ITMS Faces Complaint From Norwegian Ombudsman

Whiney Mac Fanboy writes "Following the French Bill that threatened Apple's iTunes service in France, the iTunes music store is facing more uncertainty in Scandinavia. According to a report in Norwegian newspaper Aftenposten, Norway's Consumer Ombudsman has filed a complaint with Apple's music download sales service iTunes, arguing that the transaction terms violate Norwegian law. The Register is also reporting this story:, saying a contract cannot be regulated by English law, rather than Norwegian law, so iTunes must accept responsibility for damage its software may do, and said it is unreasonable to alter terms and conditions after a song has been sold. Consumer Council told the Reg: 'The Consumer Council has asked Apple to respond as to whether iTunes should work on other platforms - they have until 21 June to respond. After that the Ombudsman is likely to set another deadline and then start fining the company.' The BPI (Britain's RIAA equivalent) has also called upon Apple to license Fairplay."

Comments

Symptom of a wider problem.

[Whiney Mac Fanboy]

While I'm sure we're going to have the inevitable "Apple should withdraw from Scandinavia" posts here, people should really consider that this is a symptom of a wider problem; Apple trying to operate assuming that all legal systems are the same as the US's.

Notions of fair use / legal exchange of copyrighted materials vary all over the world. Apple's DRM ignores all these difference (limitting legal use of content in some countries) and relies on the whip of the US-only DMCA for enforcement.

Its pretty obvious that this isn't really an Apple/Norway problem, but a DRM/Worldwide problem - Apple is just the most successful DRM pusher (the first try is free!) at the moment.

PS. FP on my own story submission?

Re:Symptom of a wider problem.

[Awful Truth]

Not at all true. Typically contracts between parties in different legal systems (even between U.S. States) will explicitly state which laws govern disputes under the contract. That way there's less of a chance of conflicting legal systems, though it can happen -- for instance, if party B agrees to use party A's legal system and do something legal in A's jurisdiction but not in B's. I work in the Financial industry; almost all derivatives contracts (for instance) specify English law governs the parties. If they use U.S. law, they specify New York State. It's not really that financial firms think they can get the best deal in those places, but rather that the law is most well developed for this industry there, and so there are more precedents and less ambiguity. So no, it's probably not a case of U.S. Centrism as it is a desire to work under a predictable legal framework. If you're rolling out a service to customers in many different countries, you don't want to have to retain lawyers in each, and customize your product.

Foriegn Laws For US Companies?

[eldavojohn]

The article linked is a little hard to read but Playlist has a decent report on the story. Also note that MacWorld UK ran this story yesterday.

But this kind of raises an interesting question. When a company operates accross many countries, which country's law do they uphold?

We saw both Google & Yahoo! run into a bit of a jam with their services in China. They pretty much violated what would be considered ethical duties in the United States overseas. Is this wrong? Do they face legal implications in one country or the other?

With iTMS operating in the UK, the US & Norway, what are they to do? Fairplay seems to be violating laws in the UK & Norway while in the United States it seems to be law to have some form of DRM (and with lobbyist Herr RIAA in charge, that's not going to change anytime soon). Do they alter the way their service works in each country? If so, sign me up for some musikk!

Perhaps Apple will license Fairplay so that other devices can play the MP4 music ... though I doubt it. They've got quite a racket going and I'm sure they don't want to hurt iPod sales anywhere. Maybe they'll have to better define a few EULAs in order to avoid this, I'm not a law-talking guy so I'm not sure.

Re:Foriegn Laws For US Companies?

[Whiney Mac Fanboy]

Apple should do the same thing Yahoo, Google, MS & Cisco should do - Don't operate in a country unless you're prepared to follow their laws.

In the case of Google, MS & Cisco - they should pull the hell out of China - their laws are unreasonable, and no company with a conscience should operate there.

Norway on the other hand has perfectly reasonable laws - Apple should change their world wide operations to comply with Norwegian law :-)

Re:Foriegn Laws For US Companies?

[famebait]

I don't understand how Norway can say that if one of the parties is Norwegian (or in Norway) that only the laws of Norway can control.

