Case C-310/15, Deroo-Blanquart – wanting the naked hardware not the pre-installed software [judgment 2016, ECLI:EU:C:2016:633]

Computers, games consoles and wireless routers all run with the aid of computer programs. Tech-savvy consumers who are not impressed by those programs will often introduce other software so that the electrical equipment functions in the way they want it to. In this case, a consumer is alleging that the pre-installed software on his Sony laptop means Sony is trading unfairly because there is an unlawful tying arrangement between the software and the hardware. Win or lose, the CJEU’s eventual judgment could affect electronics manufacturers, retailers, and the vitality of open source projects.

Background
Mr Deroo-Blanquart bought a Sony laptop. He then wrote to Sony asking for part of his money back. The basis of his request was that since he had bought his Sony laptop for its mechanical parts and technical spec, he had no need for the pre-installed software. Sony turned down his request.

A dispute ensued in which Deroo-Blanquart explained the legal grounds underpinning his request. Namely, he pointed out that it was contrary to French unfair competition law for a company to make the use of one product conditional upon the purchase of another product. That was what Sony was doing because when a consumer bought a computer and started it up, they were obliged to agree to using the pre-installed software. There was no alternative for a consumer because if they did not agree, then they could not use the computer.

Sony denies the allegation of unfair competition. They point to the fact that prior to the sale, the laptop had been advertised as coming with pre-installed software. There was no deceit on its part, nor was it competing in an unfair way.

The parties have escalated their dispute up to the French Court of Cassation.

At the French Court of Cassation
The French court noted that the dispute turned on the correct interpretation of the EU’s ‘Unfair Commercial Practices’ Directive 2005/29/EC (OJ [2005] L149/22).

The relevant provisions of the Directive are basically in Articles 5 and 7.

Article 5, is a ‘Prohibition of unfair commercial practices’, and provides:

1. Unfair commercial practices shall be prohibited.

2.A commercial practice shall be unfair if:
(a) it is contrary to the requirements of professional diligence, and (b) it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is directed to a particular group of consumers.

3. Commercial practices which are likely to materially distort the economic behaviour only of a clearly identifiable group of consumers who are particularly vulnerable to the practice or the underlying product because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee, shall be assessed from the perspective of the average member of that group. This is without prejudice to the common and legitimate advertising practice of making exaggerated statements or statements which are not meant to be taken literally.

4. In particular, commercial practices shall be unfair which: (a) are misleading as set out in Articles 6 and 7, or (b) are aggressive as set out in Articles 8 and 9.

For ease of reading, Article 8 contains a check on Aggressive commercial practices:

A commercial practice shall be regarded as aggressive if, in its factual context, taking account of all its features and circumstances, by harassment, coercion, including the use of physical force, or undue influence, it significantly impairs or is likely to significantly impair the average consumer’s freedom of choice or conduct with regard to the product and thereby causes him or is likely to cause him to take a transactional decision that he would not have taken otherwise.

Returning to Article 5 of the Directive, subsection 5 also states:

Annex I contains the list of those commercial practices which shall in all circumstances be regarded as unfair. The same single list shall apply in all Member States and may only be modified by revision of this Directive.

And for ease of reading, point 29 of Annex I, states:

Demanding immediate or deferred payment for or the return or safekeeping of products supplied by the trader, but not solicited by the consumer except where the product is a substitute supplied in conformity with Article 7(3) of Directive 97/7/EC (inertia selling).

However, Article 5 also needs to be read together with Article 7, which governs ‘Misleading omissions’ and provides:

1. A commercial practice shall be regarded as misleading if, in its factual context, taking account of all its features and circumstances and the limitations of the communication medium, it omits material information that the average consumer needs, according to the context, to take an informed transactional decision and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.

2. It shall also be regarded as a misleading omission when, taking account of the matters described in paragraph 1, a trader hides or provides in an unclear, unintelligible, ambiguous or untimely manner such material information as referred to in that paragraph or fails to identify the commercial intent of the commercial practice if not already apparent from the context, and where, in either case, this causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.

