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Abstract
The Sale of Goods Act 1979, section 12 imposes obligations on sellers. Sellers must have the right to sell the goods, and they impliedly warranty that the buyer will enjoy quiet possession. Actions by intellectual property rights holders can lead to liability for sellers for breach of the section 12 obligations. Recent technological change has brought about the development of goods that operate in conjunction with software. The extent of the relationship between goods and software varies, but the level of integration may be sufficient to consider the software ‘embedded’ within goods. To what extent can the holders of intellectual property rights in software extend their interest into goods with embedded software? Can a third-party sub-purchaser escape the reach of the intellectual property rights? A reform proposal is made that would enable sub-purchasers to avoid the problems of pre-existing intellectual property rights in goods with embedded software.
Notes
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Kelion, L. 2011. Can mobile phone innovation survive the patent trolls? BBC News, 24 October 2011, available at http://www.bbc.co.uk/news/technology-15433188: ‘a derogatory name given to organisations that aggressively defend patent libraries without releasing products of their own.’ See further Bessen, J.E., Meurer, M.J. and Ford, J.L. 2011. The private and social costs of patent trolls. Boston University School of Law, Law and Economics Research Paper No. 11-45 (September 2011), available at SSRN: http://ssrn.com/abstract=1930272.
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Millard, C. 2007. Copyright in information technology and data. In Computer law: The law and regulation of information technology, ed. C. Reed and J. Angel, 6th ed., 337 (Oxford: Oxford University Press).
‘Amazon reveals its patent lawsuits are on the rise’, BBC News, 27 October 2011, available at http://www.bbc.co.uk/news/technology-15482508.
Grosche, ‘Software patents’, 269.
Bradgate, R. 2010. Consumer rights in digital products: A research report prepared for the UK Department for Business, Innovation and Skills, September 2010, available at http://www.bis.gov.uk/assets/biscore/consumer-issues/docs/c/10-1125-consumer-rights-in-digital-products, hereafter ‘Bradgate, Consumer Rights’.
Ibid, 2.
Ibid, 3.
Bridge, M.G., ed. 2010. Benjamin's sale of goods. London: Sweet & Maxwell, 2010, hereafter ‘Benjamin’, para. 1-086.
Lloyd, I.J. 2011. Information technology law, 6th ed., v. Oxford: Oxford University Press.
Atiyah, P.S., Adams, J.N., and MacQueen, H. 2010. Atiyah's sale of goods, 12th edn., 78–79. London: Pearson, hereafter ‘Atiyah’.
Bradgate, R. 2000. Commercial law, 3rd ed., 357. London: Butterworths. All references to section numbers will be references to the SGA unless otherwise stated.
Benjamin, para 1-086.
St Albans CDC v International Computers Ltd [1996] 4 All ER 481 at 493.
McKendrick, E. 2010. Goode on commercial law, 4th ed., 213. London: Penguin, hereafter ‘Goode’.
Bradgate, Consumer rights, 40–42.
Beta Computers (Europe) Ltd v Adobe Systems (Europe) Limited [1996] FSR 367 at 375–376.
Ibid, 377.
Bradgate, Consumer Rights, 42, 50–59; Green, S., and Saidov, D. 2007. Software as goods. Journal of Business Law: 161, hereafter ‘Green and Saidov’.
Gammasonics Institute for Medical Research Pty Ltd v Comrad Medical Systems Pty Ltd [2010] NSWSC 267 at [30].
Ibid, [15], [45].
Press, T. 2007. Patent protection for computer-related inventions. In Computer law: The law and regulation of information technology, eds. C. Reed and J. Angel, 6th ed., 329. Oxford: Oxford University Press; Tapper, C. 1989. Computer law, 4th ed., 15. London: Longman, hereafter ‘Tapper’.
Lee, E.A. 2002. Embedded software. Advances in Computers 56: 55.
See, for example, Smith, L.S. 2006. RFID and other embedded technologies: Who owns the data? Santa Clara Computer & High Technology Law Journal 22: 695, 697. See also Braucher, J. 2002. When your refrigerator orders groceries online and your car dials 911 after an accident: Do we really need new law for the world of smart goods? Washington University Journal of Law and Policy 8: 241, hereafter ‘Braucher’, 241: ‘An explosion in “smart” goods is upon us.’
