Rather than argue about the software itself, they've chosen to argue about the medium on which it is supplied.
What a f**ked up mess.
Software is not a good, the Court of Appeal in London, England, has ruled. More specifically, software is not a "good" as defined in the Commercial Agents EU Regulations, said the civil court in a ruling that overturns an earlier decision granting reseller The Software Incubator Ltd a cool £475,000. Back in 2016, a UK High …
The judge referred to previous cases that had been decided on the basis of whether software was supplied on a physical media and said that distinction made no practical sense.
He also said:
For the purposes of my conclusion, I find it relevant that the legislature opted to create a sui generis obligation – the supply of digital content - rather than widening the meaning of "goods." The novel legislative solution demonstrates to my mind that this is clearly an area in which reform must come from the European legislature and/or the UK parliament and not via judicial interpretation.
In other words, parliament decided that "digital content" was something distinct from either goods or services and if they specifically want it to be one or the other then only they, not the courts, have the power to change the law accordingly.
Rather than argue about the software itself, they've chosen to argue about the medium on which it is supplied.
I think it's more that they've decided that the two are not the same thing.
There's precedent for that. I remember many years ago (pre-EU rules) the UK company where I then worked getting a copy of some software (the SPICE simulator, IIRC) from the US. It was supplied on ½" magtape, and the excise people took the view that the software was not a tangible good, and so not subject to import duties. The physical tape, however, was dutiable. The result was that we had a short period, 2-3 weeks, during which we could temporarily import the tape and then export it again without being expected to pay duty. If we kept it past that period we'd have had to pay. My first task on getting it was to copy the tape & send it back.
I'm guessing that the assumed value of the tape was calculated as the total product cost, I can't imagine the duty on a blank tape spool being high enough for all the hassle, so none of it really made sense. Them's the rules, though.
I once dutifully contacted UK Customs because I was buying software for personal use from overseas, would it attract duty equivalent-ish to VAT? i.e. between 15 to 25 percent.
At the tire I think I was told that since they were actually just supplying a licence key code by e-mail in return for the payment, to use with software that I had downloaded already, there was not tax. Since it was quite a long time ago, it's probably changed, so don't take my word for it.
The purchase price was less than £100 but I thought I still could get into trouble and I didn't want to.
"they've chosen to argue about the medium on which it is supplied."
Alternative screwed up interpretation : it is no longer "illegal" (unlawful) to pirate movies and such. Why? Because if it's just a download link with no physical media then no tangible "goods" were transferred therefore nothing was "stolen" so.......?
Alternative screwed up interpretation : it is no longer "illegal" (unlawful) to pirate movies and such.
I think this shows the lunacy of the situation.
However, I don't think your interpretation would fly in court. There's probably loads of other laws which relate to it: computer misuse, copyright violation, etc.
FWIW I strongly disagree with the phrase "copyright theft" and with the "you couldn't steal a car" style adverts. Pirating movies (by torrents etc) doesn't deprive anyone of a physical possession. In fact, it only deprives anyone of anything if you would otherwise have bought the movie/music/whatever. If not, nobody has lost anything.
"In fact, it only deprives anyone of anything if you would otherwise have bought the movie/music/whatever. If not, nobody has lost anything."
Still stealing.You stole it so you don't have to fork out to experience it.
If you download it, by definition you want to experience it. If there's a cost involved in that transaction normally, bypassing that is still theft.
By the same line of thinking I could wardrive your WiFi and hijack it for my own downloading and streaming needs, and I wouldn't have stolen from you because I would never have bought bandwidth from your provider (data throttling and overage charges notwithstanding).
The "only if I would have bought it" argument is bankrupt and obvious to everyone.
"By the same line of thinking I could wardrive your WiFi and hijack it for my own downloading and streaming needs"
Actually, in this case you would be depriving the person paying for the bandwidth of that bandwidth. If you are using the bandwidth, they cannot, hence "stealing".
I (no longer) pirate material. However, I still maintain the point. Look at the maths:
- I do not purchase and do not pirate. Amount the IP owner gains from me: £0.
