Software agents now entitled to statutory protection

July 1, 2016

The High Court has today given judgment in the claim brought by The Software Incubator Limited (TSI) against Computer Associates Limited (the UK subsidiary of Nasdaq listed CA Inc.).  

TSI acted as the commercial agent of Computer Associates before its agency agreement was terminated by Computer Associates in October 2013.  

Following termination, Fox Williams LLP, on behalf of TSI, issued a claim in the High Court for compensation and post-termination commission under the Commercial Agents Regulations and for damages for failure to give proper notice of termination.  The claim was defended by Olswang LLP on behalf of Computer Associates.

The Commercial Agents Regulations define a commercial agent by reference to an agent who is concerned with the sale of goods (as opposed to services).  In acting as Computer Associates’ agent, TSI was involved in seeking to obtain orders for licences of Computer Associates’ application release automation software.

The High Court accepted the submissions of Oliver Segal QC on behalf of TSI that:

  1. software is goods for the purpose of the Commercial Agents Regulations;
  2. the sale of goods includes the grant of a software licence; and TSI had not committed a repudiatory breach of the agency agreement as alleged by Computer Associates as the basis for its termination of the agency agreement with TSI.  

Stephen Sidkin, Head of the agentlaw team at Fox Williams, says: “This High Court judgment in favour of The Software Incubator Limited is a landmark decision.  For many years, there has been uncertainty about whether:

  1. software is goods; and 
  2. the grant of a software licence represents the sale of goods, 

for the purposes of the Commercial Agents Regulations.

“Software companies using agents to obtain orders for their software products need now to ensure that they have minimised their exposure to their agents under the Commercial Agents Regulations.  If they do not, the no fault, automatic protection afforded by the Regulations to agents will result in software companies incurring considerable costs when agency agreements end.”  

Scott Dainty, owner of TSI, says: “I am delighted with the result and very grateful to my team at Fox Williams for all their help and support. “

For further information

1.The Commercial Agents Regulations came into force on 1 January 1994. 

2.The Commercial Agents Regulations implement into UK law the provisions of the European Agents Directive. 

3.The Commercial Agents Regulations provide automatic protection to terminated agents.  This protection consists of:

3.1 damages for failure to give statutory notice; and

3.2 compensation (or indemnity) on termination; and

3.3 commission earned but unpaid on termination; and

3.4 commission on orders which are received by the principal after termination as a result of the efforts made by the agent before termination; and

3.5 commission on unfulfilled orders where the reason for nonfulfillment is as a result of the principal. 

4.The Fox Williams team acting for TSI was Stephen Sidkin (partner), Tom Custance (partner), Evie Meleagros (senior associate), Emma Roake (senior associate), Veronique Bergau (trainee solicitor). 

5.Fox Williams has previously been involved in the following High Court cases which have resulted in judgments or orders:

  • Charles Shearman v Hunter Boot Limited – Fox Williams acted for Charles Shearman in his claim against Hunter Boot Limited and obtained judgment on an interlocutory application on a critical legal issue in his favour at a hearing on 1 November 2013. Click here for full details of the judgment.
  • Robeez European Sales Limited (1), Stride Rite Europe BV (2) and Robeez UK Limited (3) v Ifuago sarl (1) and Jerome Bergeron (2) – Fox Williams acted for the claimants in obtaining a judgment against their former agents.
  • Barnett Fashion Agency Limited Nigel Hall Menswear Limited – Fox Williams advised Nigel Hall Menswear Limited in a claim brought by its former agent until just before trial which resulted in judgment for Nigel Hall Menswear Limited.
  • Npower Direct Limited v South of Scotland Power Limited – Fox Williams acted for RWE Npower plc and obtained judgment in its favour against its former agent, South of Scotland Power Limited. Click here for full details of the judgment.
  • Npower Limited (1) and Npower Direct Limited (2) v First Contact Power Limited – Fox Williams acted for RWE Npower plc in achieving a satisfactory settlement of its dispute with its former agent, First Contact, during the course of a trial in January 2005

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