Koopman, P., and Kaner, C. 2001. Why the proposed Article 2 revisions fall short for embedded systems, available at http://www.badsoftware.com/embedd0.pdf; The problem of embedded software in UCITA and drafts of revised Article 2 (Part 1). Uniform Commercial Code Bulletin 43: 1, available at http://www.badsoftware.com/embedd1.htm; The problem of embedded software in UCITA and drafts of revised Article 2 (Part 2). Uniform Commercial Code Bulletin 43: 1, available at http://www.badsoftware.com/embedd2.pdf.
Koopman, P., and Kaner, C. 2001. Why the proposed Article 2 revisions fall short for embedded systems, above note 27, 3–4. See also Green and Saidov, 167–168; Goode, 215.
Koopman, P., and Kaner, C. 2001. Why the proposed Article 2 revisions fall short for embedded systems, above note 27, 7.
Koopman, P., and Kaner, C. 2001. The problem of embedded software in UCITA and drafts of revised Article 2 (Part 2), above note 27, 7. See also Green and Saidov, 163.
Tapper. 1974. 151–56, citing Computer Sciences Corp v Commissioner of Internal Revenue 63 TC 327 at 330; Newton, J. 2007. System supply contracts. In Computer law: The law and regulation of information technology, ed. C. Reed and J. Angel, 6th ed., 42. Oxford: Oxford University Press, hereafter ‘Newton’, 42.
McN Hutcheson, L. 1998. The exclusion of embedded software and merely incidental information from the scope of Article 2B: Proposals for new language based on policy and interpretation. Berkley Technology Law Journal 13: 977, hereafter ‘Hutcheson’, 983, citing UCC Article 2B, Preface at 17 (Draft of 25 September 1997). See also, for example, Hardwick, A.J. 2004. Amending the uniform commercial code: How will a change in scope alter the concept of goods? Washington University Law Quarterly 82: 275, 288, 292 et seq; Rusch, L.J. 2003. Is the saga of the uniform commercial code Article 2. Revisions over? A brief look at what NCCUSL finally approved. Delaware Law Review 6: 41, 45; Braucher, 242–245.
Hutcheson, 983, citing UCC §2B-103, Reporter's Note 8(b) and UCC §2B-103(c)(2)(A) (Draft of February 1998).
Hutcheson, 984.
Ibid.
Ibid, 986–987.
Ibid, 987.
Ibid, 987–989; Lee, E.A. 2002. Embedded software. Advances in Computers 56: 55.
Hutcheson, 989–994.
UCC Article 9-102(a)(44).
UCC Article 2-401(1). See, for example, Smith, above note 26, 739.
See further text accompanying note 97.
Bridge, M.G. 2009. The sale of goods, 2nd ed. Oxford: Oxford University Press, hereafter ‘Bridge’, para. 2.25.
Bradgate, Consumer rights.
Ibid, 5; 13; Bradgate, R. 1999. Beyond the millennium - the legal issues: Sale of goods issues and the millennium bug. The Journal of Information, Law and Technology 2, available at http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/1999_2/bradgate/.
Bradgate, Consumer Rights, 32.
Ibid, 38.
Ibid, 39.
Bradgate, R. 199. Beyond the millennium - the legal issues: Sale of goods issues and the millennium bug. The Journal of Information, Law and Technology 2, available at http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/1999_2/bradgate/.
[1996] 4 All ER 481 at 493.
[1983] 2 NSWLR 48; (1983) 77 FLR 377.
(1983) 77 FLR 377 at 380.
Ibid.
Ibid, 383.
[2000] 2 All ER (Comm) 984, reversed on other grounds: Watford Electronics Ltd v Sanderson CFL Ltd [2001] EWCA CIV 317, [2002] FSR 19.
[2000] 2 All ER (Comm) 984, 1002.
[2005] AATA 359.
Ibid, [34].
Ibid, [42]-[43].
(1991) 925 F2d 670 at 675.
[1935] 1 KB 579.
Adams, J.N. 2009. Software and digital content. Journal of Business Law 396, 397.
Ibid, 399. See also Braucher, 246 et seq (noting that software should be considered as goods, as this makes sense according to a functional understanding of purpose of Article 2 of the UCC); Hardwick, ‘Amending the Uniform Commercial Code’, above note 32 (favouring a ‘predominant purpose’ test to determine whether goods with embedded software are to be treated as goods simpliciter).
Barber v NWS Bank PLC [1996] 1 WLR 641 at 646 (Sir Roger Parker).
Rowland v Divall [1923] 2 KB 500.
Butterworth v Kingsway Motors [1954] 1 WLR 1286 at 1290 (Pearson J).
