Limitations in End-User Licensing Agreements: Is There a Lack of Conformity Under the New Digital Content Directive?

Abstract

The recently adopted Digital Content Directive laid down some core rules concerning contracts for the supply of digital content to consumers. The Directive entitles consumers to use remedies for lack of conformity of content when the restrictions on its use breach reasonable consumer expectations. Digital content typically contains works protected under copyright and is supplied subject to end-user licensing agreements, under which a copyright holder exercises their exclusive rights to disseminate protected work. The new Directive provides consumers with contractual remedies if the use of digital content is prevented or limited due to the violation of third-party rights in breach of the subjective and objective conformity requirements. The question that arises is what limitations under the end-user licensing agreements could give rise to remedies under the Directive. This article examines some typical limitations on the use of digital content and discusses whether they could breach reasonable expectations and give rise to remedies under the Directive. First, an empirical study of the terms and conditions of some major digital content and services providers is conducted with the emphasis on the restrictions placed on the content supplied for time-unlimited use. Second, the identified restrictions are tested against the reasonable consumer expectations in order to determine whether they may be considered as a lack of conformity. The article concludes that consumers can use remedies under the directive in respect of digital content supplied on a time-unlimited basis in several cases. The following restrictions would be in breach of reasonable consumer expectations: restrictions on obtaining a (backup) copy, restrictions on non-simultaneous use of digital content on few devices belonging to consumer, limitations on sharing digital content outside consumer’s immediate family, retraction of access to content supplied on a time-unlimited basis, and restrictions on disposing of digital content through permanent transfer of access.