They don't. They say that when a business which has a norwegia branch operates a norwegian-language e-shop explicitly directed at the norwegian market, distributed through a .no site, and in every way strives to come across as a local shop, then it is no longer an import scenario: they are operating in the norwegian market, and are subject to norwegian trade law, and just claiming they're not doesn't make it so.

Re:Foriegn Laws For US Companies?

[zxSpectrum]

IANAL, but from my understanding, EULAs are not legally binding contracts under Norwegian law.

Re:Foriegn Laws For US Companies?

[pla]

No. The contract (that both parties agreed to) states the governing jurisdiction.

Thus the problem here...

Norway has basically said that a Norwegian company selling to Norwegians can't cherry-pick a jurisdiction outside Norway. Simple as that.

If Sun's Java license instead said "Any action related to this Agreement will be governed by Saudi law and controlling Sharia law", would you still feel inclined to just accept that their words make it so? Even though it would make you, (probably) a US citizen, downloading a product in the US from a US company, subject to execution for using it to denounce Islam?

Re:Foriegn Laws For US Companies?

[famebait]

You must be talking about some other country. Here in Norway, your corner shop can't claim to operate under the law of some foreign country in order to escape the law, even with the use of a contract, and neither can Apple when they operate as a local business entity.

If the customers were dealing directly with Apple in the US, things would of course be different.

Re:Foriegn Laws For US Companies?

[TubeSteak]

Nope, the GP has no clue what he's talking about, at all

In the U.S., if a company has a significant business presence* in a State, then they are subject to the laws of that jurisdiction.

If some cookie cutter EULA says "State of New York"... well, that doesn't mean shit, unless that company has no significant business presence in your state.

The second Apple opened a branch in Norway, their product became subject to the laws of that country.

Apple can either comply, change the laws of Norway, or take their shiny white iBall and go home.

*A significant business presence doesn't actually require significant business, it just requires a significant presence. Like a company store or corporate offices etc.

"iTunes must accept responsibility...

[Anonymous Coward]

...for damage its software may do". Whoa! Does anyone in Scandanavia use Windows??? Talk about damage!!!!!

Re:"iTunes must accept responsibility...

[hyfe]

Alot of uneducated replies here, so since I just read the entire original complaint in Norwegian; so I'll summarize (numbering is my own). Oh, sorry for my bad attempt at formal'ish english, I'm kinda tired now :).. and sorry for replying to an early post to get this near the top :)

First and foremost; the whole problem here is that iTunes is specifically targetting the Norwegian market, as only Norwegians are allowed to use the Norwegian version of iTunes. This clearly sets it apart from most other net-stores which counts as *imports*. There is no doubt whatsoever that Norwegian laws apply here and this is probably a large reason why iTunes is being singled out. Forbrukerombudet (ombudsmann as you wrongly named him:)) did however note that several other services would be targetted soon (he lists a couple of music stores, but I can't find it now)

Complaint 1:
In order for a contract to be valid under Norwegian contract law it has to be two-sided; that is outline both responsibilties and priviligies. The iTunes EULA is completely one-sided completely failing to provide you with any benefits whatsoever. They do not accept any responsibilities nor guarantee anything.

Complaint 2:
The language itself is unclear. It does not define what 'service' as so far non-liability concerning downtime means. Does it means the store, the player, the DRM, etc? Added to this, all the terms are not available in Norwegian (which frankly, is pretty much the only point he makes I think is a non-issue).

Complaint 3:
Their attempts at disallowing non-Norwegian credits-cards for use at Norwegian iTunes is against the European Free Trade Agreement (EFTA).

Complaint 4:
Their attempt at having the right to change the contract/terms at any time whatsoever is clearly not allowed by Norwegian law. At the most extreme, if the iTunes EULA was valid they could instantly revoke your music without you having any say.

Complaint 5:
No return-policy. This is required by Norwegian law; however this is one of several points he makes where he does not demand change *yet*, but ask them to share their views on this, due the technical issues involved.

Complaint 6.
DRM; he goes on a bit of rant here, and then lists a few laws they may be violating, and asks them for feedback.

Mark you, this is not our ombudsmann, which is someone appointed to help us against the goverment, but our consumer-ombudsmann who helps against corporations :). If you're Norwegian, I really do recommend reading it here (pdf). It's very well written and extremely insightfull. The main-stream press coverage does not do it justice at all.

