28 March 2018 at 13:58 BST

UK Court of Appeal rules software is not 'goods'

Intellectual property rules apply on the sale of a license as it is not a tangible medium.

The UK Court of Appeal ruled this week that software is not a good, overruling the lower court's opinion. In Computer Associates UK Ltd v The Software Incubator Ltd [2018] EWCA Civ 518, the court considered whether the sale of a license to use software supplied to Computer Associate's customers electronically and not on any tangible medium, constitutes 'goods' within the meaning of UK's Commercial Agents (Council Directive) Regulations 1993, 2(1). The court ruled that it did not, as the software was given to the buyer electronically and not on a 'tangible medium.' Therefore, intellectual property rules apply to the sale of the license.

Tangible

The Consumer Rights Act of 2015 defines 'Goods' as 'any tangible moveable items, but that includes water, gas and electricity if and only if they are put up for supply in a limited volume or set quantity.' The Act defines 'Digital content' as 'data which are produced and supplied in digital form.'

Other jurisdictions

Other jurisdictions, cited Lady Justice Gloster, have amended regulation to tackle the issue. New Zealand enacted a Consumer Guarantees Act 1993, which operates alongside a Sales of Goods Act modelled on our Sale of Goods Act 1979. The legislation provides that 'goods' includes 'for the avoidance of doubt…computer software.' Australia, which enacted the Australian Consumer Law, also amended the definition of 'goods' to include computer software.

The supply of digital content

Lady Justice Gloster stated: 'For the purposes of my conclusion, I find it relevant that the legislature opted to create a sui generis obligation – the supply of digital content - rather than widening the meaning of goods. The novel legislative solution demonstrates to my mind that this is clearly an area in which reform must come from the European legislature and/or the UK parliament and not via judicial interpretation.

The case may be found here

 
   
 
 
 

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