Digital Law Up(to)date: (1) the download of a software with a permanent licence can constitute a “sale of goods”; (2) alert of the BEUC regarding the privacy policy of WhatsApp and its new terms of use

The supply of a copy of software together with a licence to use it can constitute a "sale of goods”

On 16 September 2021 (C-410/19), the Court of Justice of the European Union (CJEU) stated that the supply by a company, in return for payment of a fee, of a computer software to a customer by electronic means where that supply is accompanied by the grant of a perpetual licence to use that software can be covered by the concept of ‘sale of goods’.

The case concerns the Directive 86/653 relating to self-employed commercial agents and the qualification of a “commercial agent”. According to article 1(2), three conditions must be met: a person must (1) be a self-employed intermediary, (2) be contractually bound to a principal, and (3) have an activity which may consist either simply in being an intermediary for the sale or purchase of goods or in both acting as intermediary and concluding sales or purchases of goods.

To reach its conclusion, the CJEU proceeds in two stages:

1. A computer software can be classified as “goods”, irrespective of whether it is supplied on a tangible medium or (as in the present case) by electronic download;
2. The making available of a copy of computer software by means of a download and the conclusion of a permanent user licence agreement for that copy, in return for payment of a fee, involve the transfer of the right of ownership of that copy, and thus a sale.

WhatsApp in turmoil

During the summer, the European Consumer Organisation (BEUC) launched an external alert against WhatsApp to the European Commission and the Consumer Protection Cooperation Network (CPC). This alert is possible because of Regulation 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws.

Specifically, WhatsApp is alleged to have pressured its users to accept its new terms of use and its privacy policy changes. BEUC also considers that these documents are not sufficiently transparent and clear. These alleged breaches are elaborated in a report entitled “What's up with WhatsApp? An assessment of WhatsApp's practices in the light of EU consumer protection rules”. Two main problems are highlighted: Whatsapp's aggressive practices (in the sense of the Unfair Commercial Practices Directive) and the opacity of the new policies (violating provisions of the Unfair Contract Terms Directive).

Since the launch of the external alert, WhatsApp has been fined €225 million by the Irish Data Protection Commissioner for, among other things, a lack of transparency regarding personal data (see the decision here), after the European Data Protection Board adopted a dispute resolution decision on the basis of Art. 65 GDPR (see the decision here). BEUC sees the Irish decision as an additional convincing element against Whatsapp (see here).

This article was co-authored by Edouard Cruysmans in his capacity of Professional Support Lawyer at Stibbe.