Don't like Apples DRM

[hsmith]

Don't buy it. I fail to see where this gets complicated. Apple shouldn't be forced to make iTunes file format work on other players, no one forces GM's Corvette engine to work in a Civic.

Apple is an "opt in" monopoly, they force not one person to start using iTunes and their DRM. I use them because I don't really feel like searching the net for MP3's, it is all in one place. I would assume 99% of other apple iTune users do the same. Don't like Apples DRM, fine. Vote with your pocket book and don't shop there. This forcing everyone to do something because you don't like it is getting out of hand.

Re:Don't like Apples DRM

[clickety6]

Don't buy it. I fail to see where this gets complicated. Apple shouldn't be forced to make iTunes file format work on other players, no one forces GM's Corvette engine to work in a Civic.

But GM don't actively try to prevent you from putting it into a Civic if you want to.

I would thinkA pple need to be a bit careful thoyugh because with the possible imminent demine of their nearets competitor (allofmp3) how far are they from being a monopoly on the sales of online music? And if they do get decalred a monopoly, would they then be forced to open up their format?

Re:Don't like Apples DRM

[JanneM]

It's not a monopoly issue, but a question if iTunes breaks various consumer protection and retail laws in Norway.

If a company wants to do business in a country, it must follow the laws of said country or not do business there, that is the simple issue. Saying "but it's legal where we come from" is not a defence. To put it this way, would you want to allow (say) Chinese cars to be sold in the US without the safety features US law requires, simply because they aren't required in their country of origin?

Re:Don't like Apples DRM

[hsmith]

No, the only thing that prevents other individuals from starting new companies which provide music is the RIAA. Not apple. Apple isn't the problem, at all. Anyone who thinks apple is the problem is blind to the real issue, the monopolistic practices of the RIAA in not allowing other firms to sell music such as Apple.

Re:Don't like Apples DRM

[merdaccia]

Although I agree with you, I think you're missing the point. This isn't about a group of consumers saying they want iTunes songs to work on player x. Nor is it about company y, which makes player x, saying Apple should license FairPlay because they want protected AAC to work on their players. This is about Norway saying that to operate in Norway, you have to follow Norwegian law. And that means having licenses that are regulated by Norwegian law, including the inability to disclaim damage liabilities.

The issue of whether Norwegian law requires the songs to be playable on other devices still hasn't been decided. If the ruling goes against Apple, then Apple will have to license FairPlay in order to continue operating iTMS in Norway. The only thing they would be forced to do would be to comply with the law if they choose to operate in Norway. Hardly unreasonable, especially given that every online music retailer would be subject to those same laws.

Re:Don't like Apples DRM

[hsmith]

Do you not know when you go to buy iTunes that they only work on iPods? Is this not a well know fact or is this something that Apple hides from you? The terms are well known before hand, no one is a "victim"

Re:Don't like Apples DRM

[Tom]

On the surface, your argument sounds convincing. However, it falls down once you dig deeper.

You ignore that "free market" as you laud it exists only in the theoretic world of the textbooks. This theoretical free market does indeed work as advertised. But it requires a few things that simply do not exist in the real world - total information being one of the critical components.

With limited information available to one side of the market (usually the customers), the game shifts from "whoever can make the best offer" to "whoever can seemingly make the best offer" - an important shift that gives rise not only to marketing, but also to shady business practices and outright fraud.

This is where some simple government regulations comes in and supports the market. Through warrenty requirements, for example, these regulations ensure a certain amount of information being available and allow customers to make informed choices. For example, if I know that by law the claims on the outside of the package have to be true or I can return the item, then I have more information than I would have without that law - because without it I would have to research the truth value of each and every claim instead of being able to rely on them.
In so far as regulations create a reasonable lower margin, they support the free market by bringing reality more in line with theory.

I do agree that a lot of regulations are not reasonable, and quite a few should be abolished and were almost certainly the work of lobbyists.

However, this fear of any and all regulations some people exhibit is just insane. The solution to tyranny is not anarchy.

The Cold Market War

[Draracle]

Damn those socialists and their attempts to put competitive markets over monopolies/oligopolies!!! And licensing DRM? Why would we even want DRM if we have to license it? This is totally against the rules of Supply and Command.

So here is what I don't get...

