January 01, 2006

posted by Daniel J. Solove

If the EULA is in the box, then Virgin may need to accept returns after consumers open the box as part of forming the contract (see ProCD, Hill v. Gateway). Indeed, I think it would be pretty easy to find a legal basis that allows consumers the right to return the CD under the situations you describe.

From my perspective, the more interesting Q is--would consumers (or class action lawyers standing in their stead) have the right to seek damages based on contract or consumer protection doctrines (such as failure to disclose)? Eric.

The original post makes it clear this was a CD purchased in India.

The blogger's purchase was made in India so I have no idea what the answer would be there. But assuming it was in the U.S., it's a little complicated figuring out what right of return you might have. First of all, the "we" in the last bullet of the notice is probably the record label; I don't know what obligation a label would have to accept a returned CD in the absence of any such notice. My guess is none, just like any other retail good sold without a specific warranty. The retail merchant may have an obligation to accept returns that, as you note, fail to conform with reasonable user expectations under state consumer protection laws, such as a little FTC Act. That's not my area of expertise either. However, in this situation, I think it's at least debatable whether there is a "reasonable" expectation that you can copy your CDs to your computer. The fact that your attempts to load your CD into your Grokster share folder are going to be thwarted doesn't mean Virgin has an obligation to disclose that fact somewhere on the packaging. If you can't load it onto your MP3 player either, and there was no ex ante notice of that fact, and no opportunity to return, that strikes me as more problematic.

There are several cases on the enforcement of so-called "shrinkwrap licenses" -- licenses that cannot be read until the buyer has paid for the product and taken it home. Most courts have held that such licenses are enforceable, but only if the buyer had an opportunity to reject the proposed license terms, e.g., by returning the product without using or installing it. See, e.g., ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996). Section 112 of the Uniform Computer Information Transactions Act makes this right of return explicit, but it is the law in only two states. But all of this may be inapplicable, because what we have here is not a license term, but notification of a feature (in the value-neutral sense) of the product. It's more of a disclosure issue than a contract formation issue, which gets back to commercial law.

By the way, Dan, what do you think of Itch.in's cri de coeur "When will they realize that if it’s in bits and bytes, nothing’s ever secure?" When will you realize that, and stop calling for businesses to better protect personal data?

Eric, I'm not sure the notice is a term. I think it's just a notice; just like a notice saying, "This album was recorded in 1992." You couldn't say that the latter notice is attempting to alter the terms of the original purchase in some fashion, by, e.g., imposing additional conditions on the sale; it's just telling you what you got.

It appears that the CD was sold in India. I'm interested in how the law in the US would apply had the CD been sold in the US . . . although on the off-chance there's a reader with expertise on commercial law in India, a comment about that would be interesting.

Like Eric, I suspect that consumer protection and/or ordinary commercial law doctrines (merchantability and/or fitness for a particular purpose under Article 2) would kick in here -- but not against Virgin. They would kick in against the sellers of the CDs. That assumes, per Dan, that the sellers are located in the U.S. The "notice" doesn't just indicate that purchasers won't be able to copy the contents; it also indicates that the purchasers won't be able to play the CD, at least on some devices. That strikes me as being pretty clearly contrary to the ordinary expectations of a consumer, and contrary to the specific expectations of a CD purchaser. Is that a winner of a (class) claim? I don't know. But I think that it survives a demurrer.

Why isn't it the case that Virgin Records
is engaged in fraud? (And for that matter, would
the *record store* be able to sue then for it?)