Two year guarantee for software products within the EU?

by Heidi on May 19th, 2009 in Law Enforcement and Legal Action.

As a response to the EU Action Agenda to strengthen consumer protection for software products, two EU Commissioners, Viviane Reding and Meglena Kuneva, have proposed consumer protection rules for software products which are in line with the current consumer protection rules for physical products.

Under the current Consumer Sales Directive, a manufacturer of a physical product (tangible moveable good) is obliged to guarantee such product for a period of two years, whereas the aforementioned directive does not apply to intangible products such as software products. The Distance Selling Directive includes rules relating to distance sale of software and entitles consumers to a limited cancellation period for online purchases of software products (but not if the seal has been broken). One must hope that the EU Commissioners’ proposal is rather an intent to increase consumer protection in relation to software products than an actual intent to impose the exact same guarantees for software products as for physical products as the latter raises a number of concerns.

The idea of establishing a certain level of consumer protection for software products may be a good idea per se. However, in order to achieve fair and reasonable consumer protection rules for software products one must also consider the quite huge differences between physical products and software products, such as:

-    In the software industry there is a fine line between software and services and it is often quite difficult to define whether the end user pays for the software or for the thereto related services. In the malware industry the end users generally receive, during the license period, software updates (correcting bugs in the software) and definition files updates (in order to keep the protection of the product up to date with new malware on the market). Is that a software product or a software service? Is the proposed two-year software guarantee supposed to cover software services as well, and if not, how shall one draw the distinction between software and services? Is a fixed two-year term guarantee the right tool to address software products which are licensed and not sold (and why should anyone then ever buy a license for a longer term than two years)? Shall software providers always have full liability for software products during the license term up to two years, whereas the providers of physical products are obliged to provide a two-year guarantee for products which generally are supposed to have a life cycle way beyond that guarantee?

-    Another issue to take into consideration is that consumers purchasing physical product are purchasing “finished” products, whereas software products never become “finished” in that sense. As long as there is software there will be bugs. Most software companies update their software on a regular basis to address bugs that have been discovered by end users or the company itself and provide its end users software updates that include bug fixes, whether free of charge or for a support fee. If the software industry becomes liable under law to provide non-defective software products and to correct, free of charge, all bugs in software products, that would undoubtedly delay the release of new software products and increase the license fees therefore as the quality assurance of the software products would be increased.

-    A lot of software companies offer beta versions, freeware or opens source versions of their software products. What type of liability shall software publishers face towards consumers for such software products? It is not a far-fetched guess that a lot of software companies would cease their provision of freeware or open source software if they would risk a huge liability towards consumers for such free software products.

Thus, the current consumer protection for physical products is hardly appropriate for software products and any effort to increase consumer protection for software products should rather focus on establishing fair, reasonable and appropriate consumer protection rules for software (whether it is a product or a service) than to attempt to fit it within already existing legislation. Hopefully, the purpose with this proposal from the EU Commissioners’ side is just an attempt to involve the quite unwilling software industry in a debate on consumer protection for software products in order to achieve reasonable consumer protection for software products.