On 16 September 2021, the Court of Justice of the European Union ("CJEU") tried the case between Software Incubator Ltd. ("SI") and Computer Associates UK Ltd. ("CA") in C-410/19. CJEU ruled that the supply of software by way of perpetual licence to use it amounts to the "sale of goods" within the meaning of the Agency Directive (86/653/EEC). The Court has thus concluded in accordance with the General Advocate's proposal in the preliminary ruling on 17 December 2020.
The background of the specific case relates to an agent agreement for software signed in 2013. SI and CA entered into an agency agreement for the promotion, marketing and selling of CA's software. CA was the principal and SI was the agent. In September 2013, SI entered into an agency agreement with another software company, and in October 2013, CA terminated its agreement with SI on the alleged basis that SI, by reason of accepting another engagement, was in breach of its duties.
After the agreement was terminated, SI brought an action against CA claiming compensation with reference to the Agency Directive. CA, however, disputed this claim and stated that no agency agreement had been entered into. CA argued that electronically supplied software by way of a perpetual licence did not amount to "sale of goods" within the meaning of the Agency Directive.
The CJEU stated that software has commercial value and can be subject to commercial transactions, and therefore can be considered as "goods" regardless of how the software was supplied, and even if not accompanies by any form of physical means whatsoever. This was also in accordance with the CJEU's established definition of "goods". Furthermore, the CJEU states that a "sale" is an agreement in which a person pays for transfer of rights to tangible or intellectual property. Thereafter, the CJEU stated that when customers pay to download a copy of software and a license agreement for the purpose of using it permanently, the rights to the specific copy are transferred and that this constitutes a "sale" of goods.