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Digital Consumers and The Law. Towards a Cohesive European Framework +'''''DIRECTIVE 2011/83/EU on consumer rights (Consumer Rights Directive).''''' Recital 19: ''“Digital content means data which are produced and supplied in digital form, such as computer programs, applications, games, music, videos or texts, irrespective of whether they are accessed through downloading or streaming, from a tangible medium or through any other means. Contracts for the supply of digital content should fall within the scope of this Directive. If digital content is supplied on a tangible medium, such as a CD or a DVD, it should be considered as goods within the meaning of this Directive. Similarly to contracts for the supply of water, gas or electricity, where they are not put up for sale in a limited volume or set quantity, or of district heating, contracts for digital content which is not supplied on a tangible medium should be classified, for the purpose of this Directive, neither as sales contracts nor as service contracts. For such contracts, the consumer should have a right of withdrawal unless he has consented to the beginning of the performance of the contract during the withdrawal period and has acknowledged that he will consequently lose the right to withdraw from the contract. In addition to the general information requirements, the trader should inform the consumer about the functionality and the relevant interoperability of digital content. The notion of functionality should refer to the ways in which digital content can be used, for instance for the tracking of consumer behaviour; it should also refer to the absence or presence of any technical restrictions such as protection via Digital Rights Management or region coding. The notion of relevant interoperability is meant to describe the information regarding the standard hardware and software environment with which the digital content is compatible, for instance the operating system, the necessary version and certain hardware features. The Commission should examine the need for further harmonisation of provisions in respect of digital content and submit, if necessary, a legislative proposal for addressing this matter.”'' Art. 5(1): ''“Before the consumer is bound by a contract other than a distance or an off-premises contract, or any corresponding offer, the trader shall provide the consumer with the following information in a clear and comprehensible manner, if that information is not already apparent from the context: (...) (g) where applicable, the functionality, including applicable technical protection measures, of digital content; (h) where applicable, any relevant interoperability of digital content with hardware and software that the trader is aware of or can reasonably be expected to have been aware of.”''  +
Do you ever really own a computerized device? +''"'''How do copyright rules like this affect traditional definitions of ownership?''' In this world, “property” becomes the exclusive purview of manufacturers. You don’t get to own your computerized devices: You are only and forevermore a tenant of them, and the manufacturers are the landlords and they get to decide how you use the goods they deign to allow you to pay for. It used to be that if you bought something and figured out how to get extra value out of it – using an old blender to mix paint; fixing your own car; or ripping your CDs and loading the music in an MP3 player instead of buying it again – that extra value was yours to keep. (...) If your dishwasher can detect and reject “unauthorized” dishes in it, it can refuse to run its load. It’s the inkjet printer model, metastasized into the Internet of Things where everything we own – cars, houses, hearing aids, phones – is just a computer with a fancy case."''  +


GM: That Car You Bought. We’re Really The Ones Who Own It +General Motors states that the software in its vehicles are not sold, but only licensed. It's the same claim John Deere is making about its tractors. GM's argumentations is more or less the following: * <i>"Cars work because software tells all the parts how to operate * The software that tells all the parts to operate is customized code * That code is subject to copyright * GM owns the copyright on that code and that software * A modern car cannot run without that software; it is integral to all systems * Therefore, the purchase or use of that car is a licensing agreement * And since it is subject to a licensing agreement, GM is the owner and can allow/disallow certain uses or access"</i>  +
Google Glass and the Demise of Ownership +''"Another complication is that Google Glass, like many recent- and emerging-generation consumer electronics products, is made useful largely through its ability to connect to license-based service offerings. When you use a service such as Google Maps, you do so under a license to access the associated content—you’re a licensee, not an owner of that content."'' ''"The model of requiring purchasers of consumer electronics devices to first enter into restrictive contracts as a condition of sale and then to agree to restrictive licenses when using those devices raises multiple concerns. Most fundamentally, it does an end run around legal frameworks that evolved specifically to prohibit anti-competitive and consumer-unfriendly downstream control over transfers of ownership. And it’s confusing for consumers."''  +


