The Norwegian Consumer Ombudsman has just ruled that the terms
and conditions for iTunes are unlawful and has given the service
until 21st June to amend them. After that date it will be fined
unless it changes its practices. OUT-LAW has learned that parallel
cases in Sweden and Denmark could lead to fines across Scandinavia
not only for Apple's iTunes but also for Microsoft's MSN.
Sweden and Denmark both have ombudsmen looking into the issue.
The Swedish consumer council has filed a similar complaint and
observers expect an announcement in the coming days from its
Ombudsman. "The contracts, like anglo-american contracts, keep the
right at any time to amend the terms of an agreement," said Jonas
Adols, legal advisor to the Swedish Consumer Council. "In my eyes
that includes everything including price. You would never get away
with that before a Swedish court in a business to consumer
relationship."
It is understood that though no complaint has been made in
Denmark, the Danish Ombudsman plans to issue rulings after
following the Norwegian and Swedish cases.
The actions are also about to be widened to include other major
music retail names. "After the iTunes issue is resolved we will
look at the terms of service in similar stores. The next one we
will look at is MSN," said Torgeir Waterhouse, senior advisor at
the Consumer Council of Norway, the body that took the iTunes case.
"The digital rights of consumers have been dictated by the industry
for a long time. This decision marks the start of a struggle to
recover them."
The Ombudsman, whose decisions have the status of court rulings,
said that the terms of agreement with iTunes were unreasonable with
regard to the Norwegian Marketing Control Act. It said that
Norwegian, not English, law must govern the agreements and that
iTunes cannot disclaim liability for damage done to
machines by its software. The company has until 21st June to
comply with the ruling.
The ruling also said that the digital rights management (DRM)
which attaches to iTunes songs may not be legal since the only
portable device that can play the purchased material is Apple's
iPod. Apple has until 21st June to respond to this decision, a less
severe ruling which recognises the importance of iPod sales to the
iTunes business model.
"This leaves iTunes with three options," said Waterhouse. "They
can leave the market, change their terms or operate the same as
before, but the Ombudsman can impose some pretty heavy fines."
Apple has the right to appeal to the Norwegian courts system.
The company has told the Norwegian press that it does not intend to
leave the Norwegian market and that its lawyers are working on the
issue now, but refused to comment on the digital rights management
question.
Gavin McGinty, an e-commerce specialist with Pinsent Masons, the
law firm behind OUT-LAW, said that Apple's behaviour was
uncharacteristic. "Apple has traditionally been very good at
managing these sort of risks, which is partly why you can
only use iTunes in selected countries" he said.
"They have clearly thought about some of the issues before
they started to sell in Norway, but it looks as if they didn't go
quite far enough. When you start to sell in a new country you need
to do more than just translate your terms and conditions into the
right language. Each country has different consumer laws, so you
also need to get the terms checked over by a lawyer in that country
to make sure that they are fully compatible. Getting this done
doesn't usually cost very much and, as Apple are finding out, it
can save a lot of trouble and money down the line."
Apple declined to comment on this story.
