Evan Schuman's StorefrontBacktalk

Sony’s lawyers responded in part by adding a new “Terms of Service” whereby the parties agree to arbitrate (and not litigate) any “dispute” between them. The agreement defines “dispute” as:

…any dispute, claim or controversy between you and any Sony Entity regarding any Sony Online Services or the use of any devices sold by a Sony Entity to access Sony Online Services, whether based in contract, statute, regulation, ordinance, tort (including, but not limited to, fraud, misrepresentation, fraudulent inducement or negligence), or any other legal or equitable theory, and includes the validity, enforceability or scope of this Section 15 (with the exception of the enforceability of the Class Action Waiver clause below). “Dispute” is to be given the broadest possible meaning that will be enforced.

What this means is that, if you use the PlayStation Network and someone has sold you a defective Sony Vaio (or committed fraud or misrepresentation), you can’t sue. It means if your Bravia television with integrated Internet access goes kaput, you are out of luck. If the Cyber Shot camera used to upload pictures is defective, you may not get your day in court. Remember, “dispute” is to be given the broadest possible meaning, and it applies to all Sony entities. Sony is a huge company that makes not only consumer devices but is also a full-service entertainment company.

The language above also defines a dispute as any disagreement “between you and any Sony entity,” thereby creating at least the possibility that the arbitration agreement is mutual. This could mean that Sony would be required to arbitrate any “dispute.” And that might not be a good thing for Sony.

The relationship between a consumer and a large, integrated, multinational multimedia company is a complex one. Ordinarily, we can think of dozens of things a consumer might want to sue a retailer for (defective products, rude salespeople, fraud, failure to protect data, slip and fall in a store) but few things consumers can do to raise the ire of the retailer (and the retailer’s lawyers) except failing to pay their bills.

The online environment changes this. Indeed, the Sony Terms of Service give a list of things that consumers are prohibited from doing. Consumers can’t engage in deceptive or misleading practices; harass or stalk others; upload offensive content; organize hate groups; transfer viruses, worms or malware; infringe copyrights; hack or reverse engineer code or content; or tell anyone—that’s right, not even your mother—your name or personal information through any means, among dozens of other things. You also agree not to violate the law.

So what if a consumer does any or all of these things? What if he or she pirates a Sony movie? Hacks a Sony network? Steals and sells Sony code? Uploads pirated Sony software? Assuming that the arbitration agreement is mutual, then Sony’s language may prohibit it from suing for copyright infringement, filing a complaint for hacking or pursuing any other legal remedy other than arbitration. Sony could, of course, agree by contract not to prosecute or refer for prosecution a shoplifter and instead to handle the shoplifting “dispute” through arbitration.