Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196
File number:
NSD 886 of 2014
Judge:
EDELMAN J
Date of judgment:
24 March 2016
Catchwords:
PRIVATE INTERNATIONAL LAW – Meaning of proper law of a contract – operation of “conflict of laws” clause in s 67(a) of Australian Consumer Law – whether Division 1, Part 3-2 (Chapter 3) of Australian Consumer Law applies to contracts where the real and closest connection is not the law of any part of Australia
CONSUMER LAW – meaning of “goods” in s 4(1) of the Australian Consumer Law – whether provision of computer software by contract involving a licence for provision of computer software is a supply of goods
CONSUMER LAW – meaning of “conduct in Australia” in s 131(1) of the Competition and Consumer Act 2010 (Cth) – whether there is a requirement that representations be “directed” at Australians to be conduct in Australia – whether representations made on websites are “directed”
CONSUMER LAW – meaning of “carry on business in Australia” is s 5(1)(g) of the Australian Consumer Law – whether respondent “carries on business in Australia” when it has 2.2 million Australian subscriber accounts, generates large Australian revenues, has valuable personal property in Australia, has business relationships in Australia, and incurs tens of thousands of dollars of monthly expenses in Australia
CONSUMER LAW – representations in consumer agreements, in chat logs and on website – whether representations contravened s 18(1) or s 29(1)(m) of the Australian Consumer Law – misrepresentations contained within contractual terms – extent to which qualifications in the same or other contractual terms alter the otherwise misleading representation
Legislation:
Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) Sch 2; Div 1 of Pt 3-2; Chs 2, 3, 4; ss 2, 2(1), 2(2), 3, 4(1), 4(2)(a), 5, 5(1), 5(1)(a), 5(1)(g), 5(2), 5(3), 5(5), 8(2), 11(c), 11(d), 18, 18(1), 18(1)(m), 21, 23, 29(1)(m), 47, 48, 51, 54, 54(2), 54(3), 54(6), 64, 67, 67(a), 67(b), 131, 131(1), 236, 259, 259(1), 259(3), 263(4), 276
Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) 600 [25.28]
UNCITRAL Model Law on Electronic Commerce1996 with additional article 5 bis as adopted in 1998 (adopted…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196
Case
[2016] FCA 196
Decision Date
CaseChat Overview and Summary
In the Federal Court of Australia, the Australian Competition and Consumer Commission (ACCC) brought a case against Valve Corporation, a foreign entity, over alleged breaches of consumer law. The dispute centred on whether Valve contravened the Australian Consumer Law by making misleading representations to Australian consumers in connection with the sale of computer software through its Steam platform. The ACCC argued that Valve's conduct fell under Australian jurisdiction, despite the contractual terms indicating a foreign proper law. Valve contested the applicability of the Australian Consumer Law and argued that its conduct did not involve misleading representations as claimed by the ACCC.
The court was required to decide several key legal issues, including the proper law of the contracts, the definition of "goods" under the Australian Consumer Law, the scope of "conduct in Australia," and whether Valve carried on business in Australia. The court also had to determine if Valve's representations in chat logs and on its website contravened specific sections of the Australian Consumer Law. The central issue was whether the Australian Consumer Law applied to Valve's transactions with Australian consumers, given Valve's foreign incorporation and contractual terms indicating a different proper law.
The court found that the Australian Consumer Law did apply to Valve's transactions. It concluded that the conflict of laws provisions did not exclude foreign corporations and that Valve's supply of computer software qualified as the supply of goods. Valve's conduct was deemed to be in Australia and that it carried on business in Australia, given its significant Australian subscriber base and revenue. The court held that Valve contravened sections 18(1) and 29(1)(m) of the Australian Consumer Law by the terms and conditions in its contracts and some refund policy statements. However, it found that the conduct of Valve's Steam Support representatives in online chats did not contravene the Australian Consumer Law for the specific consumers involved in this litigation.
The court ordered that the matter be listed for a hearing to determine remedies. This conclusion was limited to the specific representations alleged by the ACCC and the particular consumers involved in the case. The findings underscore that the circumstances of other consumers might lead to different outcomes.
Orders
Orders of the court
1. The matter be listed for a hearing as to remedies.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
In summary, I conclude that Valve did not contravene s 18(1) or s 29(1)(m) by the statements of Steam Support representatives in the online chats. Those statements did not mislead any of the consumers and they did not involve the pleaded representations.Conclusion 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. 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. Valve’s conduct contravened s 18(1) and s 29(1)(m) of the Australian Consumer Law by the terms and conditions in its SSAs and also by the statements in two of its Refund policies which broadly concerned availability of refunds. However, the conduct of Valve’s Steam Support representatives in online chats did not contravene the Australian Consumer Law. This latter conclusion applies only to the particular three Australian consumers in this litigation. It is a conclusion based on the particular representations alleged by the ACCC. In particular, the conclusion is based upon the pleaded allegation that statements made by the Steam Support representatives involved implied representations which, in turn, were misleading. The ACCC did not bring a case that the statements themselves were misleading. In light of the conclusions I have reached about the SSAs and two of the Refund policies, the different circumstances of other consumers seeking refunds, including particular questions asked by those consumers and answers given, might well have led to a different result.
Ratio Decidendi
Legal Principle Established
Apart from the approximately 4,000 games available for purchase or free download, the Steam Client also provides consumers with many other functions including friends lists, chat, user groups, community groups, Steam cloud, Steam music player, video driver updates, and user profiles. Valve’s evidence referred to many of these other functions and many Steam products in detail. It is sufficient to observe that many of Steam’s non-game offerings are very closely associated with Steam’s core provision of games. Some examples follow.(1)Steam Wallet, as I have explained, is a method of paying for Steam games.(2)Steam subscribers can “create content” that can be used in Valve’s games and sold to other subscribers, for which Steam receives a portion of the sale proceeds. Senior counsel for Valve gave examples of such content as a digital “hat” or digital “sword” (ts 199).(3)Steam subscribers have a licence to make modified versions of Valve games and to distribute them for free.(4)Steam curators are individuals or organisations who make recommendations to others about video games.(5)Steam Wish list is an ability for subscribers to add games on to a wishlist.(6)Steam Greenlight is a forum where Steam subscribers can submit an unreleased game for the Steam community to rate according to whether they would like to see the game on Steam.(7)Steam Play is a feature that allows subscribers to purchase subscriptions to games.(8)Steam Cloud is a feature which stores the game data of a subscriber when a game is concluded so that when the subscriber goes online again, from any computer, he or she can access this information including for sharing with friends online. Steam Cloud is made available by third party service providers such as Microsoft Azure or Amazon Web Services.(9)Steam Support has a website published to the world at large for inquiries by way of a ticket received in servers located in Washington State.The operation of the Steam servers Steam is supported by a global network of servers and associated information technology. Nearly a thousand servers are located in Washington State. The servers can broadly be classified in the following groups.(1)Steam website servers in Washington State: used to host and support the Steam website and Steam store.(2)Steam Client Software and subscription servers in Washington State: the communications which permit a subscriber located in Australia to download the Steam Client software (including any updates) onto his or her local computer, create a Steam account, select a game subscription, and pay the purchase price. These servers also include the authentication of subscribers and, in this role, were sometimes referred to during the trial as “authentication servers”.(3)Steam content servers: host the content of Valve’s video games and all third party video games and other content available on Steam. Steam has content servers in Washington State as well as other locations around the world including Australia. The three of Valve’s content servers that are in Australia are located in commercial rack spaces leased from Equinix Australia Pty Ltd (Equinix). These content servers provide content to Australian customers as well as other customers, particularly in the Asian region.