The Full Court of the Federal Court has rejected the appeal by US company Valve Corporation against a decision to fine it AUD3 million for misrepresentations in its online Service Agreement which contained a no refund policy and no guarantee that Valve’s computer games were error-free: Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 224. Our report on the original decision is here. On 19 April 2018, the High Court then rejected Valve’s attempt to appeal from the Full Court decision, so this is the end of the legal road for Valve.
Blanket no refund policies breach the Australian Consumer Law because the ACL contains a number of consumer guarantees that cannot be excluded.
The Australian Competition and Consumer Commission argued that the ACL applied to Valve’s software supplies to Australian consumers and that the representations in its Service Agreement were made in Australia. Valve denied this because it was a US company, most of its equipment and all of its staff and business premises were in Washington State, its Service Agreements were said to be subject to the law of Washington State and consumers of its games would access them from the United States.
However, the Court held that the ACL did apply to Valve’s supplies of computer games because s67 of the ACL overrode the Agreement’s choice of Washington State law. The software was supplied by Valve to customers in Australia when the customers downloaded the computer games in Australia.
The question was whether Valve’s representations were made in Australia, even though they were made on a website based in the US or in software downloaded from the US. The Court held that, if a company is based overseas and has a relationship with customers in Australia, it is likely that representations addressed to those customers will be made in Australia, being the place where the customers read the representations on their computers. Valve had the necessary relationship with customers in Australia because they had to establish an account with Valve to purchase a game, during which process they had to agree to the Service Agreement.
The case is significant for overseas companies who deal with Australian consumers over the Internet, and illustrates the importance of having an agreement reviewed for compliance with Australian law.
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