Now Microsoft Wants To Stop You Taking Them To Court

It's one of 2011's more troubling, if less sexy developments: that of major publishers and platform holders finding ways to stop customers taking them to court if something goes wrong with their product or service.

Sony was the first company to introduce a "no sue" clause as part of its terms of service in September, and was swiftly followed by Electronic Arts. Now Microsoft and its Xbox 360 are in on the act.

As part of the new dashboard update rolling out worldwide today, the console comes with a new terms of service agreement that users must agree to. Most of it is standard stuff, until you get to section 18.1.4. Binding Arbitration. It reads as follows:

IF YOU LIVE IN THE UNITED STATES, YOU AND MICROSOFT AGREE THAT IF YOU AND MICROSOFT DO NOT RESOLVE ANY DISPUTE BY INFORMAL NEGOTIATION UNDER SECTION 18.1.2 ABOVE, ANY EFFORT TO RESOLVE THE DISPUTE WILL BE CONDUCTED EXCLUSIVELY BY BINDING ARBITRATION IN ACCORDANCE WITH THE ARBITRATION PROCEDURES IN SECTION 18.1.7 BELOW. YOU UNDERSTAND AND ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION, YOU ARE GIVING UP THE RIGHT TO LITIGATE (OR PARTICIPATE IN AS A PARTY OR CLASS MEMBER) ALL DISPUTES IN COURT BEFORE A JUDGE OR JURY. INSTEAD, YOU UNDERSTAND AND AGREE THAT ALL DISPUTES WILL BE RESOLVED BEFORE A NEUTRAL ARBITRATOR, WHOSE AWARD (DECISION) WILL BE BINDING AND FINAL, EXCEPT FOR A LIMITED RIGHT OF APPEAL UNDER THE FEDERAL ARBITRATION ACT. ANY COURT WITH JURISDICTION OVER THE PARTIES MAY ENFORCE THE ARBITRATOR'S AWARD.

THE ONLY DISPUTES NOT COVERED BY THE AGREEMENT IN SECTION 18.1 TO NEGOTIATE INFORMALLY AND ARBITRATE ARE DISPUTES ENFORCING, PROTECTING, OR CONCERNING THE VALIDITY OF ANY OF YOUR OR MICROSOFT'S (OR ANY OF YOUR OR MICROSOFT'S LICENSORS') INTELLECTUAL PROPERTY RIGHTS.

Shortly after, section 18.1.6 reads:

18.1.6. CLASS ACTION WAIVER. YOU AND MICROSOFT AGREE THAT ANY PROCEED­INGS TO RESOLVE OR LITIGATE ANY DISPUTE, WHETHER IN ARBITRATION, IN COURT, OR OTHERWISE, WILL BE CONDUCTED SOLELY ON AN INDIVIDUAL BASIS, AND THAT NEITHER YOU NOR MICROSOFT WILL SEEK TO HAVE ANY DISPUTE HEARD AS A CLASS ACTION, A REPRESENTATIVE ACTION, A COLLECTIVE ACTION, A PRIVATE ATTORNEY-GENERAL ACTION, OR IN ANY PROCEEDING IN WHICH YOU OR MICROSOFT ACTS OR PROPOSES TO ACT IN A REPRESENTATIVE CAPACITY. YOU AND MICROSOFT FURTHER AGREE THAT NO ARBITRATION OR PROCEEDING WILL BE JOINED, CONSOLIDATED, OR COMBINED WITH ANOTHER ARBITRATION OR PROCEEDING WITHOUT THE PRIOR WRITTEN CONSENT OF YOU, MICROSOFT, AND ALL PARTIES TO ANY SUCH ARBITRATION OR PROECCEDING.

What this means is that if something happens to Xbox Live or the Xbox 360 in general, you can't sue Microsoft. Nor can you join in a class action suit targeting Microsoft.

As we've explained previously, this sets a dangerous precedent, as these new terms have been drafted for exactly the same reason as Sony's, EA's and many other non-gaming companies, like insurance firms, have in recent times.

Unlike courts, whose outcomes are decided by juries (who can by sympathetic towards consumers battling multinational corporations), decisions made via private arbitration often find in favour of businesses, and even when siding with consumers offer relatively small payouts.

You normally can't appeal the findings of a private arbitration hearing, nor is there an independent or public means of reviewing an arbitrator's decisions. They are also designed to be conducted privately, out of the public eye.

