The Court of Appeal has held that for the purposes of the Commercial Agents Regulations the term “Goods” does not include digital content supplied electronically.

The Commercial Agents Regulations (Council Directive) 1993

The Commercial Agents Regulations (“the Regulations”) give effect to European Union Council Directive 86/653/EEC regarding the rights of self employed commercial agents. The Regulations define “commercial agent” as:

“a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the “principal”), or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal”. 

The Regulations set out the rights and obligations of commercial agents including a right to indemnity or compensation upon termination of an agency.

As drafted the Regulations only apply to agents negotiating the sale of goods. There is no definition of either “goods” or “sale” within the Regulations.

The Court of Appeal decision in Computer Associates UK Ltd v The Software Incubator Ltd

The case concerned the termination of an agency for the promotion and sale of software supplied electronically. The Claimant agents claimed compensation under Section 17(2) of the Regulations. The Defendant principals argued that there was no claim under the Regulations at all because they did not apply. This was because the supply of software was by electronic means only without the transfer of any tangible property and thus was not a “sale of goods” for the purpose of the definition of “commercial agent” in Regulation 2 (1) of the Regulations.

The court considered previous authorities² that had distinguished between tangible and intangible property and held that “goods” required there to be tangible property. Software supplied without a tangible medium was to be considered as intellectual property rather than goods.

Despite a concern that such an approach might appear to be out-moded in light of technological advances the court felt that the weight of authority on this issue compelled it to conclude that the software did not constitute “goods” within the meaning of Regulation 2(1).

Accordingly the Regulations did not apply in the present case. In the light of this conclusion the court did not make a finding on the separate issue whether a licence was a sale for the purpose of the Regulations.

As the Regulations did not apply the agent’s claim for compensation failed.

In support of its conclusions the court made reference to the Consumer Rights Act 2015 that implements the Consumer Rights Directive 2011/83/EU . This defines “goods” as “tangible moveable items” and separately defines “digital content” as data which are produced and supplied in digital form. Although applicable only to consumer sales the court found it relevant that the legislature opted to create a separate obligation – the supply of digital content – rather than widening the meaning of “goods.”

¹ Computer Associates UK Ltd v The Software Incubator Ltd [2018] EWCA Civ 518

² Accentuate Ltd. v. Asigra Inc. [2010] 2 All E.R. (Comm) 738 at [55] – [56]

St Albans D.C. v. International Computers Ltd. [1996] 4 All ER 481

Your Response Ltd. v. Datateam Business Media Ltd. [2014] EWCA Civ 281 at [18] – [20] and [42]

Anthony de Winton

Anthony is a consultant for Pitman. He gained a wide breadth of international legal experience in house with Kraft Foods. This experience included responsibility for the Middle East & Africa region and latterly providing legal support to the international supply chain and procurement organisation.


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