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Contractual characteristics

Is the consumer allowed to modify the software and/or hardware without retaliation?

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DIRECTIVE 1999/44/EC on certain aspects of the sale of consumer goods and associated guaranteesArt. 1(2)(b): “consumer goods: shall mean any tangible movable item”. The question is therefore if the Directive can apply also to digital content supplied through the Net, and not on a tangible medium like CDs, DVDs etc.
Digital Consumers and The Law. Towards a Cohesive European FrameworkIt is doubtful that abstract considerations could be taken into account when determining product conformity. One exception could be mandatory rules established by – for example – data protection or copyright law: if we have mandatory rules, and the product doesn't respect them (e.g. it processes personal data without prior consent of the consumer, or it doesn't allow to make a back-up copy if the product is a software), this constitutes a lack of conformity. But we have also to remember that, even if there are non-mandatory rules or no rules at all, we can anyway have a lack of conformity when consumer's legitimate expectations are not satisfied.
How Smart, Connected Products Are Transforming Competition"(p)roduct usage data can also be used to validate warranty claims and identify warranty agreement violations"
I Contratti di Internet. Sottoscrizione, Nuovi Contratti, Tutela del Consumatore, Privacy e Mezzi di Pagamentothe provider often assigns to himself the right to suspend the supply of the service in case of mere fumus of the existence of presumed violations of the contractual clauses he has imposed (clauses that are often vague and ambiguous).
LCE: All watched over by machines of loving graceKarsten noted that he could count at least 17 computers in his home: in his camera, freezer, alarm clock, network router, car IVI system, laptop, and so on. All of those computers can in principle perform any computable task, but, in many cases, the software turns them into appliances.
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“lawful acquirer” did in fact mean a purchaser, licensee, renter or a person authorised to use the program on behalf of one of the above
In the view of the Commission, what was intended by Article 5 (1) and recital 18 was that it should not be possible to prevent by contract a “lawful acquirer” of a program doing any of the restricted acts that were required for the use of the program in accordance with its intended purpose or for correcting errors. It is, however, possible for a contract to include specific provisions that “control” the restricted acts which may be carried out by the user of the computer program.”

Does the provider reserve to himself the right to modify/delete his own content?

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Alessio/ToDoblablabla
Digital Consumers and The Law. Towards a Cohesive European Framework"we live in a connected world in which we neither singularly author nor own our data"

Does the provider reserve to himself the right to modify/delete consumer content?

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Digital Consumers and The Law. Towards a Cohesive European Framework"we live in a connected world in which we neither singularly author nor own our data"

Is the title on software explicitly transferred to the consumer?

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Digital Consumers and The Law. Towards a Cohesive European FrameworkDIRECTIVE 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 ItGeneral 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:

  • "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"
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 CompetitionThe 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 http://www.theinternetofthings.eu/johan-corthouts-sharing-new-buying-brought-you-buy-internet-things): 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 LawP. 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”. 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).
Oracle v. UsedSoft42 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 programsAs 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 DirectiveIn 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”. 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.
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 LawA 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).

Is the title on hardware explicitly transferred to the consumer?

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Oracle v. UsedSoft42 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.
Unfair Contract Terms in European Law. A Study in Comparative and EC LawA 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).

Is the consumer forbidden from reselling the device?

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Google Glass and the Demise of Ownership"Welcome to the shrinking privileges of ownership in an always-connected world. Are these terms beneficial for consumers? Clearly not. Are they even enforceable? To at least some extent, they probably are."
"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."
"It’s tempting to think of the Glass resale restriction as simply another unwelcome consequence of the many legalese-laden agreements that we all encounter when using almost any online service. But most of those agreements involve restrictions on data, not the devices on which they reside. You can’t resell files containing songs downloaded from Amazon, map data from Google, or restaurant recommendations from Zagat. Our purchased devices, by contrast, have generally been ours to keep, sell, loan, or donate as we see fit. That flexibility is lost when a purchase comes with restrictions like those in the Glass terms of sale."
Legally Flawed but Politically Sound. Digital Exhaustion of Copyright in Europe after UsedSoftTherefore - if we follow ROGNSTAD's reasoning - when we deal with IoT products' components (obviously if covered by copyright protection) which are provided through the Net, to understand if they can be transferred from the first acquirer to a second acquirer, first of all we must wonder if the copyright holder could calculate the remuneration on the basis of the first act of exploitation: this happens, for example, when

the component at stake is not multiplied, but used by one person at time, provided that it doesn't require the right holder's recurring or continuing intervention in order to be routinely used by the customer.

We must nonetheless remember that the exhaustion principle doesn't apply to contracts for services (ROGNSTAD, p. 17, and Oracle v. UsedSoft, § 60): therefore, we must verify if the contract between the right holder and the customer can be qualified as a sale, applying the definition of sale provided by the UsedSoft case.

If these two conditions are satisfied, the copyright holder can't forbid the subsequent circulation of the component.

This should apply a fortiori when the component at stake is not covered by copyright protection, even if in this case we must verify what definition of "sale" can apply.


It may seem weird that it exists a principle of free circulation of services which allows to apply the rationale behind the exhaustion principle also to services, but the same principle can't apply to contracts for services.

To understand this apparent incompatibility, we must differentiate the notion of "service" from the notion of "service contract".

  • "Service contracts" are all contracts that can't be qualified as sales contracts. Sales contracts are contracts which involve the transfer of ownership of goods in exchange for the payment of a price. See for example DIRECTIVE 2011/83/EU on consumer rights, Articles 2(5) and 2(6).
  • "Services", according to the TFEU, art. 57, are : "Services shall be considered to be ‘services’ within the meaning of the Treaties where they are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons". Therefore, considering only the ratio between services and goods, services are all entities that can't be considered as goods.

For example, if a videocassette is rented, the contract is a service contract, because there is no transfer of ownership, but the provisions of the TFEU concerning the free movement of goods would apply, because videocassettes are goods, not services (see for example the CJEU judgement Warner/Christiansen of 1988).

ROGNSTAD's reasoning implies that the online service which allows the creation of the downloaded software copies is a service: in fact, the first acquirer obtains them through an act of reproduction and an act of communication to the public, and also the second acquirer obtains a copy through these two acts. But the product of these services is a copy (therefore, a good) whose ownership is transferred from the right holder to the first acquirer, therefore we can say that it is a sales contract.

In my opinion, it would have been more easy, and correct, to say that the downloaded copies aren't tangible goods, so the exhaustion principle can't apply. However, they are still goods, so the principle of the free movement of goods can apply, and - if a transfer of ownership takes place - we can speak about a sales contract.

It is true that, according to DIRECTIVE 2011/83/EU on consumer rights, Recital 19, "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 contract". However, an affirmation of that kind doesn't deny that intangible content could be the object of a transfer of ownership, and therefore further circulation should be possible when this transfer of ownership takes place.
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."
The Epic Struggle of the Internet of ThingsBruce STERLING, in “The Epic Struggle of the Internet of Things”, says that IoT is not about Things on the Internet, and that individuals are no more “consumers” or “users” when IoT (as well as when Facebook, for example) is involved: IoT products providers would indeed be pleased to sell them at cost, because their aim is not to provide people with IoT products, but to implement digital surveillance.
Unfair Contract Terms in European Law. A Study in Comparative and EC LawA 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).

Is the consumer forbidden from transferring the account?

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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."
I Contratti di Internet. Sottoscrizione, Nuovi Contratti, Tutela del Consumatore, Privacy e Mezzi di PagamentoAccording to Italian law (Italian Civil Code, articles 1667 and 1570), the body of laws applicable to those contracts between a ISP and a customer for the supply of Internet access is formed by the provisions regarding the “contratto di somministrazione” (art. 1159) and the “contratto di appalto” (art. 1655), the latter applying only when compatible with the former, and anyway in a subordinate position.
LG Will Take The 'Smart' Out Of Your Smart TV If You Don't Agree To Share Your Viewing And Search Data With Third PartiesThe use of most of the smart features of the TV requires the creation of an LG SmartWorld Account: "For example, some of our services require that you become a member of LG SmartWorld, which may be subject to separate terms. You may join LG SmartWorld either through your LG Smart TV or by other means, such as through certain LG websites. This Membership Information may include your user ID, password, telephone number, name, date of birth, gender, email address, address, social networking service ID, security question answers, purchase history, and related payment information, such as credit card information or details of your PayPal account and more."
Legally Flawed but Politically Sound. Digital Exhaustion of Copyright in Europe after UsedSoftTherefore - if we follow ROGNSTAD's reasoning - when we deal with IoT products' components (obviously if covered by copyright protection) which are provided through the Net, to understand if they can be transferred from the first acquirer to a second acquirer, first of all we must wonder if the copyright holder could calculate the remuneration on the basis of the first act of exploitation: this happens, for example, when

the component at stake is not multiplied, but used by one person at time, provided that it doesn't require the right holder's recurring or continuing intervention in order to be routinely used by the customer.

We must nonetheless remember that the exhaustion principle doesn't apply to contracts for services (ROGNSTAD, p. 17, and Oracle v. UsedSoft, § 60): therefore, we must verify if the contract between the right holder and the customer can be qualified as a sale, applying the definition of sale provided by the UsedSoft case.

If these two conditions are satisfied, the copyright holder can't forbid the subsequent circulation of the component.

This should apply a fortiori when the component at stake is not covered by copyright protection, even if in this case we must verify what definition of "sale" can apply.


It may seem weird that it exists a principle of free circulation of services which allows to apply the rationale behind the exhaustion principle also to services, but the same principle can't apply to contracts for services.

To understand this apparent incompatibility, we must differentiate the notion of "service" from the notion of "service contract".

  • "Service contracts" are all contracts that can't be qualified as sales contracts. Sales contracts are contracts which involve the transfer of ownership of goods in exchange for the payment of a price. See for example DIRECTIVE 2011/83/EU on consumer rights, Articles 2(5) and 2(6).
  • "Services", according to the TFEU, art. 57, are : "Services shall be considered to be ‘services’ within the meaning of the Treaties where they are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons". Therefore, considering only the ratio between services and goods, services are all entities that can't be considered as goods.

For example, if a videocassette is rented, the contract is a service contract, because there is no transfer of ownership, but the provisions of the TFEU concerning the free movement of goods would apply, because videocassettes are goods, not services (see for example the CJEU judgement Warner/Christiansen of 1988).

ROGNSTAD's reasoning implies that the online service which allows the creation of the downloaded software copies is a service: in fact, the first acquirer obtains them through an act of reproduction and an act of communication to the public, and also the second acquirer obtains a copy through these two acts. But the product of these services is a copy (therefore, a good) whose ownership is transferred from the right holder to the first acquirer, therefore we can say that it is a sales contract.

In my opinion, it would have been more easy, and correct, to say that the downloaded copies aren't tangible goods, so the exhaustion principle can't apply. However, they are still goods, so the principle of the free movement of goods can apply, and - if a transfer of ownership takes place - we can speak about a sales contract.

It is true that, according to DIRECTIVE 2011/83/EU on consumer rights, Recital 19, "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 contract". However, an affirmation of that kind doesn't deny that intangible content could be the object of a transfer of ownership, and therefore further circulation should be possible when this transfer of ownership takes place.

Is there an explicit prohibition to use the device in combination with a third party service?

