The Software Incubator Ltd v Computer Associates (UK) Ltd

Computer software supplied electronically to customers under a perpetual licence in return for a fee is a sale of goods, so an agent who markets it is a commercial agent.

Citation
(2021) Case C-410/19
Court
Court of Justice of the European Union
Year
2021
Subject
Data Protection and Technology Law
Topic
Technology, software, platforms and digital assets

Facts

Computer Associates appointed The Software Incubator as its agent to market its software, which was supplied to customers electronically by download, under a perpetual licence, for a fee. When Computer Associates terminated the agency, Software Incubator claimed compensation under the Commercial Agents (Council Directive) Regulations 1993, which apply to self employed agents who negotiate the sale or purchase of goods. Computer Associates argued that the software was not goods, because it was not supplied on a tangible medium. The case went to the UK Supreme Court, which referred questions to the Court of Justice.

Legal principle

The Court of Justice held that the concept of a sale of goods in the Commercial Agents Directive could cover the supply, in return for a fee, of computer software to a customer in electronic form, where that supply is accompanied by the grant of a perpetual licence to use the software. The court said that the term goods should be given an autonomous meaning, that software is capable of being classified as goods regardless of whether it is supplied on a tangible medium or electronically, and that the grant of a perpetual licence in exchange for a fee amounted to a transfer of the right of ownership of the copy. This interpretation was consistent with the purpose of the directive, which was to protect commercial agents. The ruling was then applied by the UK courts.

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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.

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