Is subscribing to SaaS a ‘sale of goods’? (Kompaktwerk v LivePerson)

Article summary

Commercial analysis: Software-as-a-Service (‘SaaS’) is a cloud-based software delivery model where computer applications are hosted online and made available to customers over the internet. The SaaS model is now the predominant means of supplying software to customers. In The Software Incubator v Computer Associates, the Court of Justice decided that where a customer obtains a perpetual licence to use computer software, then that is a ‘sale of goods’ for the purposes of the Commercial Agents Directive (Council Directive 86/653/EEC). The novel question resolved in Kompaktwerk v LivePerson was whether the same analysis applied to a time-limited subscription to a SaaS under the Commercial Agents (Council Directive) Regulations 1993. The court decided that the SaaS model: (1) does not involve a ‘sale’ (it is more akin to a rental of the software; and (2) involves the provision of services, rather than the sale of goods) as the customer is merely given access to a product held on a computer server. Written by...