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Limitations in End-User Licensing Agreements: Is There a Lack of Conformity Under the New Digital Content Directive?

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Abstract

The recently adopted Digital Content Directive laid down some core rules concerning contracts for the supply of digital content to consumers. The Directive entitles consumers to use remedies for lack of conformity of content when the restrictions on its use breach reasonable consumer expectations. Digital content typically contains works protected under copyright and is supplied subject to end-user licensing agreements, under which a copyright holder exercises their exclusive rights to disseminate protected work. The new Directive provides consumers with contractual remedies if the use of digital content is prevented or limited due to the violation of third-party rights in breach of the subjective and objective conformity requirements. The question that arises is what limitations under the end-user licensing agreements could give rise to remedies under the Directive. This article examines some typical limitations on the use of digital content and discusses whether they could breach reasonable expectations and give rise to remedies under the Directive. First, an empirical study of the terms and conditions of some major digital content and services providers is conducted with the emphasis on the restrictions placed on the content supplied for time-unlimited use. Second, the identified restrictions are tested against the reasonable consumer expectations in order to determine whether they may be considered as a lack of conformity. The article concludes that consumers can use remedies under the directive in respect of digital content supplied on a time-unlimited basis in several cases. The following restrictions would be in breach of reasonable consumer expectations: restrictions on obtaining a (backup) copy, restrictions on non-simultaneous use of digital content on few devices belonging to consumer, limitations on sharing digital content outside consumer’s immediate family, retraction of access to content supplied on a time-unlimited basis, and restrictions on disposing of digital content through permanent transfer of access.

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Notes

  1. Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services, OJ L 136/1, 22.05.2019.

  2. See Lehmann criticising the Directive for little focus on consumer protection and more on the stimulation of the EU economy, as its ultimate aim is “growth stimulating through internal market uniformization of consumer protection”, Lehmann (2016), pp. 755–756.

  3. The original proposal provided in Art. 8(1) that the digital content “shall be free of any right of a third party” at the time it is supplied to the consumer. See Proposal for a Directive of the European Parliament and of the Council on certain aspects concerning contracts for the supply of digital content COM/2015/0634 final. European Commission.

  4. Proposal for a Directive of the European Parliament and of the Council on certain aspects concerning contracts for the supply of digital content (First reading)–General approach. 2015/0287 (COD).

  5. The European Law Institute Statement suggested that if the EULA reduces the consumer’s reasonable expectations under the supply contract, then the consumer must have a remedy against the supplier. Statement of the European Law Institute on the European Commission’s Proposed Directive on the Supply of Digital Content to Consumers 2016, pp. 24–26. Available at: https://www.europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Publications/ELI_Statement_on_DCD.pdf (Accessed 15 January 2020).

  6. The European Parliament suggested to include the following text under recital 26: “Contractual clauses that specifically prevent the lawful enjoyment of exceptions or limitations laid down in copyright law should constitute a lack of conformity”. See Report on the proposal for a directive of the European Parliament and of the Council on certain aspects concerning contracts for the supply of digital content COM(2015)0634 – C8-0394/2015 – 2015/0287(COD). Available at: http://www.europarl.europa.eu/doceo/document/A-8-2017-0375_EN.html. From the copyright perspective, the reference to exceptions or limitations is ambiguous as they are harmonised as an exhaustive but optional list under the EU copyright acquis. On the exceptions and limitations see Ohly (2009), p. 236; van Eechoud et al. (2009), pp. 94–118; Hugenholtz (2019), Rosenmeier et al. (2019), pp. 17–24.

  7. See Art. 7 DCD.

  8. See Art. 8 DCD.

  9. Even though DCD does not provide clear indications on reasonable expectations, it opens a door for the CJEU for further harmonisation through interpretation. See Lehmann (2016), pp. 768–769.

  10. Schovsbo (2008), p. 395; also, Helberger (2008), p. 386.

  11. For a summary of copyright rationales, see Ramahlo (2016), pp. 3–9.

  12. Not all the disposal would remain out of the copyright holder’s reach. For instance, subsequent public communication of a work would constitute exploitation requiring authorisation of the right holder.

  13. Control over access and disposal is enforced by technical protection measures and digital rights management.

  14. On standard form licenses enforcing restrictions going beyond the bounds of copyright, see Guibault (2002), pp. 302–304.

  15. On copyright lacking tools to address the right holder/consumer/supplier relation, Helberger and Guibault (2012), p. 28. There have been calls for including user interests in the copyright equation, see Chapdelaine (2017); Synodinou (2013); Synodinou (2010); Favale (2012).

  16. Valant (2015), p. 3.

  17. On the conformity test and reasonable expectations in the context of digital content, see Mak (2016), pp. 15–18.

  18. Helberger (2011), p. 70.

  19. Loos et al. (2011), p. 85.

  20. See study by Perzanowski and Hoofnagle (2017).

  21. Article 10 of Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services. 22 May 2019. OJ L 136/1.

  22. Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC, OJ L 136/28, 22.05.2019. For the overview of the Directives and the differences, see Carvalho (2019).

  23. Sein and Spindler (2019), p. 261.

  24. Schulte-Nölke (2019), p. 112.

  25. Such a solution has been contested on the grounds that it might unreasonably burden a trader who does not exercise any real control over the terms. See Schulze suggesting that the rules should be supplemented by the rules on the responsibility of third-parties versus the final supplier because the entire responsibility could fall on the final supplier rather than the party which actually exercises control. Schulze (2016), p. 130. Also, Lehmann questions whether or not it makes sense to harmonise IP, as copyright is the main obstacle to the internal market. Lehmann (2016), p. 757.

  26. Sein and Spindler (2019), p. 262.

  27. Staudenmayer (2019), p. 2499.

  28. Spindler (2017), pp. 222, 226–227.

  29. Design of a distribution network means here the way in which the delivery of the content is organised, e.g. in which digital format, whether connected to a device/an account, etc. See Guibault on “packaging” digital content with licensing conditions, access measures, etc. Guibault (2017), pp. 208–209. See also Rott on difficulties distinguishing between use restrictions and business models, Rott (2008), p. 450.

  30. Apple Media Services Terms and Conditions, https://www.apple.com/legal/internet-services/itunes/uk/terms.html, last updated on 13 May 2019 (Accessed 15 January 2020).

  31. Google Play Terms of Services, not specific to software: https://play.google.com/intl/en_cy/about/play-terms/. Effective as of 22 January 2019 (Accessed 15 January 2020).

  32. Amazon Music Terms of Use, https://www.amazon.com/gp/help/customer/display.html?nodeId=201380010 Last updated 1 October 2019 (Accessed 15 January 2020). Amazon Kindle Store Terms of Use (UK Store), https://www.amazon.co.uk/gp/help/customer/display.html?nodeId=201014950. Last updated: 23 May 2018 (Accessed 15 January 2020).

  33. In particular, 2019 Desktop Home and Business version. Microsoft Software License Terms for Office 2019, generated at https://www.microsoft.com/en-us/useterms. Last updated in September 2018 (Accessed 15 January 2020).

  34. Bandcamp Terms of Use, https://bandcamp.com/terms_of_use. Effective Date: 17 November 2017 (Accessed 15 January 2020).

  35. On the lack of transparency see also Loos et al. (2011), p. 23.

  36. Under the EU copyright acquis, making a backup copy of acquired software is explicitly allowed under Art. 5(2) of the Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the Legal Protection of Computer Programs (Codified Version). 5.5.2009. OJ L 111/16 and cannot be prevented by contract. Also, under the Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society. 22.6.2001. OJ L 167/10, Art. 5(2)(b) provides for a limitation of the right of reproduction “in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial”.

  37. System design in the sense of how the delivery and access to the digital content is organised, which can depend on technology constraints, interoperability, etc.

  38. Not to mention that it can be impractical to rely on an online download of a backup copy when a file is large (e.g. software installation file).

  39. Para. G(a) of the Apple Media Services terms.

  40. See part B of the Apple Media Services terms.

  41. The significance of this exception to the general rule is limited as CDs are generally a phase-out model of distribution of digital content.

