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1.4.4 Computer Software

Computer software is generally considered to fall within the definition of goods.120 However, development of software or design of a website is likely to be considered services.121 Maryland and Virginia have adopted the Uniform Computer Information Transactions Act, which has special provisions regarding software sales, including special warranty provisions and validation of terms contained in post-sale documents such as shrink-wrap licenses as long as the buyer has the option to return the product instead of accepting the terms.122


  • 120 {120} Advent Sys. Ltd. v. Unisys Corp., 925 F.2d 670 (3d Cir. 1991) (Tex. law); Zaragoza v. Apple Inc., 2019 WL 1171161 (N.D. Cal. Mar. 13, 2019) (downloadable TV shows are goods, but suggesting that a licensing transaction rather than an outright purchase may not be a goods transaction); First Am. Bankcard, Inc. v. Smart Business Tech., Inc., 176 F. Supp. 3d 390 (E.D. La. 2016) (software is goods rather than services under Louisiana’s non-U.C.C. sales law); Rottner v. AVG Technologies USA, Inc., 943 F. Supp. 2d 222 (D. Mass. 2013) (Del. law) (downloadable software);, Inc. v. Oracle Corp., 73 U.C.C. Rep. Serv. 2d 199 (N.D. Ill. 2010) (software was goods even though ancillary services were required); Waterfront Properties, Inc. v. Xerox Connect, Inc., 58 U.C.C. Rep. Serv. 2d 809 (W.D.N.C. 2006) (custom software); ePresence, Inc. v. Evolve Software, Inc., 190 F. Supp. 2d 159 (D. Mass. 2002) (when software programs, not related services, were essence of agreement, U.C.C. governs); i.LAN Sys., Inc. v. Netscout Serv. Level Corp., 183 F. Supp. 2d 328 (D. Mass. 2002) (U.C.C. may cover software sale but possibly not licensing of software); Dahlmann v. Sulcus Hospitality Technologies, 63 F. Supp. 2d 772 (E.D. Mich. 1999) (package including hardware, software, installation, training, and support services is goods); Confer Plastics, Inc. v. Hunkar Laboratories, Inc., 964 F. Supp. 73 (W.D.N.Y. 1997); NMP Corp. v. Parametric Tech. Corp., 958 F. Supp. 1536 (N.D. Okla. 1997) (licensing agreement for software); Architectronics, Inc. v. Control Sys., Inc., 935 F. Supp. 425 (S.D.N.Y. 1996); Colonial Life Ins. Co. v. Elec. Data Sys. Corp., 817 F. Supp. 235 (D.N.H. 1993); First Nationwide Bank v. First Nationwide Fin. Corp., 770 F. Supp. 1537 (M.D. Fla. 1991) (software licensing is governed by Art. 2); D.P. Tech. Corp. v. Sherwood Tool, Inc., 751 F. Supp. 1038 (D. Conn. 1990) (“computer systems, including software”); Analysts Int’l Corp. v. Recycled Paper Products, Inc., 45 U.C.C. Rep. Serv. 2d 747 (N.D. Ill. 1987) (computer program is a good even if seller provides services to create it); W. Dermatology Consultants, P.C. v. Vitalworks, Inc., 78 A.3d 167 (Conn. App. Ct. 2013), review allowed, 81 A.3d 1182 (Conn. 2013); Dealer Mgmt. Sys., Inc. v. Design Auto. Grp., Inc., 822 N.E.2d 556 (Ill. App. Ct. 2005) (software is goods, but contract to create software may be predominantly services); Olcott Int’l & Co. v. Micro Data Base Sys., Inc., 793 N.E.2d 1063 (Ind. Ct. App. 2003) (sale of preexisting standardized software is goods); Wachter Mgmt. Co. v. Dexter & Chaney, Inc., 144 P.3d 747 (Kan. 2006); Richard A. Rosenblatt & Co. v. Davidge Data Sys. Corp., 743 N.Y.S.2d 471 (N.Y. App. Div. 2002) (sale of computer hardware and software is sale of goods even if service is included); Smart Online, Inc. v. Opensite Technologies, Inc., 51 U.C.C. Rep. Serv. 2d 47 (N.C. Super. Ct. 2003) (might be sale of services if contract involved substantial development and customization, but not shown in this case); Gasbarre Products, Inc. v. Link Computer Corp., 40 U.C.C. Rep. Serv. 2d 446 (Pa. C.P. 1999), aff’d, 790 A.2d 345 (Pa. Super. Ct. 2001) (table). See also Softman Products Co. v. Adobe Sys., Inc., 171 F. Supp. 2d 1075 (C.D. Cal. 2001) (licensing agreement for software was really a sale for purposes of copyright infringement claim). Cf. Specht v. Netscape Communications Corp., 306 F.3d 17, 29 n.13 (2d Cir. 2002) (questioning whether downloadable software is goods); i.LAN Sys., Inc. v. Netscout Serv. Level Corp., 183 F. Supp. 2d 328 (D. Mass. 2002) (questioning whether U.C.C. covers software licenses, but applying U.C.C. if only by analogy); Ankle & Foot Care Centers v. Infocure Sys., Inc., 164 F. Supp. 2d 953 (N.D. Ohio 2001) (contract for software licensing and training involves mixed goods and services; whether U.C.C. applies depends on which predominates); Arlington Elec. Constr. v. Schindler Elevator Corp., 1992 Ohio App. LEXIS 953 (Ohio Ct. App. Mar. 6, 1992) (software not always goods, but it is here, when contract also included hardware and did not primarily involve customizing). But see Sys. Unlimited, Inc. v. Cisco Sys., Inc., 228 Fed. Appx. 854 (11th Cir. 2007) (Cal. law) (software is intellectual property, not goods); Attachmate Corp. v. Health Net, Inc., 73 U.C.C. Rep. Serv. 2d 89 (W.D. Wash. 2010) (U.C.C. Article 2 does not apply to licensing of software); Mortg. Plus, Inc. v. DocMagic, Inc., 55 U.C.C. Rep. Serv. 2d 58 (D. Kan. 2004) (service of preparing documents predominated over seller’s provision of software for buyer to use when ordering documents, so U.C.C. did not apply).

