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New Xbox Dashboard Update Contains "No Sue" Clause

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Posted by: Matt Liebl

Microsoft has become the latest to join the growing list of publishers and platform holders to prevent customers from sueing them if there is a problem with their product or service.

Contained in the new terms of service for the most recent Xbox 360 dashboard update, which began rolling out late last night, is a "no sue" clause which users must agree to before downloading the new dashboard.

Most of the agreement is standard, but when you get to section 18.1.4 Binding Arbitration, it reads:

IF YOU LIVE IN THE UNITED STATES, YOU AND MICROSOFT AGREE THAT IF YOU AND MICROSOFT DO NOT RESOLVE ANY DISPUTE BY INFORMAL NEGOTIATION UNDER SECTION 18.1.2 ABOVE, ANY EFFORT TO RESOLVE THE DISPUTE WILL BE CONDUCTED EXCLUSIVELY BY BINDING ARBITRATION IN ACCORDANCE WITH THE ARBITRATION PROCEDURES IN SECTION 18.1.7 BELOW. YOU UNDERSTAND AND ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION, YOU ARE GIVING UP THE RIGHT TO LITIGATE (OR PARTICIPATE IN AS A PARTY OR CLASS MEMBER) ALL DISPUTES IN COURT BEFORE A JUDGE OR JURY. INSTEAD, YOU UNDERSTAND AND AGREE THAT ALL DISPUTES WILL BE RESOLVED BEFORE A NEUTRAL ARBITRATOR, WHOSE AWARD (DECISION) WILL BE BINDING AND FINAL, EXCEPT FOR A LIMITED RIGHT OF APPEAL UNDER THE FEDERAL ARBITRATION ACT. ANY COURT WITH JURISDICTION OVER THE PARTIES MAY ENFORCE THE ARBITRATOR’S AWARD.

THE ONLY DISPUTES NOT COVERED BY THE AGREEMENT IN SECTION 18.1 TO NEGOTIATE INFORMALLY AND ARBITRATE ARE DISPUTES ENFORCING, PROTECTING, OR CONCERNING THE VALIDITY OF ANY OF YOUR OR MICROSOFT’S (OR ANY OF YOUR OR MICROSOFT’S LICENSORS’) INTELLECTUAL PROPERTY RIGHTS.

Section 18.1.6 reads:

18.1.6. CLASS ACTION WAIVER. YOU AND MICROSOFT AGREE THAT ANY PROCEED­INGS TO RESOLVE OR LITIGATE ANY DISPUTE, WHETHER IN ARBITRATION, IN COURT, OR OTHERWISE, WILL BE CONDUCTED SOLELY ON AN INDIVIDUAL BASIS, AND THAT NEITHER YOU NOR MICROSOFT WILL SEEK TO HAVE ANY DISPUTE HEARD AS A CLASS ACTION, A REPRESENTATIVE ACTION, A COLLECTIVE ACTION, A PRIVATE ATTORNEY-GENERAL ACTION, OR IN ANY PROCEEDING IN WHICH YOU OR MICROSOFT ACTS OR PROPOSES TO ACT IN A REPRESENTATIVE CAPACITY. YOU AND MICROSOFT FURTHER AGREE THAT NO ARBITRATION OR PROCEEDING WILL BE JOINED, CONSOLIDATED, OR COMBINED WITH ANOTHER ARBITRATION OR PROCEEDING WITHOUT THE PRIOR WRITTEN CONSENT OF YOU, MICROSOFT, AND ALL PARTIES TO ANY SUCH ARBITRATION OR PROECCEDING.

In short, this means that if something were to go wrong with Xbox LIVE, Xbox 360, or anything related to the two, you can't sue Microsoft.  Nor can you join a class action suit against Microsoft.  It's fitting they would introduce this new agreement with the new update, shortly followed by a Xbox LIVE connection issue that has plagued some since the release.  If you were planning on taking them to court now, tough luck.

Instead of the case being taken to court and being decided by juries, decisions are made via a private "neutral" arbitrator.  These usually don't bode well for the consumers.

As I said earlier, Microsoft isn't the first to include a "no sue"clause in their terms of agreement.  They join a growling list led by Sony who introduced a similar clause in September, which was then followed by EA.

As Kotakul.au explains, the move is designed "to steamroll your rights as a consumer.  To ensure that even if Microsoft screws something up, or something terrible happens to the platform, any compensation or dispute will be handled on their terms, not those of a court and jury."

It should be noted that this new move only affects United States residents.  Good news, however, is that there is a way out of the new terms of agreement.  You must contact Microsoft within 30 days of signing the new terms of service agreement, and you can be exempt from the new clause.  You'll need to contact them in writing to:

Microsoft Corporation, ATTN: LCA ARBITRATION, One Microsoft Way, Redmond, WA 98052-6399

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