  42. See part 4 of the Google Play terms.

  43. Ibid.

  44. Technical protection measures (TPMs) are measures taken to prevent unauthorised access or use of content. Use of TPMs is often not aligned with permissible and admissible use under copyright. Rott has suggested to prohibit the use of TPMs which are reaching beyond the minimum standards under the proposed iconsumer contract law, see Rott (2008), p. 455. The status of TPMs is increasingly questioned under copyright. See, for instance, Rognstad and Poort suggesting treating them within the scope of exclusive rights rather than an additional layer of protection, Rognstad and Poort (2018), pp. 146–147.

  45. See part B of the Apple Media Services terms.

  46. See part 1 of the Amazon Kindle Store terms.

  47. See para. 2(c)(ii) of Microsoft Software License Terms for Office 2019.

  48. See para. 2(e) of Microsoft Software License Terms for Office 2019. The Home Use Programme allows consumers to buy an annual subscription, seehttps://www.microsoft.com/en-gb/home-use-program/frequently-asked-questions (Accessed 15 January 2020).

  49. See Bandcamp ToS, the part on “Content and License”.

  50. See part “Fees and Payments – Artists” of Bandcamp ToS. All purchases of music through Bandcamp take place via personal Fan account.

  51. For instance, access to family sharing features requires Apple devices. See part D of the Apple Media Services terms.

  52. Importantly, the use of DRM-protected content is connected to the devices associated with a particular account. Hence, the content can be accessed only via centralised closed environment. See part B of the Apple Media Services terms.

  53. See part B of the Apple Media Services terms.

  54. See part 3.2. of Amazon Music Terms of Use.

  55. See parts 1 and 2 of Amazon Kindle Store terms.

  56. See para. 2(a) of Microsoft Software License Terms for Office 2019.

  57. “In this agreement, ‘device’ means a hardware system (whether physical or virtual) with an internal storage device capable of running the software. A hardware partition or blade is considered to be a device.” Also, “Use in a virtualized environment. This license allows you to install only one instance of the software for use on one device, whether that device is physical or virtual.” See paras. 2(b) and 2(d)(iii) of Microsoft Software License Terms for Office 2019.

  58. Usually requires activation or a license key.

  59. See para. 2(e) of Microsoft Software License Terms for Office 2019. Usually, the software traders have specific technological measures in place to ensure that the software related to a particular purchase cannot be run simultaneously on different devices. For example, through license keys that have to be verified for installing software or that are being checked every time software is used when connected to the Internet.

  60. See part B of the Apple Media Services terms.

  61. Ibid.

  62. See “Fees and Payments – Fans” section of Bandcamp terms. Also, by using Bandcamp to disseminate their works, the artists allow users to reproduce “the Artist’s Music and Artworks on any and all devices owned or controlled by the user for non-commercial purposes and receive performances and displays of same.” See section “Intellectual Property Rights – Artists” of the terms.

  63. Seehttps://www.amazon.com/gp/help/customer/display.html/ref=help_search_1-1?ie=UTF8&nodeId=201945470&qid=1571903531&sr=1-1 (Accessed 15 January 2020).

  64. Seehttps://www.amazon.com/gp/help/customer/display.html?nodeId=GWGVV6VBWBXHMHQB (Accessed 15 January 2020).

  65. Furthermore, members of the family can only access each other’s purchases of movies and TV shows if these were purchased with the family payment method.

  66. Accordingly, music from Music Library, Kindle Unlimited titles, Prime Videos and Prime Reading are not eligible.https://www.amazon.co.uk/gp/help/customer/display.html/ref=help_search_1-2?ie=UTF8&nodeId=201620400&qid=1557737940&sr=1-2 (Accessed 15 January 2020).

  67. For Amazon Music, see para. 1(2)(b) of Amazon Music Terms of Use,.

  68. See part D of the Apple Media Services terms.

  69. Interestingly, a purchased bundle of movies can be added or removed only entirely but not individually.

  70. Unless, of course, you transfer your rights completely by selling it or giving as a gift or just lending the whole device, you cannot separate content from it.

  71. See Bandcamp ToS, the part on “Content and License”.

  72. On Amazon Kindle, seehttps://www.theguardian.com/technology/2009/jul/17/amazon-kindle-1984 (Accessed 15 January 2020). On Microsoft Books, see https://support.microsoft.com/en-us/help/4497396/books-in-microsoft-store-faq (Accessed 15 January 2020).

  73. See part B of the Apple Media Services terms.

  74. See part 5.1. of Amazon Music Terms.

  75. See part 3 of Kindle Store Terms of Use.

  76. See part 4 of the Google Play ToS.

  77. The ability to use a copy and run a software might, however, be interfered with using the activations keys.

  78. See “Modification of Terms of Use” part of Bandcamp terms.

  79. See “Fees and Payments – Fans” part of Bandcamp terms.

  80. See part G(a) of Apple Media Services terms.

  81. See part 4 of Google Play Services terms.

  82. See part 1 of Amazon Kindle Store Terms.

  83. See part 3(1) of Amazon Music Terms.

  84. See paras. 2(e) and 3(b) of Microsoft Software License Terms for Office 2019.

  85. For instance, under the jurisprudence of the CJEU on the exhaustion of the right of distribution under the Software Directive, see Oprysk (2019).

  86. See “Content and License” section of Bandcamp terms.

  87. In the recent TomKabinet judgment the Court ruled that dissemination of e-books falls under the right of communication to the public under the Copyright Directive and, hence, redistribution of copies in principle requires authorisation. See CJEU, Nederlands Uitgeversverbond and Groep Algemene Uitgevers v Tom Kabinet Internet BV and Others (2019). Case C-263/18, Judgment of 19 December 2019. Also, Sect. 4.5 of this article.

  88. Loos et al. (2011), p. 15. They also proposed to turn to standards instead of relying on an information model and consumer expectations as it ought to be more effective, especially for digital content, see Loos et al. (2011), p. 278. See also Rott (2008), p. 450 and more recently, Grünberger, Verträge über digitale Güter (2018) 218 Archiv für die civilistische Praxis p. 259.

  89. Rott (2008), p. 449.

  90. Loos et al. (2011), p. 105.

  91. See Helberger on the lack of guidelines, Helberger (2011). On the types of expectations see Loos et al. (2011), p. 22.

  92. According to the study, the expectations and perceptions of younger generations correspond to that of older ones to a much greater extent than expected. Also, the expected functionality was linked to established notions of property and the functions it serves, such as efficacy, self-identity, and place of belonging. See Helm et al. (2018), pp. 184–185.

  93. Rott (2008), p. 454.

  94. Loos et al. (2011), p. 224.

  95. Beale (2016), p. 27.

  96. See Statement of the European Law Institute on the European Commission’s Proposed Directive on the Supply of Digital Content to Consumers (2016), p. 24.

  97. Helm et al. (2018), p. 181.

  98. Guibault holds, for instance, that reasonable expectations towards private copying depend on the context, e.g. whether content is streamed or downloaded. Guibault (2017), pp. 219–221.

  99. One of the strategies of software traders is not to seek to eliminate unauthorised copies altogether but to prompt such users to upgrade to the authentic version to have access to the full functionality.

  100. Rott (2008), p. 448.

  101. Ibid., p. 450.

  102. See also Helberger and Hugenholtz on consumer expectation being a subjective element which leaves room for considering individual circumstances and the intended use. Helberger and Hugenholtz (2007), p. 1085.

  103. Sein and Spindler (2017), p. 7.

  104. Helm et al. (2018), p. 181.

  105. Rott (2008), p. 454.

  106. Dufft et al. (2005), p. 50. Also, see the recent study on consumer preference for a right to use digital content on their device of choice and readiness to pay for it. Prezanowski and Hoofnagle (2017), pp. 339, 357–359.

  107. See Oprysk et al. (2017) discussing highly centralised systems for content distribution on an example of Amazon Kindle and suggesting that overreaching control over circumstances enables further serving consumers’ interest without detriment to right holders’ interests.

  108. Unless digital content is only an element of physical good, falling under the new consumer sales directive. See Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC, OJ L 136/28, 22.05.2019.

  109. See Sect. 3.3 of the paper examining the restrictions on sharing feature.

  110. A study has shown that consumers believe that “buying” digital content entitles them to lend it or gift it. See Prezanowski and Hoofnagle (2017), pp. 340–341. A study on e-books confirmed that consumers perceive lending and borrowing as essential functionality and consider limitations on lending as decreasing the value of the content. See Helm (2018), pp. 182, 185.

