Software agents now entitled to statutory protection

The High Court has today given judgment in the claim brought by The Software Incubator Limited (TSI) against Computer Associates Limited (the UK subsidiary of Nasdaq listed CA Inc.).  

TSI acted as the commercial agent of Computer Associates before its agency agreement was terminated by Computer Associates in October 2013.  

Following termination, Fox Williams LLP, on behalf of TSI, issued a claim in the High Court for compensation and post-termination commission under the Commercial Agents Regulations and for damages for failure to give proper notice of termination.  The claim was defended by Olswang LLP on behalf of Computer Associates.

The Commercial Agents Regulations define a commercial agent by reference to an agent who is concerned with the sale of goods (as opposed to services).  In acting as Computer Associates’ agent, TSI was involved in seeking to obtain orders for licences of Computer Associates’ application release automation software.

The High Court accepted the submissions of Oliver Segal QC on behalf of TSI that:

  1. software is goods for the purpose of the Commercial Agents Regulations;
  2. the sale of goods includes the grant of a software licence; and TSI had not committed a repudiatory breach of the agency agreement as alleged by Computer Associates as the basis for its termination of the agency agreement with TSI.  

Stephen Sidkin, Head of the agentlaw team at Fox Williams, says: “This High Court judgment in favour of The Software Incubator Limited is a landmark decision.  For many years, there has been uncertainty about whether:

  1. software is goods; and 
  2. the grant of a software licence represents the sale of goods, 

for the purposes of the Commercial Agents Regulations.

“Software companies using agents to obtain orders for their software products need now to ensure that they have minimised their exposure to their agents under the Commercial Agents Regulations.  If they do not, the no fault, automatic protection afforded by the Regulations to agents will result in software companies incurring considerable costs when agency agreements end.”  

Scott Dainty, owner of TSI, says: “I am delighted with the result and very grateful to my team at Fox Williams for all their help and support. “


 

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Stephen Sidkin
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