This ruling stems from a spat between Oracle and UsedSoft -- a German business that resells product licenses for Oracle software, after they have been bought from Oracle customers.
The software maker objected. It wasn't getting a cut of the profits, and had to provide these second-hand customers with the files, updates and patches for its programs. It took its case to the German courts, hoping to stop UsedSoft from carrying out its scheme.
The Federal Court of Justice in Germany then asked Europe's highest court to give a ruling on the legal protection of digital software.
Much to Oracle's chagrin, the EU says that a copyright holder loses all distribution rights the moment it sells a copy of its software to the customer -- whether it's on a physical medium like a DVD, or distributed through downloads from a website.
"Therefore," the court explains, "even if the licence agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy." The business must also provide patches and updates to the new customer.
There are some caveats, of course. If a customer does decide to sell on his digital copy, he must "make the copy downloaded onto his own computer unusable at the time of resale." If you continue to use the software after selling it you're now reproducing -- not distributing -- it, which very likely goes against your terms of service.
To avoid such reproduction, the ruling states that a copyright holder, like Oracle, is entitled to "ensure by all technical means at his disposal that the copy is made unusable." That means DRM.
In the case of Oracle, where businesses can buy licenses in bulk, you're not allowed to sell off the ones you don't need anymore. You do not get authorisation to divide up your license and resell only one part of it.
This isn't the end of the case for Oracle. The German court still needs to make its ruling -- but it's likely that the European Court of Justice's ruling will dictate that final judgement.
"The door for the trade in used software has been pushed wide open throughout the European Union," UsedSoft said in a statement, provided to Deutsche Welle. The company said this ruling welcomed "perfect legal safety on the market."
What's not clear is what this means for customers on digital distribution services like Steam, iTunes and Xbox Live, where there is no built-in functionality to transfer games, apps and files to new users. Whether Apple and Valve and the like must implement such features in the EU, remains to be seen.