Vol 7 No 1 - Roger Williams University School of Law
Vol 7 No 1 - Roger Williams University School of Law Vol 7 No 1 - Roger Williams University School of Law
important to know whether a contract is in existence and uponwhat terms. This question has been raised in the context ofshrink-wrap and click-wrap/click-through contracts. “Shrinkwrapcontracts” are normally used where the product, e.g.,software, is sold in a store. The terms of the contract are shrinkwrappedaround the product in fine print and in most instancesnot fully disclosed until after opening the package. “Click-wrap orclick-through contracts” are normally employed in an onlineenvironment, such as the Internet, and may, at best, involve theacceptance of the terms of the contract by clicking on a digital icondenoting consent after having been shown the terms. In someclick wrap cases, which are highly questionable from a legalperspective, terms are not clearly displayed prior to the buyerentering into the agreement. In the recent decision of Specht v.Netscape Communications Corp and AOL,345 a third type ofsituation called “browse-wrap” was outlined. A browse-wrapscenario arises where the Internet consumer is not required tonegotiate an “I agree” button or icon or view the licence termsbefore gaining access to the product. Instead, the terms arelocated behind a button/icon on the website that the consumer isnot forced to view or engage. In Specht, the court held that thebrowse-wrap scenario would not usually give rise to a validcontract.346In ProCD, Inc. v. Zeidenberg,347 the court held that shrinkwrap,and arguably click-wrap, licences are enforceable in certaincircumstances.348 ProCD developed a product known as SelectPhone (the compilation of over 3,000 telephone directories on CD),which was sold in stores for $150.349 ProCD invested over $10million in developing this product.350 Mindful of the Feist decisionand the inability of copyright law to protect raw data, ProCDsought to commodify informational value through a contractual345. 150 F. Supp. 2d 585 (S.D.N.Y. 2001).346. See id. at 594.347. 86 F.3d 1447 (7th Cir. 1996).348. Id. at 1449; see, e.g., Register.com v. Verio Inc., 126 F. Supp. 2d 238 (S.D.N.Y.2001); Hotmail Corp. v. Van Money Pie Inc., 47 U.S.P.Q. 2d. 1020 (N.D. Cal. 1998);Lemley et al., Software and Internet Law 494-95 (2000); see also Hill v. Gateway 2000,Inc., 105 F.3d 1147 (7th Cir. 1997), cert. denied, 118 S. Ct. 47 (1997); Nat’l BasketballAss’n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997).349. ProCD, 86 F.3d at 1449.350. Id.
agreement.351 Shrink-wrapped around the CD in plastic orcellophane was a detailed user agreement or licence, whichcontained a term stipulating that the application program orinformation should not be on sold for commercial purposes.352Zeidenberg allegedly purchased the CD, went home and loaded itonto a website where it was sold at a price less than that chargedby ProCD.353 He was sued for breach of contract and argued thatnothing in the contract prevented him from selling theinformation.354 He argued that, at the point of purchase, it wasimpossible to read all the terms of the shrink-wrapped licence;therefore, he had no adequate notice of those terms and was notbound by them.355 The court held that the economics of the newinformation economy suggested that he should be bound by theshrink-wrapped terms and furthermore, if he did not like them, hecould have taken the CD back, but by acquiescing and choosing tokeep and use the informational product he was bound by theterms.356 While many have questioned whether this reasoning isfair, it is now embodied in sections 208 and 209 of UCITA, underthe umbrella of layered contracting.357Judge Easterbrook rejected the argument that the contractuallicence was preempted by section 301(a) of the U.S. Copyright Act.The argument was that creating copyright-like rights in data, thecontractual user agreement was in contravention of section 301 ofthe Copyright Act, which preempts states from legislating on theissue of copyright.358 Judge Easterbrook held that contractual351. Id.352. Id.353. Id. at 1450.354. Id. at 1450-52.355. ProCD, 86 F.3d at 1450-51.356. See id.357. UCITA is a model law promulgated for adoption by the United States thatcreates a “sale of goods” styled regime for the licensing of software and otherinformational transactions. It is argued that the process of transacting software andother informational products is not adequately covered by existing sale of goods typelegislation, which finds it hard to classify software. In the case law software issometimes classified as a good and sometimes as a service; leading commentators tolabel software the digital chameleon. UCITA aims to avoid this debate by creating asui generis regime governing the formation, performance and termination ofinformation transactions. It has been highly controversial in its content and has onlybeen adopted by two U.S. states: Maryland and Virginia. Uniform ComputerInformation Transactions Act, available athttp://www.law.upenn.edu/bll/ulc/ucita/ucita01.htm.358. See ProCD, 86 F.3d at 1453.
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agreement.351 Shrink-wrapped around the CD in plastic orcellophane was a detailed user agreement or licence, whichcontained a term stipulating that the application program orinformation should not be on sold for commercial purposes.352Zeidenberg allegedly purchased the CD, went home and loaded itonto a website where it was sold at a price less than that chargedby ProCD.353 He was sued for breach <strong>of</strong> contract and argued thatnothing in the contract prevented him from selling theinformation.354 He argued that, at the point <strong>of</strong> purchase, it wasimpossible to read all the terms <strong>of</strong> the shrink-wrapped licence;therefore, he had no adequate notice <strong>of</strong> those terms and was notbound by them.355 The court held that the economics <strong>of</strong> the newinformation economy suggested that he should be bound by theshrink-wrapped terms and furthermore, if he did not like them, hecould have taken the CD back, but by acquiescing and choosing tokeep and use the informational product he was bound by theterms.356 While many have questioned whether this reasoning isfair, it is now embodied in sections 208 and 209 <strong>of</strong> UCITA, underthe umbrella <strong>of</strong> layered contracting.357Judge Easterbrook rejected the argument that the contractuallicence was preempted by section 301(a) <strong>of</strong> the U.S. Copyright Act.The argument was that creating copyright-like rights in data, thecontractual user agreement was in contravention <strong>of</strong> section 301 <strong>of</strong>the Copyright Act, which preempts states from legislating on theissue <strong>of</strong> copyright.358 Judge Easterbrook held that contractual351. Id.352. Id.353. Id. at 1450.354. Id. at 1450-52.355. ProCD, 86 F.3d at 1450-51.356. See id.357. UCITA is a model law promulgated for adoption by the United States thatcreates a “sale <strong>of</strong> goods” styled regime for the licensing <strong>of</strong> s<strong>of</strong>tware and otherinformational transactions. It is argued that the process <strong>of</strong> transacting s<strong>of</strong>tware andother informational products is not adequately covered by existing sale <strong>of</strong> goods typelegislation, which finds it hard to classify s<strong>of</strong>tware. In the case law s<strong>of</strong>tware issometimes classified as a good and sometimes as a service; leading commentators tolabel s<strong>of</strong>tware the digital chameleon. UCITA aims to avoid this debate by creating asui generis regime governing the formation, performance and termination <strong>of</strong>information transactions. It has been highly controversial in its content and has onlybeen adopted by two U.S. states: Maryland and Virginia. Uniform ComputerInformation Transactions Act, available athttp://www.law.upenn.edu/bll/ulc/ucita/ucita01.htm.358. See ProCD, 86 F.3d at 1453.
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