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Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A Digital Single Market Strategy for Europe"The Digital Single Market must be built on reliable, trustworthy, high-speed, affordable networks and services that safeguard consumers' fundamental rights to privacy and personal data protection while also encouraging innovation. This requires a strong, competitive and dynamic telecoms sector to carry out the necessary investments, to exploit innovations such as Cloud computing, Big Data tools or the Internet of Things. The market power of some online platforms potentially raises concerns, particularly in relation to the most powerful platforms whose importance for other market participants is becoming increasingly critical" (p. 9).
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Communication on future networks and the internetPage 7: "EC competition rules (Articles 81 and 82 EC) will play a crucial role in preventing and removing anti-competitive conduct. These provisions allow tackling both abusive conduct of dominant network operators as well as co-ordinated conduct aimed at excluding other services or alternative operators from the market".
Page 8:
"Convergence is also leading to many different devices and services having to talk to one another. For instance, the proliferation of nomadic services requires networks, handsets, content protection and security applications that are interoperable. Most of the time, these issues are resolved by market mechanisms: the win-win of open interfaces and standards is that the market can grow for all. However, and this is particularly relevant in the presence of network externalities, dominant players may try to use proprietary standards to lock consumers into their products or to extract very high royalties from market players, ultimately slowing innovation and foreclosing market entry by new players".
Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings48. ‘Tying’ usually refers to situations where customers that purchase one product (the tying product) are required also to purchase another product from the dominant undertaking (the tied product). Tying can take place on a technical or contractual basis.
49. Tying and bundling are common practices intended to provide customers with better products or offerings in more cost effective ways. However, an undertaking which is dominant in one product market (or more) of a tie or bundle (referred to as the tying market) can harm consumers through tying or bundling by foreclosing the market for the other products that are part of the tie or bundle (referred to as the tied market) and, indirectly, the tying market.
62. Provided that the conditions set out in Section III D are fulfilled, the Commission will look into claims by dominant undertakings that their tying and bundling practices may lead to savings in production or distribution that would benefit customers. The Commission may also consider whether such practices reduce transaction costs for custo- mers, who would otherwise be forced to buy the compo- nents separately, and enable substantial savings on packa- ging and distribution costs for suppliers. It may also examine whether combining two independent products into a new, single product might enhance the ability to bring such a product to the market to the benefit of consu- mers. The Commission may also consider whether tying and bundling practices allow the supplier to pass on effi- ciencies arising from its production or purchase of large quantities of the tied product.
Digital Consumers and The Law. Towards a Cohesive European FrameworkWhen – because of TPMs or incompatibility of formats and standards – the consumer can't access digital content or transfer it to another device and make use of it according to its ordinary or specifically agreed purpose, it constitutes a lack of conformity, unless, before the conclusion of the contract, the consumer wasn't “properly informed of such restrictions, and such restrictions cannot be said to constitute an unfair contract term, an unfair commercial practice, or an unlawful restriction of fundamental rights such as the right to information or the right to privacy” (HELBERGER p. 94); therefore, we also have to examine the Consumer Information Directive about the information requirements, the Directive on Unfair Terms in Consumer Contracts about unfair contract terms, the UCP Directive about unfair commercial practices, the Data Protection Directive about privacy, etc.; in Germany, when digital content is protected by TPMs, it must be labeled as such, and, when it isn't, it is a case of non-conformity.
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.”
Five Challenges For The Internet of Things Ecosystem"Data Sharing: In the Internet of Things paradigm, data is gold. However, data provisioning builds off a social contract between large corporations and customers. Corporations provide a free or nominally-priced service in exchange for a consumer’s personal data. This data is either sold to advertisers or used to develop further products or services useful to consumers. Third-party applications, which build off the core service, poach customers (and related customer data) from such applications. For established networks and large corporations, this can be detrimental practice because such applications eventually poach their customers. In such a scenario, large corporations need to balance their approach to open source with commercial considerations."
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."
Opinion 8/2014 on the Recent Developments on the Internet of Things"In practice, users in the IoT tend to be locked to specific systems. Devices usually first send data to the device manufacturer, which then makes this data accessible to the user through a web portal or an app. This design allows manufacturers to provide online services that leverage the device capabilities, but it may also prevent users from freely choosing the service that interacts with their device. Additionally, today, end-users are rarely in a position to have access to the raw data that are registered by IoT devices. Clearly, they hold a more immediate interest in the interpreted data than in the raw data that may not make sense to them. Yet, access to such data can prove useful for the end-users to understand what the device manufacturer can infer from it about them. Also, availing of this raw data would give them a capacity to transfer their data to another data controller and switch services - for instance, if the original data controller changes its privacy policy in a way that does not satisfy them. Today, in practice, these persons have in practice no other possibility than to stop using their devices as most data controllers do not provide such functionality and provide access only to a degraded version of the stored raw data."
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“lawful acquirer” did in fact mean a purchaser, licensee, renter or a person authorised to use the program on behalf of one of the above
In the view of the Commission, what was intended by Article 5 (1) and recital 18 was that it should not be possible to prevent by contract a “lawful acquirer” of a program doing any of the restricted acts that were required for the use of the program in accordance with its intended purpose or for correcting errors. It is, however, possible for a contract to include specific provisions that “control” the restricted acts which may be carried out by the user of the computer program.”

Are there explicit duration boundaries to consumer’s enjoyment of the device?

PageSentence
DRM in Cars Will Drive Consumers Crazy"The problem extends beyond inconvenience. In plenty of cases, DRM has led to users losing altogether the ability to watch, listen to, read, or play media that can't be "authenticated." Video games with online components now routinely reach an end-of-life period where the company providing the authentication decides it's no longer worth it to operate the servers. That raises the frightening possibility of a company like Renault deciding that it's not cost-effective anymore to verify new batteries—and leaving car owners high and dry."
Internet of Things. Applicazioni, sicurezza e riservatezza dei dati personali"La tendenza mostra che, anche senza un contatore intelligente, i dispositivi che ci stiamo portando in casa sono fin troppo “smart”. Vi ricordate il caso di LG dello scorso maggio? I possessori di una smart TV di LG si sono visti aggiornare il software, ma non per eliminare una vulnerabilità di sicurezza. L’interfaccia chiedeva all’utente di esprimere o declinare consenso, pena il non funzionamento dei servizi a valore aggiunto. Consenso per cosa? Vediamo: "Our Privacy Policy explains and seeks your agreement for how we collect, use, and share information that we obtain as a result of your use of LG Smart TV Services, as well as how we use cookies. You do not have to agree to the Privacy Policy but if you do not, not all Smart TV Services will be available to you. In that case, we will still receive certain non-identifying information from your Smart TV that we need to provide the basic functions that will be available". Aggiungo che il testo di cui sopra è stato trascritto manualmente leggendo dalla TV, perché non ne esiste una versione pubblicamente disponibile, nemmeno nel manuale cartaceo o sul sito di LG. Sì, è la stessa LG che pochi mesi prima era stata contestata perché ogni volta che si collegava un disco esterno o una chiavetta USB alla TV, l’elenco dei file ivi presenti veniva spedito ai server di LG. Tornando alla privacy policy, avete notato il passaggio in cui si dice che, indipendentemente dall’accettazione o meno delle condizioni, LG continuerà a raccogliere dati (non identificanti il possessore) per continuare a poter erogare le funzionalità essenziali?"'
"Of course, there is always the “dumb” option. Users may have the ability to disable data collection, but it comes at a cost. The device will not function properly or allow the use of its high-tech features. This leaves consumers with an unacceptable choice between keeping up with technology and retaining their personal privacy."
Opinion 8/2014 on the Recent Developments on the Internet of Things"In practice, users in the IoT tend to be locked to specific systems. Devices usually first send data to the device manufacturer, which then makes this data accessible to the user through a web portal or an app. This design allows manufacturers to provide online services that leverage the device capabilities, but it may also prevent users from freely choosing the service that interacts with their device. Additionally, today, end-users are rarely in a position to have access to the raw data that are registered by IoT devices. Clearly, they hold a more immediate interest in the interpreted data than in the raw data that may not make sense to them. Yet, access to such data can prove useful for the end-users to understand what the device manufacturer can infer from it about them. Also, availing of this raw data would give them a capacity to transfer their data to another data controller and switch services - for instance, if the original data controller changes its privacy policy in a way that does not satisfy them. Today, in practice, these persons have in practice no other possibility than to stop using their devices as most data controllers do not provide such functionality and provide access only to a degraded version of the stored raw data."
Payment Method Design: Psychological and Economic Aspects of PaymentsWe may try to apply this research to the current trend of the IoT market, in which - even if there is actually along-time relationship between the provider and the consumer - usually the payment is a lump-sum at the moment in which the consumer acquires the possession of the token that makes the service possible. Among the reasons for the business model chosen, there might be the consumer's pain of paying: paying for the token could be considered the equivalent of a subscription, in which you pay once and for all, and in which therefore consumer's pain of paying is reduced. Businesses should thus prefer this form of payment, because - given that consumers prefer it, rather than pay-per-use (and also, as an intermediary step, periodical fees) - they will more willing to conclude the contract and subsequently to use the product frequently and for a long time. And - considering the fact that often the business model of the firm is focused on the collection of data rather than on the commercialization of the hardware - this kind of approach may be susceptible to foster a greater data collection.

The problems are, however, that: 1) when physical objects are concerned, and consumers pay once and for all for them, they think to be able to use them permanently: even if the free paired service ceases to be provided after a period long enough to reward the sum paid for the hardware, consumers will claim against the supervened unusability of the product; 2) even if, unofficially, the sum is paid for the service, officially it is paid for the token: therefore, if the service ceases to be provided before a period of time sufficient to remunerate the lump-sum paid, nothing will be returned to the consumer, and usually the standard terms accompanying the product even state that the service could be discontinued at any time and for any reason.

Someone may complain about the fact that, in the adaptation of this study to the IoT world, I have approached the periodical fees to the pay-per-use, considering the fact that - in traditional services - the opposite of pay per use is subscription (i.e. periodical fees; think about the flat rates paid to network operators). But traditional services have from the start been considered as "services", where the alternative payment methods could be subscription and pay-per-use (even in the world of contracts for Internet provision, where we have a service + a token - which is the router -, the router has always been seen as a tool to access the service); on the contrary, when dealing with the IoT, the products concerned are traditional items - which have always been subject alternatively to sale or rental - that suddenly become smart and susceptible of providing services: therefore, in consumers' view, the payment method consisting in periodical fees is not the payment method that reduces the most the pain of paying, because there is a further method which causes lesser pain, i.e. a lump-sum paid once and for all.
Renault Introduces DRM For CarsWhen you buy a Renault Zoe, the battery isn't included. Instead, you sign a rental contract for the battery with the car maker. In a Zoe owner's forum, user Franko30 reports that the contract contains a clause giving Renault the right to prevent your battery from charging at the end of the rental period. According to an article in Der Spiegel, the company may also do this when you fall behind on paying the rent for the battery.
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 LawBecause of the difficulty to assess the unfair character of a term on the basis of the general definition of article 3, there is an Annex to the Directive 93/13/EEC, which contains an indicative and non-exhaustive list of unfair terms (p. 4: NEBBIA states that those clauses can be clustered in four categories: 1) terms giving a party the control of the terms of the contract or of the performance of the contract (i, j, k, l, m, p); 2) terms determining the duration of the contract (g, h); 3) terms restraining a party to have the same rights as the other (c, d, f, o); 4) exemption and limitation clauses (a, b, n, q)). Clauses J (terms that enable the provider to alter the contract unilaterally without a valid reason) and G (terms that enable the provider to terminate a contract of indeterminate duration without reasonable notice) may be particularly useful in the context of IoT products. However, pay attention to the fact that paragraph 2 letter (b) of the Annex states: “Subparagraph (j) is also without hindrance to terms under which a seller or supplier reserves the right to alter unilaterally the conditions of a contract of indeterminate duration, provided that he is required to inform the consumer with reasonable notice and that the consumer is free to dissolve the contract”.

