I'm not a lawyer, and don't play one on television. But I think the common sense answer to notfadeaway's question is that if you buy the S4 at the new-purchase price, now you have two licenses and can
arguably sell the S3 license to someone else for their
exclusive use.
But if you buy an upgrade (probably at a reduced price) then you're
not buying a new license, only piggybacking on the old license. In that case, both S3 and S4 use the same license and it is
unarguably illegal to sell the S3 for someone else to
use (as opposed to being able to admire the artwork on the CD).
To make this argument even more specific:
-- new-purchase price of S4PE from Cakewalk: $959 (includes license)
-- upgrade price from S3PE to S4PE: $179 (no new license included)
That is, Cakewalk is charging $780 for the license and the new features.