United States: Productwise Bitesize: Digital Content And Digital Services Directive 2019/770

What is it called?

Directive 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services (the "DCSD"). Forming part of the European "digital single market strategy", the DCSD continued the European Commission's objective to harmonise consumer law provisions. It contains rules on conformity with the contract and remedies available where there is an issue with any digital content/digital service supplied. It also stipulates that the consumer must be kept informed of and supplied with updates (including security updates) where required under the contract and as necessary to ensure continued conformity of the contract/services with the contract.

What is it about?

In a similar manner to Directive (EU) 2019/771 concerning contracts for the sale of goods (the "SGD", as discussed in a recent blog post here), the DCSD puts consumer protection first. It sets out both subjective and objective requirements for conformity, so the digital content or services must be fit for both any specified/agreed purposes and for purposes for which content or services of the same type would normally be used.

Under the DCSD, the business is liable for any failure to supply digital content or services, or any lack of conformity that exists at the time of supply and becomes apparent within two years (also referred to as a two-year warranty period).

Three remedies available to a consumer that receives non-conforming digital content/services are as follows: to have the content/service brought into conformity; to receive a proportionate reduction in price for the content/service (where a price has been paid); and (in certain cases, including where it is impossible or disproportionate to bring the content/service into conformity) to terminate the contract. The DCDS itself doesn't address whether the consumer may receive damages for breach of contract by the trader, and so this matter was left to the discretion of member states.

Who and what does it apply to?

The DCSD applies to B2C sales contracts between a business and a consumer for the supply of digital content or services. It bites either where the consumer pays the business (or undertakes to pay a price) or provides personal data to the business (other than where such data is provided only for the purpose of supply).

The focus areas of the DCSD are standalone digital content and digital services. Notable exceptions from the scope of the DCSD include (amongst others) texting (e.g. SMS); internet access; goods with inter-connected digital elements (which are regulated under the SGD); free/open-source software; financial services; and gambling services.

The DCSD applies regardless of the method of supply of the digital content or services, which will vary depending on the exact nature of the supply in question.

Why does it matter?

Furthering the digital single market strategy, the goal of the DCSD is to strengthen the EU's position as a digital economy leader by improving access to digital content/services. The harmonization brought about by this legislation is viewed to increase opportunities for growth at the same time as reducing potential barriers to trade.

The deadline for EU Member States to adopt national implementing legislation was 1 July 2021. From 1 January 2022, Members States must apply these rules regardless of when the relevant contract was formed (with very limited exceptions).

The DCSD is a piece of "maximum harmonisation" legislation. This means that unless expressly permitted in the text of the legislation, any contractual term that (to the consumer's detriment) excludes the application of national legislation implementing the DCSD, derogates from it, or modifies its effect, will not be enforceable against the consumer.

The DCSD only applies in the EU and was not incorporated into UK law prior to Brexit. A different regime operates in the UK following Brexit.

Where can I find it?

The DCSD is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.