Presentation at the Legal Affairs Committee of the European Parliament 19 June 2012, Brussels Prof. dr. M.B.M. Loos Centre for the Study of European Contract Law Remedies for buyers in case of contracts for the supply of digital content

Approach taken in CESL Application of sales law to digital content Application also to gratuitous digital content Payment through personal data or by accepting advertising Restricted expectations (Art. 100(g) CESL) In particular if also paid version available Possibility for trader to apply same legal regime to different business models

Conformity test, Art. 99ff CESL Conformity test in practice applied to digital content, irrespective of classification Sale of goods, services, lease Types of conformity problems Bad or substandard quality Flaws, bugs and other security and safety matters Accessibility, functionality and compatibility issues

Conformity test Reasonable expectations of consumer Fitness for purpose Particular purpose If made known before conclusion of contract If not countered by trader Ordinary purpose Standard difficult to assess May be influenced by statements of trader or producer System requirements Technical restrictions with regard to interoperability Possibility to make private copies

Restriction of legitimate expectations Statements trader/producer shape expectations Need not be truthful Should not unjustly limit legitimate expectation based on other experiences and interests Sales demonstration, packaging and labeling Previous experience with similar tangible goods/digital content More abstract interests Public order, protection of fundamental rights State of the market and technology Nature and characteristics of comparable goods and digital content Public policy objectives of intellectual property law Art. 99 (3) CESL does not suffice

Conformity and long-term contracts Art. 105 (4) CESL In case of updates: conformity throughout contract period Suffices for updated online subscriptions Databases, e-papers and e-magazines, Satellite navigations systems Antivirus-programs Insufficient for access problems that do not appear at delivery Subscription to online game that can no longer be accessed

Copying of digital content Entitlement to make back-up copy (needed for normal use) So far limited to computer programs only Entitlement to make private copy If for non-commercial use and fair compensation Limitation of number of copies allowed If specifically drawn to consumers attention No private copy right during cooling-off period

Copying of digital content Entitlement to make back-up copy (needed for normal use) So far limited to computer programs only Entitlement to make private copy If for non-commercial use and fair compensation Limitation of number of copies allowed If specifically drawn to consumers attention No private copy right during cooling-off period

Remedies for buyers of digital content Specific performance (Art. 110 CESL) Useful if not performed at all Repair and replacement as remedy? Quality problems Access problems Withholding performance (Art. 113 CESL) Price reduction (Art. 120 CESL) Damages (Art. 159ff CESL) Termination (Art. 114ff CESL) When is lack of conformity minor? Consequences of termination problematic …

Consequences of termination Restitution of performances (Art. 172 CESL) For digital content: monetary value of performance (Art. 173(1) CESL) = amount saved by making use of digital content (para.(4)) Whether or not delivered on tangible medium Also if easily returnable, e.g. sealed CD or protected e-book Also if other means to prevent further use

Limitation of remedies for gratuitous digital content (Art. 107 CESL) Only remedy: damages And only for loss or damage caused by non-conformity to buyers property, including hardware, software and data No right to have provided personal data removed No loss of gain Exclusion of price reduction logical Exclusion of other remedies not Disparity in treatment between digital content provided for free and for a price of 0,50 Discrepancy within CESL Art. 173 (6) CESL: restitution excluded in case of termination of gratuitous digital content contract

Transfer of ownership? Typical for ordinary sales contracts Not typical for digital content contracts Transfer of ownership of tangible medium No transfer of ownership of IP-rights Text in Art. 91 (a) and (b) multi-interpretable Delivery of digital content and transfer of ownership of tangible medium Delivery of digital content and transfer of ownership thereof