Contracts for Supply of Digital Content: A Legal Analysis of the Commission's Proposal for a New Directive
As part of the implementation of the Digital Single Market Strategy, in December 2015 the European Commission tabled a proposal for a directive on the supply of digital content. The proposed directive contains rules on the contractual aspects of the relationship between suppliers and consumers of digital content. In principle, the directive's rules will be mandatory, in that a contract may not deviate from them to the consumer's detriment. However, many rules are default ones, i.e. may be deviated from by the contract. This is especially so with regard to laying down the criteria for conformity of digital content. Importantly, the proposed directive is to be a 'targeted maximum harmonisation' instrument, meaning that once in force Member States cannot retain or introduce more consumer friendly rules within its scope.The scope ratione materiae of the directive includes not only the supply of digital content to consumers in the strict sense, i.e. the supply of software, digital music, e books, films or images, but also digital services, in particular rental of on line computer programs, cloud computing and social media platforms. The directive extends only to contracts concluded for consideration (counter performance) which can also take the form of digital data, including personal data, provided by the consumer. Finally, the scope ratione materiae includes all modes of conclusion, i.e. on line and off line. Importantly, according to the directive's preamble, digital content embedded in tangible goods is to be excluded from its scope. The scope ratione personae comprises exclusively business to consumer contracts.As regards criteria for evaluating whether the digital content is in conformity with the contract, the directive provides that a primary source for such criteria is the terms of the contract, as well as items of pre contractual information which are deemed to be part of the contract. Subsidiary criteria for evaluating conformity include objective fitness for purpose, international technical standards, as well as public statements.The proposal takes over from the Consumer Sales Directive the idea of a 'hierarchy of remedies' meaning that in the case of non conformity, consumers are barred from terminating the contract or claiming a reduction in price, instead having first to ask the trader to bring the digital content into conformity. Hence, consumers do not have a free choice of remedies. However, in the case of non supply, consumers have the right to terminate immediately. They also have the right to terminate regardless of conformity in cases where the trader modifies the digital content, as well as in long term contracts. The proposal contains detailed rules on the consequences of termination, particularly regarding the further use of consumers' personal data by traders, and the further use of digital content by consumers.Experts have identified a number of issues which have not been, but potentially could be, addressed by the directive. These include consumers' rights to multiple downloads, to re sell digital content and to receive essential updates and maintenance, as well as the issue of optional guarantees granted on top of statutory liability for conformity.Finally, there are a number of questions about how the proposed directive relates to other legal instruments of EU law, in particular the General Data Protection Regulation, and intellectual property law. With regard to the former, the directive remains 'without prejudice' which means that its legal regime is parallel. With regard to all other legislation, the directive is a lex generalis, meaning that any sectoral or specific legislation will prevail over the directive's rules in case of conflict.