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Australia Software The Courts The Internet Technology

In AU, Court Rules Downloaded Software Is Not "Goods" 81

Posted by Soulskill
from the unless-it's-pirated-right dept.
bennyboy64 writes "A court decision ruling that the supply of software through a digital download mechanism is not a supply of 'goods' has been upheld in the Supreme Court of New South Wales in Australia, setting a precedent that software downloaded via the Internet is not protected by the Sale of Goods Act, reports ZDNet. It's a court decision that lawyer Patrick Gunning said attorneys had been waiting to have clarified for some time. What this meant was that 'people who purchase software will have more legal rights if they buy over the counter rather than downloading,' Gunning said."
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In AU, Court Rules Downloaded Software Is Not "Goods"

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  • by Peach Rings (1782482) on Friday May 07, 2010 @03:26PM (#32131736) Homepage

    I suppose that means that they can't be taxed as goods then?

    • by 0100010001010011 (652467) on Friday May 07, 2010 @03:29PM (#32131796)

      Or counted as theft.

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      Does it extend to other purely-digital creations? WHAT ABOUT E-BOOKS? What about logo designs? What about digital photographs? Even if sold, are they no longer considered "goods" as well?

    • by spun (1352) <loverevolutionary@@@yahoo...com> on Friday May 07, 2010 @03:36PM (#32131912) Journal

      It's not a good, it's a service. Like a song played over the radio isn't a good, it's a service, while a song bought on a CD is a good. The judge recognized that his ruling could lead to injustice, and called on parliament to change the law to reflect the changes in the definition of 'goods' that the digital revolution has brought about.

    • Before you all throw full bottles of beer at your computer screen, let me remind you of a post I made earlier today. About Valve and their steamworks software. Since they are not selling the goods, they are "Licensing" it out to you. This does mean you do not have certain rights to the product, but it also means you have certain other rights. For example, you won't have to pay Taxes. (and I've never paid taxes on any Steam Games).

      So, yes, unless they are taxing you on some service, then you shouldn't be ta

      • by OzPeter (195038)

        So, yes, unless they are taxing you on some service, then you shouldn't be taxed at all. So make sure you read the fine print for some "Supplier services fee".

        Australia has the GST - Goods and Services Tax which applies to anything you provide as a business - except for certain food stuffs, etc which exempt.

        • Re: (Score:3, Interesting)

          by rtb61 (674572)

          An interesting tax principle. The Australian GST is a federal value added tax http://en.wikipedia.org/wiki/Goods_and_Services_Tax_(Australia)#Economic_and_social_effects_of_the_GST [wikipedia.org] that was used to replace all state sales taxes and thus provide a simplified and uniform across the board taxation basis across all states and that even online sales within Australia now have to in affect pay sales tax. A substantive portion of GST tax income is the redistributed back to each state. This would certainly resolve

        • by KDR_11k (778916)

          As do most European countries. Here in Germany that creates funny situations like restaurants clearly having to mark whether the food is sold for consumption in-house (counts as a service, full tax) or take-away (runs under the reduced tax for food).

      • by idontgno (624372)

        For example, you won't have to pay Taxes.

        That's fine, except that in many jurisdictions, services are taxed at sale [google.com] just like goods. So that "right" is more hypothetical than real.

        Licensed software means, effectively, you (the licensee) have only the rights the license concedes to you (in worst cases, almost none) plus any rights enforced by your jurisdiction's commerce codes and contract laws. And the latter may be available to you only after a court fight.

        No, IANAL. This is not legal advice. Just an out

      • Re: (Score:2, Informative)

        by Anonymous Coward

        The reasons you don't pay taxes with Valve is the same reason you don't pay taxes with Amazon. Sales tax is a state level tax, and large national and international companies don't want to have to deal with the ever changing tax laws covering your region. The expectation is that since you aren't paying at time of sale that you will pay when you file your state income tax at the end of the year. I realize that most people don't add the sales tax for Amazon purchases when they do their taxes, but legally you

  • What is their deal? Their motto seems to be "The consumer is always a criminal". It's weird.