Are there explicit duration boundaries to consumer’s enjoyment of the service?

PageSentence
DRM in Cars Will Drive Consumers Crazy"The problem extends beyond inconvenience. In plenty of cases, DRM has led to users losing altogether the ability to watch, listen to, read, or play media that can't be "authenticated." Video games with online components now routinely reach an end-of-life period where the company providing the authentication decides it's no longer worth it to operate the servers. That raises the frightening possibility of a company like Renault deciding that it's not cost-effective anymore to verify new batteries—and leaving car owners high and dry."
Digital Consumers and The Law. Towards a Cohesive European FrameworkWe have non-conformity (it may depend both on technical problems and DRM) if the consumer was entitled to continuous access but there are access problems, or if the digital content is not provided within the time necessary to perform its function.
When – because of TPMs or incompatibility of formats and standards – the consumer can't access digital content or transfer it to another device and make use of it according to its ordinary or specifically agreed purpose, it constitutes a lack of conformity, unless, before the conclusion of the contract, the consumer wasn't “properly informed of such restrictions, and such restrictions cannot be said to constitute an unfair contract term, an unfair commercial practice, or an unlawful restriction of fundamental rights such as the right to information or the right to privacy” (HELBERGER p. 94); therefore, we also have to examine the Consumer Information Directive about the information requirements, the Directive on Unfair Terms in Consumer Contracts about unfair contract terms, the UCP Directive about unfair commercial practices, the Data Protection Directive about privacy, etc.; in Germany, when digital content is protected by TPMs, it must be labeled as such, and, when it isn't, it is a case of non-conformity.
I Contratti di Internet. Sottoscrizione, Nuovi Contratti, Tutela del Consumatore, Privacy e Mezzi di PagamentoAccording to Italian law (Italian Civil Code, articles 1667 and 1570), the body of laws applicable to those contracts between a ISP and a customer for the supply of Internet access is formed by the provisions regarding the “contratto di somministrazione” (art. 1159) and the “contratto di appalto” (art. 1655), the latter applying only when compatible with the former, and anyway in a subordinate position.
the provider often assigns to himself the right to suspend the supply of the service in case of mere fumus of the existence of presumed violations of the contractual clauses he has imposed (clauses that are often vague and ambiguous).
the contract often states that the provider isn't able to guarantee an uninterrupted service, which is an unfair clause.
Internet of Things. Applicazioni, sicurezza e riservatezza dei dati personaliN.B. Today, device connectivity (also when these devices are "traditional objects" equipped with computational capacities) is a requirement, an essential feature, and not an extra.'
"La tendenza mostra che, anche senza un contatore intelligente, i dispositivi che ci stiamo portando in casa sono fin troppo “smart”. Vi ricordate il caso di LG dello scorso maggio? I possessori di una smart TV di LG si sono visti aggiornare il software, ma non per eliminare una vulnerabilità di sicurezza. L’interfaccia chiedeva all’utente di esprimere o declinare consenso, pena il non funzionamento dei servizi a valore aggiunto. Consenso per cosa? Vediamo: "Our Privacy Policy explains and seeks your agreement for how we collect, use, and share information that we obtain as a result of your use of LG Smart TV Services, as well as how we use cookies. You do not have to agree to the Privacy Policy but if you do not, not all Smart TV Services will be available to you. In that case, we will still receive certain non-identifying information from your Smart TV that we need to provide the basic functions that will be available". Aggiungo che il testo di cui sopra è stato trascritto manualmente leggendo dalla TV, perché non ne esiste una versione pubblicamente disponibile, nemmeno nel manuale cartaceo o sul sito di LG. Sì, è la stessa LG che pochi mesi prima era stata contestata perché ogni volta che si collegava un disco esterno o una chiavetta USB alla TV, l’elenco dei file ivi presenti veniva spedito ai server di LG. Tornando alla privacy policy, avete notato il passaggio in cui si dice che, indipendentemente dall’accettazione o meno delle condizioni, LG continuerà a raccogliere dati (non identificanti il possessore) per continuare a poter erogare le funzionalità essenziali?"

"Of course, there is always the “dumb” option. Users may have the ability to disable data collection, but it comes at a cost. The device will not function properly or allow the use of its high-tech features. This leaves consumers with an unacceptable choice between keeping up with technology and retaining their personal privacy."
Payment Method Design: Psychological and Economic Aspects of PaymentsWe may try to apply this research to the current trend of the IoT market, in which - even if there is actually along-time relationship between the provider and the consumer - usually the payment is a lump-sum at the moment in which the consumer acquires the possession of the token that makes the service possible. Among the reasons for the business model chosen, there might be the consumer's pain of paying: paying for the token could be considered the equivalent of a subscription, in which you pay once and for all, and in which therefore consumer's pain of paying is reduced. Businesses should thus prefer this form of payment, because - given that consumers prefer it, rather than pay-per-use (and also, as an intermediary step, periodical fees) - they will more willing to conclude the contract and subsequently to use the product frequently and for a long time. And - considering the fact that often the business model of the firm is focused on the collection of data rather than on the commercialization of the hardware - this kind of approach may be susceptible to foster a greater data collection.

The problems are, however, that: 1) when physical objects are concerned, and consumers pay once and for all for them, they think to be able to use them permanently: even if the free paired service ceases to be provided after a period long enough to reward the sum paid for the hardware, consumers will claim against the supervened unusability of the product; 2) even if, unofficially, the sum is paid for the service, officially it is paid for the token: therefore, if the service ceases to be provided before a period of time sufficient to remunerate the lump-sum paid, nothing will be returned to the consumer, and usually the standard terms accompanying the product even state that the service could be discontinued at any time and for any reason.

Someone may complain about the fact that, in the adaptation of this study to the IoT world, I have approached the periodical fees to the pay-per-use, considering the fact that - in traditional services - the opposite of pay per use is subscription (i.e. periodical fees; think about the flat rates paid to network operators). But traditional services have from the start been considered as "services", where the alternative payment methods could be subscription and pay-per-use (even in the world of contracts for Internet provision, where we have a service + a token - which is the router -, the router has always been seen as a tool to access the service); on the contrary, when dealing with the IoT, the products concerned are traditional items - which have always been subject alternatively to sale or rental - that suddenly become smart and susceptible of providing services: therefore, in consumers' view, the payment method consisting in periodical fees is not the payment method that reduces the most the pain of paying, because there is a further method which causes lesser pain, i.e. a lump-sum paid once and for all.
Unfair Contract Terms in European Law. A Study in Comparative and EC LawBecause of the difficulty to assess the unfair character of a term on the basis of the general definition of article 3, there is an Annex to the Directive 93/13/EEC, which contains an indicative and non-exhaustive list of unfair terms (p. 4: NEBBIA states that those clauses can be clustered in four categories: 1) terms giving a party the control of the terms of the contract or of the performance of the contract (i, j, k, l, m, p); 2) terms determining the duration of the contract (g, h); 3) terms restraining a party to have the same rights as the other (c, d, f, o); 4) exemption and limitation clauses (a, b, n, q)). Clauses J (terms that enable the provider to alter the contract unilaterally without a valid reason) and G (terms that enable the provider to terminate a contract of indeterminate duration without reasonable notice) may be particularly useful in the context of IoT products. However, pay attention to the fact that paragraph 2 letter (b) of the Annex states: “Subparagraph (j) is also without hindrance to terms under which a seller or supplier reserves the right to alter unilaterally the conditions of a contract of indeterminate duration, provided that he is required to inform the consumer with reasonable notice and that the consumer is free to dissolve the contract”.

Are there explicit terms and conditions allowing the consumer to access (view only) his data?

PageSentence
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A Digital Single Market Strategy for Europe"(C)ontracts often exclude, or severely limit, the contractual liability of the cloud provider if the data is no longer available or is unusable, or they make it difficult to terminate the contract. This means that the data is effectively not portable" (p. 14).
Digital Consumers and The Law. Towards a Cohesive European FrameworkArt. 12 of the Data Protection Directive is about the right to access, which includes the right to obtain from the controller “communication to him in an intelligible form of the data undergoing processing and of any available information as to their source”.
Privacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies.

Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).
How Smart, Connected Products Are Transforming CompetitionWho owns the data? "As a company chooses which data to gather and analyze, it must determine how to secure rights to the data and manage data access. The key is who actually owns the data. The manufacturer may own the product, but product usage data potentially belongs to the customer. (...) There is a range of options for establishing data rights for smart, connected products. Companies may pursue outright ownership of product data, or seek joint ownership. There are also various levels of usage rights, including NDAs (non-disclosure agreements, ed.'s note), the right to share the data, or the right to sell it. Firms must determine their approach to transparency in data collection and use. Rights to data can be laid out in an explicit agreement or buried in small print or hard-to-understand boilerplate documents. Although we are seeing the early stages of a movement toward more transparency in data gathering across industries, data disclosure and ownership standards often have yet to be established. Another option for handling data rights and access includes the establishment of a data-sharing framework with component suppliers for providing information about the component’s condition and performance but not about its location. Limiting suppliers’ access to data, however, could reduce potential benefits if the supplier lacks a full understanding of how products are being used, slowing innovation. Customers and users want a say in these choices. Some customers today are much more willing than others to share data on their product use.
But not every customer wants to share this data. Likewise, cautious drivers may be willing to share data on their driving habits with insurance or rental car companies as a way to lower premiums or fees, but others may resist. Firms will need to provide a clear value proposition to customers to encourage them to share usage or other data. As consumers become more aware of the value that data generates across the value chain, they will become more active and demanding participants in decisions about what data is collected, how it is used, and who benefits. Today it’s common to see “click through” agreements giving broad consent to collect product data the first time a smart, connected product is used. This consent allows companies to indiscriminately collect product data and use it with few constraints. In time we expect that more-stringent contractual frameworks and mechanisms governing those rights will emerge to define and protect intellectual property associated with smart, connected product data. It behooves companies to get ahead of this trend, especially on the product data they truly need to collect in order to drive value.

Are there explicit terms and conditions allowing the consumer to delete his data?

PageSentence
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A Digital Single Market Strategy for Europe"(C)ontracts often exclude, or severely limit, the contractual liability of the cloud provider if the data is no longer available or is unusable, or they make it difficult to terminate the contract. This means that the data is effectively not portable" (p. 14).
Digital Consumers and The Law. Towards a Cohesive European FrameworkLetters (b), (c) and (e) of art. 6 of the Data Protection Directive are called the “data minimization principle”: personal data must be adequate, relevant and not excessive in relation to the purposes for which they are collected, and they may be kept in a form that permits identification of the data subject for no longer than is necessary for the purposes for which the data were collected, and they may be collected only for specified, explicit and legitimate purposes and no further processed in a way incompatible with those purposes.
Privacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies.

Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).
Five Challenges For The Internet of Things EcosystemData Control: From the user perspective, this is one of the more significant barriers to large-scale adoption of the technology. Data control is commonly mistaken for data ownership. “It is no longer about who owns the data,” clarifies Kalmar. “It is about control and about deciding who gets access to my data”.
How Smart, Connected Products Are Transforming CompetitionWho owns the data? "As a company chooses which data to gather and analyze, it must determine how to secure rights to the data and manage data access. The key is who actually owns the data. The manufacturer may own the product, but product usage data potentially belongs to the customer. (...) There is a range of options for establishing data rights for smart, connected products. Companies may pursue outright ownership of product data, or seek joint ownership. There are also various levels of usage rights, including NDAs (non-disclosure agreements, ed.'s note), the right to share the data, or the right to sell it. Firms must determine their approach to transparency in data collection and use. Rights to data can be laid out in an explicit agreement or buried in small print or hard-to-understand boilerplate documents. Although we are seeing the early stages of a movement toward more transparency in data gathering across industries, data disclosure and ownership standards often have yet to be established. Another option for handling data rights and access includes the establishment of a data-sharing framework with component suppliers for providing information about the component’s condition and performance but not about its location. Limiting suppliers’ access to data, however, could reduce potential benefits if the supplier lacks a full understanding of how products are being used, slowing innovation. Customers and users want a say in these choices. Some customers today are much more willing than others to share data on their product use.
But not every customer wants to share this data. Likewise, cautious drivers may be willing to share data on their driving habits with insurance or rental car companies as a way to lower premiums or fees, but others may resist. Firms will need to provide a clear value proposition to customers to encourage them to share usage or other data. As consumers become more aware of the value that data generates across the value chain, they will become more active and demanding participants in decisions about what data is collected, how it is used, and who benefits. Today it’s common to see “click through” agreements giving broad consent to collect product data the first time a smart, connected product is used. This consent allows companies to indiscriminately collect product data and use it with few constraints. In time we expect that more-stringent contractual frameworks and mechanisms governing those rights will emerge to define and protect intellectual property associated with smart, connected product data. It behooves companies to get ahead of this trend, especially on the product data they truly need to collect in order to drive value.

Are there explicit terms and conditions allowing the consumer to export (with proprietary format) his data?

PageSentence
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A Digital Single Market Strategy for Europe"(C)ontracts often exclude, or severely limit, the contractual liability of the cloud provider if the data is no longer available or is unusable, or they make it difficult to terminate the contract. This means that the data is effectively not portable" (p. 14).
Digital Consumers and The Law. Towards a Cohesive European FrameworkPrivacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies.

Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).
How Smart, Connected Products Are Transforming CompetitionWho owns the data? "As a company chooses which data to gather and analyze, it must determine how to secure rights to the data and manage data access. The key is who actually owns the data. The manufacturer may own the product, but product usage data potentially belongs to the customer. (...) There is a range of options for establishing data rights for smart, connected products. Companies may pursue outright ownership of product data, or seek joint ownership. There are also various levels of usage rights, including NDAs (non-disclosure agreements, ed.'s note), the right to share the data, or the right to sell it. Firms must determine their approach to transparency in data collection and use. Rights to data can be laid out in an explicit agreement or buried in small print or hard-to-understand boilerplate documents. Although we are seeing the early stages of a movement toward more transparency in data gathering across industries, data disclosure and ownership standards often have yet to be established. Another option for handling data rights and access includes the establishment of a data-sharing framework with component suppliers for providing information about the component’s condition and performance but not about its location. Limiting suppliers’ access to data, however, could reduce potential benefits if the supplier lacks a full understanding of how products are being used, slowing innovation. Customers and users want a say in these choices. Some customers today are much more willing than others to share data on their product use.
But not every customer wants to share this data. Likewise, cautious drivers may be willing to share data on their driving habits with insurance or rental car companies as a way to lower premiums or fees, but others may resist. Firms will need to provide a clear value proposition to customers to encourage them to share usage or other data. As consumers become more aware of the value that data generates across the value chain, they will become more active and demanding participants in decisions about what data is collected, how it is used, and who benefits. Today it’s common to see “click through” agreements giving broad consent to collect product data the first time a smart, connected product is used. This consent allows companies to indiscriminately collect product data and use it with few constraints. In time we expect that more-stringent contractual frameworks and mechanisms governing those rights will emerge to define and protect intellectual property associated with smart, connected product data. It behooves companies to get ahead of this trend, especially on the product data they truly need to collect in order to drive value.

Are there explicit terms and conditions allowing the consumer to export (with open format) his data?

PageSentence
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A Digital Single Market Strategy for Europe"(C)ontracts often exclude, or severely limit, the contractual liability of the cloud provider if the data is no longer available or is unusable, or they make it difficult to terminate the contract. This means that the data is effectively not portable" (p. 14).
Digital Consumers and The Law. Towards a Cohesive European FrameworkPrivacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies.

Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).
How Smart, Connected Products Are Transforming CompetitionWho owns the data? "As a company chooses which data to gather and analyze, it must determine how to secure rights to the data and manage data access. The key is who actually owns the data. The manufacturer may own the product, but product usage data potentially belongs to the customer. (...) There is a range of options for establishing data rights for smart, connected products. Companies may pursue outright ownership of product data, or seek joint ownership. There are also various levels of usage rights, including NDAs (non-disclosure agreements, ed.'s note), the right to share the data, or the right to sell it. Firms must determine their approach to transparency in data collection and use. Rights to data can be laid out in an explicit agreement or buried in small print or hard-to-understand boilerplate documents. Although we are seeing the early stages of a movement toward more transparency in data gathering across industries, data disclosure and ownership standards often have yet to be established. Another option for handling data rights and access includes the establishment of a data-sharing framework with component suppliers for providing information about the component’s condition and performance but not about its location. Limiting suppliers’ access to data, however, could reduce potential benefits if the supplier lacks a full understanding of how products are being used, slowing innovation. Customers and users want a say in these choices. Some customers today are much more willing than others to share data on their product use.
But not every customer wants to share this data. Likewise, cautious drivers may be willing to share data on their driving habits with insurance or rental car companies as a way to lower premiums or fees, but others may resist. Firms will need to provide a clear value proposition to customers to encourage them to share usage or other data. As consumers become more aware of the value that data generates across the value chain, they will become more active and demanding participants in decisions about what data is collected, how it is used, and who benefits. Today it’s common to see “click through” agreements giving broad consent to collect product data the first time a smart, connected product is used. This consent allows companies to indiscriminately collect product data and use it with few constraints. In time we expect that more-stringent contractual frameworks and mechanisms governing those rights will emerge to define and protect intellectual property associated with smart, connected product data. It behooves companies to get ahead of this trend, especially on the product data they truly need to collect in order to drive value.
User Data Manifesto 2.0"Freedom to choose a platform. Users should always be able to extract their data from the service at any time without experiencing any vendor lock-in. Open standards for formats and protocols are necessary to guarantee this."

Does the provider reserve to himself the right to unilaterally modify terms and conditions?

PageSentence
Internet of Things. Applicazioni, sicurezza e riservatezza dei dati personali"La tendenza mostra che, anche senza un contatore intelligente, i dispositivi che ci stiamo portando in casa sono fin troppo “smart”. Vi ricordate il caso di LG dello scorso maggio? I possessori di una smart TV di LG si sono visti aggiornare il software, ma non per eliminare una vulnerabilità di sicurezza. L’interfaccia chiedeva all’utente di esprimere o declinare consenso, pena il non funzionamento dei servizi a valore aggiunto. Consenso per cosa? Vediamo: "Our Privacy Policy explains and seeks your agreement for how we collect, use, and share information that we obtain as a result of your use of LG Smart TV Services, as well as how we use cookies. You do not have to agree to the Privacy Policy but if you do not, not all Smart TV Services will be available to you. In that case, we will still receive certain non-identifying information from your Smart TV that we need to provide the basic functions that will be available". Aggiungo che il testo di cui sopra è stato trascritto manualmente leggendo dalla TV, perché non ne esiste una versione pubblicamente disponibile, nemmeno nel manuale cartaceo o sul sito di LG. Sì, è la stessa LG che pochi mesi prima era stata contestata perché ogni volta che si collegava un disco esterno o una chiavetta USB alla TV, l’elenco dei file ivi presenti veniva spedito ai server di LG. Tornando alla privacy policy, avete notato il passaggio in cui si dice che, indipendentemente dall’accettazione o meno delle condizioni, LG continuerà a raccogliere dati (non identificanti il possessore) per continuare a poter erogare le funzionalità essenziali?"'
LG Will Take The 'Smart' Out Of Your Smart TV If You Don't Agree To Share Your Viewing And Search Data With Third Parties"Because I will not agree to LG's Privacy Policy, I can now no longer access/use any of of the TV's network based programs: Iplayer, Skype, 3D etc. As of the 7th May following a software update to our less than two year old LG TV. I was confronted with a message asking me to read and agree with a couple of important new documents. So like a good little citizen I read and agreed with the first doc regarding use of said TV. but having read the Privacy Doc I was not best pleased with the companies assumption that I would simply agree to their sharing all our intimate viewing details (plus what ever else they can see)with all and sundry. Since I agreed not to hack into installed software (as if I Could)We cannot get around the block. I think the company must be in breach of contract since the smart functions are no longer available. Surely in the uk at least you should not be able to change the goal posts at will. Any one sorted this problem yet?? Before some smart alec says "Take It back". We bought the set because it satisfied our criteria at the time. We did not expect some legal bully to come along nearly two years later and tell us to share all our information with the world OR ELSE??"
N.B. "UK law does offer some additional protections in this regard. The Unfair Terms in Consumer Contracts Regulation of 1999 notes the following in its long list of specified "unfair terms": "enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided". LG presenting customers with the false choice of a) giving up control of their data or b) losing access to a great deal of the Smart TV features could be construed as "altering the characteristics of the product." A lot would depend on the investigating agency's definition of "valid reason." LG's Privacy Policy claims that most of what it collects is essential to provide these "smart" services. Indeed, many of them are. But there's also plenty in that wording that indicates LG is collecting additional information solely for the purpose of providing ads. Whether or not that's a legally "valid reason" is still up for discussion."
Unfair Contract Terms in European Law. A Study in Comparative and EC LawBecause of the difficulty to assess the unfair character of a term on the basis of the general definition of article 3, there is an Annex to the Directive 93/13/EEC, which contains an indicative and non-exhaustive list of unfair terms (p. 4: NEBBIA states that those clauses can be clustered in four categories: 1) terms giving a party the control of the terms of the contract or of the performance of the contract (i, j, k, l, m, p); 2) terms determining the duration of the contract (g, h); 3) terms restraining a party to have the same rights as the other (c, d, f, o); 4) exemption and limitation clauses (a, b, n, q)). Clauses J (terms that enable the provider to alter the contract unilaterally without a valid reason) and G (terms that enable the provider to terminate a contract of indeterminate duration without reasonable notice) may be particularly useful in the context of IoT products. However, pay attention to the fact that paragraph 2 letter (b) of the Annex states: “Subparagraph (j) is also without hindrance to terms under which a seller or supplier reserves the right to alter unilaterally the conditions of a contract of indeterminate duration, provided that he is required to inform the consumer with reasonable notice and that the consumer is free to dissolve the contract”.

Does the provider reserve to himself the right to unilaterally modify the software?

