Limitation of Sales Warranties as an Alternative to Intellectual Property Rights: An Empirical Analysis of IPhone Warranties’ Deterrent Impact on Consumers

By: Marc L. Roark

Apple’s success with the Apple iPhone has brought with it certain problems. Its success has engendered a community that has attempted to circumvent Apple’s exclusive service agreement with AT&T. Unfortunately for Apple (and similarly situated manufacturers), intellectual property law allows consumers to alter their products so as to circumvent relationships that manufacturers may have with others. The patent and copyright law first sale doctrine allows consumers to manipulate a product after it is purchased. As a result, manufacturers are increasingly turning to alternatives to intellectual property to secure control over the device after the sale. One such alternative is the exclusion of warranty under Article 2 of the Uniform Commercial Code. This iBrief considers whether limitation of warranties have the deterrence effect manufacturers desire. Said differently, it considers whether manufacturers can use warranty limitations to prevent consumers from using their products in an unauthorized manner. The iBrief presents a behavioral model based on the Triandis model of planned behavior and enhances the model by accounting for likely and unlikely benefits and detriments. The model suggests that participants weigh the probability and magnitude of the detriment against the probability and magnitude of the beneficial impact when making the decision to engage in technological piracy. This model, considered with other empirical evidence, suggests that Apple’s warranty could be a stronger deterrent for consumers than civil liability. The iBrief concludes that manufacturers can better protect their post-sale expectation of profits by raising consumer awareness of their warranty’s quality and by raising awareness of the consequences for using the product in a way that is outside the terms of the consumers’ authorized use.

Cite: 2010 Duke L. & Tech. Rev. 018

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