- I do not purchase but pirate the material. Amount the IP owner gains from me: £0.
There is a difference to me, as I get to experience something I otherwise would not. However, the IP owner experiences zero difference.
I'm not saying it's morally right to do so, but the pure fact is that it doesn't make a jot of difference to the IP owner. In fact they are likely to benefit from it. An example is that Microsoft strengthened their stranglehold on the desktop OS market through piracy, because those who would not normally have paid for their OS could get it for free and therefore didn't bother looking elsewhere. In the case of a movie, it means more people have seen it and talk about it, leading to more sales (as long as it was actually a good movie).
*) possessions, especially movable effects or personal property.
*) articles of trade; wares; merchandise:
*) canned goods.
*) Informal. what has been promised or is expected:
*) to deliver the goods.
*) Informal. the genuine article.
*) Informal. evidence of guilt, as stolen articles:
*) to catch someone with the goods.
*) cloth or textile material:
*) top-quality linen goods.
*) Chiefly British. merchandise sent by land, rather than by water or air.
They are articles of trade. You exchange money for the software.They have also been paid for and promised, and are expected. They don't count as a service. The service is the electronic means (download link) by which the goods (software) are delivered.
This is going to run, and run, and run. Ultimately, I think CA is on a losing wicket with this one.
A computer program is just a very long number. Can a number be counted as goods? ("Here's my number twelve and here's my copy of pi...")
What's special about these particular numbers is they explain to a binary slave how to perform a service. It's a way of mapping electrical inputs into outputs; a configuration file that configures your computer to serve you in a particular form.
(That said, the original judge was right. There are no perpetual services. The only things that can serve you for as long as you own them are goods.)
No, HMG. The distinction that's making the judge rule that software is not goods is one issued by the UK government, not from the EU. The law that is being sued over is EU-wide and specific to goods.
Either the UK can amend their local version of it to fit their local issue of Software being defined as not goods because they've got a separate definition of it. Or the EU can pre-empt them and rewrite the original law to include Software specifically. The question is, is this an issue in any other EU countries?
We've already got rulings here in the Netherlands holding that a perpetual software license is treated as a good in all ways applicable to it, including right of sale and transference. AFAIK Germany and France have similar rulings.
"We've already got rulings here in the Netherlands holding that a perpetual software license is treated as a good in all ways applicable to it, including right of sale and transference. AFAIK Germany and France have similar rulings."
That's weird. This appears to be an EU Regulation rather than a Directive, in which case it's not a transcription issue (as EU Regulations are not transcribed into local laws, they apply directly, so there's no issue there). There's a possible issue in the translation of the Regulation into different languages (this can sometimes cause a problem) or in the interaction between the Regulation and other UK-specific laws. I suspect a quick trip to the ECJ might be necessary, as this really should have a single definition EU-wide.
I'm fairly sure that *some* judges in the past would have taken that situation and said "This is absurd. Parliament are not idiots. Therefore, Parliament cannot have meant this. Let's reconstrue the laws in a way that isn't daft.". For example, the judge in the lower court appears to have done exactly that.
But yes, HMG shouldn't be relying on judges to patch up their crappy legislation with sensible case law. (Indeed, they tend to get uppity when that happens, although usually it is no more than they deserved.) They need to sort this out. Happily, they don't seem to have anything else on their plate at the moment, at least judging by their general inactivity and silliness.
When it plainly becomes one.
If being purely tangible defines the definition, I wonder how many loop holes will be played out around that then, how many contracts could theoretically be ripped up (as this one) with little to no comeback.
I love it when the law keeps up with the times.
I understand that the Court of Appeal has to work with the law as it is, so I'm not criticising them. But it seems that the distinction between software and goods is somewhat arbitrary and artificial. Take a piece of art, for example. This rule seems to imply that a digitally created artwork can't be a good, even if it's printed out on paper; on the other hand, a piece of art produced on paper is a good, even if it can be digitally scanned in.