PageSentence
Internet of Things. Applicazioni, sicurezza e riservatezza dei dati personali"La tendenza mostra che, anche senza un contatore intelligente, i dispositivi che ci stiamo portando in casa sono fin troppo “smart”. Vi ricordate il caso di LG dello scorso maggio? I possessori di una smart TV di LG si sono visti aggiornare il software, ma non per eliminare una vulnerabilità di sicurezza. L’interfaccia chiedeva all’utente di esprimere o declinare consenso, pena il non funzionamento dei servizi a valore aggiunto. Consenso per cosa? Vediamo: "Our Privacy Policy explains and seeks your agreement for how we collect, use, and share information that we obtain as a result of your use of LG Smart TV Services, as well as how we use cookies. You do not have to agree to the Privacy Policy but if you do not, not all Smart TV Services will be available to you. In that case, we will still receive certain non-identifying information from your Smart TV that we need to provide the basic functions that will be available". Aggiungo che il testo di cui sopra è stato trascritto manualmente leggendo dalla TV, perché non ne esiste una versione pubblicamente disponibile, nemmeno nel manuale cartaceo o sul sito di LG. Sì, è la stessa LG che pochi mesi prima era stata contestata perché ogni volta che si collegava un disco esterno o una chiavetta USB alla TV, l’elenco dei file ivi presenti veniva spedito ai server di LG. Tornando alla privacy policy, avete notato il passaggio in cui si dice che, indipendentemente dall’accettazione o meno delle condizioni, LG continuerà a raccogliere dati (non identificanti il possessore) per continuare a poter erogare le funzionalità essenziali?"'
LG Will Take The 'Smart' Out Of Your Smart TV If You Don't Agree To Share Your Viewing And Search Data With Third Parties"Because I will not agree to LG's Privacy Policy, I can now no longer access/use any of of the TV's network based programs: Iplayer, Skype, 3D etc. As of the 7th May following a software update to our less than two year old LG TV. I was confronted with a message asking me to read and agree with a couple of important new documents. So like a good little citizen I read and agreed with the first doc regarding use of said TV. but having read the Privacy Doc I was not best pleased with the companies assumption that I would simply agree to their sharing all our intimate viewing details (plus what ever else they can see)with all and sundry. Since I agreed not to hack into installed software (as if I Could)We cannot get around the block. I think the company must be in breach of contract since the smart functions are no longer available. Surely in the uk at least you should not be able to change the goal posts at will. Any one sorted this problem yet?? Before some smart alec says "Take It back". We bought the set because it satisfied our criteria at the time. We did not expect some legal bully to come along nearly two years later and tell us to share all our information with the world OR ELSE??"
N.B. "UK law does offer some additional protections in this regard. The Unfair Terms in Consumer Contracts Regulation of 1999 notes the following in its long list of specified "unfair terms": "enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided". LG presenting customers with the false choice of a) giving up control of their data or b) losing access to a great deal of the Smart TV features could be construed as "altering the characteristics of the product." A lot would depend on the investigating agency's definition of "valid reason." LG's Privacy Policy claims that most of what it collects is essential to provide these "smart" services. Indeed, many of them are. But there's also plenty in that wording that indicates LG is collecting additional information solely for the purpose of providing ads. Whether or not that's a legally "valid reason" is still up for discussion."


Technical characteristics

Which is the duration of the provider role?

PageSentence
Internet of Things. Applicazioni, sicurezza e riservatezza dei dati personaliN.B. Today, device connectivity (also when these devices are "traditional objects" equipped with computational capacities) is a requirement, an essential feature, and not an extra.
LG Will Take The 'Smart' Out Of Your Smart TV If You Don't Agree To Share Your Viewing And Search Data With Third PartiesThe use of most of the smart features of the TV requires the creation of an LG SmartWorld Account: "For example, some of our services require that you become a member of LG SmartWorld, which may be subject to separate terms. You may join LG SmartWorld either through your LG Smart TV or by other means, such as through certain LG websites. This Membership Information may include your user ID, password, telephone number, name, date of birth, gender, email address, address, social networking service ID, security question answers, purchase history, and related payment information, such as credit card information or details of your PayPal account and more."
Payment Method Design: Psychological and Economic Aspects of PaymentsWe may try to apply this research to the current trend of the IoT market, in which - even if there is actually along-time relationship between the provider and the consumer - usually the payment is a lump-sum at the moment in which the consumer acquires the possession of the token that makes the service possible. Among the reasons for the business model chosen, there might be the consumer's pain of paying: paying for the token could be considered the equivalent of a subscription, in which you pay once and for all, and in which therefore consumer's pain of paying is reduced. Businesses should thus prefer this form of payment, because - given that consumers prefer it, rather than pay-per-use (and also, as an intermediary step, periodical fees) - they will more willing to conclude the contract and subsequently to use the product frequently and for a long time. And - considering the fact that often the business model of the firm is focused on the collection of data rather than on the commercialization of the hardware - this kind of approach may be susceptible to foster a greater data collection.

The problems are, however, that: 1) when physical objects are concerned, and consumers pay once and for all for them, they think to be able to use them permanently: even if the free paired service ceases to be provided after a period long enough to reward the sum paid for the hardware, consumers will claim against the supervened unusability of the product; 2) even if, unofficially, the sum is paid for the service, officially it is paid for the token: therefore, if the service ceases to be provided before a period of time sufficient to remunerate the lump-sum paid, nothing will be returned to the consumer, and usually the standard terms accompanying the product even state that the service could be discontinued at any time and for any reason.

Someone may complain about the fact that, in the adaptation of this study to the IoT world, I have approached the periodical fees to the pay-per-use, considering the fact that - in traditional services - the opposite of pay per use is subscription (i.e. periodical fees; think about the flat rates paid to network operators). But traditional services have from the start been considered as "services", where the alternative payment methods could be subscription and pay-per-use (even in the world of contracts for Internet provision, where we have a service + a token - which is the router -, the router has always been seen as a tool to access the service); on the contrary, when dealing with the IoT, the products concerned are traditional items - which have always been subject alternatively to sale or rental - that suddenly become smart and susceptible of providing services: therefore, in consumers' view, the payment method consisting in periodical fees is not the payment method that reduces the most the pain of paying, because there is a further method which causes lesser pain, i.e. a lump-sum paid once and for all.

Is the branded hardware necessary for product usability?

PageSentence
Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings48. ‘Tying’ usually refers to situations where customers that purchase one product (the tying product) are required also to purchase another product from the dominant undertaking (the tied product). Tying can take place on a technical or contractual basis.
49. Tying and bundling are common practices intended to provide customers with better products or offerings in more cost effective ways. However, an undertaking which is dominant in one product market (or more) of a tie or bundle (referred to as the tying market) can harm consumers through tying or bundling by foreclosing the market for the other products that are part of the tie or bundle (referred to as the tied market) and, indirectly, the tying market.
53. The risk of anti-competitive foreclosure is expected to be greater where the dominant undertaking makes its tying or bundling strategy a lasting one, for example through technical tying which is costly to reverse. Technical tying also reduces the opportunities for resale of individual components.
62. Provided that the conditions set out in Section III D are fulfilled, the Commission will look into claims by dominant undertakings that their tying and bundling practices may lead to savings in production or distribution that would benefit customers. The Commission may also consider whether such practices reduce transaction costs for custo- mers, who would otherwise be forced to buy the compo- nents separately, and enable substantial savings on packa- ging and distribution costs for suppliers. It may also examine whether combining two independent products into a new, single product might enhance the ability to bring such a product to the market to the benefit of consu- mers. The Commission may also consider whether tying and bundling practices allow the supplier to pass on effi- ciencies arising from its production or purchase of large quantities of the tied product.
Digital Consumers and The Law. Towards a Cohesive European FrameworkSo, about interoperability: if information isn't provided about lack of interoperability because of standard/format incompatibility or because of TPMs, it is a violation of information obligation according to CRD and a non-conformity of the product according to Consumer Sales Directive; if information is provided, and it is provided in a way that makes consumer's legitimate expectations of interoperability (we may question if an information provided in a way that can't make the consumer's legitimate expectations fall allows the applicability only of the Consumer Sales Directive or also of the CRD, seen that – in the latter – the burden of proof of the compliance with the information requirements belongs to the trader, but it is unclear if he has to prove only the formal satisfaction of the requirement or also the effectiveness of the information provided), these Directives can't help, but the UCP Directive and competition law perhaps can.
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.”
How Smart, Connected Products Are Transforming CompetitionOpen or closed system? In the IoT world, we often have "systems encompassing multiple products". If the firm chooses a closed system, this approach is normally aimed to have customers purchase the entire system from it (technical tying): "(k)ey interfaces are proprietary, and only chosen parties gain access". If, on the contrary, an open system is chosen, the end customer is enabled to assemble the parts of the solution (both the products involved and the platform that ties the system together) from different companies: "the interfaces are open and standardized, allowing outside players to create new applications". "Closed systems create competitive advantage by allowing a company to control and optimize the design of all parts of the system relative to one another. The company maintains control over technology and data as well as the direction of development of the product and the product cloud. Producers of system components are restricted from accessing a closed system or are required to license the right to integrate their products into it. A closed approach may result in one manufacturer’s system becoming the de facto industry standard, enabling this company to capture the maximum value. A closed approach requires significant investment and works best when a single manufacturer has a dominant position in the industry that can be leveraged to control the supply of all parts of the smart, connected product system". "A fully open system enables any entity to participate in and interface with the system. The open approach enables a faster rate of applications development and system innovation as multiple entities contribute. It can also result in a de facto industry standard, but one from which no company gains a proprietary benefit" (Philips Hue light bulb is an example). When we have systems of systems, it is difficult to maintain a complete closed system, because often one firm doesn't have the capability of managing the entire system of systems: therefore, her we have firms (for example Whirpool) that try to maintain control on its product features, but enable those products to connect with other systems: hybrid approach.

Is the branded software necessary for product usability?

PageSentence
Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings48. ‘Tying’ usually refers to situations where customers that purchase one product (the tying product) are required also to purchase another product from the dominant undertaking (the tied product). Tying can take place on a technical or contractual basis.
49. Tying and bundling are common practices intended to provide customers with better products or offerings in more cost effective ways. However, an undertaking which is dominant in one product market (or more) of a tie or bundle (referred to as the tying market) can harm consumers through tying or bundling by foreclosing the market for the other products that are part of the tie or bundle (referred to as the tied market) and, indirectly, the tying market.
53. The risk of anti-competitive foreclosure is expected to be greater where the dominant undertaking makes its tying or bundling strategy a lasting one, for example through technical tying which is costly to reverse. Technical tying also reduces the opportunities for resale of individual components.
62. Provided that the conditions set out in Section III D are fulfilled, the Commission will look into claims by dominant undertakings that their tying and bundling practices may lead to savings in production or distribution that would benefit customers. The Commission may also consider whether such practices reduce transaction costs for custo- mers, who would otherwise be forced to buy the compo- nents separately, and enable substantial savings on packa- ging and distribution costs for suppliers. It may also examine whether combining two independent products into a new, single product might enhance the ability to bring such a product to the market to the benefit of consu- mers. The Commission may also consider whether tying and bundling practices allow the supplier to pass on effi- ciencies arising from its production or purchase of large quantities of the tied product.
Digital Consumers and The Law. Towards a Cohesive European FrameworkSo, about interoperability: if information isn't provided about lack of interoperability because of standard/format incompatibility or because of TPMs, it is a violation of information obligation according to CRD and a non-conformity of the product according to Consumer Sales Directive; if information is provided, and it is provided in a way that makes consumer's legitimate expectations of interoperability (we may question if an information provided in a way that can't make the consumer's legitimate expectations fall allows the applicability only of the Consumer Sales Directive or also of the CRD, seen that – in the latter – the burden of proof of the compliance with the information requirements belongs to the trader, but it is unclear if he has to prove only the formal satisfaction of the requirement or also the effectiveness of the information provided), these Directives can't help, but the UCP Directive and competition law perhaps can.
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.”
How Smart, Connected Products Are Transforming CompetitionOpen or closed system? In the IoT world, we often have "systems encompassing multiple products". If the firm chooses a closed system, this approach is normally aimed to have customers purchase the entire system from it (technical tying): "(k)ey interfaces are proprietary, and only chosen parties gain access". If, on the contrary, an open system is chosen, the end customer is enabled to assemble the parts of the solution (both the products involved and the platform that ties the system together) from different companies: "the interfaces are open and standardized, allowing outside players to create new applications". "Closed systems create competitive advantage by allowing a company to control and optimize the design of all parts of the system relative to one another. The company maintains control over technology and data as well as the direction of development of the product and the product cloud. Producers of system components are restricted from accessing a closed system or are required to license the right to integrate their products into it. A closed approach may result in one manufacturer’s system becoming the de facto industry standard, enabling this company to capture the maximum value. A closed approach requires significant investment and works best when a single manufacturer has a dominant position in the industry that can be leveraged to control the supply of all parts of the smart, connected product system". "A fully open system enables any entity to participate in and interface with the system. The open approach enables a faster rate of applications development and system innovation as multiple entities contribute. It can also result in a de facto industry standard, but one from which no company gains a proprietary benefit" (Philips Hue light bulb is an example). When we have systems of systems, it is difficult to maintain a complete closed system, because often one firm doesn't have the capability of managing the entire system of systems: therefore, her we have firms (for example Whirpool) that try to maintain control on its product features, but enable those products to connect with other systems: hybrid approach.