It's a move designed, in essence, to steamroll your rights as a consumer. To ensure that even if Microsoft screws something up, or something terrible happens to the platform, any compensation or dispute will be handled on their terms, not those of a court and jury.

Note that this move only affects residents of the United States. Those outside the US can carry on as usual. For Americans who want to do something about the new terms, there is a way out. So long as you contact Microsoft within 30 days of singing the new terms of service agreement, you can be exempt from this new clause. You'll need to contact them in writing, by mailing:

Microsoft Corporation, ATTN: LCA ARBITRATION, One Microsoft Way, Redmond, WA 98052-6399

You should probably do so.


Comments

    This will never happen in Australia we have all these unfair contract laws and the ACCC crawling up every companies crevice over anything remotely unjust.

      You make it sound like a bad thing! I think the contract and consumer protection legislation in Australia is quite robust.

        Wasn't trying to come off as negative, maybe using the words crevice and crawling made it seem that way.

          Those words are always negative.

          A term like this would probably also be unconscionable since its so one sided and we can't buy an Xbox from anyone else.

            Security isn't a dirty word, Blackadder. Crevice is a dirty word, but security isn't.

      You mean it won't happen because we DON'T have class action lawsuits...

      Actually, it CAN happen! None of the laws have been retrofitted to handly electronic documents.

      Even if the whole cannot be enforced, individual EULA causes can be enforced.

      Contrary to popular belief, EULAs are binding regardless of the fact a pen is not involved.

        I think you need to check your definition the term 'retrofitted'.

        Saying that our laws (made decades ago) need to be retrofitted to include clauses relating to online content made me chuckle heartily. Now THAT's foresight.

      "This will never happen in Australia we have all these unfair contract laws"

      I have checked the Unfair Contract laws and unfortunately none of them even mention the term EULA. Thus their scope does to offer protection to EULAs, making them enforcible.

        I don't think you are correct. There are lots of legal issues around standard form contracts, which I believe this to be one (involving unfair contract terms etc). However simply put, as is my understanding, no clause in any contract can remove an Australian's ability to pursue a legal case.

          Depends on the nature of the contract. The problem I see is that most protections involve paper contracts and do not have scopes on digital contracts - which is what EULAs are. An electronic agreement that can be held up in court (depending on interpretation, let's not go there).

            You are wrong. It makes no difference whether the contract is in paper or electronic form, that is simply a question of form. What a Court will be concerned with is the substance of the agreement and whether it adheres to contractual requirements of the common law. The fact that the consumer protection legislation doesn't specifically mention the word EULA has no bearing on the issue because it is still asserted to be a contract being enforced against another party.

            A EULA is just a contract, WiseHacker. You're way off there. The "A" stands for "agreement" after all. It being electronic makes no difference at all.

    Yeah i love that in Australia none of these things are actually legally binding if negligence or anything along those lines are found to be present.

      The specific cause? Maybe.

      But EULAs as a whole? Unfortunately, they ARE binding. How far depends on the causes in them.

      I play it safe and reject them first until I know for sure. Causes my install times to be measured in hours but I rather safe than sorry.

      And before anyone tries that trick again - Accepting agreements via the likes of installing the software or pressing the 'X' button DOES count as a pen stroke.

        Your unreserved belief in the enforceability of EULA's in Australia is misplaced. I suggest you read the new provisions of the Australian Consumer Law which SPECIFICALLY deal with standard form contracts such as EULAs. Here is a simplified guide for your benefit:

        http://www.consumerlaw.gov.au/content/the_acl/downloads/Unfair_Contract_Terms_Guide.PDF

        That is quite apart from the fact that an Australian Court will NEVER accept the enforceability of a clause which ousts the Court's authority to review and determine issues arising in respect of that agreement. Feel free to look this up.

    lol why is gaming becoming a complicated contract?

      I think it all started when we stopped buying the product in our hands and started to simply buy the "licence" to use the product...

        That's all you've EVER been buying.

          And let's not forget that it's a load of horseshit. Legally correct or not, it doesn't accord with the practical reality and how we feel about the product.

    I wonder why it only covers US residents. The Sony one covered everyone worldwide, didn't it?

      Most likely because Microsoft's legal department couldn't be bothered to see if this was legal in countries outside the US and took the easy/safe way out

        Yeah. I am sure Microsoft hires lazy and incompetent lawyers. :p

      Does that make the Wii the best console EVAR?

      troll

        No, its library of fantastic games does that!