Definitions are easy. Everyone can give examples of "software", "hardware", "goods", and so on. But defining the precise *boundaries* of those classes is infinitely more difficult. Far too much muddled thinking caused by people not being cognizant of the important distinction between defining something versus being able to define its precise boundaries.
Spectrums and attempted bifurcation. Many parameters are to be found in a continuous spectrum. Attempting to break a spectrum into two sections (e.g. hardware vs software) can be difficult, especially if those involved haven't yet hoisted aboard the boundary definition issue described above.
Trifurcation can help with spectrums and fuzzy boundaries. Imagine how many wars would result if clothing only came in two sizes, SMALL or LARGE. The invention of MEDIUM has saved countless lives. Providing a middle option assists greatly. Avoid arbitrary bifurcation. Minimum three, to allow compromises to be agreed.
Boundaries are attractive. There is a great deal of profit to be found by placing new products precisely on the existing boundaries. E.g. Crossover vehicles. New paint colours that are precisely aimed into the gaps. CPUs chips with embedded microcode. Programmable hardware like FPGAs. Boundaries to market planners are like a bright light for moths. They're not trying to annoy, they're just filling gaps and combining approaches. Plan your regulations and definitions for inevitable boundary cases.
There's so much more. This margin is too small...
No software was ever created without bugs, if you include its ability to fail in an unplanned for situation.
The classic example from 52 years ago on IBM mainframes was the IEFBR14 single-instruction program that simply returned to the caller. It should have set a return code showing that it was successful.
That's the story I grew up with but am prepared to believe this is an urban myth after reading the following http://www.miketaylor.org.uk/tech/oreilly/more-iefbr14.html#gsc.tab=0
That said, it does show how it's almost impossible to produce bug-free code for all situations.
On the other hand, I'm quite happy with the change of title from 'good' to 'bad'.
"No software was ever created without bugs" = lie
I write software all the time without any bugs, it isn't difficult you just have to know what you are doing.
Here is an example written in BBCBASIC for the BBC Micro Model B, there are no bugs at all
10 PRINT "Hello World"
"fail in an unplanned for situation" = software used out of designed context = not bug
If you took my BBCBASIC example and tried to run the saved binary on a PC as an EXE it would not perform as expected but this is not a bug nor is the code is wrong. Neither would it be if you run my example on a machine that is faulty, non-standard or intentionally broken in any other manner such as not having an output device to view the result.
I know my example is not complex and is only intented for a simple system but the fact remains that if all parts of a well design system work correctly and as expected then so will the entire system.
Where you get problems with the PC is that the hardware and operating system have their own bugs, the actual system specification is too loose and the user's typically unworthy of admin rights result in developing for the PC is a bit like Russian Roulette.
Now if I created something that doesn't work as advertised within it's designed context and sold it as a finished product then in all areas except IT I would be held accountable. In IT I would not necessarily be held accountable because the idea that selling code with errors still present, is okay. The reason for this is IMHO the repeating of comments such as yours and results is people accept crap as gold. So please stop repeating the lie, it is possible to produce code without errors but why would a bad company bother when they are allowed to sell crap as gold instead.
Your lies and everyone else's acceptance of bad code is IMHO killing and robbing people, decades since a well know name said "the carpenter gets paid so why shouldn't I" code is still crap and people are still buying it. I know who to blame even if you do not
Wrong. There are quite a number of software engineers in this world that use formal methods to engineer software that is bug free, as it must be when dealing with safety critical systems. Planes that crash themselves are not acceptable. And in the instances where this does occur, failure analysis methods are used to determine why the formal methods failed. Every case with which I am familiar, we've found that it was the failure to completely apply formalism that was the causative agent.
No one has ever found a bug in my software and that's going on thirty years now, across multiple platforms. Believe, you will hear about it as a number of people will end up quite dead with a few billion dollars in damages.