Is the branded "service" necessary for product usability?

PageSentence
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A Digital Single Market Strategy for Europe"The Digital Single Market must be built on reliable, trustworthy, high-speed, affordable networks and services that safeguard consumers' fundamental rights to privacy and personal data protection while also encouraging innovation. This requires a strong, competitive and dynamic telecoms sector to carry out the necessary investments, to exploit innovations such as Cloud computing, Big Data tools or the Internet of Things. The market power of some online platforms potentially raises concerns, particularly in relation to the most powerful platforms whose importance for other market participants is becoming increasingly critical" (p. 9).
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Communication on future networks and the internetPage 7: "EC competition rules (Articles 81 and 82 EC) will play a crucial role in preventing and removing anti-competitive conduct. These provisions allow tackling both abusive conduct of dominant network operators as well as co-ordinated conduct aimed at excluding other services or alternative operators from the market".
Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings48. ‘Tying’ usually refers to situations where customers that purchase one product (the tying product) are required also to purchase another product from the dominant undertaking (the tied product). Tying can take place on a technical or contractual basis.
49. Tying and bundling are common practices intended to provide customers with better products or offerings in more cost effective ways. However, an undertaking which is dominant in one product market (or more) of a tie or bundle (referred to as the tying market) can harm consumers through tying or bundling by foreclosing the market for the other products that are part of the tie or bundle (referred to as the tied market) and, indirectly, the tying market.
53. The risk of anti-competitive foreclosure is expected to be greater where the dominant undertaking makes its tying or bundling strategy a lasting one, for example through technical tying which is costly to reverse. Technical tying also reduces the opportunities for resale of individual components.
62. Provided that the conditions set out in Section III D are fulfilled, the Commission will look into claims by dominant undertakings that their tying and bundling practices may lead to savings in production or distribution that would benefit customers. The Commission may also consider whether such practices reduce transaction costs for custo- mers, who would otherwise be forced to buy the compo- nents separately, and enable substantial savings on packa- ging and distribution costs for suppliers. It may also examine whether combining two independent products into a new, single product might enhance the ability to bring such a product to the market to the benefit of consu- mers. The Commission may also consider whether tying and bundling practices allow the supplier to pass on effi- ciencies arising from its production or purchase of large quantities of the tied product.
DRM in Cars Will Drive Consumers Crazy"The problem extends beyond inconvenience. In plenty of cases, DRM has led to users losing altogether the ability to watch, listen to, read, or play media that can't be "authenticated." Video games with online components now routinely reach an end-of-life period where the company providing the authentication decides it's no longer worth it to operate the servers. That raises the frightening possibility of a company like Renault deciding that it's not cost-effective anymore to verify new batteries—and leaving car owners high and dry."
Digital Consumers and The Law. Towards a Cohesive European FrameworkSo, about interoperability: if information isn't provided about lack of interoperability because of standard/format incompatibility or because of TPMs, it is a violation of information obligation according to CRD and a non-conformity of the product according to Consumer Sales Directive; if information is provided, and it is provided in a way that makes consumer's legitimate expectations of interoperability (we may question if an information provided in a way that can't make the consumer's legitimate expectations fall allows the applicability only of the Consumer Sales Directive or also of the CRD, seen that – in the latter – the burden of proof of the compliance with the information requirements belongs to the trader, but it is unclear if he has to prove only the formal satisfaction of the requirement or also the effectiveness of the information provided), these Directives can't help, but the UCP Directive and competition law perhaps can.
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.”
European Parliament resolution on the Internet of ThingsThe Parliament "(b)elieves that consumers should be given the opportunity to opt-in or opt-out of the Internet of Things, including the ability to opt-out of individual IoT technologies without disabling other applications or a device as a whole".
Five Challenges For The Internet of Things Ecosystem"Data Sharing: In the Internet of Things paradigm, data is gold. However, data provisioning builds off a social contract between large corporations and customers. Corporations provide a free or nominally-priced service in exchange for a consumer’s personal data. This data is either sold to advertisers or used to develop further products or services useful to consumers. Third-party applications, which build off the core service, poach customers (and related customer data) from such applications. For established networks and large corporations, this can be detrimental practice because such applications eventually poach their customers. In such a scenario, large corporations need to balance their approach to open source with commercial considerations."
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 CompetitionLocal or remote smartness? "Once a company has decided which capabilities to offer, it must decide whether the enabling technology for each feature should be embedded in the product (raising the cost of every product), delivered through the product cloud, or both. In addition to cost, a number of factors should be taken into consideration": response time (if there is need for a quick response time, it is better for the software to be embedded in the product: in this way, we should also avoid that lack of connectivity slows down response); automation (fully automated products usually require that greater functionality be embedded capabilities); network availability, reliability, and security (embedding software minimizes dependence on network availability; moreover, if data doesn’t have to move from device to cloud or vice-versa, there are less threats to data security); location of product use (when the products are locate din dangerous locations, remote storing of data could be a good idea); nature of user interface (if it is complex and changed frequently, it is better to locate it on the cloud); frequency of service or product upgrades (when we have cloud-based interfaces and applications, upgrades and changes can be made easily and automatically).
Open or closed system? In the IoT world, we often have "systems encompassing multiple products". If the firm chooses a closed system, this approach is normally aimed to have customers purchase the entire system from it (technical tying): "(k)ey interfaces are proprietary, and only chosen parties gain access". If, on the contrary, an open system is chosen, the end customer is enabled to assemble the parts of the solution (both the products involved and the platform that ties the system together) from different companies: "the interfaces are open and standardized, allowing outside players to create new applications". "Closed systems create competitive advantage by allowing a company to control and optimize the design of all parts of the system relative to one another. The company maintains control over technology and data as well as the direction of development of the product and the product cloud. Producers of system components are restricted from accessing a closed system or are required to license the right to integrate their products into it. A closed approach may result in one manufacturer’s system becoming the de facto industry standard, enabling this company to capture the maximum value. A closed approach requires significant investment and works best when a single manufacturer has a dominant position in the industry that can be leveraged to control the supply of all parts of the smart, connected product system". "A fully open system enables any entity to participate in and interface with the system. The open approach enables a faster rate of applications development and system innovation as multiple entities contribute. It can also result in a de facto industry standard, but one from which no company gains a proprietary benefit" (Philips Hue light bulb is an example). When we have systems of systems, it is difficult to maintain a complete closed system, because often one firm doesn't have the capability of managing the entire system of systems: therefore, her we have firms (for example Whirpool) that try to maintain control on its product features, but enable those products to connect with other systems: hybrid approach.
I Contratti di Internet. Sottoscrizione, Nuovi Contratti, Tutela del Consumatore, Privacy e Mezzi di Pagamentothe contract often states that the provider isn't able to guarantee an uninterrupted service, which is an unfair clause.
LG Will Take The 'Smart' Out Of Your Smart TV If You Don't Agree To Share Your Viewing And Search Data With Third PartiesThe use of most of the smart features of the TV requires the creation of an LG SmartWorld Account: "For example, some of our services require that you become a member of LG SmartWorld, which may be subject to separate terms. You may join LG SmartWorld either through your LG Smart TV or by other means, such as through certain LG websites. This Membership Information may include your user ID, password, telephone number, name, date of birth, gender, email address, address, social networking service ID, security question answers, purchase history, and related payment information, such as credit card information or details of your PayPal account and more."
Payment Method Design: Psychological and Economic Aspects of PaymentsWe may try to apply this research to the current trend of the IoT market, in which - even if there is actually along-time relationship between the provider and the consumer - usually the payment is a lump-sum at the moment in which the consumer acquires the possession of the token that makes the service possible. Among the reasons for the business model chosen, there might be the consumer's pain of paying: paying for the token could be considered the equivalent of a subscription, in which you pay once and for all, and in which therefore consumer's pain of paying is reduced. Businesses should thus prefer this form of payment, because - given that consumers prefer it, rather than pay-per-use (and also, as an intermediary step, periodical fees) - they will more willing to conclude the contract and subsequently to use the product frequently and for a long time. And - considering the fact that often the business model of the firm is focused on the collection of data rather than on the commercialization of the hardware - this kind of approach may be susceptible to foster a greater data collection.

The problems are, however, that: 1) when physical objects are concerned, and consumers pay once and for all for them, they think to be able to use them permanently: even if the free paired service ceases to be provided after a period long enough to reward the sum paid for the hardware, consumers will claim against the supervened unusability of the product; 2) even if, unofficially, the sum is paid for the service, officially it is paid for the token: therefore, if the service ceases to be provided before a period of time sufficient to remunerate the lump-sum paid, nothing will be returned to the consumer, and usually the standard terms accompanying the product even state that the service could be discontinued at any time and for any reason.

Someone may complain about the fact that, in the adaptation of this study to the IoT world, I have approached the periodical fees to the pay-per-use, considering the fact that - in traditional services - the opposite of pay per use is subscription (i.e. periodical fees; think about the flat rates paid to network operators). But traditional services have from the start been considered as "services", where the alternative payment methods could be subscription and pay-per-use (even in the world of contracts for Internet provision, where we have a service + a token - which is the router -, the router has always been seen as a tool to access the service); on the contrary, when dealing with the IoT, the products concerned are traditional items - which have always been subject alternatively to sale or rental - that suddenly become smart and susceptible of providing services: therefore, in consumers' view, the payment method consisting in periodical fees is not the payment method that reduces the most the pain of paying, because there is a further method which causes lesser pain, i.e. a lump-sum paid once and for all.

Do the device's administration rights belong to the product provider?

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Digital Consumers and The Law. Towards a Cohesive European FrameworkDIRECTIVE 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.”
I Contratti di Internet. Sottoscrizione, Nuovi Contratti, Tutela del Consumatore, Privacy e Mezzi di Pagamentothe provider often assigns to himself the right to suspend the supply of the service in case of mere fumus of the existence of presumed violations of the contractual clauses he has imposed (clauses that are often vague and ambiguous).
LCE: All watched over by machines of loving grace"At the same time as the number of computers in our lives has increased, the cost of communication has plummeted, and the range of knowledge to which we have access has vastly increased. (...) Karsten noted that these huge changes in the cost of communication and accessibility of information are based on two powerful tools: general-purpose computers that will do anything we teach them to do, and general-purpose networks that will transmit whatever we want. (...) However, the technological advances described above are under threat from those who see profit in turning our general-purpose computers into limited appliances, or into devices that are controlled by someone other than the owner."
"Restrictions on functionality are often added when marketing gets involved in the product-design cycle. At this point, product features that get in the way of business goals are eliminated. Here, Karsten mentioned a couple of examples. All digital cameras produce raw image output. However, after converting that format to JPEG, low-end cameras then discard the raw data. Photographers who want the option of keeping the raw data must instead purchase a more expensive "professional" camera that doesn't discard the raw data. In the telecoms world, mobile phone operators often try to block VOIP over their data services, in an effort to force their customers to make and to pay for calls over the operator's own service." However, at least for what concerns the example of the digital cameras, we must question if a trade-off can be found in this limitation: cameras have limited features, but in exchange manufacturers to keep lower prices, and therefore there is a greater accessibility to digital cameras for those consumers that don't want or can spend more money. This argument could be brought also with reference to other products.
Renault Introduces DRM For Cars"If there is a mechanism to remotely control what your car does, some will make use of this mechanism at some point."
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."

Which possibilities does the consumer have to dispose of his data?

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Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A Digital Single Market Strategy for Europe"The lack of open and interoperable systems and services and of data portability between services represents another barrier for the cross-border flow of data and the development of new services (...)" (p. 14).
Digital Consumers and The Law. Towards a Cohesive European FrameworkIt is doubtful that abstract considerations could be taken into account when determining product conformity. One exception could be mandatory rules established by – for example – data protection or copyright law: if we have mandatory rules, and the product doesn't respect them (e.g. it processes personal data without prior consent of the consumer, or it doesn't allow to make a back-up copy if the product is a software), this constitutes a lack of conformity. But we have also to remember that, even if there are non-mandatory rules or no rules at all, we can anyway have a lack of conformity when consumer's legitimate expectations are not satisfied.
Statements given by the product provider are of great importance in determining the legitimate expectations of consumers. And this is partly a problem, because in this way the conformity test may be manipulated by the product provider: his statements become a “self-fulfilling prophecy” (HELBERGER p. 89). It is true that the existing legislative framework may be a partial correction, and the ordinary features of similar products also, but we have to remember – for what concerns these ordinary features – that “given the fact that there is no standard (yet) to indicate what constitutes “normal use” or “ordinary use of the digital content, this criterion is often of little use” (HELBERGER p. 89).
Privacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies. Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).
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.”
How Smart, Connected Products Are Transforming CompetitionWhat data must be collected? To answer this question, we must find an answer to a series of other questions: "How does each type of data create tangible value for functionality? For efficiency in the value chain? Will the data help the company understand and improve how the broader product system is performing over time? How often does the data need to be collected to optimize its usefulness, and how long should it be retained?".
Who owns the data? "As a company chooses which data to gather and analyze, it must determine how to secure rights to the data and manage data access. The key is who actually owns the data. The manufacturer may own the product, but product usage data potentially belongs to the customer. (...) There is a range of options for establishing data rights for smart, connected products. Companies may pursue outright ownership of product data, or seek joint ownership. There are also various levels of usage rights, including NDAs (non-disclosure agreements, ed.'s note), the right to share the data, or the right to sell it. Firms must determine their approach to transparency in data collection and use. Rights to data can be laid out in an explicit agreement or buried in small print or hard-to-understand boilerplate documents. Although we are seeing the early stages of a movement toward more transparency in data gathering across industries, data disclosure and ownership standards often have yet to be established. Another option for handling data rights and access includes the establishment of a data-sharing framework with component suppliers for providing information about the component’s condition and performance but not about its location. Limiting suppliers’ access to data, however, could reduce potential benefits if the supplier lacks a full understanding of how products are being used, slowing innovation. Customers and users want a say in these choices. Some customers today are much more willing than others to share data on their product use.
But not every customer wants to share this data. Likewise, cautious drivers may be willing to share data on their driving habits with insurance or rental car companies as a way to lower premiums or fees, but others may resist. Firms will need to provide a clear value proposition to customers to encourage them to share usage or other data. As consumers become more aware of the value that data generates across the value chain, they will become more active and demanding participants in decisions about what data is collected, how it is used, and who benefits. Today it’s common to see “click through” agreements giving broad consent to collect product data the first time a smart, connected product is used. This consent allows companies to indiscriminately collect product data and use it with few constraints. In time we expect that more-stringent contractual frameworks and mechanisms governing those rights will emerge to define and protect intellectual property associated with smart, connected product data. It behooves companies to get ahead of this trend, especially on the product data they truly need to collect in order to drive value.
Internet of Things. Applicazioni, sicurezza e riservatezza dei dati personali"Of course, there is always the “dumb” option. Users may have the ability to disable data collection, but it comes at a cost. The device will not function properly or allow the use of its high-tech features. This leaves consumers with an unacceptable choice between keeping up with technology and retaining their personal privacy."
IoT Design Manifesto 1.0. Guidelines for Responsible Design in a Connected WorldWe empower users to be the masters of their own domain. Users often do not have control over their role within the network of stakeholders surrounding an IoT product. We believe that users should be empowered to set the boundaries of how their data is accessed and how they are engaged with via the product.
LCE: All watched over by machines of loving grace"Restrictions on functionality are often added when marketing gets involved in the product-design cycle. At this point, product features that get in the way of business goals are eliminated. Here, Karsten mentioned a couple of examples. All digital cameras produce raw image output. However, after converting that format to JPEG, low-end cameras then discard the raw data. Photographers who want the option of keeping the raw data must instead purchase a more expensive "professional" camera that doesn't discard the raw data. In the telecoms world, mobile phone operators often try to block VOIP over their data services, in an effort to force their customers to make and to pay for calls over the operator's own service." However, at least for what concerns the example of the digital cameras, we must question if a trade-off can be found in this limitation: cameras have limited features, but in exchange manufacturers to keep lower prices, and therefore there is a greater accessibility to digital cameras for those consumers that don't want or can spend more money. This argument could be brought also with reference to other products.
Opinion 8/2014 on the Recent Developments on the Internet of Things"In practice, users in the IoT tend to be locked to specific systems. Devices usually first send data to the device manufacturer, which then makes this data accessible to the user through a web portal or an app. This design allows manufacturers to provide online services that leverage the device capabilities, but it may also prevent users from freely choosing the service that interacts with their device. Additionally, today, end-users are rarely in a position to have access to the raw data that are registered by IoT devices. Clearly, they hold a more immediate interest in the interpreted data than in the raw data that may not make sense to them. Yet, access to such data can prove useful for the end-users to understand what the device manufacturer can infer from it about them. Also, availing of this raw data would give them a capacity to transfer their data to another data controller and switch services - for instance, if the original data controller changes its privacy policy in a way that does not satisfy them. Today, in practice, these persons have in practice no other possibility than to stop using their devices as most data controllers do not provide such functionality and provide access only to a degraded version of the stored raw data."
User Data Manifesto 2.0"Freedom to choose a platform. Users should always be able to extract their data from the service at any time without experiencing any vendor lock-in. Open standards for formats and protocols are necessary to guarantee this."


Usability

Can the consumer enjoy the product for an unlimited period?

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DIRECTIVE 1999/44/EC on certain aspects of the sale of consumer goods and associated guaranteesArt. 1(2)(b): “consumer goods: shall mean any tangible movable item”. The question is therefore if the Directive can apply also to digital content supplied through the Net, and not on a tangible medium like CDs, DVDs etc.
I Contratti di Internet. Sottoscrizione, Nuovi Contratti, Tutela del Consumatore, Privacy e Mezzi di Pagamentothe contract often states that the provider isn't able to guarantee an uninterrupted service, which is an unfair clause.
Internet of Things. Applicazioni, sicurezza e riservatezza dei dati personaliN.B. Today, device connectivity (also when these devices are "traditional objects" equipped with computational capacities) is a requirement, an essential feature, and not an extra.
"Of course, there is always the “dumb” option. Users may have the ability to disable data collection, but it comes at a cost. The device will not function properly or allow the use of its high-tech features. This leaves consumers with an unacceptable choice between keeping up with technology and retaining their personal privacy."
IoT Design Manifesto 1.0. Guidelines for Responsible Design in a Connected WorldWe design things for their lifetime. Currently physical products and digital services tend to be built to have different lifespans. In an IoT product features are codependent, so lifespans need to be aligned. We design products and their services to be bound as a single, durable entity.
LG Will Take The 'Smart' Out Of Your Smart TV If You Don't Agree To Share Your Viewing And Search Data With Third PartiesThe use of most of the smart features of the TV requires the creation of an LG SmartWorld Account: "For example, some of our services require that you become a member of LG SmartWorld, which may be subject to separate terms. You may join LG SmartWorld either through your LG Smart TV or by other means, such as through certain LG websites. This Membership Information may include your user ID, password, telephone number, name, date of birth, gender, email address, address, social networking service ID, security question answers, purchase history, and related payment information, such as credit card information or details of your PayPal account and more."
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“lawful acquirer” did in fact mean a purchaser, licensee, renter or a person authorised to use the program on behalf of one of the above
In the view of the Commission, what was intended by Article 5 (1) and recital 18 was that it should not be possible to prevent by contract a “lawful acquirer” of a program doing any of the restricted acts that were required for the use of the program in accordance with its intended purpose or for correcting errors. It is, however, possible for a contract to include specific provisions that “control” the restricted acts which may be carried out by the user of the computer program.”
Unfair Contract Terms in European Law. A Study in Comparative and EC LawBecause of the difficulty to assess the unfair character of a term on the basis of the general definition of article 3, there is an Annex to the Directive 93/13/EEC, which contains an indicative and non-exhaustive list of unfair terms (p. 4: NEBBIA states that those clauses can be clustered in four categories: 1) terms giving a party the control of the terms of the contract or of the performance of the contract (i, j, k, l, m, p); 2) terms determining the duration of the contract (g, h); 3) terms restraining a party to have the same rights as the other (c, d, f, o); 4) exemption and limitation clauses (a, b, n, q)). Clauses J (terms that enable the provider to alter the contract unilaterally without a valid reason) and G (terms that enable the provider to terminate a contract of indeterminate duration without reasonable notice) may be particularly useful in the context of IoT products. However, pay attention to the fact that paragraph 2 letter (b) of the Annex states: “Subparagraph (j) is also without hindrance to terms under which a seller or supplier reserves the right to alter unilaterally the conditions of a contract of indeterminate duration, provided that he is required to inform the consumer with reasonable notice and that the consumer is free to dissolve the contract”.

Can the consumer sell the device?

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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."
"It’s tempting to think of the Glass resale restriction as simply another unwelcome consequence of the many legalese-laden agreements that we all encounter when using almost any online service. But most of those agreements involve restrictions on data, not the devices on which they reside. You can’t resell files containing songs downloaded from Amazon, map data from Google, or restaurant recommendations from Zagat. Our purchased devices, by contrast, have generally been ours to keep, sell, loan, or donate as we see fit. That flexibility is lost when a purchase comes with restrictions like those in the Glass terms of sale."

Can the consumer transfer the account?