How Smart, Connected Products Are Transforming Competition +The IoT products enable business models alternative to product ownership models: * product-as-a-service business models: they ''" allow users to have full access to a product but pay only for the amount of product they use"''; * product-sharing services (see for example they are a variation of the product-as-a-service model (think about the car or bike sharing enabled by the smart and connected capabilities that the IoT allows): ''"(p)roduct sharing, a variation of the product-as-a-service model, focuses on more efficient utilization of products that are used intermittently. Customers pay for the use of the product (such as cars or bikes) when they need it, and the company (such as Zipcar or Hubway) is responsible for everything else. Product sharing is spreading to nonmobile products such as houses"''.  +, A change in the business model? ''"Manufacturers have traditionally focused on producing a physical good and capturing value by transferring ownership of the good to the customer through a sales transaction. The owner is then responsible for the costs of servicing the product and other costs of use, while bearing the risks of downtime and other product failures and defects not covered by warranties. Smart, connected products allow the radical alteration of this long-standing business model. The manufacturer, through access to product data and the ability to anticipate, reduce, and repair failures, has an unprecedented ability to affect product performance and optimize service. This opens up a spectrum of new business models for capturing value, from a version of the traditional ownership model where the customer benefits from the new service efficiencies to the product-as-a-service model in which the manufacturer retains ownership and takes full responsibility for the costs of product operation and service in return for an ongoing charge. Customers pay as they go, not up front. Here, the value of product performance improvements that reduce operating cost (such as better energy efficiency) and service efficiencies are captured by the manufacturer. Smart, connected products create a dilemma for manufacturers, particularly those that make complex, long-lived products for which parts and service generate significant revenue and often disproportionate profit.''  +, ''The profitability of product-as-a-service models depends on the pricing and terms of contracts, which are a function of bargaining power. Product-as-a-service models can increase buyers’ power, because customers may be able to switch after the contract period (if the product is not embedded as with an elevator), unlike with perpetual ownership.Companies can also pursue hybrid models between the extremes of product-as-a-service and conventional ownership, such as product sales bundled with warranty or service contracts, or product sales bundled with performance-based contracts. Service contracts allow the manufacturer to keep service in-house and capture more of the value from service efficiencies. In a performance-based contract, the manufacturer sells the product along with a contract that promises that the product will perform to certain specifications (such as percentage of uptime). Here, ownership is transferred, but the manufacturer maintains responsibility and bears the risk of product performance.''  +


Information Technology Law +P. 536. Enforceability of shrink-wrap licences. N.B.: ''“From a licensing perspective, use of the Internet may simplify the supplier's task of establishing customer awareness of and agreement to the licence terms. It is a simple matter to cause either a set of the terms or at least reference to their existence to be displayed, with the customer required to 'click' on a button marked 'I accept' before the transaction can proceed”''. <u>Therefore, with the commercialization of software through the Internet, it is less in doubt the validity of software licences. The problem raises again, however, when we deal with browse-wrap licences (see HELBERGER).</u>  +


Oracle v. UsedSoft +''42 According to a commonly accepted definition, a ‘sale’ is an agreement by which a person, in return for payment, transfers to another person his rights of ownership in an item of tangible or intangible property belonging to him.''  +, ''a customer of Oracle who downloads the copy of the program and concludes with that company a user licence agreement relating to that copy receives, in return for payment of a fee, a right to use that copy for an unlimited period. The making available by Oracle of a copy of its computer program and the conclusion of a user licence agreement for that copy are thus intended to make the copy usable by the customer, permanently, in return for payment of a fee designed to enable the copyright holder to obtain a remuneration corresponding to the economic value of the copy of the work of which it is the proprietor.'' ''46 In those circumstances, the operations mentioned in paragraph 44 above, examined as a whole, involve the transfer of the right of ownership of the copy of the computer program in question.''  +, ''47 It makes no difference, in a situation such as that at issue in the main proceedings, whether the copy of the computer program was made available to the customer by the rightholder concerned by means of a download from the rightholder’s website or by means of a material medium such as a CD-ROM or DVD.''  +


Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the implementation and effects of Directive 91/250/EEC on the legal protection computer programs +''As to the exhaustion of copyright it must be borne in mind that under the Directive Community exhaustion only applies to the sale of copies i.e. goods, whereas supply through on-line services does not entail exhaustion.''  +, ''Furthermore, the Commission notes that by contrast with the other Community acquis concerning the distribution right Article 4 (c) of the Directive refers to "any form" of distribution “to the public” of a copyright computer program. This could be interpreted as meaning that the distribution right under Directive 91/250/EEC is not limited to the distribution of tangible copies of a computer program on floppy disks.''  +


Shrink-Wrap Licences in Europe After the EC Software Directive +In the memorandum, the Commission takes also an example of the limitation the rightholder can impose to the licensee: ''“for example, the licence to use a copy of a program may prohibit the licensee from running the program at all in any circumstances, but it may limit its use to a specific machine or impose other similar restrictions”''. <u>From this example, we may infer that a use limited to a specific machine or other similar restrictions are not possible when a sale has taken place.</u>  +


The End of Ownership: Why You Need to Fight America's Copyright Laws +''"While this ushers in a whole new world of possibilities, it’s also redefining ownership. Because when you purchase a physical object, you don’t actually buy the software in it — that code belongs to someone else. If you do something the manufacturer doesn’t like — repair it, hack it, unlock it — you could lose the right to use “their” software in “your” thing. And as these lines between physical and digital blur, it pits copyright and physical ownership rights against each other."''  +


Unfair Contract Terms in European Law. A Study in Comparative and EC Law +A general transparency requirement is stated: terms offered to consumers are expressed in plain, intelligible language; where terms are subject to different interpretations, the one which is the most favorable to the consumer must prevail (art. 5 Directive 93/13/EEC).  +