"use formal methods to engineer software that is bug free"
You mean, "software that meets the spec". Yes, that's a significant improvement in many cases, but it is only workable in situations where writing a complete spec is less effort than writing the program that meets it. Your formal methods may be as rigorous as a mathematical proof, but the history of maths is full of cases where proofs were undermined by someone noticing an unwarranted assumption.
that determines its application. If the agent has a physical stock of something, has to find warehousing, find a means of disposal, provide security, provide power etc etc. and thus has incurred an overhead with an expectation that said overhead would be recouped through the sale of the something, then there is a case to say the law applies to protect that investment and recover that outlay when the value is reduced by an outside agency that one has a contract with. Further, that would apply to, say, warehousing digital copies of serial numbers to activate the software - an existing expense that one would expect to recoup.
Consider, then, a loss of expected income when one has expended nothing of monetary value. Was the spirit of the Act to afford protection in this scenario?
This Act is, I think, not applicable to software per se, with it considered as intellectual property and a traceable commodity, but rather to the nature of the relationship between agent, supplier and customer.
I wouldn't like to have to have judged that one.
isn't there also the issue that if software becomes defined as a "good", then a consumer's rights change and things start having to be of merchantable quality, fit for purpose, free of material defect, etc? Half of the "get out" clauses in EULAs would not longer be possible?
Well the Consumer Protection Act 1987 deals in 'products' rather than 'goods', and helpfully includes a definition which should help one considering the tangibility of articles covered by the Act...
“product” means any goods or electricity and [...] includes a product which is comprised in another product, whether by virtue of being a component part or raw material or otherwise;
The Consumer Rights Act 2015 specifically deals with Digital Content, Services etc. and defines 'goods' as...
“Goods” means any tangible moveable items, but that includes water, gas and electricity if and only if they are put up for supply in a limited volume or set quantity.
No, it's the letter of the law that matters. You and I may have different ideas about what the spirit might be but what the Act actually says is beyond dispute - it's the text that emerges from the Westminster Gas Works and that's what the courts have to work with, even if they're not happy with it, as here. All the court can do is drop a big hint.
Having now read the background to the Commercial Agents (Council Directive) Regulations Act, and the Act itself, it's clear that this is one of the more sloppily worded pieces of legislation that fails to give a definition to the term 'Goods', such as is given in various consumer protection legislative acts. In the other Acts, Goods is defined as a tangible, moveable object but also includes electricity specifically. It's important to note that legislation created AFTER the CA(CD)RA contains separate sections for Goods, Software & Digital Content and Services. The CA(CD)RA concerns the situation where a commercial agent acts to procure business (sales) for a vendor (principal) in return for some form of payment or commission, and relates to payments that may be due following the termination of a contract as a result of the agent's activity, including reputation enhancement. Under the Act, continuation of payments following contract termination are time limited.
The background to the legislation is rooted in EU harmonisation - a directive was issued that member states were to incorporate legislation to harmonise with German commercial law's indemnity statutes, and French commercial law's compensation statutes. These protect commercial agents from loss of revenue resulting from the closure of part of their market following the loss of an agent contract. The EU council directive specifically defined a commercial agent as dealing in goods without a clear definition, even though the corresponding legislation in most other EU countries DID apply to goods (chattels), products and services.
Another example of EU woolliness the Brexit mob can pounce upon!
Given this, and the lack of similar indemnity for the arguable more extensive service industry commercial agent sector, I would have said that software should be counted as a "Goods" under the spirit of the directive, namely the harmonisation required to trade freely in the EU. A massive expansion of Commercial Agencies was going on at the time that the trade barriers were being eliminated.
According to the Business Dictionary, a Commercial Agent is "Agent who solicits and procures business from potential customers on behalf of one or more principals, usually against payment of a percentage of the realized sales revenue as commission."
Soliciting business is a far broader definition than just Goods (as physical chattels).
This is a poor judgment in my opinion. I can see this one rumbling on.
If the bits of data flowing down the wires into my computer are 'not tangible', how come my ISP seems eminently capable of measuring them one by one and can place a cap on their numbers if I exceed certain limits?
