In a somewhat longer blog article, I just reported information about the new material defect concept for digital content, which will probably apply in Germany from January 1, 2022. Since I supervise many computer game developers, I would like to briefly add what problems this might bring to this industry. The law governing material defects in mass-produced software is highly controversial. While with individual software – hopefully – things like specifications and requirements are worked with, which then offer clues for owed contents and defects, this is not so simple with mass software like computer games. When is a computer game defective? When it jerks? When it crashes? If some quests can not be completed?

Key Facts

From January 1, 2022, a new definition of material defects will apply in Germany for digital content, especially for computer games.
The law on material defects is controversial, especially in the case of mass-produced software, where legal issues are often difficult to clarify.
The new directive is intended to replace the inadequate legal defect concept of Section 435 BGB for digital content.
The new § 327e BGB defines product defects of digital elements based on functionality and compatibility.
Computer games must be regularly updated in the future and meet the expectations of quality standards.
Statements made by marketing or PR departments can have legal consequences for manufacturers.
Consumer rights burden retailers, not directly the manufacturers of computer games.

The question of whether copy protection constitutes a material defect, for example, is controversial but probably not very relevant. However, this can probably be negated in the end, at least if the game can be started properly. This could be different in the case of a compulsory Internet registration, if this circumstance is not pointed out before the purchase. . Everything else is often controversial, at least in the B2C area, because often a buyer of a game will have so far shied away from making claims because of 30-40 euros or dealers have simply shown goodwill when individual claims have been made. In any case, I am not aware of any major court cases on this.

This could now change with the news mentioned in my other article. This is because the directive and thus the amendments to the BGB are intended to address precisely one problem. The fact is that the concept of defective title in Section 435 of the German Civil Code, which is tailored to physical objects, is already proving to be inadequate in the case of the purchase of rights; in the case of digital content, where the scope of the license provided and the stability of positions under the law of obligations are important, the outdated paragraphs are actually of little use.

According to the current status, however, this will only change for consumer contracts. With digital elements, a new subject category will be added starting next year. For computer games sold in isolation, i.e. where there is no qualified connection between an item and the digital element, the absence of defects in accordance with the digital element is then to be governed by the new §§ 327d BGB. However, its changes do not result from the implementation of the Sale of Goods Directive, but from the implementation of the Digital Content Directive (EU) 2019/770. I will shed more light on this policy soon. However, the new § 327e of the German Civil Code (BGB), which then defines the product defect of digital elements, is probably most relevant for computer games:

(1) The digital product is free from product defects if, at the relevant time, in accordance with the provisions of this subtitle, it complies with the meets subjective requirements, objective requirements and integration requirements. […]

(2) The digital product meets the subjective requirements if
1. the digital product
a) has the agreed quality, including the requirements for its functionality, compatibility and interoperability, otherwise,
b) is suitable for the use assumed under the contract,
2. it is provided as agreed with accessories, instructions and customer service
and
3. it is updated as agreed.

Functionality is the ability of a digital product to perform its functions according to its purpose. Compatibility is the ability of a digital product to work with hardware or software with which digital products of the same type are typically used, without the need for conversion. Interoperability is the ability of a digital product to function with hardware or software other than that with which digital products of the same type are typically used.

This does provide some clues, e.g. that computer games will probably have to get better user manuals again in the future and that these will have to be compatible for e.g. all PC systems for which they are intended. Just the latter can be problematic but also a point of contention. It is highly probable that the general terms and conditions, packaging content and other aspects will have to be adapted.

However, the legislator will probably also define objective characteristics:

(3) The digital product complies with the objective requirements if
1. it is suitable for ordinary use,
2. it has a quality, including functionality, compatibility, accessibility, continuity and security, which is customary for digital products of the same type and which the consumer can expect, taking into account the nature of the digital product,
3. it corresponds to the nature of a test version or advance notice that the entrepreneur provided to the consumer before the conclusion of the contract,
4. it is provided with the accessories and instructionsthat the consumer can expect to receive,
5. the consumer is informed of updates in accordance with § 327f and these are provided, and
6. unless the parties have agreed otherwise, it is provided in the latest version available at the time of conclusion of the contract.

Here, too, there could therefore be explosives. Thus, computer games must be updated regularly, must have the latest version when purchased, need accessories and manuals, and must match the quality standard of other common products. This could be quite a big hurdle, because if these points are missing, a game would be defective and the consumer could claim the usual consumer rights such as rescission or reduction of the purchase price. If the latter were to prevail, these might be points that urgently need to be taken into account in publishing contracts.

And ultimately, the usual nature will also be newly regulated for digital content:

The usual quality according to sentence 1 number 2 also includes requirements that the consumer can expect according to the public statements of the entrepreneur or on behalf of the entrepreneur or according to the public statements of another person in preceding links of the distribution chain. This does not apply if the entrepreneur did not know and could not have known the statement, if the statement was corrected in the same or an equivalent way at the time of the conclusion of the contract or if the statement could not influence the decision to purchase the digital product.

Especially statements of the marketing or PR department of publishers are to be considered particularly critically due to this regulation from next year on. Here, PR agencies could also face major liability issues.

Last but not least, the new § 327f BGB will regulate the integration of software:

(4) The digital product complies with the integration requirements if the integration
1. has been carried out properly or
2. has been carried out improperly, but this is neither due to improper integration by the contractor nor to a defect in the instructions provided by the contractor.

Integration means the connection and incorporation of a digital product with or into the components of the consumer’s digital environment so that the digital product can be used as required by the provisions of this subtitle. Digital environment means hardware, software or network connections of any kind used by the consumer to access or use a digital product.

These regulations could become relevant especially for consoles or similar, but also for other peripherals.

And as always, consumer rights burden the retailers, not the computer game manufacturer directly.

Many things can still change and many things will have to be specified and judged by the courts. However, developers of computer games should prepare themselves in good time for the potentially major changes resulting from the implementation of both EU directives or seek expert help.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.