Clickwrap License Cases: Other/Misc @ Paper This Deal

  • Starke v. Gilt Groupe, Inc., 2014 U.S. Dist. LEXIS 58006 (S.D.N.Y. 2014) (arbitration provision in clickwrap license, which had a link to the text of the license, was upheld, and found not to be unconscionable).
  • Motise v. America Online Inc., 346 F. Supp 2d 563 (S.D.N.Y. 2004) (user that signed on with another user’s id and password still bound, as sub-licensee, of the terms including forum selection clause).
  • Hoffman v. Supplements Togo Management, LLC 18 A3d 210 (N. J. App. Div. 2011) (found forum selection clause unenforceable due “the manifestly unfair manner in which defendant’s website was structured” and court seemed to imply that it believed the website owner was intentionally hiding the terms).
  • Caspi v. Microsoft Network, LLC, 323 NJ Super 118 (N.J. App. Div. 1999) (upheld forum selection clause where users had to click on scrollable window and click “I agree” or “I don’t agree.”)
  • Mortgage Plus, Inc. v. DocMagic, Inc., 2004 WL 2331918, 2004 U.S. Dist. LEXIS 20145 (D. Kan. 2004) (clickwrap agreement upheld)
  • Taxes of P.R., Inc. v. TaxWorks, Inc., 2014 U.S. Dist. LEXIS 37765 (D.P.R. 2014) (upheld forum selection clause in clearly stated clickwrap agreement, following ProCD precedent).

Clickwrap License Cases: Treiber & Straub, Inc. v. UPS, 474 F.3d 379 (7th Cir. 2007)

Treiber & Straub, Inc. v. UPS, 474 F.3d 379 (7th Cir. 2007).

I think this case gives a more “substantive” holding than some of the other cases which merely hold that procedural items are enforceable, such as forum selection, class action waivers, etc.  This case actually enforces UPS’s online shipping website’s Terms of Use to the detriment of the shipper.

In this case, a user shipped a ring worth $100,000 via UPS’s online shipping website.  He submitted the ring in a package for shipping with the shipping label.  UPS then lost or misplaced the package.

In order to ship the ring the user had to click not once, but twice, to agree to UPS’s websites shipping Terms of Use.  The terms provided that UPS would not be responsible for any item of “unusual value” which it stated was anything over $50,000 (which is the maximum amount UPS let you insure an item for).

The shipper then put in a claim with UPS, and UPS disclaimed stating it did not have to pay him anything because it was an item of unusual value. The shipper then sued for the value of the ring and the court upheld UPS’s Terms of Use, finding that UPS provided adequate notice on its website to anyone shipping an item.

The Court held that using a clickwrap agreement for online transactions was “common in Internet commerce” where “one signifies agreement by clicking on a box on the screen.”  The court reasoned that merely because the user chose not to read the terms, that does not let him avoid any of the provisions he does not like.

Clickwrap License Cases: Davidson & Associates v. Jung, 422 F.3d 630 (8th Cir. 2005)

In Davidson & Associates v. Jung, 422 F.3d 630 (8th Cir. 2005), the Court of Appeals for the Eighth Circuit upheld a clickwrap agreement that prohibited reverse engineering. In that case, the clickwrap agreement that had to be accepted prior to playing the online game prohibited reverse engineering.

The clickwrap agreement was included in the End User License Agreement that each user had to affirmatively agree to (by clicking on “I Agree” button) when installing the game, and you could not play the game without agreeing. Users also had to enter a CD Key which was included on the copy of the CD the game came on. The CD Key was connected to the CPU’s IP address to prohibit pirating and copying of the CDs.

Certain users, unhappy with the games’ performance and the system used to play the online game, reverse engineered the game and created their own site to play it against others on the game maker’s site.  Blizzard, the game maker sued.

The Court of Appeals for the Eighth Circuit upheld the clickwrap agreement provision that prohibited reverse engineering, stating that the users had expressly relinquished their right to reverse engineer by agreeing to the terms of the license agreement.