    • by Rene S. Hollan (1943) on Friday May 07, 2010 @03:30PM (#32131808)

      Well, since Australia used to be a penal colony, that kind of makes some kind of twisted sense.

      • by OzPeter (195038) on Friday May 07, 2010 @03:38PM (#32131922)

        What is their deal? Their motto seems to be "The consumer is always a criminal". It's weird.

        Well, since Australia used to be a penal colony, that kind of makes some kind of twisted sense.

        I can't remember the comedian who said this, but:

        I'd rather live in a country founded by criminals, than one founded by puritans

        Having lived in both places I totally agree with him

        • by Bing Tsher E (943915) on Friday May 07, 2010 @03:53PM (#32132166) Journal

          Australia wasn't founded by criminals. It was founded by wardens.

          • by OzPeter (195038)

            Australia wasn't founded by criminals. It was founded by wardens.

            Actually the Aboriginals founded it first, then the Dutch floundered on it, followed by Cook floundering on the other side of it and only then did it get founded by criminals - you think for a moment that the wardens actually did the work to build up the colony??

            Beside which it was an American comedian, so he was lucky enough to just get to a country outside of the US, let alone not get the pedantry right

          • by syousef (465911)

            Australia wasn't founded by criminals. It was founded by wardens.

            You're conveniently leaving out the ex-criminals, who once they served their sentences often became successful and respected.

            http://en.wikipedia.org/wiki/Convicts_in_Australia#See_also:_Famous_convicts_transported_to_Australia [wikipedia.org]

            Everything from establishing ferry services (Billy Blue) to famous architect (Francis Greenway).

        • Re: (Score:3, Informative)

          by MBGMorden (803437)

          Having lived in both places I totally agree with him

          Eh - only the New England area of the US was puritans. Most of the South was just greedy plantation owners, and Georgia was originally a penal colony just like Australia.

          • by svtdragon (917476)
            Which is ironic, since New England is arguably the *least* puritanical area of the country, or perhaps second to the area immediately around San Francisco.
      • by sjwt (161428)

        Id learn a bit of history as so was America. Australia was used latter, 50K of the worst the British had where sent to the good old USA.

        Penal colony [wikipedia.org]

  • Does the "purchase" somehow get "erased" if I download AFTER providing my billing information? Do I get a credit after I pay you and THEN download?

    What part of "this makes no sense" does the court not get?

    I can understand for the cases of a download of software when no money changes hands (and indeed, this helps those of us who want to provide code free of charge with no warranty attached -- use at you own risk). But, it makes no sense if money has changed hands.

    • I believe downloads do not meet the legal definition of 'goods' under AU law and therefore, would be considered a service. The judge felt compelled by the letter of the law to render the decision he did, even saying it would lead to injustice, and calling on parliament to change the law to reflect the changing definition of 'goods.'

      It's amazing what one can learn by actually reading the articles. It is not, despite what most Slashdotters seem to think, a complete waste of time that only serves to keep one from achieving a first post.

      • by dpastern (1077461)

        Yes, but the judge could have marked them as goods, forcing the government to change the definition. It's nothing more than a cop out on the judge's part. Politicians never do anything, other than line their fucking greedy pockets with more money and do more dirty deals with big business. The ordinary person just got screwed some more with this decision.,

        Dave

        • That's what I was originally thinking. If they are sold as goods in other contexts (say media over the counter at a retail outlet, or provided by the vendor on media), then the fact that the exact same thing can be sold in a manner that does not rely on anything physical should not change the fact that it is a good.

          Look, it's not the packaging you're buying: if the box the "retail" version came in was printed in the "wrong" language for your locale, would you have a case under the Sale of Goods Act? Methink

          • by dpastern (1077461)

            Absolutely. We have a judicial system that is so out of touch with the real world, and the ordinary person, and bases legal decisions not on common sense, but law (anyone who's studied law, and who is honest will tell you that law is not based on commonsense, far, far, far from it). We have a political system that doesn't give a fuck about the ordinary person, but ONLY caters to the needs of the wealthy, powerful and business, usually at the expense of the ordinary person. Nothing will get done. And whe

    • Re: (Score:3, Informative)

      by rtfa-troll (1340807)

      Read The Fucking Article.

