22 October 2012

I WAS a bit interested until I read SpiderOak's illegal terms of service

I had been interested in SpiderOak's products until I read their FAQ, which breaches several parts of Australian law:
Help and Frequently Asked Questions/FAQ - SpiderOak.com: "As is stated in our Services Agreement (https://spideroak.com/services_agreement), SpiderOak is under no obligation to provide refunds of any kind on service. However, we do believe in standing behind our product and will evaluate specific requests on a case-by-case basis."
I've had a few questions about why this term is illegal in Australia.

The Australian Consumer Law is part of the Competition and Consumer Act 2010. The FAQ set out above breaches several sections of the Law.

Section 18 prohibits misleading and deceptive conduct, and the deception here is that there is "no obligation to provide refunds of any kind on service."

Section 29 prohibits making a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2).

Section 64 does not permit statutory warranties to be avoided. It states:

(1) A term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) is void to the extent that the term purports to exclude, restrict or modify, or has the effect of excluding, restricting or modifying: 
    (a) the application of all or any of the provisions of this Division; or
    (b) the exercise of a right conferred by such a provision; or 
    (c) any liability of a person for a failure to comply with a guarantee that applies under this Division to a supply of goods or services.

14 October 2012

Copyright breach by Apple confirmed - you and I are liable

Copyright breach by Apple, Inc - you and I are liable

Apple, Inc recently released a Clock application for the iPad which used the design of the clock designed for the Swiss Federal Railways (SBB).

It appears that Apple failed to license the use of the clearly copyright (and perhaps trade marked) appearance of the clock. SBB has now forced Apple to enter into a licensing agreement and pay license fees for the use of the design.

The use of such a design without a licence is, all by itself, a breach of intellectual property law. However, there is a much bigger issue here - Apple has caused all its iPad customers using iOS 6 to also breach SBB's rights, and SBB has the right to take action against Apple's customers. This is clearly a case of what Australian law would term "authorisation" of infringement (which is the claim that the movie companies tried to run against iiNet).

Normally a supplier of software will indemnify its customers for any claims for breach of other's intellectual property rights. That is a fair apportionment of risk since the software company has complete control and knowledge of the risk.

The iOS 6 license agreement

Amusingly, clause 5 (f) of the iOS 6 licence agreement requires you and me to ensure that we are legally permitted to use any content we upload to any Apple services. I guess Apple doesn't think it is fair to have the same obligations that you and I have.

Clause 8 limits liability of Apple for any loss or damage you and I suffer arising out of use of the software. In other words, if SBB (or anyone else who is aggrieved by Apple's disregard of their intellectual property rights) sued you, Apple would say it is not liable to compensate you.

And the most important clause which exists in every software agreement I have read in the 26 years of legal practice - the indemnity by the software vendor for any breach of others' IP rights - it doesn't exist.

This is completely outrageous in a consumer software agreement - it would be good if someone could take action under s.23 of the Australian Consumer Law. That section provides that a term of a consumer contract is void if the term is unfair and the contract is a standard form contract. Clearly cl 8 of the iOS license agreement is unfair and capable of being declared void in Australia.

Why is clause 8 unfair?

Section 24 of the Australian Consumer Law provides that a term will be unfair if it causes a significant imbalance in the parties' rights, or is not reasonably necessary or it would cause detriment if relied upon.  Further, the term is simply not transparent (cl 24(2)) - if you read it you will see it is not expressed in reasonably plain language, is not legible (it's IN ALL CAPS), and is not presented clearly (IT REALLY IS IN ALL CAPS AND THAT MAKES IT HARD TO READ). Clause 8 offends several of the examples in s.25 of the Act.

Perhaps one day we'll see some kind of reasonable response from the Australian company Apple Pty Limited (ABN 46 002 510 054).