UK Competition Appeal Tribunal Grants Partial Stay in MS Case

The UK’s Competition Appeal Tribunal has approved a partial pause in proceedings involving MS and used-software reseller ValueLicensing by extending the stay on most aspects of the case.

Supreme Court Permission and Liability

MS has signaled its intention to seek permission from the UK Supreme Court regarding the case, although the court has yet to grant approval. Such permission is required before the Supreme Court can hear the dispute. Importantly, neither the partial stay nor the request for permission determines liability in the case.

Active Applications: Disclosure and Confidentiality

Disclosure and confidentiality applications remain outside the scope of the stay. Disclosure establishes the documents that parties must exchange, while confidentiality rules dictate how sensitive information will be handled. Keeping these applications active allows evidence preparation to continue, even as the core claim is delayed.

Background of the Dispute

The licensing-resale dispute originated in 2021, when ValueLicensing filed a claim for £270 million against MS. The claim centers on alleged competition-law breaches related to software-licence sales.

Between 2014 and 2022, restrictive clauses and discounts allegedly reduced the availability of second-hand perpetual Windows and Office licenses. ValueLicensing argues that these restrictions harmed the secondary market, which enterprise customers rely on to acquire perpetual software licenses outside of time-limited subscriptions.

Key Legal Issues

• At the heart of the dispute is the question of whether perpetual software licenses—designed for ongoing use—can be legally divided and resold.
• Resellers require eligible licenses for their inventory, while buyers depend on the secondary market for continued use of software without subscribing to new models.
• The case officially names three MS entities as defendants. MS declined to comment prior to publication.

Legal Developments and Appeals

On July 7, the Court of Appeal dismissed MS’s jurisdiction and preliminary-issue appeals. MS had argued that copyright in downloaded software was not exhausted upon first sale, which would prevent third parties from subdividing or reselling licenses. The dismissal allows the Competition Appeal Tribunal to rule on copyright issues as part of the competition claim.

MS’s appeals followed a preliminary copyright ruling in November 2025. That ruling found that the resale and subdivision of MS’s on-premise licenses did not infringe its copyright. However, the decision addressed only preliminary copyright issues, not liability for damages.

Understanding Software-Licence Exhaustion

The concept of software-license exhaustion limits a copyright owner’s control over a perpetual copy of software after it has been sold. While this principle can apply to downloaded perpetual software, it does not extend to subscription-based models. Legal resale also requires the original buyer to cease using the sold copy, ensuring that one license cannot support simultaneous use by both seller and buyer.

Tribunal’s Perspective on Cost and Delay

Justin Turner KC, chair of the Competition Appeal Tribunal panel, explained the rationale for the partial stay:

“By pausing the core claim, the tribunal limits spending on proceedings that a successful appeal could alter, without freezing preparation for a liability trial. ValueLicensing can continue seeking documents and protections for confidential material while MS pursues its possible appeal.”

Stakeholder Reactions

Jonathan Horley, CEO of ValueLicensing, expressed support for the tribunal’s decision, emphasizing the importance of continuing disclosure and confidentiality work while the core damages proceeding remains paused.

Precedent: UsedSoft v Oracle

The 2012 UsedSoft v Oracle judgment established the principle of exhaustion for downloaded perpetual software copies in the EU. However, the MS dispute hinges on how rights are structured within volume licensing arrangements. The case raises questions about whether licenses within such arrangements can be subdivided and resold.

Legal Complexity in Volume Licensing

Rob Bratby, managing partner at Bratby Law, cautioned against oversimplifying the appeal as a straightforward case of exhaustion:

“A single copy licensed for many users is not necessarily divisible. Independent copies or licenses in a genuine volume arrangement may support separate transfers. Buyers and resellers must document that a seller stopped using each transferred copy, tying the legal distinction to procurement records, license configuration, and saleable inventory.”

Next Steps

MS’s immediate challenge is to file for and obtain the necessary permission to appeal to the Supreme Court. Meanwhile, ValueLicensing anticipates that the tribunal will address its two active applications—disclosure and confidentiality—during a case-management conference scheduled for September 2026.