Introduction
Does the DSD stipulate a right to updates?
FAQs on new updating obligation
Comment
The new EU Digital Services Directive (DSD) aims to harmonise certain aspects of consumer protection law by providing consumers with a mandatory warranty for digital content and digital services supplied by a vendor. This primarily concerns contracts covering the purchase or rental of software (usually comprising licence agreements) or cloud services.
The DSD sets forth only a few changes to existing Austrian warranty law. Nevertheless, Austria chose to transpose the directive mostly by a separate law, which is applicable only to consumers and largely resembles the wording of the DSD and the EU Sale of Goods Directive. The most notable novelty is the introduction of a mandatory supply of certain updates to consumers as a default rule.
Does the DSD stipulate a right to updates?
In general, Austrian warranty law has always stipulated that any good or service supplied for a price is to be delivered or rendered in conformity with respective contractual requirements, including qualities usually expected (but not explicitly specified in the respective contract) with such products or services. Such conformity would have to be maintained at the time of delivery in case of a purchase agreement or, in case of a service, for the entire time that such a service is rendered.
Public statements of sellers or producers are regularly factored in when assessing what may usually be expected from a purchased product or service. This is applicable regardless of whether the contract is concluded business-to-business or business-to-consumer (B2C). However, the Austrian Consumer Protection Act provides for these provisions to be mandatory in nature in case of B2C agreements.
At first glance, the DSD seems to follow this idea for B2C contracts, but, actually, it merely separates conformity requirements into requirements as stipulated in the respective contract (subjective conformity) and requirements that may be expected by a consumer pursuant to a detailed description of references to be considered when assessing such requirements (objective conformity).
As with existing Austrian law, the objective and subjective conformity of the software or service must be assessed at the time of supply if supplied in a single act of supply (eg, the purchase of a software licence not limited in time) or during the entire time that the services are rendered if not supplied in a single act but continuously (eg, a software rental licence that has to be regularly renewed or any form of cloud services). It is therefore clear that, in the case of continuous supply, updates must be provided regularly so that the service fulfils conformity requirements at any point in time it is rendered. Otherwise, the respective plaintiff would be entitled to the remedies provided by warranty law.
Up until now, no such requirement to provide for updates could be deduced from Austrian warranty law for software being provided in a single act of supply (eg, purchased software). However, this may change with the transposition of the directive. The DSD now also expressly stipulates that where software is supplied in a single act of supply for an indefinite period of time, updates are to be supplied to consumers so that the software remains in conformity not only at the time of supply but also for the period of time a consumer may reasonably expect "given the type and purpose" of the software.
In effect, this introduces a novel obligation to provide updates for software sold to consumers for as long as the software is initially expected to fulfil the measures of conformity. This will come down to how long a certain software product may be expected to be used for its intended purpose and when it may be expected to become obsolete.
FAQs on new updating obligation
How far does this novel obligation extend?
Nothing in the DSD indicates that the respective standard for (objective) conformity of a certain (software) product would have to be reassessed continuously during the period in which conformity is to be maintained via updates supplied to the respective consumer. Hence, such updates do not need to comprise novel features or enhanced quality, performance or usability that go beyond what may be anticipated when the contract between the vendor and the consumer was concluded.
How is an update to be supplied?
The DSD makes clear that updates must not be automatically installed remotely by Austrian suppliers but that the consumer must remain free to choose whether to install newly provided updates or not.
Can the update requirement be expressly excluded according to the DSD?
As conforming with an update obligation may create a disproportionate burden, the DSD also allows for the exclusion or limitation of the update requirement (eg, by limiting the timeframe during which updates are made available or by limiting updates to certain aspects of the software) via explicit consent to such exclusion or limitation by respective consumers.
When does the update requirement not apply?
There are many situations where such an update requirement may be nearly impossible for consumers to fulfil – for example, if the software is a necessary part of the functioning of a hardware product, such as a smart fridge or in the case of firmware. Nevertheless, delivering a hardware product along with preinstalled software does not preclude the applicability of the DSD and therefore the required supply of continuous updates on purchased software.
The DSD comprises the novel obligation to provide continuous updates for a period of time that is usually expected for products to maintain the proper quality and functioning of existing features concerning software delivered to consumers in a single act of supply. This update obligation is a novelty in Austrian law. Although limited to maintaining the proper functioning of the software, software vendors may be required to expend additional effort in connection with software already sold. To prevent this, consumers will in many cases likely be asked to waive the update obligation by means of an express and explicit statement.
For more information on this topic please contact Alexander Pabst at Schoenherr by telephone (+43 1 534 37 0) or email ([email protected]). The Schoenherr website can be accessed at www.schoenherr.eu.