  • 121 {121} Pain Ctr. of S.E. Ind. L.L.C. v. Origin Healthcare Solutions L.L.C., 893 F.3d 454 (7th Cir. 2018) (Ind. law) (construing contract as one for medical billing and IT services rather than sale of goods); Kentwool Co. v. NetSuite, Inc., 2015 WL 693552 (N.D. Cal. Feb. 18, 2015); Sys. Am., Inc. v. Rockwell Software, Inc., 61 U.C.C. Rep. Serv. 2d 933 (N.D. Cal. 2007) (development of software from scratch is services); Pearl Investments, L.L.C. v. Standard I/O, Inc., 257 F. Supp. 2d 326 (D. Me. 2003) (mag.) (sale of preexisting software is goods, but software development is services); Multi-Tech Sys., Inc. v. Floreat, Inc., 47 U.C.C. Rep. Serv. 2d 924 (D. Minn. 2002) (software may be goods, but a contract for developing software is not); Heidtman Steel Products, Inc. v. Compuware Corp., 1999 U.S. Dist. LEXIS 21700 (N.D. Ohio Feb. 15, 1999) (computer consulting services contract was not a contract for goods even though final phase would have involved delivery of customized software); Conopco, Inc. v. McCreadie, 826 F. Supp. 855 (D.N.J. 1993) (computer consulting services not goods even though part of work involved customizing and modifying software), aff’d, 40 F.3d 1239 (3d Cir. 1994); Wharton Mgmt. Grp. v. Sigma Consultants, Inc., 50 U.C.C. Rep. Serv. 2d 678 (Del. Super. Ct.) (contract for creation of custom software is services), aff’d, 582 A.2d 936 (Del. 1990) (table); Conwell v. Gray Loon Outdoor Mktg. Grp., Inc., 906 N.E.2d 805 (Ind. 2009) (creation of website).

  • 122 {122} Md. Code Ann., Com. Law §§ 22-101 to 22-816 (West); Va. Code Ann. §§ 59.1-501.1 to 59.1-509.2.