ProCD v. Zeidenberg
86 F.3d1447 (7th Cir. 1996)
This case concerned the sale of a CD-ROM database of telephone
numbers and addresses. ProCD, the licensor, had spent in excess of
$10 million compiling its database from more than 3,000 publicily available
telephone and address directories. The CD-ROM was sold with both a
shrinkwrap and a clickwrap license, with the agreement appearing on the user's
screen when the CD-ROM was first installed requiring the user to click a
button indicating his or her assent to the displayed terms before proceeding.
The shrinkwrap and clickwrap licenses included with the CD-ROM provided that
the data could be copied only for non-commercial purposes. Zeidenberg,
the defendant, purchased ProCD's database and subsequently resold the information
over the Internet in violation of the license terms. The United States
District Court for the Western District of Wisconsin granted Zeidenberg's
motion for summary judgment, holding that ProCD's shrinkwrap license was unenforceable
because Zeidenberg did not consent to the terms on the interior of the package
at the time of the purchase.
Subsequently, the Seventh Circuit reversed the district court's holding with
respect to the shrinkwrap license, holding that shrinkwrap licenses in mass-market
consumer transactions are enforceable under the
Uniform Commercial Code 'unless their terms are objectionable on grounds
applicable to contracts in general (for example, if they violate a rule of
positive law, or if they are unconscionable).'
In its decision, the Seventh Circuit emphasized that parties are free to
structure their relations so that the buyer can make a final decision after
a detailed review of the license agreement. In this case, therefore,
Zeidenberg could have prevented the formation of a contract simply by returning
the software after he had found any objectionable terms in the clickwrap
agreement. Importantly, the court noted that it is fair to enforce the terms
of a shrinkwrap license as long as certain basic protections are provided
to the consumer, namely notice of the existence of the shrinkwrap license,
opportunity to review and reject the license, and an available refund if the
license is not acceptable.
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