Software as Goods... - UCC Article 9, def #44

["todd glassey" <tglassey at earthlink.net>]

For the WG - My apologies for this legal analysis - and note I am not a
lawyer, but read along with me and see if this doesn't make sense to you
too... As to where this came from, Bill and I continued our discussion
offlist but this is important and I wanted to have this in the record of the
WG.

BTW - I propose that Jorge formally verify this or debunk it...

The IETF and its operations
----------------------------------------
There was a discussion (between Bill and others and myself) as to whether
the wares of the IETF constitute 'Goods' as described in the UCC or not. The
issue is that the secure transfer of the title to goods can be documented
through the requirements of the UCC and my commentary was that the IETF
processes must comply with these by law.

So let me jump right in: See Article 9 -102 (a)(44) for details...
http://www.law.cornell.edu/ucc/9/article9.htm ,

As it happens the IETF's processes, if they are supposed to be a SALE would
be constrained under Article 2 of the Uniform Commercial Code but since
there are not the other aspects of a SALE type process, I believe that the
Secure Transaction Section of the UCC is more applicable meaning that the

In Article 9 we read that "Software is a 'Good's type entity if its embedded
or the functionality of the 'good' itself is predicated on that SW's
existence" (my paraphrasing), and while there I suggest reviewing some of
the other key words there as well, like "Authenticate" - Something that the
IETF's submission process 'does not do today' IMHO.

Here then is #44:
-----------
(44) "Goods" means all things that are movable when a security interest
attaches. The term includes (i) fixtures, (ii) standing timber that is to be
cut and removed under a conveyance or contract for sale, (iii) the unborn
young of animals, (iv) crops grown, growing, or to be grown, even if the
crops are produced on trees, vines, or bushes, and (v) manufactured homes.
The term also includes a computer program embedded in goods and any
supporting information provided in connection with a transaction relating to
the program if (i) the program is associated with the goods in such a manner
that it customarily is considered part of the goods, or (ii) by becoming the
owner of the goods, a person acquires a right to use the program in
connection with the goods. The term does not include a computer program
embedded in goods that consist solely of the medium in which the program is
embedded. The term also does not include accounts, chattel paper, commercial
tort claims, deposit accounts, documents, general intangibles, instruments,
investment property, letter-of-credit rights, letters of credit, money, or
oil, gas, or other minerals before extraction.
------------
Wherein we see that:

"The term (Goods) also includes a computer program embedded in goods and any
supporting information provided in connection with a transaction relating to
the program if (i) the program is associated with the goods in such a manner
that it customarily is considered part of the goods, or (ii) by becoming the
owner of the goods, a person acquires a right to use the program in
connection with the goods."

So then IOS for instance is a member of the class "Goods". The reason one
would think in Cisco's case is that since their HW is useless w/o IOS (i.e.
cannot be used per se), that also includes IOS as a member of the class
definition "Goods"... (see #i above) Under the proviso so then is Solaris,
since it is licensed with the HW it comes on, but arguably Tru64 and other
individually licensed OS's are not since they are sold/licensed separately
from the systems they run on.  (see #ii above)


"The term (goods) does not include a computer program embedded in goods that
consist solely of the medium in which the program is embedded."

Please also notice also in the excerpt above that what is excluded is "SW
shipped as SW itself", so the electronic distribution of patches and the
like are not Goods... likewise putting an application on a Disk, CD, or DVD
doesn't classify that SW as a "Goods item" although the physical media it
comes on would be.

And while the listing of 'other General Intangibles (outside of those
specified as 'embedded programs' or as defined in the 'part of the package'
definition) are excluded, SW as defined in the two key cases is.

"The term also does not include accounts, chattel paper, commercial tort
claims, deposit accounts, documents, general intangibles, instruments,
investment property, letter-of-credit rights, letters of credit, money, or
oil, gas, or other minerals before extraction.

That said - The IETF's controlling processes do need to be brought into
alignment with UCC.

Todd Glassey





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