Consumer guarantees – an update on the Steam case

Published On 31/10/2014 | By Patrick Gunning | Consumer protection, Enforcement

The Federal Court of Australia is set to consider the application of the consumer law guarantees to cross border internet sales.  Back in September we blogged in great detail on the novel legal issues arising from the case of ACCC v Valve Corporation.  Since then, the court has set a timetable for the preparation of the case.  Importantly, the court has decided to determine liability separately from all questions of relief.  This means that the case will progress more quickly on the issues of substance.

Valve filed their defence on 29 October 2014, and the ACCC is due to file a reply in the first week of November.  Evidence will then be filed, and a further directions hearing is scheduled for 17 December at which it is likely that the court will set the matter down for hearing in the new year.

As predicted in our earlier post, Valve’s defence contends that the proper law of the contract between Valve and Australian consumers is the law of the State of Washington USA and that the consumer guarantee regime does not apply to the supplies made under that contract (described in the pleadings as the section 67 ACL defence).

Valve has raised another interesting defence we did not discuss in September.  They state that their business consists of providing online access to video games via a subscription service, and that the legal consequence is that they supply services to Australian consumers, not “goods”.  If successful, this argument would also cause the ACCC’s case to fail, since the consumer guarantees identified in the statement of claim are those that apply only to goods.  The prospects of success of this argument will depend on Valve being able to lead persuasive evidence that they do not supply “computer software” to consumers.  Before the introduction of the ACL, this argument would have been much easier – as we blogged back in 2010, the Supreme Court of NSW came to the conclusion that a digital download of software was not a supply of “goods”.  However, unlike its statutory predecessors, the ACL expressly provides that “goods” include “computer software”.  So Valve will need to convince the court that the provision of access to software (that enables the user to play an interactive video game) as a service is not a supply of “computer software”.  The outcome of this argument should be of interest to providers and users of cloud based software-as-a-service offerings.

We will continue to follow the proceedings with interest.

Photo Credit, Southern Methodist University, Central University Libraries, DeGolyer Library,  Flikr

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About The Author

advises on a wide range of commercial and corporate transactions, with an emphasis on transactions involving material technology or IP. He has particular expertise in the gaming and health sectors and counsels clients on regulatory issues relevant to those sectors. Patrick’s practice extends over the full life cycle of projects, and includes assisting clients to resolve disputes.

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