. To software as a service - which Windows and the Office suite are - this ruling does expressly not apply and you can not re-sell such a software license after it has been used.

Signed License v. License Key

That does not apply to the key, the representation of the payment. You can buy them in a store. They are a pretty tangible good. The principle is - in general - that you validate the license you sign by handing over the key to the supplier of the software. This usually voids the key.

But... all those sites claim you can transfer?!

not.... quite: once you agreed to the EULA and obtained the software service it can no longer be resold. Also, you just agreed you may not do that with transferable software.

However, as long as you have the key unused the unused key for a license can be resold. That is a physical good that the first sale doctrine applies to. However, you may not retain a copy of the key to sell it, again and again, you would interfere with your customer's ability to contract as a used key often is rejected - you'd have defrauded the customer. Even in the EU, if you bought a perpetual license, you need to render your copy unusable under the ruling above:

The CJEU held that the first purchaser needs to "make his own copy unusable at the time of its resale…in order to avoid infringing the exclusive right of reproduction of a computer program which belongs to its author“

The CJEU therefore briefly commented “to solve that problem, it is permissible for the distributor – whether ‘classic’ or ‘digital’ – to make use of technical protective measures such as product keys“.

The key is a means to show you are entitled to a contract. It is the consideration Microsoft gets for signing the other side of the contract. Most software resellers deal with keys, the resale of keys is expressly possible.

Some software companies mark a used-and re-sold key and require to contact the company to make sure that the software has been disabled on the other end. Since many companies can't render the software disabled on the seller's end, they refuse to acknowledge the sale on the same basis: the software was not disabled or rendered useless, and as a result, the sale did not happen in accordance with the judgment.

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  • Good answer. I appreciate it, despise what you may think of our discussion in comments :-/ I would be happier if you could actually cite decided case (although there is equably likely to be another which says the opposite). And, of course, it was your blanket statement which threw me, as there is no worldwide jurisdiction, so "Software licenses are not an item that is freely exchangeable like... a physical good. Once "used" it is no longer transferable``" may not hold in North Korea, for instance.
    – Mawg
    Commented Feb 6, 2021 at 11:04
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    north korean law is a field of study few peope look into as there is little to no law enacted by the DPRK available for research. It is however better than Somalian law, which is pretty much nonexistent or not-acted-upon in large areas of the country. But in the general western world, contracts hold similar place and contract law is surprisingly global.
    – Trish
    Commented Feb 6, 2021 at 11:08

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