[tfvdw2at]

...can someone explain why Apple selling music that only works on their devices (unless of course you consider those crappy Motorola ROKR and SLVR phones) is bad, but Sony selling games that only play on the PlayStation or Microsoft selling software that only runs on Windows is OK. Seriously. Why is what Apple is doing any different in the eyes of the Norwegian government?

Swedish Chef != Norwegian Ombudsman

[yardbird]

Bork bork bork?! I know they are right next to each other and all, but they are two different countries (at the moment).

Other elements of note: the ombudsman's name is Thor!*, and other headlines on the Aftenposten site include: "Women wont [sic] give up laundry" and "angry hare attacked dogsled". I thought Norway was only silly in Monty Python sketches?

* NB: It's actually Thon. Drat.

Re:Don't like Norways laws?

[Whiney Mac Fanboy]

Easier said than done. If Norwegian residents can browse the internet then they can buy from the iTunes store.

Incorrect. Apple divides the market up. Try buing from the US itunes with a British Credit Card.

Re:Apple + Interoperability = Ha ha ha ha ha

[xenolon]

I'm a little curious where you're getting these sales figures?

From this TIME article:

...For every 99 Apple gets from your credit card, 65 goes straight to the music label. Another quarter or so gets eaten up by distribution costs. At most, Jobs is left with a dime per track, so even $500 million in annual sales would add up to a paltry $50 million profit...

and this NARIP document. (Sorry, direct link to a PDF.)

If you insist on making spurious claims about Apple, or any other company for that matter, don't try to disguise them as facts please, that's all we ask. They're certainly not the kings of interoperability, but I can't think of any OS/company that is. no, not even *nix.

English Law = England, not US

[cmiller173]

Talk about US Centric. ITMS Europe is based in Luxembourg and its terms of service are governed by English (as in England) law, not US law.

That said, if Norway was part of the EU this would not be a problem for Apple as I think that they would be able to choose any particular EU member states laws (in this case England) to apply, but since Norway is not AND apple got a Norwegian TLD for ITMS Norway AND nicely translated the site into Norwegian a Norwegian using the site would likely assume they are dealing with a Norwegian subsidiary operating under Norwegian law. If on the other hand ITMS Europe used a .uk TLD, even if they translated the site, I think they could justifiably say that the Norwegian person coming to the site would be expected to know that they are dealing with a site operating in the UK, under UK law.(yes I know that TLD use is not strictly tied to geographic location)

Re:Apple + Interoperability = Ha ha ha ha ha

[hector66]

Xenolon killed those facts pretty quickly. But the real problem with your post is blaming Apple for the royalties that artists get from their song sales. That is between the record company and the artist, and doesn't involve Apple one bit. I think the big thing that is being ignored so far is the focus has been on iTunes and the iPod. Neither work without a computer. There is complaints that there is no choice. If you want to use iTune Music Store you have to have an iPod to play your purchased music. But, if I wanted to use another service such as Napster I would be forced to use Windows, because Microsoft's Plays For Sure DRM does not work on Macintosh, or Linux. If a government forces a company to open their DRM to multiple MP3 devices, then they also have to open up the OS platform that they will run on. It can't be only one way or the other.

Re:The "Consumer Council" is anti-consumer

[dada21]

Two parties make an agreement. Both parties are not in any way being forced to accept this agreement. Both parties agree. How is that anti-consumer?

I have _not_ made 3 purchases in the past week based on bad contracts. One was with a roofer (my other roofer decided to accept my terms), one was with a mechanic (I struck out the part about going over the quote and he didn't accept it) and one was with a lawyer. We couldn't come to terms, so we didn't do business. That's the free market.

If people are _dumb_ and can't read a contract, then why should the law be their daddies?

EU consumer protection to the rescue

[andersh]

I'm sorry but you seem to forget that Norway is subject to the same laws as EU member states due to the extensive EEA agreement. Of course you can agree to resolve issues in a foreign court of law. The issue is not simply a matter of EU membership or not. The real issue is one of consumer protection not commercial contracts. In fact according to a European Union directive consumers can actually choose to invoke their local legislation when shopping from a European website. Yes, this directive is also valid in Norway. And under Norwegian law when a website is reachable and targes Norwegian citizens it's also subject to local law.