  111. It has been explicitly suggested to include a right to obtain a new copy under the DCD if the original one cannot be used by the consumer. Beale (2016), p. 27.

  112. As has happened with e-books purchased with Microsoft, once Microsoft discontinued offering e-books for purchase. See https://support.microsoft.com/en-us/help/4497396/books-in-microsoft-store-faq (Accessed 15 January 2020).

  113. Rott (2008), p. 452.

  114. Recital 12 DCD.

  115. Prezanowski and Hoofnagle (2017), pp. 337–338.

  116. See the European Law Institute on the reasonable consumer expectations towards continuous access to the digital content for the period a consumer might legitimately expect. Statement of the European Law Institute on the European Commission’s Proposed Directive on the Supply of Digital Content to Consumers 2016, pp. 25–26.

  117. See, for instance, the Microsoft Store, where movies are offered for sale or rent https://www.microsoft.com/en-us/p/the-lion-king-2019/8d6kgwxn2mp9?activetab=pivot%3aoverviewtab (Accessed 15 January 2020).

  118. In this section, it is a permanent transfer of access to another person which is meant. Time-limited transfer of access such as through lending or rental has been dealt with in Sect. 4.3.

  119. In the recent TomKabinet judgment the Court ruled that dissemination of e-books falls under the right of communication to the public not subject to exhaustion, relying, inter alia, on the distinction between books on material medium and e-books as resulting in a different impact on the interests of right holders. See CJEU, Nederlands Uitgeversverbond and Groep Algemene Uitgevers v. Tom Kabinet Internet BV and Others (2019). Case C-263/18, Judgment of 19 December 2019. paras 53–59.

  120. Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society. OJ L 167/10, 22.6.2001.

  121. Geiregat and Steennot (2019), p. 160.

  122. CJEU, Nederlands Uitgeversverbond and Groep Algemene Uitgevers v. Tom Kabinet Internet BV and Others (2019). Case C-263/18, Judgment of 19 December 2019. para. 58.

  123. Grünberger (2018), p. 276. See also Spindler pointing out that in the UsedSoft case the CJEU used contract law as a leitmotif for copyright law. Spindler (2017), p. 214–215.

  124. Rott (2008), pp. 446–447. He also proposed iconsumer contract law with a mandatory right to resale. Ibid, p. 454.

  125. See Beale (2016), p. 27. Also, see Statement of the European Law Institute on the European Commission’s Proposed Directive on the Supply of Digital Content to Consumers 2016, p. 26; and Spindler and Sein (2019), p. 490.

  126. Perzanowski and Hoofnagle (2017), p. 335. See also Schroeder’s proposal to oblige the traders to provide consumers with the information on any restrictions placed on the fundamental rights associated with ownership such as resale, lending, use and access. See Schroeder (2014), pp. 263–269.

  127. Perzanowski and Hoofnagle (2017), pp. 340–341.

  128. Ibid, pp. 357–360.

  129. Restrictions on such dispositional control result in a decrease in value for consumers, see Helm et al. (2018), p. 182.

  130. Schroeder (2014), p. 268. On the other hand, when the content is clearly being lent, the expectations would differ. See, for instance, the Microsoft Store, where movies are offered for sale or rent https://www.microsoft.com/en-us/p/the-lion-king-2019/8d6kgwxn2mp9?activetab=pivot%3aoverviewtab (Accessed 15 January 2020).

  131. On the ways to enable a secondary market on an example of Amazon Kindle e-books, see Oprysk et al. (2017).

  132. Article 8(5) DCD.

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Authors and Affiliations

  1. IT Law Programme, School of Law, University of Tartu, Tartu, Estonia

    Liliia Oprysk

  2. Professor of Civil Law, School of Law, University of Tartu, Tartu, Estonia

    Karin Sein

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  1. Liliia Oprysk
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  2. Karin Sein
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Correspondence to Liliia Oprysk.

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This work was supported by the Estonian Research Council grant PUT PRG 124.

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Oprysk, L., Sein, K. Limitations in End-User Licensing Agreements: Is There a Lack of Conformity Under the New Digital Content Directive?. IIC 51, 594–623 (2020). https://doi.org/10.1007/s40319-020-00941-y

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