The ISP is counting representations of bits, not the (Platonic) ideal of bits. The bits can be represented in many ways: voltage levels, phase changes, magnetic field orientations, differing reflectance of pigment and the medium it is smeared upon, and so on. The representations are all different, but the data are the same. You have simply agreed with the ISP on a particular representation for convenience.
Software is 'mere' ordering of bits in a particular way, and if you formalise it, you can (in principle) generate a Gödel number or a Turing Description Number that describes the software, which is a good reason software is not patentable in many jurisdictions.
So, in most sensible jurisdictions, software can be copyrighted, but not patented.
and comes under fit for purpose regulations.
I don't know about EU rules AND don't care.
Software is a device, devised to function and do work, it is not just for entertainment, i.e to be perceived as Art, nor is it purely content, for information purposes.
It can replace hardware as with MPEG cards, Sound Synthesis, Hardware control systems and much more.
The act of creating software, like designing a car can involve intellectual property in designs and plans, that may be copyrighted or patented, but it produces a finite product intended to fulfill a functional purpose.
Stupid EU, Silly Judges, need to look beyond the fluff to the hard bits and get their brain in order.
If software is not a good and not a service, I assume it must be treated as data (information) and can't be subject to tax. How can software and other copyright objects such as journalistic articles, music and video be legally defined as different to data? I can't see how pure data can be taxed. Then again, the UK doesn't tax books or newspapers but does tax the electronic versions of the same content. The original exemption of books and newspapers was to avoid a 'tax on knowledge' but that doesn't seem to have made it all the way into the 21st century.
We certainly encountered the question of downloadable software back in the 1980's when we uploaded our product to the customer using FTP. They told us that sending them a tape would make it taxable but electronic transfer would not. We did as the customer requested.
The issue here is not so much "Is software 'goods' such that the law clearly applies to this situation and compensation is therefore due to the agent for the residual business done by their principal based on the work of the agent in promoting the principal's product" as more "what do your commercial agents do for your business and why?"
That is to say that if I, as a duly authorised UK agent for Microsoft, promote Windows 10, persuade companies and businesses and individuals in the UK that Windows 10, Office 365 etc etc are the answer to their requirements, that if I send out sales and technical staff to meetings across the land, provide specification sheets, uncover and resolve technical issues prior to the sale of some software, if I build the reputation of the Microsoft brand in the UK and I do so IN EXPECTATION that I would negotiate and broker a deal for Microsoft software receiving reimbursement for my efforts in promoting that software product, and then had that authority and the agreement to be paid commission REMOVED at short notice, I have no legal claim for payment for any of that work? Yet if I did the same for Volkswagen cars, then I would??!!
I provide a service to them under contract, but the protection by law is unidirectional in one case but not the other - if they are providing a service or a non-tangible product no protection. If they are providing a chattel, protection. My work to fulfil my end of the contract is exactly the same regardless of what I am promoting or pre-selling.
the proper thing must be handing over the license on paper, Paper is a tangible good, "enough scarce in relation to demand to command a price". This "good" has properties, like any hammer has properties making it useful for different purposes, sheet steel, nails or as a geological pick. The important property in this case is to give access to some expensive intellectual property but, nota bene this property is not essential as seen by the UK Court of Appeal though, I'm just trying to argue for it's likeness to other tangible things
Refer to https://english.stackexchange.com/questions/153342/one-type-of-good-singular-or-plural
The OED 'goods' - meaning: C lll 7b would seem to suggest that the singular form is obsolete and (7a (b)) that the plural form, 'goods' is used for singular.
"However, I recalled from Pure Economics that theoretical Economists, will often refer to an 'economic good'. I was delighted to discover that the OED has a separate entry on 'economic good' which appears below."
"economic good n.[oun] a commodity or service which is sufficiently scarce in relation to demand to command a price."
Lastly but not at all leastly: to this I can only say the words "or service" makes the UK Court of Appeal's decision rather shaky. The case all depends on which source of reference they use when deciding that a "good" is a tangible thing, their own beliefs or the community of theoretical economists...
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