In the summer of 2012, a ruling in Germany called UsedSoft v Oracle ruled that if a consumer pays a one-time fee for a lifetime license of software, the consumer owns the software and can resell it. In the US, the opposite is true and an End User License Agreement can prevent a consumer from reselling their used software even if the consumer paid a one-time fee for a lifetime license of the software (for details see Vernor v Autodesk). The UsedSoft v Oracle ruling has big implications beyond just high-end software for businesses. It should definitely apply to iOS and Android apps.
With the UsedSoft v Oracle ruling unlocking a large amount of software and apps in the EU, I set about creating an online marketplace where people can resell their apps and software. I'm an American citizen but my business needed to be based in Europe so that it would be protected by the German court decision. Setting up a company in the UK remotely couldn't have been simpler. There are several online companies that make the process quick and affordable (around $100 USD). In addition to being protected by the UsedSoft v Oracle decision, I also liked the idea that my company would be more difficult for US patent trolls to target. With the Snowden leaks, I think even more US entrepreneurs will opt to establish their companies in Europe.
However, I did run into one significant problem after setting up my company in the UK. A problem that Bitcoin can solve for US entrepreneurs setting up shop in Europe; I couldn't open a bank account. Since I was opening an online marketplace, I needed at least a UK Paypal account, but until I had a bank account in the UK my Paypal account could only receive a small amount of payments before being frozen. I didn't want to use my US Paypal account for fear that it might be frozen at some point by the US government because my site relied on an EU ruling that is the complete opposite of what the US ruled on the same matter. I spent literally months and hundreds of dollars trying to open a bank account in Europe. I called every bank I could find. Most of them were not willing to open an account for a US citizen due to recently tightened money laundering laws and the few banks that would allow me to open an account required that I travel to their country to submit my application in person. Some of the banks that wanted me to travel to the UK to open an account actually had a branch in the city I live in within the US, but they still wanted me to fly to London just to apply for an account, which might not have been accepted. I didn't have the funds to miss work for a week and fly to London, so I resorted to hiring a company in England that forms companies in the UK and provides bank "introduction" services. Unfortunately, the company that I hired to "introduce" my company to banks in the UK was unable to open a bank account for my new company despite several months of putting in applications with various banks. Luckily, the company that provided me with bank introductions was reputable and refunded most of the cost of their services, but I'm not sure what would have happened with some of the other less reputable companies offering this service.
After many months of getting nowhere with UK banks, I decided to launch my site even though my Paypal account would hit its limit quickly should my site get popular. The initial launch of my site failed to attract users and I decided to add the ability for users to buy & sell items using Bitcoins on my site in order to attract a niche audience. However, I had also solved my banking problem without even realizing it. Now that my site accepted Bitcoin, I potentially no longer had to worry about hitting account limits with my Paypal account because I could always just switch over to accepting only Bitcoin as payment for my site fees until I was able to actually travel to the UK to open a bank account. In addition, I also protected my company from powerful US interests that might pressure Paypal to freeze my account, even though my company's operations are perfectly legal in the EU.
I think there are several compelling reasons for US entrepreneurs to base their startups in the EU. Issues like patent abuse come to mind. Starting a company in the UK is incredibly easy, but setting up a bank account in the EU is not. Fortunately, Bitcoin solved this problem for my company and it could solve this problem for many other US entrepreneurs that choose to form their companies in the EU.
About the author: Michael runs HalfPriceDigital.com a marketplace for used apps, games and software @HalfPriceDigi
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