The Australian Competition and Consumer Commission has emerged with a win from a Federal Court stoush involving US software publisher Valve Software.
The ACCC took action over Valve’s refund policies for its Steam platform, which is used for the digital distribution of software (mostly games).
The consumer watchdog announced in late 2014 that it would take court action against Valve, which in addition to operating Steam is the publisher of a number of well-known gaming franchises including the Half-Life and Portal series.
The ACCC took Valve to court over elements of the publisher’s subscriber agreement and refund policy for Steam.
Valve was accused of making false and misleading representations in several versions of the agreement and policy.
The ACCC today said that the Federal Court had found Valve made false or misleading representations about guarantees under the Australian Consumer Law (ACL) including that
• consumers were not entitled to a refund for digitally downloaded games purchased from Valve via the Steam website or Steam Client (in any circumstances);
• Valve had excluded statutory guarantees and/or warranties that goods would be of acceptable quality; and
• Valve had restricted or modified statutory guarantees and/or warranties of acceptable quality.
Valve had contested ACCC’s arguments on a number of grounds. They included that the infringing conduct did not occur in Australia and that it does not carry out business in Australia, although it admitted that Australians were able to access Steam. The company is headquartered in Bellevue, Washington, in the US.
Valve also denied that it supplied “goods” as defined in the Australian Consumer Law, arguing it instead supplied a service (“online access to video games via a subscription service”).
“The Federal Court’s decision reinforces that foreign based businesses selling goods and/or services to Australian consumers can be subject to Australian Consumer Law obligations, including the consumer guarantees,” the ACCC’s chairperson, Rod Sims, said in a statement.
“In this case, Valve is a US company operating mainly outside Australia, but, in making representations to Australian consumers, the Federal Court has found that Valve engaged in conduct in Australia.
“It is also significant that the Court held that, in any case, based on the facts, Valve was carrying on business in Australia.”
“A heavy focus of this trial was upon whether the Australian Consumer Law applied to transactions of this nature involving the sale to Australian consumers from a foreign corporation of products, the essence of which was computer software," Justice Edelman ruled.
“Each of Valve’s challenges to the applicability of the Australian Consumer Law fails. The conflict of laws provisions in the Australian Consumer Law did not essentially carve out an exception for conduct by foreign corporations like Valve governed by a different contractual proper law. Valve supplied goods (which are defined as including computer software). And Valve’s conduct was in Australia and it was carrying on business in Australia.”
“This is also the first time Courts have applied the extended definition of ‘goods’ to include ‘computer software’ in the ACL,” Sims said.
“It will provide greater certainty where digital goods are supplied to consumers through online platforms.
“Consumer issues in the online marketplace are a priority for the ACCC and we will continue to take appropriate enforcement action to hold businesses accountable for breaches of the ACL.”
Valve has been approached for comment.
Until July 2014, the Steam website indicated it did not offer refunds or exchanges. In July 2014 it modified its policy to say it did not offer refunds or exchanges "unless requried by local law".
In June 2015 the company introduced a refund system for Steam.
Under the platform’s current refund policy, consumers will be granted a refund if they request it within two weeks as long as they have played a game or used an application for less than two hours.
If a user falls outside those requirements, he or she may still be granted a refund in some circumstances, the policy states.
According to Valve, Steam has 1800 titles and 35 million active users. The service is available in 237 countries and 21 languages.
The court is yet to set a date for a hearing on relief.
A directions hearing will be held on 15 April.
The full judgement: