The Software IP Report

Software Can Be a “Good” under the California UCC

By Charles Bieneman

Categories: The Software IP Report

Sale of a software license constituted sale of a “good” for purposes of applying the California UCC.  Gross v. Symantec Corp., No. C 12-00154 CRB (N.D. Cal. July 31, 2012).  A putative class action plaintiff sued Symantec, alleging that a free trial for its software “was essentially a scam, and that the software does not increase security.”  Among other causes of action, the plaintiff alleged a breach of the express warranties set forth in the California Uniform Commercial Code, Cal. Com. Code § 2312. The court held that, in California, the UCC applied to this type of software transaction, and UCC warranties could govern the license.

Symantec argued that the California UCC “only covers the sale of goods, which excludes licenses for the use of intellectual property, like Symantec’s software.”  Citing RRX Indus., Inc. v. Lab-Con, Inc., 772 F.2d 543, 546 (9th Cir. 1985), the court acknowledged that “[s]oftware transactions often straddle the line between goods and services, so courts look to the ‘essence of the agreement’ to determine how best to characterize the transaction.”  Because software varies depending on consumer needs being met, software contracts are analyzed on a case-by-case basis.

The transaction here was similar to a retail purchase of licensed software at a bricks and mortar store, to which the Ninth Circuit had previously suggested the California UCC would apply.  The present software transaction “resembles the sale in RRX Industries, except that it doesn’t include the installation, training, maintenance, and upgrading services that might have jeopardized the applicability of the California UCC in that case.”

Accordingly, assuming that the plaintiff could amend certain factual allegations, the plaintiff would be permitted to bring a claim for breach of warranties under the California UCC.