Date:

28 Sept 2022

Author:

PREO AG

Used Software


How companies recognise and exclude risks when trading in used software     

Sustainable, resource-conserving management is already a high priority in most companies. What has long been common practice in energy supply, waste avoidance or the purchase of everyday consumer goods is also increasingly being applied to IT. 

For medium and large-sized companies especially, it is not only about their hardware stocks, but also the existing software assets. IT managers and CDOs are discovering more and more the advantages of used software licences - from cost reduction, to the reduction of internal support, to positive image factors through green IT. Even though these are obvious, some interested parties are still sceptical at first, which is mainly due to questions regarding audit security and compliance. In this blog post, you will learn which security aspects companies should pay attention to when trading with used software and why you are guaranteed to be on the safe side with PREO.


Safe trading of used software - recognising and excluding risks

Second-hand software licences are offered on the Internet through a wide variety of channels and platforms. In any case, caution is advised here, because the criminal creativity of fraudsters should not be underestimated, especially in the business with digital products. According to our experience, the most common scams are:

 

  • Artificial software keys created by hackers by replicating the manufacturer's algorithms that never legally existed.

  • Already activated software keys from volume licences that were originally sold outside the EU and are still activated and in use there.

  • Fake softwares and certificates, where almost everything from product packaging to data carriers to manufacturer or authenticity certificates has been deceptively copied.
     

As one of the pioneers in the trade with used software, PREO offers you 100 percent audit-proof used software. Do you have questions about safety when buying or selling used software? Our licence experts will be happy to advise you personally and answer your questions.




PREO-Safety-Tip 1: Used software licences only with accurate proof of origin

For companies, the following applies: Only buy used software licences from experienced and reputable dealers who obtain their products from absolutely reliable sources with audited and fully transparent licence chains. The fewer owners previously held the licence rights, the easier it is to document them in an audit-proof manner. This is the only way to avoid expensive re-licensing in the event of a manufacturer audit or even penalties against which there is no legal recourse. Big players such as Microsoft consistently pursue such cases.  

 

At PREO, your security is our top priority when dealing with used software. We disclose all information on the origin of the used software and ensure that the evidence required for audit safety is available in full. Therefore, we acquire 99 percent of our offered software licences from the first licensee. For each licence you purchase from us, you will receive precise information about it

 

  • Who the previous owners were,

  • From which type of licence agreement the software originates and

  • What the contract numbers are.
     

Very important: You will receive a written declaration that the used software has been properly uninstalled by the previous owner. This is one of the most important legal requirements and is expressly demanded by both the Federal Court of Justice and the European Court of Justice.




PREO-Security-Tip 2: Essential information for the audit security of used software

When buying or selling used software in the European market, the following criteria are decisive and their observance is indispensable so that all software licences are transferred in a legally secure manner, a manufacturer audit is mastered without any problems and a future resale is possible at any time:


  1. The software was placed on the market in the territory of the EU or another contracting state of the European Economic Area (EEA) at the time of first sale with the consent of the manufacturer. Used software licences that someone wants to sell to you in Europe must not have originally come from Asia, Africa, the USA or South America.

  2. The software licences are perpetual and the licence chain including security patches and updates is fully and completely documented.

  3. All previous owners of the used software licences must have demonstrably permanently deleted their respective copies on their computers.


PREO-Security-Tip 3: 100 percent audit security thanks to the Safe3 system

You are looking for a strong and experienced partner who will provide you and your company with comprehensive advice in the field of software asset management and licensing law when trading in used software, who will support you right from the start and who will also offer 100 percent audit security. Convince yourself of our Safe3 system and a unique triple warranty.

  1. Full transparency of the rights chain
    We fully disclose the chain of title for all transfers. This includes proof of the type of contract (including contract numbers) from which the software originated, who the previous owners of the software were and that they have properly uninstalled the software. You will also receive full details of the update history.

  2. We stand for audit security
    PREO has its own legal department specialising in licensing law. Our licence experts thoroughly check the licences ordered before they are sold. This check is equivalent to a software audit, so you can be sure that the software you buy from PREO will stand up to any audit without any problems. In the trade of well over a million used software licences, all manufacturer audits have been passed without any problems so far.

  3. Our insurance for the worst case scenario
    Even if the software has been running with you for a long time, we still care about your compliance. All our transfers are covered by liability insurance against financial loss with a reputable insurance company. The insurance covers any financial damages up to 10 million euros for an unlimited period of time.



Added value in efficient documentation


In addition, we store all important information on each individual licence for you in our licence portal, which you can access online at any time. This means that software audits no longer require a great deal of effort.


Numerous well-known customers from a wide range of industries, for example hospital, logistics, IT or hotel and tourism, have already benefited from this security advantage. See for yourself!

PREO used software passes manufacturer audit from Microsoft

Demmin Hospital, one of the most progressive hospitals in Mecklenburg-Vorpommern, has relied on used software as a secure and cost-effective form of procurement since 2015. Microsoft has now certified the public institution the lawful use of transparent used software from PREO. However, the manufacturer criticised used software purchased in parallel from another dealer due to insufficient proof of origin, which required subsequent licensing. In this customer case, you can find out why IT manager Reiner Lange is not only convinced by PREO in terms of security when using used software.


The Demmin district hospital, which is run by the local authorities, employs 350 people and offers 193 beds and 10 places in the day clinic. It includes clinics for internal medicine, anaesthesia and intensive care, surgery, gynaecology, obstetrics, paediatrics and adolescent medicine, beds for urology and ophthalmology, an outpatient treatment centre and a rheumatology day clinic.

Digital Fort Knox - the PREO Blockchain solution

In addition to our Safe3 security system, we also offer you tamper-proof proofs of ownership for your used software assets. This makes it even easier for you to trace the supply chain of the software - from the first purchaser to the buyer. We do not store any clear data or details of a transaction in the blockchain, but only an abstract hash value. This is calculated via an encryption mechanism from information about the purchase, the licence origin and the transfer. The hash value of your used software is recorded unchangeably in the blockchain for all times.

First, several encrypted hash values are generated for the purchase information and stored in a specially developed sidechain. All transactions are chained together. This solution has two advantages:

  • No dependence on a particular blockchain

  • Best practice in terms of data protection.


The information is written to two blockchains. One is the Metaverse blockchain. This has the advantage that it is very functional and writing to the blockchain takes place at short intervals. The other is the Bitcoin blockchain, which is the most widespread and thus the most tamper-proof public blockchain. With our solution, the transfer to the Bitcoin blockchain takes place once a week.



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