Goods with embedded software: Obligations under Section 12 of the Sale of Goods Act 1979

Abstract

The Sale of Goods Act 1979, section 12 imposes obligations on sellers. Sellers must have the right to sell the goods, and they impliedly warranty that the buyer will enjoy quiet possession. Actions by intellectual property rights holders can lead to liability for sellers for breach of the section 12 obligations. Recent technological change has brought about the development of goods that operate in conjunction with software. The extent of the relationship between goods and software varies, but the level of integration may be sufficient to consider the software ‘embedded’ within goods. To what extent can the holders of intellectual property rights in software extend their interest into goods with embedded software? Can a third-party sub-purchaser escape the reach of the intellectual property rights? A reform proposal is made that would enable sub-purchasers to avoid the problems of pre-existing intellectual property rights in goods with embedded software.