There were various other copyright claims, and the court also held that the users violated the Digital Millennium Copyright Act, which seemingly made ruling against the users easier.

 

Clickwrap License Cases: Patterson v. Compuserve @ Paper This Deal

Compuserve v. Patterson, 89 F.3d 1257 (6th Cir. 1996).

Patterson, a resident of Texas (a lawyer and software programmer), sold his own software to third parties over Compuserve’s system, pursuant to the terms of a clickwrap agreement (where he had to type “I Agree” into various sections of the agreement).

Compuserve began to sell its own software that was similar to Patterson’s and Patterson demanded Compuserve pay him $100,000 as a settlement.  Compuserve then filed a declaratory judgment action in Federal court in Ohio.

Patterson moved to dismiss the action due to alleged lack of personal jurisdiction, claiming he never visited, did business in, or consented to suit in Ohio.

The Sixth Circuit found that making Patterson subject to suit in Ohio due to his acceptance of the clickwrap agreement, a Shareware Registration Agreement, did not violate the due process clause of the United States Constitution.

The Court reasoned that Patterson personally availed himself to do business with Compuserve, and made money doing so, and could therefore have reasonably expected he’d have to defend himself in Ohio due to the terms of the agreement.

The “Godfather” of the Shrinkwrap Cases: ProCD v. Zeidenburg @ Paper this Deal

This is the seminal case in the shrinkwrap realm, which paved the way for the rise of the browsewrap and shrinkwrap cases.  Upholding the software license as normally provided to purchasers, to get around the First Sale Doctrine under U.S. Copyright Law.   Cite, facts and holding are below.  Continue reading

Best Practices for Drafting Browsewrap and Clickwrap Agreements @ Paper this Deal

There’s still some hostility from the court system, and the public at times, on the enforceability of browsewrap and clickwrap agreements. Having an enforceable license for your website, software or mobile application is of the utmost importance.

The ABA Committee on Cyberspace Law provided general rules to ensure your online agreement is enforceable:

  1. The user must have adequate notice that the proposed terms exist;
  2. The user must have a meaningful opportunity to review the terms;
  3. The user must have adequate notice that taking a specified, optional action manifests assent to the terms; and
  4. The user must, in fact, take that action.

I fully agree with the above.  Notice, notice, notice is so important. But not just any notice.  You need to ensure that the notice is reasonable, that is that a reasonable person using your software/website/application would understand that by taking a certain action (clicking or continuing use of the site) it renders the agreement binding on them. My reading of the case law on shrinkwrap, browsewrap and clickwrap agreements made me come up with my own list in addition to the ABA Committee’s pointers:

  1. Create an easy to read, reasonable license that follows industry norms;
  2. Give the user reasonable notice that the license exists;
    • Make sure the notice is CLEAR AND CONSPICUOUS
    • Colors, size, font, placement, timing, etc. all relevant. Don’t “bury” it.  Get it in front of the user’s faces.
  3. Let the user read the full license if he or she so chooses (scrollable pop-up being preferred), prior to acceptance (click or use);
  4. Opt for clickwrap over browsewrap if possible.

 

 

Paper this Deal Book Review: PLI’s Health Care Mergers and Acquisitions Answer Book 2014

We’re going to start a new series of posts on legal and business guides, treatises and books.  First up is PLI‘s Health Care Mergers and Acquisitions Answer Book 2014.

Health Care MA AB 2014PLI recently provided me a copy and I’ve used it in connection with a recent acquisition and generally for information needed for counseling a health care client.  The book provides insight into general counseling of clients in the industry,  including compliance, business and accounting/tax issues. It’s useful for more than simply M&A type work.

The way the book is set up is different than most legal texts (i.e. info dump) which is refreshing – it is called an “Answer Book” after all and is therefore comprised of answers to the most common questions about health care generally, M&A transactions generally and M&A transactions in the health care context. It also has information on the typical structure of these types of transactions, as well as case studies in the important precedent applicable.  Case law is inserted throughout for general propositions. Continue reading