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

[David_Mirchin@silverplatter.com]

Terry,

You want to distinguish the cases I have cited on two grounds:

First, that these cases were "commercial", rather than "consumer" uses.

Second, that there is no "consideration" (legalese for a "benefit")
received by the individual researcher.

Neither are applicable here.

1. As to the commercial vs. consumer distinction--ProCD involved a
consumer, Matt Zeidenberg, a graduate student at the University of
Wisconsin, who went to a local store and bought SelectPhone.  He uploaded
to the internet for free. He did not create a competing commercial
product. So this is a quintessentially consumer purchase.

Similarly, Hill v. Gateway 2000 and Brower v . Gateway 2000 were also
consumers who purchased computers.

You are correct that for consumer contracts (as opposed to commercial
contracts), there are laws which could invalidate individual terms (such
as disclaimers of warranties).  Usually these laws do not, however,
invalidate the entire agreement.

More relevantly, the individual researchers in scholarly databases are
probably not "consumers" under the law.  A "consumer" (as in Article 2 of
the Uniform Commercial Code) is someone who purchases "primarily for
personal, family or household use."  Researchers and professionals using
scholarly databases are more likely to be using the work as part of their
professional/business life.

2. As to the "consideration", --an individual searcher in a library
absolutely receives a benefit--the ability to search the database and find
answers to their questions.  For this benefit, they are agreeing to
certain terms, such as that they will not do what Matt Zeidenberg did and
put the entire database on the internet for free, undermining the ability
of a publisher to charge for their hard work.

3. Finally, the CompuServe v. Patterson case is an electronic license.
It?s true the case uses the word "agreement", but that's what a license
is--an agreement.  Richard Patterson had to type the word "Agree" after
the electronic license and transmit it to CompuServe by computer.

David Mirchin
Vice President & General Counsel
SilverPlatter Information, Inc.
davidm@silverplatter.com
tel: 781-769-2599, ext. 235




Terry Cullen <tcullen@seattleu.edu> on 01/28/99 10:55:10 PM

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
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