How does French case law deal with bundled software?

by White & Case LLP

Combined offers have always drawn significant attention from French courts. This is all the more the case since combined offers are standard practices when selling computer equipments. Indeed, such equipments are most often sold by retailers in the form of ready-to-use packages including hardware and software, the latter comprising of operation system and other basic programs.

The legality of selling bundled software has been challenged and has given rise to a considerable amount of disputes in France over the last few years. Legal grounds invoked include: prohibition of combined offers per se (Article L. 122-1 of the French consumer code), unfair commercial practice (Article L.120-1 of the French consumer code) and misleading commercial practices (Article L.121-1 of the French consumer code).

In the past, article L. 122-1 of the French consumer code provided for a general prohibition of tied selling and was often relied upon by claimants when contesting the sale of a computer with pre-installed software. However, this general prohibition has been censored for breach of Directive of 11 May 2005 concerning unfair business-to-consumer commercial practices (the "Directive").[1] Indeed, combined offers are not listed among unfair practices provided in Annex I of the Directive and may thus not be prohibited per se.

In 2009, the ECJ explicity stated that combined offers may be reprehensible if they meet the conditions set out in articles 5 to 9 of the Directive, despite not being listed among as unfair commercial practices.[2] As a result, combined offers of hardware and software will be declared illicit only if they fail to comply with the requirements of professional diligence and if they materially distort, or are likely to materially distort, the economic behaviour with regard to the product of the average consumer.

In light of this ruling, the French lawmaker rephrased Article L. 122-1 of the French consumer code that now provides that combined offers are prohibited only if they constitute an unfair commercial practice as defined by the same code.[3]

In spite of these recent developments, French courts are still compelled to provide clarifications regarding the nature of bundled software.

The French Supreme Court has recently refined the test it applied formerly to determine whether bundled software constitute unfair commercial practices.[4] In its latest decision, the Court ruled that unfair commercial practices are not established without the demonstration that the consumer was not in a position to purchase hardware without the software subject to receiving prior information on their terms of use.[5]

In other words, in order to avoid charges of conducting unfair commercial practices, retailers will most likely be required (i) to provide consumers with information on the conditions of use of the pre-installed software and (ii) to offer them a choice to purchase different types of hardware which comes with or without pre-installed software.

With regards to the first of these requirements, and referring to Article 7 of the Directive, the French Supreme Court hold that the information to be provided by the retailer must be assessed in light of the average consumer regardless of the skills of the consumer involved in the matter.[6] This obligation of information includes information regarding the terms of use of the software, as mentioned above, and maybe information pertaining to the prices of the pre-installed software.

Moving forward, we expect that French courts will be compelled to provide further clarifications, and take a position on the question of tied selling of smartphones and tablets with operation system and related apps.

[1] - Directive 2005/29/EC of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market.
[2] - European Court of Justice, 23 April 2009, VTB-VAB NV v. Total Belgium NV and Galatea BVBA v. Sanoma Magazines Belgium NV, C-261/07 and C-299/07.
[3] - Article 45 of the Law of 17 May 2011.
[4] - French Supreme Court, 12 July 2012, n°11-18807.
[5] - French Supreme Court, 5 February 2014, n°12-25748.
[6] - French Supreme Court, 22 January 2014, n°12-20982.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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