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Digital Consumers and The Law. Towards a Cohesive European FrameworkWe have non-conformity (it may depend both on technical problems and DRM) if the consumer was entitled to continuous access but there are access problems, or if the digital content is not provided within the time necessary to perform its function.
When – because of TPMs or incompatibility of formats and standards – the consumer can't access digital content or transfer it to another device and make use of it according to its ordinary or specifically agreed purpose, it constitutes a lack of conformity, unless, before the conclusion of the contract, the consumer wasn't “properly informed of such restrictions, and such restrictions cannot be said to constitute an unfair contract term, an unfair commercial practice, or an unlawful restriction of fundamental rights such as the right to information or the right to privacy” (HELBERGER p. 94); therefore, we also have to examine the Consumer Information Directive about the information requirements, the Directive on Unfair Terms in Consumer Contracts about unfair contract terms, the UCP Directive about unfair commercial practices, the Data Protection Directive about privacy, etc.; in Germany, when digital content is protected by TPMs, it must be labeled as such, and, when it isn't, it is a case of non-conformity.
Privacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies.

Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).
LG Will Take The 'Smart' Out Of Your Smart TV If You Don't Agree To Share Your Viewing And Search Data With Third Parties"Because I will not agree to LG's Privacy Policy, I can now no longer access/use any of of the TV's network based programs: Iplayer, Skype, 3D etc. As of the 7th May following a software update to our less than two year old LG TV. I was confronted with a message asking me to read and agree with a couple of important new documents. So like a good little citizen I read and agreed with the first doc regarding use of said TV. but having read the Privacy Doc I was not best pleased with the companies assumption that I would simply agree to their sharing all our intimate viewing details (plus what ever else they can see)with all and sundry. Since I agreed not to hack into installed software (as if I Could)We cannot get around the block. I think the company must be in breach of contract since the smart functions are no longer available. Surely in the uk at least you should not be able to change the goal posts at will. Any one sorted this problem yet?? Before some smart alec says "Take It back". We bought the set because it satisfied our criteria at the time. We did not expect some legal bully to come along nearly two years later and tell us to share all our information with the world OR ELSE??"
The Epic Struggle of the Internet of ThingsBruce STERLING, in “The Epic Struggle of the Internet of Things”, says that IoT is not about Things on the Internet, and that individuals are no more “consumers” or “users” when IoT (as well as when Facebook, for example) is involved: IoT products providers would indeed be pleased to sell them at cost, because their aim is not to provide people with IoT products, but to implement digital surveillance.

Can the consumer delete his data?

PageSentence
Digital Consumers and The Law. Towards a Cohesive European FrameworkLetters (b), (c) and (e) of art. 6 of the Data Protection Directive are called the “data minimization principle”: personal data must be adequate, relevant and not excessive in relation to the purposes for which they are collected, and they may be kept in a form that permits identification of the data subject for no longer than is necessary for the purposes for which the data were collected, and they may be collected only for specified, explicit and legitimate purposes and no further processed in a way incompatible with those purposes.
Privacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies.

Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).

Can the consumer delete his account?

PageSentence
Digital Consumers and The Law. Towards a Cohesive European FrameworkLetters (b), (c) and (e) of art. 6 of the Data Protection Directive are called the “data minimization principle”: personal data must be adequate, relevant and not excessive in relation to the purposes for which they are collected, and they may be kept in a form that permits identification of the data subject for no longer than is necessary for the purposes for which the data were collected, and they may be collected only for specified, explicit and legitimate purposes and no further processed in a way incompatible with those purposes.
Privacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies.

Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).

Can the consumer use his data?

PageSentence
Digital Consumers and The Law. Towards a Cohesive European FrameworkPrivacy as currency (HELBERGER p. 162). The processing of personal data is today not only a method to facilitate the core business model, but it is becoming the core of the business model.

This collection may be done explicitly through registration forms, tacitly through sharing personal information on social network, or secretly via cookies.

Cookie: it is placed on an Internet user's computer and enables that computer to be recognized during subsequent visits; they may be functional when cookies when used for a service explicitly requested by an Internet user; they are tracking cookies when used to minutely register the Internet behavior of Internet users (HELBERGER, p. 160).

Can the consumer use the HW and SW in combination with third party SRV?

Can the consumer use the HW and SRV in combination with third party SW?

Can the consumer use the SW and SRV in combination with third party HW?

Can the consumer use the HW in combination with third party SW and SRV?

PageSentence
Digital Consumers and The Law. Towards a Cohesive European FrameworkCJEU, case 362/88, GB-INNO v. Confédération du Commerce Luxembourgoise, § 18: “under Community law concerning consumer protection the provision of information to the consumers is considered to be one of the principal requirements”.


Consumer information is particularly relevant when dealing with digital content, because its usability depends for the most part on licensing conditions (when digital content is protected by copyright) and technology.

Indeed, in an analog context, there are standardized and well-known benchmarks (which depend on the intrinsic characteristics of analog goods – accessibility to the embedded corpus mysticum – if present – is possible without reproduction; there is no need for complementary devices of a particular brand to use the good; uses that are susceptible to harm the provider of the good are not easy to put in place) that establish what can be done with the good. On the contrary, when we have digital goods, on one hand it is potentially possible to put in place all kind of (harmful) activities simply using an initial single copy of a work, but on the other hand the simplest activities may be prevented through technology: i.e. there are no intrinsic features when dealing with digital content.

It is therefore important for consumers to be informed about the interoperability (need for particular hardware or software requirements; technical tying to goods or services of a particular brand) and the functionality of the product (DRM, TPMs, region code, tracking of consumers' behavior).
So, about interoperability: if information isn't provided about lack of interoperability because of standard/format incompatibility or because of TPMs, it is a violation of information obligation according to CRD and a non-conformity of the product according to Consumer Sales Directive; if information is provided, and it is provided in a way that makes consumer's legitimate expectations of interoperability (we may question if an information provided in a way that can't make the consumer's legitimate expectations fall allows the applicability only of the Consumer Sales Directive or also of the CRD, seen that – in the latter – the burden of proof of the compliance with the information requirements belongs to the trader, but it is unclear if he has to prove only the formal satisfaction of the requirement or also the effectiveness of the information provided), these Directives can't help, but the UCP Directive and competition law perhaps can.
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.”

Can the consumer use the SW in combination with third party HW and SRV?

PageSentence
DIRECTIVE 1999/44/EC on certain aspects of the sale of consumer goods and associated guaranteesArt. 1(2)(b): “consumer goods: shall mean any tangible movable item”. The question is therefore if the Directive can apply also to digital content supplied through the Net, and not on a tangible medium like CDs, DVDs etc.
Digital Consumers and The Law. Towards a Cohesive European FrameworkCJEU, case 362/88, GB-INNO v. Confédération du Commerce Luxembourgoise, § 18: “under Community law concerning consumer protection the provision of information to the consumers is considered to be one of the principal requirements”.


Consumer information is particularly relevant when dealing with digital content, because its usability depends for the most part on licensing conditions (when digital content is protected by copyright) and technology.

Indeed, in an analog context, there are standardized and well-known benchmarks (which depend on the intrinsic characteristics of analog goods – accessibility to the embedded corpus mysticum – if present – is possible without reproduction; there is no need for complementary devices of a particular brand to use the good; uses that are susceptible to harm the provider of the good are not easy to put in place) that establish what can be done with the good. On the contrary, when we have digital goods, on one hand it is potentially possible to put in place all kind of (harmful) activities simply using an initial single copy of a work, but on the other hand the simplest activities may be prevented through technology: i.e. there are no intrinsic features when dealing with digital content.

It is therefore important for consumers to be informed about the interoperability (need for particular hardware or software requirements; technical tying to goods or services of a particular brand) and the functionality of the product (DRM, TPMs, region code, tracking of consumers' behavior).
So, about interoperability: if information isn't provided about lack of interoperability because of standard/format incompatibility or because of TPMs, it is a violation of information obligation according to CRD and a non-conformity of the product according to Consumer Sales Directive; if information is provided, and it is provided in a way that makes consumer's legitimate expectations of interoperability (we may question if an information provided in a way that can't make the consumer's legitimate expectations fall allows the applicability only of the Consumer Sales Directive or also of the CRD, seen that – in the latter – the burden of proof of the compliance with the information requirements belongs to the trader, but it is unclear if he has to prove only the formal satisfaction of the requirement or also the effectiveness of the information provided), these Directives can't help, but the UCP Directive and competition law perhaps can.
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.”
Shrink-Wrap Licences in Europe After the EC Software DirectiveTherefore, the rightholder can establish – through contractual conditions and technical measures (and perhaps also advertising, even if SMITH doesn't mentioned it) – the intended purpose of the software sold (even if contractual conditions must be notified to the buyer before the conclusion of the sale; and we can probably say that technical measures that limit the purpose have also to be made clear before the conclusion of the contract: indeed, not informing the consumer about interoperability issues violates the Consumer Rights Directive, and probably also the Directive on Consumer Sales because – as HELBERGER has said – if you don't inform about a lack of interoperability, the product you sell doesn't satisfy the conformity test introduced by this Directive); but, once determined this purpose, those acts which are necessary to realize this purpose can be realized without authorization. And therefore there is no need for a direct relationship between the rightholder and any lawful user. Moreover, once determined the intended purpose, if some clauses established by the rightholder are incompatible with its realization (e.g. if they forbid acts which are instrumental to those purposes), these clauses don't apply.

Can the consumer use the SRV in combination with third party HW and SW?

PageSentence
DIRECTIVE 1999/44/EC on certain aspects of the sale of consumer goods and associated guaranteesArt. 1(2)(b): “consumer goods: shall mean any tangible movable item”. The question is therefore if the Directive can apply also to digital content supplied through the Net, and not on a tangible medium like CDs, DVDs etc.
Digital Consumers and The Law. Towards a Cohesive European FrameworkCJEU, case 362/88, GB-INNO v. Confédération du Commerce Luxembourgoise, § 18: “under Community law concerning consumer protection the provision of information to the consumers is considered to be one of the principal requirements”.


Consumer information is particularly relevant when dealing with digital content, because its usability depends for the most part on licensing conditions (when digital content is protected by copyright) and technology.

Indeed, in an analog context, there are standardized and well-known benchmarks (which depend on the intrinsic characteristics of analog goods – accessibility to the embedded corpus mysticum – if present – is possible without reproduction; there is no need for complementary devices of a particular brand to use the good; uses that are susceptible to harm the provider of the good are not easy to put in place) that establish what can be done with the good. On the contrary, when we have digital goods, on one hand it is potentially possible to put in place all kind of (harmful) activities simply using an initial single copy of a work, but on the other hand the simplest activities may be prevented through technology: i.e. there are no intrinsic features when dealing with digital content.

It is therefore important for consumers to be informed about the interoperability (need for particular hardware or software requirements; technical tying to goods or services of a particular brand) and the functionality of the product (DRM, TPMs, region code, tracking of consumers' behavior).
So, about interoperability: if information isn't provided about lack of interoperability because of standard/format incompatibility or because of TPMs, it is a violation of information obligation according to CRD and a non-conformity of the product according to Consumer Sales Directive; if information is provided, and it is provided in a way that makes consumer's legitimate expectations of interoperability (we may question if an information provided in a way that can't make the consumer's legitimate expectations fall allows the applicability only of the Consumer Sales Directive or also of the CRD, seen that – in the latter – the burden of proof of the compliance with the information requirements belongs to the trader, but it is unclear if he has to prove only the formal satisfaction of the requirement or also the effectiveness of the information provided), these Directives can't help, but the UCP Directive and competition law perhaps can.
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.”