EFF Question "General" 6.  "Click wrap licenses. a)  What is the case law supporting the
requirement for a manifesting of assent to contract? b) Does case law support the creation 
of binding agreements through purchase only? c) what is the impact of "hacking" around a 
click-wrap on the requirement for assent to contract?"

maintained by Rob Warren
last updated 3/20/2000

Introduction

Notes

	Click-wrap licenses, from a law student working with the Berkman Center and
	helping on the Connecticut case:


	"
	CASES HOLDING THAT THEY ARE ENFORCEABLE
	
	Hotmail Corp. v. Van $ Money Pie, 47 U.S.P.Q.2d 1020 (N.D. Cal. 1998)
	(upholding clickwrap agreement)

	M.A. Mortenson Co. v. Timberline Software Corp., 93 Wash. App. 819, 970
	P.2d 803 (holding that shrinkwrap agreement was enforceable)
	
	Brower v. Gateway 2000, Inc., 246 A.D.2d 246; 676 N.Y.S.2d 569 (N.Y App.
	Div. 1998) (holding that mail-order computer manufacturer's shrinkwrap
	agreement was enforceable contract but that clause requiring binding
	arbritration before ICC was unconscionable)

	Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir. 1997) (Easterbrook,
	J.) (holding that shrinkwrap agreement inside mail-order computer box
	was enforceable contract)

	ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) (Easterbrook,
	J.) (holding that shrinkwrap license was enforceable).


	CASES HOLDING THAT THEY ARE NOT ENFORCEABLE

	Step-Saver Data Sys, Inc. v. Wyse Tech., Inc., 939 F.2d 91 (3d. Cir.
	1991) (holding that defendant's shrinkwrap agreement was unenforceable
	under the UCC)

	Novell v. Network Trade Center, 25 F. Supp. 2d 1218 (D. Utah) 1997
	("Most courts that have addressed the validity of the shrinkwrap license
	have found them to be invalid, characterizing them as contracts of
	adhesion, unconscionable, and/or unacceptable pursuant to the U.C.C. . .
	. A minority of courts have determined that the shrinkwrap license is
	valid and enforceable.")

	Arizona Retail Sys, Inc. v. The Software Link, Inc., 831 F. Supp. 759
	(D. Ariz. 1993) (holding that defendant's shrinkwrap agreement was
	unenforceable under the UCC)

	On occassion, I have seen an older Fifth Circuit case (Vault v. Quaid
	Software, 847 F.2d 255 (5th Cir. 1998) cited for finding shrinkwrap
	agreements unconscionable -- but I'm not so sure that the opinion
	actually says that.

	I'm giving you this list from memory, and the last time that I
	researched the subject was summer 1999, so there are probably more
	recent cases on the subject too, if someone shephardizes ProCD and
	Hotmail . . .

	From what I found, in the early 1990s there was a trend in case law
	towards finding shrinkwrap agreements unenforceable under the UCC.
	However, Easterbrook wrote two influential opinions (ProCD and Hill),
	arguing that shrinkwrap agreements are consistent with the UCC.
	Easterbrook examining the offer/acceptance model in the UCC, argues that
	at the time of purchase, the buyer consents to being bound by additional
	terms that the seller later supplies.  He argues that in modern
	transactions, "commercial realities" require sellers to contract on a
	pay now, terms later" basis.  The Easterbrook analysis applies to
	shrinkwrap licenses where the buyer pays before receiving the additional
	terms.  (In clickwrap models, the buyer usually agrees to terms before
	paying, make it more likely that a court would find a valid contract
	even if it were to apply Step-Saver's traditional offer and acceptance
	approach to the UCC.)

	Most courts have adopted Easterbrook's approach.  Today, it is likely
	that most courts would uphold a shrinkwrap agreement -- although a
	particular term may be unenforceable.
	
	Rather than do much research on whether shrinkwrap/clickwrap agreements
	are enforceable, it might be more productive to research whether a
	provision prohibiting the licensee from reverse-engineering the software
	is enforceable.  I could see an argument that such a provision should be
	void as a matter of public policy (unduly restricting trade) and/or
	constitutes misuse."



Conclusion

Sources

	http://www.carolinapatents.com/copyright_articles/copy_article2.htm
	http://www-db.stanford.edu/CHAIMS/Doc/Papers/98legal/legalpaper.html

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