A new judgment in the Court of Appeal has addressed the issue of the status of downloaded software and, in particular, whether such software could be classified as ‘goods’
The appeal in Computer Associates UK Ltd v The Software Incubator Ltd  EWCA Civ 518 was concerned with damages arising under an agreement between a principal and agent and are focused in part on the Commercial Agents (Council Directive) Regulations 1993. The agency agreement covered release automation software which was generally sold as downloads by way of licence. For most tech lawyers the crucial area of interest in the judgment of Lady Justice Gloster will be her answer to the ‘important question of whether a licence to use electronically supplied software amounts to the “sale of goods”’. In a judgment with which the other Lord Justices agreed, Gloster LJ concludes that it does not.
The judgment includes a wide-ranging review of the case law on the issue, including cases from Scotland and Australia as well as EU law pointers. Gloster LJ shows some reluctance to reach a conclusion that involves the status of a product being determined by the manner of its delivery rather than its nature – a conclusion that she feared might be technologically outmoded. It was not, in her view, for judges to seek to resolve any issues that arise from the distinction that has been drawn between tangible and intangible goods. Moreover, a good deal of that reluctance evaporated in light of the fact that the parties were in business and in no need of special protection and special provision is now made for digital content in the consumer protection legislation.
Read the full judgment for a full analysis of the past cases and factors weighed by Gloster LJ.