3. Where the medium used to communicate the commercial practice imposes limitations of space or time, these limitations and any measures taken by the trader to make the information available to consumers by other means shall be taken into account in deciding whether information has been omitted.

4. In the case of an invitation to purchase, the following information shall be regarded as material, if not already apparent from the context:
(a) the main characteristics of the product, to an extent appropriate to the medium and the product;
(b) the geographical address and the identity of the trader, such as his trading name and, where applicable, the geographical address and the identity of the trader on whose behalf he is acting;
(c) the price inclusive of taxes, or where the nature of the product means that the price cannot reasonably be calculated in advance, the manner in which the price is calculated, as well as, where appropriate, all additional freight, delivery or postal charges or, where these charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable;
(d) the arrangements for payment, delivery, performance and the complaint handling policy, if they depart from the requirements of professional diligence;
(e) for products and transactions involving a right of withdrawal or cancellation, the existence of such a right.

5. Information requirements established by Community law in relation to commercial communication including advertising or marketing, a non-exhaustive list of which is contained in Annex II, shall be regarded as material.

In turn, these provisions also need to be interpreted in light of two Recitals.
Recital 3 provides:

The laws of the Member States relating to unfair commercial practices show marked differences which can generate appreciable distortions of competition and obstacles to the smooth functioning of the internal market. In the field of advertising, Council Directive 84/450/EEC of 10 September 1984 concerning misleading and comparative advertising (3) establishes minimum criteria for harmonising legislation on misleading advertising, but does not prevent the Member States from retaining or adopting measures which provide more extensive protection for consumers. As a result, Member States’ provisions on misleading advertising diverge significantly.

And Recital 23 states:

Since the objectives of this Directive, namely to eliminate the barriers to the functioning of the internal market represented by national laws on unfair commercial practices and to provide a high common level of consumer protection, by approximating the laws, regulations and administrative provisions of the Member States on unfair commercial practices, cannot be sufficiently achieved by the Member States and can therefore be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to eliminate the internal market barriers and achieve a high common level of consumer protection.

Consequently, in light of those provisions three questions arose in the mind of the judges at the French Court of Cassation.

First, did Articles 5 and 7 of the Directive mean that it was an unfair commercial practice for a manufacturer or retailer to sell a computer with pre-installed software to a consumer without indicating the precise cost of each of the pre-installed programs?

Second, was the manufacturer trading unfairly when he gave the consumer no choice other than to accept the terms for using the pre-installed software or to revoke the contract?

Third, was the manufacturer trading unfairly when the consumer could not buy the same object from the same manufacturer without the pre-installed software?

Questions Referred
According to the Legifrance website, the French Court of Cassation has asked:

1°) les articles 5 et 7 de la directive 2005/29 du Parlement européen et du Conseil du 11 mai 2005 relative aux pratiques commerciales déloyales des entreprises vis-à-vis des consommateurs dans le marché intérieur doivent-ils être interprétés en ce sens que constitue une pratique commerciale déloyale trompeuse l’offre conjointe consistant en la vente d’un ordinateur équipé de logiciels préinstallés lorsque le fabricant de l’ordinateur a fourni, par l’intermédiaire de son revendeur, des informations sur chacun des logiciels préinstallés, mais n’a pas précisé le coût de chacun de ces éléments?

2°) l’article 5 de la directive 2005/29 doit-il être interprété en ce sens que constitue une pratique commerciale déloyale l’offre conjointe consistant en la vente d’un ordinateur équipé de logiciels préinstallés, lorsque le fabricant ne laisse pas d’autre choix au consommateur que celui d’accepter ces logiciels ou d’obtenir la révocation de la vente?

3°) l’article 5 de la directive 2005/29 doit-il être interprété en ce sens que constitue une pratique commerciale déloyale l’offre conjointe consistant en la vente d’un ordinateur équipé de logiciels préinstallés, lorsque le consommateur se trouve dans l’impossibilité de se procurer auprès du même fabricant un ordinateur non équipé de logiciels?