RE: "Double" Licenses--enforceability of shrink-wrap and click-wrap licenses

[Terry Cullen <tcullen@seattleu.edu>]

There's a great difference between end-user click-on licenses of
information products made available in libraries and the licenses at issue
in the cases cited by Mr. Mirchin.  First, it is a basic tenet of contract
law that contracts are not enforceable without consideration.  That is,
there must be a bargain or exchange, which means if you paid for a product
or did something else that benefited (even minimally) the other party,
then it is enforceable, but otherwise not. I fail to see what the end user
bargains for in the situations we are discussing, and there is certainly
no exchange or payment involved.  As far as the cases Mr. Mirchin cites, I
will respond with respect to those in U.S. jurisdictions.

First, as I said earlier, ProCD was not a consumer case, but a commercial
user who bought the consumer version of a database product and then
combined it with other materials to create a competing commercial product.
Very different from what we are talking about here.  And, it was PURCHASED
by Zeidenberg, so there was consideration.  Yes, Hill v. Gateway followed
ProCD, and yes, it was a consumer case, but again, the key was that there
was a PURCHASE of a product (by phone), and the court discussed the
shrink-wrap license sent with the product as governing the "terms of sale"  
agreed to when the buyers ordered and paid for the product (acceptance of
the contract by conduct, under the UCC).

Brower was similar to Hill, in that it dealt with enforceability of a
mandatory arbitration clause shrink-wrapped with products purchased from
Gateway 2000 by mail order or phone.  Again, we have a bargain, with
consideration.  And, there's an interesting additional twist here: the UCC
contains a section making unconscionable contract provisions unenforceable
against consumers, and this particular arbitration clause, which required
binding arbitration to be conducted in Chicago in accordance with ICC
rules, was found unenforceable against these folks from New York.

As to Patterson, I think I must be missing something.  I could not find
the terms "click" or "license" even mentioned in the case.  The court did
mention that Mr. Patterson entered into a subscription agreement that
required him to type the word "Agree" at certain points in the online
agreement, which was transmitted to CompuServe.  But Patterson was a
software developer, doing business as Flashpoint Development, who entered
an agreement (contract) with CompuServe that included assent to specific
terms.  And there's clearly a bargain based on consideration here:
CompuServe agreed to market Mr. Patterson's software as shareware on it's
service.  Again, a far cry from an end-user click-on license.

Mr. Mirchin notes that Hotmail v. Van$ Money Pie did not go to trial and
can't be relied on, so I won't elaborate on it, except to say that, from
the title, the parties both appear to be commercial entities, not
consumers.

There are two obvious problems with enforcing the click-on end-user
license in the library setting that convince me that the intent is to
discourage end users from using materials in any manner other than those
that the publisher sanctions, including uses that might fit the fair use
balancing test.  First, publishers cannot actually identify the end-user
sitting at a library terminal, so how would they know who to sue?  
Second, it is hardly likely that a publisher will go after a typical
library user (read: student with no money, who couldn't possibly pay
damages) anyway.

Just my two cents.

Terry Cullen, Esq.
Electronic Services Librarian
Seattle University School of Law Library
950 Broadway Plaza, Tacoma, WA  98402-4470
Email:  tcullen@seattleu.edu
Phone:  253-591-7092  FAX:  253-591-6313

On Wednesday, January 27, 1999 5:08 PM, David_Mirchin@silverplatter.com 
[SMTP:David_Mirchin@silverplatter.com] wrote:
> In this discussion, there have been many comments which stated outright 
or
> implied that shrink-wrap or click-through licenses are not enforceable.
> >From my reading of the case law, this is simply not true: shrink-wraps
> and click-through licenses are enforceable.  Courts in different countries
> and various jurisdictions in the United States have held them to be
> enforceable.  If there are more recent cases or statutes which have
> overturned the cases I mention below, I would be very interested in being
> referred to them.
>
> 1. As for enforceability of shrinkwrap licenses, the first case to
> unambiguously hold that they are enforceable is the Scottish case of Beta
> Computers (Europe) Limited v. Adobe Systems (Europe) Limited.  FSR (1996)
> 367.
>
> 2. In the United States, ProCD v. Zeidenberg (7th Cir., June 20, 1996)
> held shrink-wraps enforceable.  In dicta, it approved of "click-wraps".
>
> 3. The ProCD case has been followed by other courts.  For example, in 
Hill
> v. Gateway 2000 (7th Circuit, January 6, 1997) the court permitted phone
> orders of goods, with the contract to follow.  It held contract terms
> provided in a Gateway 2000 computer box were enforceable, as long as a
> refund was offered.  http://www.law.emory.edu/7circuit/jan97/96-3294.html
>
> 4. In Brower v. Gateway 2000, Inc. (1998 N.Y. Slip Op. 07522, 1998 WL
> 481066 (N.Y.A.D. 1 Dept.), Supreme Court Appellate Division, First
> Department, August 13, 1998, the court upheld the enforceability of
> shrinkwrap license agreement, including the arbitration clause in
> question, which was included in the box in which the computer was shipped
> to the consumer.
>
> 5. As for the enforceability of click-through licenses, CompuServe v.
> Patterson (6th Circuit, July 22, 1996) held these licenses to be
> enforceable.  http://www.law.emory.edu/6circuit/july96/96a0228p.06.html
>
> 6. More recently, in the California spamming case of Hotmail v. Van$ Money
> Pie. (N.D. Cal. April 20, 1998) the court relied on the enforceability of
> a click-through license to issue a preliminary injunction.  It is true
> that this did not go to a full trial, and therefore cannot be relied upon
> to the same degree as the CompuServe v. Patterson decision.
>
> SilverPlatter is interested in using licenses which are enforceable, and
> which address our interests as well as those of our customers.
> Click-through licenses offer the possibility of rapidly delivering
> products to our customers, and at a meaningfully lower cost to the
> customers and to us.
>
> David Mirchin
> Vice President & General Counsel
> SilverPlatter Information, Inc.
> tel: 781-769-2599, ext. 235
> davidm@silverplatter.com