      The judge recognised in the case that what had been ruled could lead to an injustice, especially with the way technology had changed since the Sale of Goods Act was made law. "The judge said that if there was any injustice, it was up to parliament to change the law and not for the court," Gunning said.

      He knows that. He's said it's wrong. That's just not the way the law was written. The article even says that there is draft legislation to address this.

    • Software is information.
      Information exists in bitspace.
      Goods are matter that is traded.
      Matter exists in meatspace.
      The laws of bitspace are fundamentally different than those of meatspace.
      Because in bitspace, ownership is not an applicable concept, since information can not be taken away from you (only the meatspace container can), and reproduction does not require production since the copies are loss- and effortless.
      Trade requires ownership.
      Ownership requires control.
      Information that is passed on, can not b

  • Makes perfect sense (Score:3, Interesting)

    by JesseMcDonald (536341) on Friday May 07, 2010 @03:32PM (#32131830) Homepage

    Software is information—a set of instructions and related data. If pure information is not considered a good in other contexts then it makes sense that software delivered without any physical medium would not be considered a good either. Software purchased "over the counter" is not pure information, however, since you're buying the physical packaging as well as the information content.

    • Last time I checked, electrons do have a mass, and are therefore "physical" products. Photons, on the other hand, are technically mass-less (Well, we are still not sure about it, but we consider them essentially mass-less, since they ought to be in order to move at the speed of light). So, if you have FTTP, you are technically buying a service, and not a good?

      This whole definition is absolutely stupid. Cable television is considered a service too, and you are receiving just a signal. But if you copy the in

      • Re: (Score:3, Interesting)

        by JesseMcDonald (536341)

        Last time I checked, electrons do have a mass, and are therefore "physical" products.

        Yes, they are. However, you're not receiving any of the specific electrons (or photons) handled by the sender. At most those electrons/photons came from your ISP, or, in the case of electrons, the wire itself. Only the abstract pattern—the information—is communicated all the way from the sender to the recipient.

        You might have a case for considering bulk electricity a physical good, however.

    • Re: (Score:3, Interesting)

      by Hurricane78 (562437)

      Exactly. As soon as you see the production of information as a service, all the problems with laws, making money from it, DRM, file sharing etc instantly vanish.

      And interestingly, most artist already do the service business model. They just don’t know it.
      They offer the service of music production to the distributors. But it’s those distributors, who then try to cram it into a business model that has no relation to physical reality.
      If the artists just start seeing the end users themselves as the

    • by jon3k (691256)
      You're buying data either way. The packaging is a delivery mechanism just like the Internet.
  • How does this affect downloading software illegally?

    If the business is not subject to a contract saying what it's software will have, why should the customer be subject to the same contract about what the do with it?

  • If the companies are simply providing a service to write arbitrary bytes to a customers' hard drive, not selling a market good, then they shouldn't get copyright protection on those bytes being written either. After all, those bytes aren't a sold good, but are merely a byproduct of the service provided.

    Ryan Fenton

    • Re: (Score:2, Informative)

      by vbraga (228124)

      A copyright is a legal device that gives the creator of a literary, artistic, musical, or other creative work the sole right to publish and sell that work. Copyright owners have the right to control the reproduction of their work, including the right to receive payment for that reproduction. An author may grant or sell those rights to others, including publishers or recording companies. Violation of a copyright is called infringement.

      From here [thefreedictionary.com].

      The information on given bytes are the work of the creator and it has rights to it, regardless of it reproduced through the sale of a good or the providing of a service.

    • Software is to "arbitrary" bytes, as a story is to "arbitrary" words. But they are not arbitrary, they are specially crafted.
      The story is copyrighted, not the physical book.

    • Copyright law has nothing to do with sales or selling anything. I can copyright a poem, never sell it to anybody, and still retain copyright over it.