      What are chances of Microsoft getting sued in Japan for the Xbox. No one really owns one there.

      America is their largest market.

        Japan will proberly be more focused on bringing back tourism after having a nuclear disaster as you can imagine chernobyl isn't exactly a high demand place to visit (unless your into vacant cities)

      Maybe they could not be bothered with checking International Laws. It's quicker and faster to generate contracts for each country than a International Blanket Contract.

    The ACCC would take one look at this, laugh, and tell them to get over themselves and take that clause out. Thank god for the litigation rights protections here in Aus

    Luke Plunkett. Because all the best bloggers evoke Godwin's Law when talking about trivialities. What a hack.

      It's not Hitler, bud. It's Big Brother from '1984'.

      That image isn't of Adolf Hitler, it is Big Brother from Nineteen eighty-four by Orwell.

      Probably should have made sure it was a Nazi reference before you called the guy a hack.

    Either way, I don't see how this applies to the article. This particular change doesn't impede on human rights, the availability of the truth or privacy.

      Doesn't the Janeva Protocol clearly state that one is entitled to a trial by jury? Or am I confusing with the US Constitution?

        A trial by jury only applies to criminal cases, and I do believe that's the US Constitution. I could be wrong, however.

        The Geneva Protocol is about prohibiting the first use of biological and/or chemical weapons.

      Big brother is a word synonyms with abuse of power, especially when it impedes civil liberties. Seems obvious why someone would use it.

    GOD BLESS THE ACCC AND AUSTRALIAN LAW.

    I guess there's no stopping MS from making another defective product with a 55% failure rate anymore... Microsoft had the chance of learning from the billion dollar mistake with the Xbox 360, but I guess they're just too arrogant.

    I won't be buying the next Xbox anymore. Even if this doesn't affect Australia, there still is no stopping MS from making the console defective and having a mere 1-year warranty like the 360 originally did. I don't like the idea of buying another $600 console and having to pay $200 every 12 months because the thing likes to shit itself.

    is Australia legit for gamers? is there any restriction? like in Germany?

    "So long as you contact Microsoft within 30 days of singing the new terms of service agreement, you can be exempt from this new clause."

    That's possibly the only consolidation - if I remember right, EA only allowed 30 days after the issue of the updated agreement. Signing basically means from the moment you select "Accept" on the screen.

    Do users have to inform Microsoft in writing? Or will Microsoft get a clue and allow email?

    And I'm sure if any US users do contact Microsoft within 30 days they will be happy to close their accounts, cancel any subscriptions, and refund any DLC purchases.

    WHY IS MICROSOFT SHOUTING AT ME!

    Seriously though, why do US lawyers seem to think capitals get their point across better?

    LOL, so someone actually reads that? l'll be honest, when I was asked to Agree with the new Terms and Conditions today, I scrolled to the bottom to make sure they didn't include a clause in which I could be used in a Centi-Ipad

    I think what people are missing here is that the clause prevents law suits and class action suits (something americans are particularly 'liberal' with).

    it does state that prior to this, informal arbitration has to occur to allow the clause preventing law suits - i.e if they don't attempt to solve the dispute themselves they are open to litigation.

    i've also never dealt with a company such as microsoft (cue apple, optus, telstra, and toshiba) plus a number of other places which have refused to conduct discussions at how to resolve the dispute.

    the purpose of this clause is to prevent massive strung out law suits that cost microsoft $$$ to fund a defence and they end up winning anyway.

    The ACCC would probably allow this in concept, but would monitor all cases arising closely.

      In fact, having re-read the contract terms.

      It does NOT prevent personal litigation. It just prevents collective litigation.

      As such, I'm sure the ACCC would have no issue with this - if this were to apply to australia.

        That's still the big problem. A single person could still sue but would be crushed by the companies stronger team of lawyers. Class action brings the public onto more even footing by forcing the courts to recognise that there are multitudes of people claiming.

    what pricks

    you can't sue them but they can sue you if you pirate their software.

    In australia you have a right to take them to Fair Trading if a product or service is not fit for the purpose it was sold for. No amount of get of jail free card clauses are going to do diddly. Furthemore they'd be idiots to try to claim such protection since the Tribunal Member would instantly see it as bullshit.

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