Benjamin, para. 4-002.
Bridge, para. 5.04.
Ibid, para. 5.05.
Mason v Burnigham [1949] 2 KB 545 at 563, approved in Heating (Sales) Property Ltd v Inglis Electrix Property Ltd (1968) 121 CLR 584 (though cf. Windeyer J, at 617: ‘the application, scope and operation of [the warranty of quiet possession] may, in some circumstances, still be debatable, especially in relation to disturbance by title paramount.’); Microbeads [1975] 1 Lloyd's Rep 375 at 337 (Lord Denning MR), 378-79 (Roskill LJ), 380-81 (Sir John Pennycuick).
Heating (Sales) Property (above note 70), followed with approval in Empresa Exportadora De Azucar v Indutria AzuCarere Nacional SA (The ‘Playa Larga’ and ‘Marble Islands’) [1983] 2 Lloyd's Rep 171 at 179 (Ackner LJ); Rubicon Computer Systems Ltd v United Paints Ltd (CA, 12 November 1999) at 4 (Mantell LJ).
[1921] 3 KB 387; (1921) 37 TLR 653, hereafter ‘Niblett’.
[1975] 1 Lloyd's Rep 375, hereafter ‘Microbeads’.
(1921) 37 TLR 103.
[1921] 3 KB 387 at 398.
(1921) 37 TLR 653 at 655.
J Barry Winsor & Associates Ltd v Belgo Canadian Manufacturing Co Ltd (1975) 61 DLR (3d) 352 (British Columbia Supreme Court); (1976) 76 DLR (3d) 685 (British Columbia Court of Appeal).
Meyknecht-Lischer Contractors Ltd v Stanford (2005) Carswell Ont 9246 (Ontario Superior Court of Justice), aff'd (2006) 57 CLR. (3d) 145 (Ontario Superior Court of Justice (Divisional Court)).
[1921] 3 KB 387 at 401-02.
[1975] 1 Lloyd's Rep 375 at 376-77.
See, for example, Heating (Sales) Property (above note 70) at 616 (Windeyer J).
[1975] 1 Lloyd's Rep 375 at 378-80.
Ibid, 378.
Ibid, 377.
See above text accompanying note 79.
The Playa Larga, above note 71.
[1975] 1 Lloyd's Rep 375 at 378.
Compare Lloyd, I.J. 2000. Information technology law, 3rd ed., 504. London: Butterworths and Information technology law, 6th ed., 491–492. Oxford: Oxford University Press.
Ibid (the analysis has not changed).
Newton, 6–7.
Bradgate, Consumer Rights, 20.
Ibid.
Stone, B. 2009. Amazon erases Orwell books from Kindle devices, New York Times, 17 July 2009, available at http://www.nytimes.com/2009/07/18/technology/companies/18amazon.html; Amazon sued for Kindle deletion of Orwell', CBS News, 31 July 2009, available at http://www.cbsnews.com/stories/2009/07/31/tech/main5201198.shtml; K. DeGroot Carter, KNOW THIS: E-Books Update: Amazon's disappearing E-Books debacle, 6 August 2009, available at http://www.knowsomethingproject.com/publishing/0809ebooksdeleted.html. See also, for example, Feiler, L. 2011. Separation of ownership and the authorization to use personal computers: Unintended effects of EU and US law on IT security. Santa Clara Computer & High Technology Law Journal 27: 131, 132–133 (noting different instances of IPR holders affecting ownership and/or usage of goods).
Hargreaves, I. 2011. Digital opportunity: A review of intellectual property and growth (May).
For which see generally de Lacy, J. ed. 2010. The reform of UK personal property security law: Comparative perspectives. Abingdon: Routledge Cavendish.
See text accompanying note 40.
Available at http://www.philips.com/about/company/businesses/conditionsofcommercialsale/europe/en_uk.page.
Green and Saidov, 178.
Ibid.
Newton, 7.
Newton, 32.
Newton, 32.
AAG Investments Ltd v BAA Airports Ltd [2010] EWHC (Comm) 2844.
Niblett [1921] 3 KB 387 at 395 (Bankes LJ), 398 (Scrutton LJ), 401 (Atkin LJ).
Ibid, 401 (Atkin LJ).
Ocean Chemical Transport Inc v Exnor Craggs Ltd (CA, 15 December 1999).
Unfair Terms in Consumer Contracts Regulations 1999 SI 1999/2083 as amended by SI 2001/1186 regs. 5, 8.
