UK Report Slams EULAs

draevil writes "Britain's National Consumer Council has completed an investigation into the practice of software End User License Agreements(EULAs) with the conclusion that many consumers are signing away their legal rights and agreeing to unfair terms, which they could never have scrutinized before purchase. The report also acknowledges that even if the EULA were available prior to purchase, it would be unreasonable to expect an average consumer to understand the terms to which they were agreeing. Here are the full report (PDF) and a summary." The NCC recommends that the European Commission bring softwre licenses under the same consumer protections that apply to other products in the EU.

Comments

Unfair Contract Terms Act 1977

[tagishsimon]

UK consumers who have reason to contest contract terms would likely be protected by the Unfair Contract Terms Act 1977.

No need.

[Benanov]

GPL != EULA as you don't have to agree to the GPL.

Re:No need.

[reebmmm]

Lies and damned lies.

I think that the parent's post is probably one of the favorite myths of this site. And, as a matter of law, it is simply not true. When you "accept" GPL software, you "accept" a few very important things:

2. Basic Permissions.

All rights granted under this License are granted for the term of copyright on the Program, and are irrevocable provided the stated conditions are met. This License explicitly affirms your unlimited permission to run the unmodified Program. The output from running a covered work is covered by this License only if the output, given its content, constitutes a covered work. This License acknowledges your rights of fair use or other equivalent, as provided by copyright law.

You may make, run and propagate covered works that you do not convey, without conditions so long as your license otherwise remains in force.

***

15. Disclaimer of Warranty.

THERE IS NO WARRANTY FOR THE PROGRAM, TO THE EXTENT PERMITTED BY APPLICABLE LAW. EXCEPT WHEN OTHERWISE STATED IN WRITING THE COPYRIGHT HOLDERS AND/OR OTHER PARTIES PROVIDE THE PROGRAM "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PROGRAM IS WITH YOU. SHOULD THE PROGRAM PROVE DEFECTIVE, YOU ASSUME THE COST OF ALL NECESSARY SERVICING, REPAIR OR CORRECTION.
16. Limitation of Liability.

IN NO EVENT UNLESS REQUIRED BY APPLICABLE LAW OR AGREED TO IN WRITING WILL ANY COPYRIGHT HOLDER, OR ANY OTHER PARTY WHO MODIFIES AND/OR CONVEYS THE PROGRAM AS PERMITTED ABOVE, BE LIABLE TO YOU FOR DAMAGES, INCLUDING ANY GENERAL, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE THE PROGRAM (INCLUDING BUT NOT LIMITED TO LOSS OF DATA OR DATA BEING RENDERED INACCURATE OR LOSSES SUSTAINED BY YOU OR THIRD PARTIES OR A FAILURE OF THE PROGRAM TO OPERATE WITH ANY OTHER PROGRAMS), EVEN IF SUCH HOLDER OR OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

In this sense, it is an agreement with END USERS. Among other things, it grants to the end user the permission to run the software. It also addresses distribution, but that is not the point.

I also states that you get it without any warranties (non-infringement, merchantability, fitness for a purpose, etc.). And it states that even if you think you had damages because of the use of the software, you'd have no right to recover anything.

I'll point out, most people think that limitations on liability that limit your damages to $0 as some of the most heinous parts of EULAs.

If you don't agree to those terms, you can reject the offer.

Even under the terms of most EULAs (and most case law), a EULA is only effective if you have some right to reject: return, refund, etc. ** Contrary to what some think, that right to reject doesn't have to be "easy" or obvious. **

Re:No need.

[fishbowl]

Thank you for your comment!

My perspective is from the other direction: Find some basis to "invalidate" the GPL (I love the saying "...untested in court..." as though it is important)... Find that legal basis and ALL software contracts derived from copyright law are invalidated as well. Essentially if the author does not have the rights needed to license under the terms of the GPL, then he does not have some of the rights that copyright supposedly grants.

