The software Proteus – UsedSoft changing our understanding of software as ‘saleable goods’

Abstract

One of the ongoing conundrums in the field of IT law is the nature of software. Pragmatic solutions have been adopted, and lawyers and developers alike have become comfortable that contracts and licences can be drafted and concluded in relative certainty despite the fundamental conceptual problem. As Atiyah's Sale of Goods puts it:

 … the key to the conundrum is not to get lost in metaphysical questions as to whether or not software is goods, but to focus on who is being sued in respect of what sort of defect, and to be clear as to the basis on which liability is being imposed. (Atiyah 2010, 78–79)

However, the decisions in UsedSoft (C-128/11 [2012] All E.R. (EC) 1220) have illustrated that these pragmatic solutions are just that, contingent arrangements that can be shaped, and changed, and re-interpreted to fit new legal and economic realities. Repeated legislation in this area has caused the Court of Justice of the European Union (CJEU) to reshape and remould its ideas about what software is at various different stages and although these ideas have usually loosely tracked technological and business development, and therefore met the expectations of both the legal and business communities, this time both have been taken by surprise. Like the mythical Proteus who changed shape to avoid having to foretell the future, the CJEU has repeatedly changed the nature of software in its attempts to fit law to the economic a technical future.

Keywords:

• IP competition software

Notes

1. For a glimpse into the European debate see, for example: Bräutigam (2012, 1–8) and Overdijk et al. (2011, 33–39). To understand the debate around the American equivalent the ‘doctrine of first sale’ see: Frankel and Harvey (2011, 40–42).

2. Due to the adoption of various treaties these article numbers have changed quite frequently in recent years although the content has remained unchanged; to avoid confusion all references to Article numbers will be updated by the present author. Similarly, all references to ECJ will be uniformly updated to CJEU and EC and EEC to EU, etc.

3. For another venerable example of the application of exhaustion see: Case 15/74 Centrafarm BV v. Sterling Drug, Inc., 1974 E.C.R. 1147, 2 (1974).

4. For example, in a generally excellent discussion of the case stored on the SCL website and hosted for UK practitioners by Linklaters the sole mention of the doctrine of ‘specific subject matter’ was accompanied with the comment ‘this was a favourite phase of the Court when driving the doctrine of exhaustion’ and further that many aspects of the opinion were ‘rather parental’ and based on ‘because I said so’ – see Podcast: ‘UsedSoft GmbH v Oracle International Corp – The Legal and Commercial Implications of the ECJ decision’, 22 November 2012.