Thursday, 7 December 2017

Digital content proposal extended to IoT

Last month we have reported on the updated proposals for the Directive on online and other distance sale of goods (Towards a more coherent...). This proposal is part of one package together with a proposal for a Directive on the supply of digital content. Last week, in the first reading at the European Parliament certain amendments have been introduced to this latter proposal (see here for the full text of amendments). 

One of the amendments changes the scope of the proposal by making it apply not only to the supply of the digital content but also explicitly to digital services. Amendment 11 clarifies that the Directive would also apply to dual purpose contracts. Amendment 14 leaves it to the Member States to regulate remedies for 'hidden defects' as well as to continue to provide for the short-term right to reject. 

One of the most controversial amendments is Amendment 18 which extends the scope of application of the Directive to smart goods (IoT) (further confirmed by Amendments 25 and 31). Whenever the digital content or digital services come pre-installed in goods, 'the trader should be liable under this Directive to the consumer for meeting his obligations only in respect of the embedded digital content or digital service. Liability for the other elements of those goods should be governed by the applicable law.' The same rules would apply to IoT goods purchased online and offline. Whilst the liability of producers and traders of software for IoT goods should then not extend to covering other elements of IoT goods, traders of IoT goods would be subject to the conditions of the proposed Directive which require digital content and digital services providers to guarantee a high standard of security and interoperability. The European Parliament considers these adjustments necessary to guarantee that the proposed Directive remains relevant when faced with the reality of the use of modern technology. Apparently, however, the Council is likely to object to these amendments (European Parliament pushes on IoT device security and interoperability). We will continue to observe the fate of these proposals.


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