One argument will be "without these licenses, software makers will not produce the products." We all know how unlikely that is. Besides it would be fine and dandy if the playing field were more open. Another argument is that vendors will have to go back to individual agreements with each customer. I wonder what would be so wrong with that? If you want me to sign a contract in order to use your product, by all means, put the contract in front of me, let me evaluate its terms side-by-side with its consideration, and I'll get back to you -- maybe your competition offers better terms. Maybe your big ugly contract influenced me during the critical moment when I was hot to buy, and now I'm not so sure.

FYI, the only software I've ever written for profit, did indeed have an individually negotiated contract with each client, and the legal terms were specified in that, and would be fully enforceable in the state where I was doing business.

But these mass-market software folks want to have all the power of an individual contract (actually, they want more than the assignee can legally grant via contract, sometimes), but they want none of the obligations, and want to offer no real consideration. EULA's won't stand up as contracts, in general.

The GPL on the other hand, holds if the grantor actually has the appropriate rights under copyright law.

In essence, to "Test the GPL in Court" and find it invalid, would mean invalidating *copyright law* to a certain degree. In other words, this is not going to happen.

Re:Too bad.

[I confirm I'm not a]

> Contract's a contract...

Under UK law that's not entirely true. If a contract employs unfair clauses those clauses can be nullified. An analogy is, if you borrow £10000 from me and agree that (a) you will repay it with 12 months, and (b) if you don't repay it I can break your legs. This is unfair: if the contract was challenged in court it's highly likely that (a) you would have to repay the debt, and (b) I could not break your legs if you didn't repay within the specified time-frame.

IANAL etc etc

Re:They didn't review the GPL

[sconeu]

GPL is a distribution license, not an EULA. Section 0 specifically says you don't need to agree to it to use the software.

GPL doesn't take away any of your (end users) rights under copyright law, it adds additional rights.

GPL (at least GPL2) is readable and pretty much understandable by mere mortals.

Re:Where's my signature?

[sjbe]

IANAL, but how does clicking a button on a VB form constitute a legally binding signature? A signature isn't the only way to legally agree to something. There are verbal contracts, contracts and licenses agreed to by an action (think GPL), the Uniform Commercial Code which sets the terms of many sales unless both parties expressly agree to some alternative arrangement, and others. A signature is just one way (albeit a common one) to acknowledge your agreement to something.

In college I asked a law professor about EULAs and his take was that (generally speaking) EULAs are enforceable only if the buyer has had an opportunity to review them prior to the sale. I think this is a reasonable argument, especially since in practice you cannot return opened boxes of software. He would be the first to acknowledge that this has not been widely tested in court however so take what I'm saying with however much NaCl suits you.

Do you accept these terms? Only option is "Next"!

[Anonymous Coward]

If you start a new computer (w/ Vista) for the first time, you are presented with a screen to accept the EULA.

What's (NOT!) funny here is that the only option is to accept and click Next.
There is no option for Cancel. Just poweroff...

The Borland "It's like a book" license c. 1980s

[davidwr]

In the 1980s, Borland products came with a "treat it like a book" license.

It was written in Plain English. It essentially said you could trade, lend, buy, sell, resell, etc. as long as no more than one person had copies at a time and that the software wasn't being used on more than one computer at a time.

Re:Too bad.

[Anonymous Coward]

Q: When is a contract NOT a contract?
A: When it is not legally valid and violates the law.

If there is no meeting of the minds, there is no contract, not matter what one party writes down.

If there is an adhesion contract where one party receives its consideration (money) before releasing the terms of its offer and the terms, when enforced are unconscionable, or if there is a mistake because the two parties reasonably think the terms of the contract to mean different things, a court can and should put such contracts aside. The fact that most people do not fight for there rights or that some judges may not correctly apply the law does not change the legal principles.

In most EULAs and TOS, there is no level playing field. Other than getting in on some sort of class action suit where all the money goes to the lawyers, there is no way most consumers will take on corporate lawyers. The EU is not into class actions like the US. It makes sense for the laws to level the playing field and keep contracts fair.

Re:Not quite

[mr_matticus]

I'm not sure how this got modded insightful, but it's not true.

