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Spangenberg, Shibley & Liber, LLP | Mar 5, 2014

When Product Features Disappear, What Legal Recourse is Available?

Categories: Business Litigation

I recently read a blogpost by Stanford professor and computer entrepreneur Steve Blank regarding “reverse feature creep.”1That is, in a world in which new features are constantly being added to software, electronics, cars and other consumer goods – often by means of “updates” consumers are not even aware of – what happens when some features disappear?

Blank provides a few examples of reasons that features can disappear post-purchase. In one, Apple encouraged users to download updates (for free) to software they had purchased previously. Only after they downloaded the “new” versions did users learn that many of the features that had prompted them to buy the software initially had been removed. From the point of view of Apple’s software developers, the updated software ran more smoothly, but customers were more interested in the features they had paid for that the update took away.

In another example, Amazon unilaterally removed books from customers’ “libraries” after Amazon found itself on the wrong end of a copyright lawsuit. In another, the car manufacturer Tesla updated the vehicle’s software to remove the “smart air suspension” feature after it was implicated in cars catching fire. While consumers were no doubt happy their cars were less likely to burst into flames, they were presumably not pleased that a feature for which they paid over $2,000 was removed with no notice or compensation.

The issue raised here is not easily addressed by traditional legal remedies such as warranties. First, software vendors most always include a waiver of any express or implied warranty.2That waiver was typically not enforceable when presented after the sale of software (for example, inside the sealed package).3 However, as we buy less software and content on physical media, that case law becomes less relevant. If presented prior to the sale – as is almost always the case when purchasing software or digital content by way of an electronic device4 – these waivers are generally enforceable and invariably disclaim any warranty outside of whatever minimal protection is explicitly provided. Further, in agreeing to electronic updates, consumers are usually required to again waive rights to a legal remedy related the software’s functionality, whether through a waiver clause and/or an arbitration clause. And it is rarely if ever cost effective for consumers to sue software or content providers over disappearing features, no matter the validity of the claim.

Blank proposes a 21st century consumer bill of rights, requiring that purchased content be protected absolutely and that features of purchased software or equipment be protected to the extent possible with, at a minimum, notice to the user that an update may remove a feature. That seems a laudable goal, although there is reason to believe it would be difficult to accomplish legislatively, as new economy companies like Apple and Amazon have joined their old economy brethren as powerful voices in our legislators’ ears. The solution might ultimately require some novel thinking (and litigation) on behalf of consumers. Case law will define a standard of care owed by vendors of oft-changing “new-economy” products to their consumers, while also making it easier for vendors to understand what is in and out of bounds when updating purchased software and hardware. ■

1 steveblank.com/2013/11/21/when-product-features-disappear-amazon-apple-and-tesla-and-troubled-future-of-21st-century-consumers
2 "Software publishers disclaim the implied warranty of merchantability because the repercussions of recognizing such warranties are unknown."www.jcil.org/journal/articles/243.html, Robert W. Gomulkiewicz, 1998, 16 John Marshall J. of Comp. & Info. Law 393.
3 See, e.g., Step-Saver Data Systems v. Wyse Technology & The Software Link, Inc., 939 F.3d 91 (3rd.Cir, 1991)
4 Those annoying terms and conditions everyone hastily clicks through