Atiyah, 227
Reynolds, F.M.B. 1963. Warranty, condition and fundamental term. Law Quarterly Review 79: 534, 542; Hudson, A.H. 1957. The condition as to title in sale of goods. Modern Law Review 20: 236; Hudson, A.H. 1961. The exclusion of Section 12(1) of the sale of goods act. Modern Law Review 24: 690.
Bridge, para. 5.20.
[2002] FSR 15 (Patents County Court).
Ibid, [59] (Mr Recorder Christopher Floyd QC).
Atiyah, 114.
The Playa Larga [1983] 2 Lloyd's Rep 171 (CA).
Ibid, 180.
Ibid, 180.
(1980) 114 DLR (3d) 92.
Ibid, [32].
(CA, 15 December 1999).
Ibid, [50] (Evans LJ).
Limitation Act 1980 s39; Prescription and Limitation (Scotland) Act 1973 s8; Fisher v Brooker [2009] UKHL 41; [2009] 1 WLR 1764 [3]-[4] (Lord Hope); Scottish Law Commission, Discussion Paper on Prescription and Title to Moveable Property (Scot Law Com DP No 144, 2010), paras 11.1–11.10.
Rubicon Computer Systems Ltd v United Paints Ltd (CA, 12 November 1999).
Butterworth v Kingsway Motors [1954] 1 WLR 1286.
Brown, I. 1992. Case comment: The scope of section 12 of the Sale of Goods Act. Law Quarterly Review 108: 221, hereafter ‘Brown’.
Atiyah, 109.
(1991) 92 Cr App R 279.
Sale of Goods (Amendment) Act 1994.
Niblett [1921] 3 KB 387 at 398.
Brown, 223.
Ibid, 222–223. See also Crowther Committee, Consumer credit (Cmnd 4596, 1971), vol I, para 5.7.32; Clayton v Le Roy [1911] 2 KB 1031.
Bridge, M.G. 1998. The title obligations of the seller of goods. In Interests in goods, ed. N. Palmer and E. McKendrick, 2nd ed., 303. London: LLP, hereafter ‘Bridge, ‘Title Obligations’', 310; Bridge, para. 5.28.
Niblett [1921] 3 KB 387 at 403.
Bridge, ‘Title Obligations’, 309.
See, for example, Braucher, 255–256 (noting the potential impact of transfer and usage controls, leading potentially to problems of waste).
See, for example, Bentley, L. and Sherman, B. 2009. Intellectual property law, 3rd ed., 12–16. Oxford: Oxford University Press; Braucher, 253–257.
Bentley, L., and Sherman, B. 2009. Intellectual property law, 3rd ed., 13. Oxford: Oxford University Press: ‘However clothed, the doctrine of exhaustion is best seen as a judicial and political compromise that allows the free movement of goods within the [EU] … despite the fact that national intellectual property rights enable [IPR holders] to interfere with the free movement of goods.’
Atiyah, 109; Bridge, ‘Title Obligations’, 308.
See also Braucher, 257–258 (arguing that resale of ‘smart goods’ should be free of restrictions on transfer and/or usage).
[1921] 3 KB 387 at 398.
Bridge, para. 5.23, citing Page v Cowasjee Eduljee (1866) LR 1 PC 127; Clark v England (1916) 10 WWR 1056; Northwest Co Ltd v Merland Oil Co of Canada Ltd [1936] 2 WWR 577; Warming's Used Cars Ltd v Tucker [1956] SASR 249.
European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law’, 2011/0284 (COD), (2011) available at http://ec.europa.eu/justice/contract/files/common_sales_law/regulation_sales_law_en.pdf.
Law Commission and Scottish Law Commission. 2011. An optional common European sales law: Advantages and problems: Advice to the UK Government, 10 November 2011, available at http://www.justice.gov.uk/lawcommission/docs/Common_European_Sales_Law_Advice.pdf.
Ibid, para. S3.
Ibid, paras. 4.160-162.
Ibid, para. 7.7.
Kröll, S. 2011. ‘Article 42’ in UN Convention on Contracts for the International Sale of Goods (CISG), eds S. Kröll, L. Mitselis and P. Perales Viscasillas, 648. Munich and Oxford: C.H. Beck and Hart Publishing.
Ibid, 649.
Ibid, 662.
Bradgate, Consumer Rights, 68.
Campbell, A. and Rowland, D. 2002. Supply of software: Copyright and contract issues. International Journal of Law and Information Technology 10: 23, 27.
See text accompanying note 130.