My Lords, this has been an interesting debate. Amendment 34 raises an important issue for digital content—when does a defect in digital content render it faulty and at what point is digital content not of satisfactory quality? I can confirm that BIS has listened to Professor Bradgate. As such, I recognise that some forms of digital content, such as software or games, commonly contain minor defects, or bugs, because it is currently difficult to produce code that is entirely error-free, whereas other types of digital content, such as music files, do not. I know that industry players such as techUK and the Federation Against Software Theft have expressed the concern that complex forms of digital content, such as software, should not be treated in the same way as simpler forms of digital content, such as music files. I believe that the Bill is flexible enough to cope with these differences.
Reasonable consumers understand that some types of digital content sometimes contain minor bugs, and that bugs will usually be fixed along the way through an update, although I went into a reverie at one stage listening to the noble Lord, Lord Knight, and remembered that my very early updates of MS-DOS were actually posted to me on a five and a quarter inch floppy disk, so things have moved on. While I know that the software industry is concerned about the phrase “freedom from minor defects”, the key point is that freedom from minor defects is an aspect of satisfactory quality only “in appropriate cases”.
We have acknowledged in the Explanatory Notes that it is the norm to encounter some bugs in a complex game or piece of software on release. A reasonable person might not expect that type of digital content to be completely free from minor defects. We will also highlight this point in business and consumer guidance when implementing the Bill. That guidance is being written in consultation with industry and consumer stakeholders. The Bill team confirmed this when we went through it again just before this session.
Assessments of satisfactory quality also take into account “all relevant circumstances” and I would expect the type and nature of the digital content to be such a relevant circumstance. However, it is entirely reasonable to expect other forms of digital content, such as MP3 or music files, to be free from minor defects. Such types of digital content would probably not be judged to be of satisfactory quality if they contained bugs, even minor ones. So it is important to retain “free from minor defects” as an aspect of satisfactory quality in “appropriate cases”, as the Bill provides.
Although I understand the driver behind the amendment, I believe that the Bill is already flexible enough to take these concerns into account. To pick up a point made by my noble friend Lord Clement-Jones, about evidence that reasonable consumers expect bugs in software, the presence of bugs is widely understood in the marketplace. In its evidence to the BIS Select Committee during pre-legislative scrutiny, Which? stated:
“Consumers are very accepting of updates and patches within the software development world and when purchasing apps”.
That will, necessarily, form part of the assessment of satisfactory quality. However, consumers do expect software to work as they are told and as described when sold and that in any given situation, you would be able to tell the difference between a faulty piece of software and one that is just evolving.
The Bill is based on, and takes into account, the expectations of a reasonable person. Amendments that address specific types of software would reduce this flexibility, and may limit the relevance of the provisions in future as the industry evolves. I am also concerned that a blanket requirement to take account of the common presence of defects could have negative implications for consumers. It would make it harder for a consumer ever to show that software was not of satisfactory quality when it contained a defect, even one that was not minor.
Amendment 36 seeks to bring the issue of defects into the concept of “fit for a particular purpose”. As such, it conflates two different concepts: satisfactory quality and fit for a particular purpose. Digital content is fit for a particular purpose or it is not. That is separate from questions about whether it is of satisfactory quality. Clause 35 relates to instances when a consumer might let a trader know that they intend to use the digital content for a specific purpose that is not the normal use of that digital content. So if a consumer tells a sales assistant that she wants to use a computer game described as helping children learn to read in order to teach her child some basic letter sounds, and the trader sells her the game for that purpose, the game must be fit for that particular purpose—it must be able to teach basic letter sounds. The consumer is relying on the skill and judgment of the trader that the game has this feature.
If the digital content is not fit for that particular purpose, Clause 35 is breached, unless the trader can show that the consumer did not rely, or it was unreasonable for them to have relied, on the skill or judgment of the trader. A defect might render some digital content unfit for a particular purpose if a necessary feature did not work well enough or, indeed, it did not work at all. In such cases, I would be concerned that a requirement to take account of the common presence of defects could create a lack of clarity for consumers and lower consumer protection. The amendment could water down the concept of “reasonably fit” in subsection (3) for products that could be argued to be of a type that commonly includes defects. This could have the effect of reducing the impact of Clause 35 and therefore consumer protection.
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Finally, Amendments 37 and 38 seek to provide that, for complex types of digital content, the mere presence of defects should not mean that the digital content is not as described, unless the description specifically states that the digital content is defect-free. However, as with “fit for a particular purpose”, the digital content either meets the description or it does not. As with Amendment 36, Amendments 37 and 38 have the effect of undermining the requirement that the digital content should be as described.
The description of the digital content is largely in the gift of the trader, but it includes information on the main characteristics of the digital content and its functionality and interoperability, as required under the Consumer Contracts Regulations. Again, digital content is either as described or it is not. If digital content does not perform a function it is described as having, then it is not as described.
What about defects that prevent functions from working? If a consumer buys a word processor that is described as having a spell checker and the spell checker has a defect that prevents it from working properly, the digital content is clearly not as described. I am concerned that the amendment could be interpreted such that, in this scenario, the word processor still meets the description because software normally contains defects, so that is to be expected. This is not an acceptable outcome for consumers. If a defect affects the functioning of the digital content so that it no longer meets the description, the consumer should be entitled to a remedy for breach of Clause 36. That is the position in the Bill and I believe it is the right one.
As well as being concerned by a reduction in consumer protection, I am concerned about the effect of the amendment on the longer-term competitiveness of the UK digital content industry. If we effectively state in legislation that some types of software contain bugs and are therefore not usually faulty, what is the driver for improvement in the industry?
My noble friend Lord Clement-Jones raised a point that certain features might have to be removed to deal with new security threats. I am not really ducking the issue, but I say to him that we are going to discuss that under Amendment 40A.
The noble Lord, Lord Knight, asked about Clause 34(3) and how quality is defined, especially in paragraph (c), “safety”. If a company has a B2C relationship and collects data from consumers but the personal data is not kept secure by the business, is the consumer protected by the term “safety”? To be of satisfactory quality, digital content must meet
“the standard that a reasonable person would consider satisfactory”,
taking into account all relevant circumstances. Our view is that the security of digital content is a relevant circumstance that could form part of the judgment of whether or not digital content is of satisfactory quality.
All that being said, I therefore ask the noble Lord to withdraw his amendment.