This in many case nullify the contract utterly. No, with the exception of particularly egregious contracts, it nullifies the invalid term, not the contract itself. This is also true in the United States, though US courts are less inclined to interfere with terms and there are overall fewer objectionable contract terms.

for example in saying they are not liable for any damage occasioned by the software They're not. This is a standard disclaimer on consumer products. All liability is specifically disclaimed, except that covered by the limited warranty and that which is not waived under the law (e.g. if it causes bodily injury through defect or negligence). I don't believe there is any significant case awarding damage for defective software.

Such shenanigan would not happen with a real signed contract. Clearly you don't have a lot of experience with contracts, then, because those shenanigans are the only reason that contract attorneys have jobs. What you do with the text box is just as irrelevant as what you do with your copy of the written terms. You can fire up Word and mess around with it all you like. The process is simple: did you buy the copy of the software? Are you the registered owner of the software? Do you represent yourself as the owner of the license to the software? If yes, it doesn't matter if your two year old clicked "next". There aren't many instances in which you'd have an opportunity or a reason in court to use that particular out. If you're challenging the terms in court, you have to be a party to them. If you decide you don't like the terms, you can always back out by uninstalling the software. Quite simply, it's not as though you had no access to the terms before purchase; on the contrary, EULAs are available quickly and easily in advance for anyone who wants to review them. This is the big weakness in the report and it's a major consideration when attempting to litigate in this field.

There are certainly issues that need to be worked out (e.g. some fairly ridiculous and one-sided provisions are common; if the terms are rejected, getting a refund for open software generally requires you to send a letter threatening to sue before they offer to take care of it), but similar devices are and have been a commonly used tool and will remain so.

And once again, the report, like Netscape and the other seminal cases people like to point to, don't go as far as people commonly believe they do. This report says that EULAs are unfair and overly complex. That is true; it doesn't mean they're saying EULAs themselves are wrong. As a consumer advocacy group, their job is to simplify and re-balance the terms. This is a great thing, but it's not an incrimination of the agreement as a tool, so don't lose sight of that.

Re: They didn't review the GPL

[WNight]

They're totally different things. A Shrinkwrap EULA purports to change the nature of a preexisting sale, and is not voluntary. It further restricts access to the thing you purchased until you agree to be bound by additional restrictions.

Depriving someone of the ability to use the rights they legally have is actionable.

The GPL on the gripping hand, is a voluntary license offered for those who want extra rights. It acknowledges specifically that you do *not* need to even read the GPL to use the software.

EULA: Secret, withholds lawful rights, non-voluntary

GPL: voluntary, offers only additional rights, not secret

Shrinkwrap EULAs are not valid, the GPL is.

Re:I Do Not Agree letter

[EzInKy]

Copyright violation. In the USA, a judge has ruled that you need a contract to legally run software, since when activated the computer loads portions of the code into memory, which is considered copying, and additionally, most software also must first be copied and extracted from archives on the CD, creating a derivative work on your hard-drive.


Please cite, because that makes no sense. Of course IANAL, but US copyright law seems to specifically say that installing and running a program is not infringement.


117. Limitations on exclusive rights: Computer programs

(a) Making of Additional Copy or Adaptation by Owner of Copy. -- Notwithstanding the provisions of section 106, it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided:

(1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner, or

(2) that such new copy or adaptation is for archival purposes only and that all archival copies are destroyed in the event that continued possession of the computer program should cease to be rightful.


Copying files from CD/DVD to hard drive and into memory are essential steps to utilize most computer programs.

Re:return-to-store test case

[Anonymous Brave Guy]

The judge should rule that either:

*you had a contract with the store, in which case the product did not meet ordinary merchantability standards i.e. it would not work without imposing other obligations not present at the time of the contract, in which case you can void the contract

Part of the problem here is that in the UK, while you have some protections if you buy something that comes in a box, the general legislation (basically the Sale of Goods Act) may not apply to downloads that are purely electronic in nature because of some legal loopholes. It's not clear that under those circumstances there is any requirement of merchantability, suitability for a particular purpose, or similar.