      I can sing a song, or sketch a drawing on your hard drive with a sharpie, and still retain copyright over it.

      • Re: (Score:3, Interesting)

        by Hurricane78 (562437)

        And that is why copyright is wrong. It has nothing to do with physical reality.
        And additionally, with a business model that is also based on reality, there also is no need for it. At all.

  • "Goods" include all chattels personal other than things in action and money. The term includes emblements and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

    Acquired from the definitions page of the Sales of Goods Act 1923 [austlii.edu.au].

  • In the case of downloaded software, not only is most of clearly not "goods", a great deal of it must be characterized as "terribles".
  • Seems to me this would open the door to selling something like a PS3, simply hardware, and offer a code to download the OS. The hardware itself does nothing except allow you to open a connection to download the OS at first run. This way if the hardware fails, sure they can return it. But the software you're stuck with.
    • Re: (Score:3, Insightful)

      by idontgno (624372)
      Well, other than the fact that a PS3 isn't completely blank out of the box, that's precisely how a PS3 works. You bought the hardware. You license the software, and SCE can (and will) change it any time they want--because it's still their software. The recent "Other OS" debacle is the logical extreme of the "software as service" approach, as well as the typical disclaimers of warranty you've seen in EULAs (not that those would fare so well in court, IMHO... the serviceability and suitability for purposes of
  • All the EULAs I've read in the past 30 years say that you're not buying the software, you're licensing the use of a copy of the software.

    Weird that it's getting twisted like this, but I've been surprised by Australian law before.

    • by geekoid (135745)

      They can also say people in red shirts have to pay double. That doesn't make it enforcible or even correct.

      • Re: (Score:3, Funny)

        by dissy (172727)

        They can also say people in red shirts have to pay double. That doesn't make it enforcible or even correct.

        That rule is only there because there's a much smaller window of opportunity to get money from a red shirt, before they are called to the bridge or on an away mission and their spending days are over!

  • We get a certain protection for purchasing goods from some distributers, would this no longer apply to an item newly classified as a "non-good"?
  • they shouldn't be taxed as goods then.

    • they shouldn't be taxed as goods then.

      There is no state sales tax in NSW. We have a Goods and Services Tax (GST) of 10% which is federal but shared with the states. If it is not goods, it is a service. A few things like whole foods (water, sugar, flour. f&v) are exempt.

      This makes things interesting for restaurants and cafes. If I purchase a bottle of 100% fruit juice for take-out - I pay no GST as the goods are a whole food and thus exempt. However, if I were to consume that juice at the restaurant, the sale would then also constitute a s

  • I think this just means that you can't resell your software-licenses AS LONG as you didn't buy a physical storage device...
  • Got a phone call from the Illinois Dept. of Revenue wondering why we hadn't paid sales tax. Well, it's because our software is opensource. We don't see it, we sell installation, implementation, and support contracts. The guy on the other end of the phone could not get it through his head until I explained: 6% of $0.00 = $0.00.

  • It's important to remember this is only applicable to one Australian State, New South Wales, and is not National.
  • Technically in Australia it's illegal to import into the country anything that has been refused classification - the situation with our backward laws regarding the lack of an 18+ game rating is well-known. It's legal to possess the material, but technically bringing them into the country is an offense.

    However if downloaded material is not 'goods' then do import restrictions apply? Customs & import laws are only applied to goods, after all.

  • That seems quite logical and, consequently, should drive people to buying over the counter.

    Or negotiate and demand same rights for the downloaded software in the EULA (or something) and do not buy downloads without those same right granted "in writing".

  • Probably too late to this discussion, but what the heck.

    I think big media needs to be forced to make a choice between:

    1) Physical media, first sale applies. It is not a "license", it is a genuine copy and you can do whatever you want with it apart from making it available for others to download.

    2) Digital media, first sale does not apply. However, it is a license subject to the laws of [insert country]. One mandatory feature is free or very cheap redownloadability. A second mandatory feature is 3 free copie

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