Software - goods or services?

November 7, 2014

The Commercial Agents Regulations define a commercial agent expressly by reference to “goods”.  As such, there has been a question mark as to whether an agent who obtains orders for software can be an agent under the Regulations. 

The situation is not helped by the absence of a definition of “goods” in the Regulations. 

However, a recent High Court decision provides some clarity as to the latest judicial thinking on this point. 

The case in question concerned software supplied on CDs and CD-ROMs.  Unsurprisingly, the software house principal argued that whilst CDs and CD-ROMs were physical things, they did not make the software “goods”. 

The court looked at a number of cases and EU directives. 

Whilst the judge noted that there was no European guidance, he considered that there could be policy reasons which might persuade the European Court that “goods” should have a wider interpretation in a digital age. 

Independent of this view, the judge also noted a previous English Court of Appeal decision where it was found that a sale of software which takes place by virtue of the supply of a disc which contains the software is a sale of “goods”. 

Ultimately, this decision and other case law led the judge to conclude that there was a real prospect of success in arguing that where software is supplied on CDs, it does constitute a supply of goods. 

In addition, the judge noted that when in 2012 the European Court considered whether a software licence amounted to a sale of software, it had decided that there was no difference between the supply of software over the internet and supply via a physical medium such as a CD-ROM. 

Whilst a final decision on the point is awaited, there can be little doubt now that, for the purpose of the Regulations, software will be treated as goods irrespective of the way in which it is made available. 

It is also worth noting that whilst for English law this development may be considered innovative, for many EU member states, which do not distinguish between goods and services for the purpose of the laws protecting commercial agents, it is likely to be regarded as a case of the UK simply playing catch-up!


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