Exhaustion of Distribution Rights and Contract Clauses

LG Hamburg 315 O 449/12

The District Court of Hamburg found two clauses in SAP's software licensing terms and conditions invalid. The first clause limits user's right to transfer the software (client-server model). The second clause restricts any use of the software beyond the originally contractually agreed use which would be the case for example if user adds additional clients to it. In both clauses the transfer or additional use is made subject to prior approval by SAP.

The Court held that the software licensing terms constitute a sale of the software copies and that therefore the mandatory principle of exhaustion of distribution rights applies to the sold copies. The first clause would limit user's right to transfer such copies to prior approval by SAP and is therefore invalid. The second clause implies that user can only add more clients to the software by procuring it from SAP and not a third party. This would conflict with one of the intents of the exhaustion principle which is to make a sold copy generally marketable.