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Author: Vera Van Thuyne (Altius)

Publication date: 17/04/2019

On 15 April 2019, the Council of the EU formally adopted a draft directive on certain aspects concerning contracts for the supply of digital content and digital services. This was the last approval necessary in order for the draft directive to be adopted. This directive aims to enhance consumer protection in the online world, and is one of the upcoming directives bringing changes to EU consumer law under the Digital Single Market and the New Deal for Consumers packages.

Thanks to the digital content directive, consumers in the European Union who are confronted with malfunctioning digital content or services, such as a music streaming service or a social media platform, will now be able to benefit from harmonised remedies.

Scope of the directive: the supply of digital content and digital services to consumers, including when the consumer ‘pays’ with his/her personal data

The directive covers contracts between traders and consumers in which the trader supplies or undertakes to supply digital content or a digital service to the consumer in return for the payment of a price (defined in the directive as money or a digital representation of value) or the provision of personal data. The directive thus takes into account that data is a new ‘currency’ in the digital world. Broadening the scope of the directive to contracts in which the consumer ‘pays’ with his/her personal data is still revolutionary for consumer law and strengthens consumer protection to what previously were considered as ‘free’ contracts.

Digital content means data that is produced and supplied in a digital form, irrespective of whether a tangible medium is used or not, such as computer programs, applications, video and audio files and e-books. Digital services are services that: (1) allow the creation, processing, access to or storage of data; or (2) allow the sharing of or any other interaction with data in digital form that is uploaded or created by the consumer or other users of those services. Examples include video and audio sharing platforms, cloud computing services and social media.

Although the directive covers a broad range of contracts, there are significant exclusions. The directive does not apply, amongst other things, to: goods with digital elements, so-called ‘smart’ goods, or to the digital elements embedded in such goods if they are provided with the goods under a sales contract, healthcare and medical devices (if prescribed or provided by a health professional), contracts constituting financial services, free and open source software, and gambling services.

The trader’s liability and remedies for the consumer

The trader will be liable for the failure to supply the digital content or digital services or for a lack of conformity with the contract. The consumer will then have the right to have the digital content or digital service brought into conformity, to receive a proportionate reduction in the price or the right to terminate the contract (in the event of a failure to supply, the consumer will only be entitled to terminate the contract). These remedies are clearly inspired by the Consumer Sales Directive[1], but adapted for the specific characteristics of digital content and digital services.

For instance, a breach of the General Data Protection Regulation (GDPR) or a restriction to use the content or service resulting from a third party’s intellectual property rights could be considered as constituting a lack of conformity with the contract. On the other hand, if a consumer fails to install updates within a reasonable timeframe and according to the trader’s instructions, the trader will not be held liable for a lack of conformity.

It is for the trader to prove that the digital content or digital services are in conformity with the contract, or have been duly supplied, since the trader is deemed to be more knowledgeable and to have better access to know-how, technical information and high-tech assistance than the consumer. However, the consumer also has a duty to cooperate with the trader, for instance by providing automatically-generated incident reports or details of his/her internet connection.

In the event of a contract termination, the trader should in principle refrain from using any content provided by the consumer, and make this content available for the consumer to retrieve this digital content free of charge. The directive expressly provides that the GDPR will govern use of personal data by the trader after the termination of the contract.

Evaluation and future outlook

It is undeniable that this directive enhances consumer protection and will provide legal certainty. There are currently no mandatory rules under Belgian contract law governing these kind of contracts, which leaves it essentially up to the traders to determine the quality of the content or services that they deliver. Many of these products are already deemed to be unmissable by many people in an ever-more digitally connected world.

The next step will be publication in the Official Journal of the European Union. Following the publication, Member States will have approximately two years to transpose the directive into their national law. Consumers will thus have to wait some time before they can fully benefit from these new contract rules. Only time will tell whether the directive will be as truly technologically ‘neutral’ and future-proof as it seeks to be.

Read the original article here

[1] Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees, which will be replaced by the draft directive on certain aspect concerning the contracts for the sales of goods.