Clickwrap

A clickwrap agreement (also known as a "clickthrough" agreement or clickwrap license) is a common type of agreement often used in connection with software licenses. Such forms of agreement are mostly found on the Internet, as part of the installation process of many software packages, or in other circumstances where agreement is sought using electronic media. The name "clickwrap" came from the use of "shrink wrap contracts" commonly used in boxed software purchases, which "contain a notice that by tearing open the shrinkwrap, the user assents to the software terms enclosed within".^[1]

The content and form of clickwrap agreements vary widely. Most clickwrap agreements require the end-user to manifest his or her assent by clicking an "ok" or "agree" button on a dialog box or pop-up window. A user indicates rejection by clicking cancel or closing the window. Upon rejection, the user cannot use or purchase the product or service. Classically, such a take-it-or-leave-it contract was described as a "contract of adhesion, which is a contract that lacks bargaining power, forcing one party to be favored over the other".

The terms of service or license do not always appear on the same webpage or window, but are always accessible before acceptance, such as through a hyperlink embedded in the product's webpage or a pop-up screen prior to installation. In order to be deemed to have accepted the terms of service, the purchaser must be put on notice that certain terms of service may apply. If the terms of service are not visible and/or accessible, courts have found the notice requirement to be lacking and as such, the purchaser may not be bound to the terms of the agreement. An analysis of the terms of service of major consumer websites has found that they frequently contain clauses that impede consumer rights in substantial and often unexpected ways.^[2]

Legal consequences in the United States

Cases

Few cases have considered the validity of clickwrap licenses. Still, in the cases that have challenged their validity, the terms of the contract have usually been upheld:

Feldman v. Google, Inc., 513 F.Supp.2d 229 (E.D.Pa. 2007) (upholding forum-selection clause)
In re RealNetworks, Inc. Privacy Litigation, No. No. 00-1366, 2000 WL 631341 (D. Ill. May 8, 2000) (upholding an arbitration clause)
Hotmail Corp. v. Van$ Money Pie, No. 98-20064, 1998 WL 388389 (N.D. Cal. Apr. 16, 1998) (granting preliminary injunction for alleged breach of contract for violating the terms of service by using a Hotmail account to send spam or pornography). The court said that clicking the clickwrap button after notice gave consent.
I. Lan Sys., Inc. v. Netscout Serv. Level Corp., 183 F. Supp. 2d 328, 336 (D. Mass. 2002) (upholding a clickwrap agreement on two grounds: first, clickwrap is simply "Money now, terms later" contract formation; second, the court found that the "additional terms" of the clickwrap license was not material under UCC (§207(2)(b)).
Caspi v. Microsoft, LLC, held a forum selection clause in an online membership agreement was consented to when the user clicked the "I agree" symbol of the agreement in order to proceed with registration.
In A.V., et al. v iParadigms, LLC, Judge Claude M. Hilton granted summary judgment on the students' complaint in favor of iParadigms/Turnitin, because they had accepted the click-wrap agreement on the Turnitin website.^[3]

However, see In the Matter of Sears Holdings Management Corporation.

Even though courts have ruled some clickwrap licenses to be enforceable contracts, it does not follow that every term of every clickwrap license is enforceable. Clickwrap licenses must still meet the criteria for enforceability of a unilateral form contract. For example, see Bragg v. Linden Research, Inc., 487 F.Supp.2d 593 (E.D. Pa. 2007), in which the judge found certain aspects of the Second Life clickwrap agreement "unconscionable, and therefore unenforceable."

Cases in detail

In Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d. Cir. 2004), the court described a clickwrap license, even though the license in question was distinguished from a clickwrap license

Essentially, under a clickwrap arrangement, potential licensees are presented with the proposed license terms and forced to expressly and unambiguously manifest either assent or rejection prior to being given access to the product.

An earlier case, Specht v. Netscape Communications Corp., 150 F.Supp.2d 585 (S.D.N.Y. 2001), aff'd, 306 F.3d 17 (2d. Cir. 2002), gave perhaps the clearest definition of a clickwrap license.

A click-wrap license presents the user with a message on his or her computer screen, requiring that the user manifest his or her assent to the terms of the license agreement by clicking on an icon. n12 The product cannot be obtained or used unless and until the icon is clicked. For example, when a user attempts to obtain Netscape's Communicator or Navigator, a web page appears containing the full text of the Communicator / Navigator license agreement. Plainly visible on the screen is the query, "Do you accept all the terms of the preceding license agreement? If so, click on the Yes button. If you select No, Setup will close." Below this text are three button or icons: one labeled "Back" and used to return to an earlier step of the download preparation; one labeled "No," which if clicked, terminates the download; and one labeled "Yes," which if clicked, allows the download to proceed. Unless the user clicks "Yes," indicating his or her assent to the license agreement, the user cannot obtain the software.

The clickwrap method was presented to the court in ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996), where Zeidenberg purchased a CD-ROM, created by ProCD, which contained a compilation of a telephone directory database. Upon purchase of this CD-ROM, Zeidenberg installed the software onto his computer then created a website which offered to visitors the information contained on the CD-ROM at a price less than what ProCD charged for the software. Prior to his purchase of the software, Zeidenberg may not have been aware of any prohibited use or dissemination of the product without consent by ProCD. However, upon preparing to install the software onto his computer, the software license appeared on his computer screen and would not allow him to continue with the installation without indicating acceptance by clicking his assent in a dialog box. The court held that Zeidenberg did accept the offer and the terms contained within the license by clicking through the dialog box. Zeidenberg had the opportunity to read the terms of the license prior to clicking the acceptance box. The court further stated that Zeidenberg could have rejected the terms of the contract and returned the software. (Id.).^[4]^[5]

References

↑ Murdoch University Electronic Journal of Law
↑ A Nicol. Clickwrapped: Who Respects Your Rights Online? Accessed July 30, 2013.
↑ Hilton, Claude (2008). "Memorandum Opinion" (PDF). United States District Court for the Eastern District of Virginia, Alexandria Division. Archived from the original (PDF) on 2010-07-05.
↑ FindLaw Article
↑ Loundy, David (February 8, 1996). "'Shrink-wrap' licenses don't shrink access to data". Chicago Daily Law Bulletin. p. 5.

External links

Examples of Clickwrap contracts: Online electronic signatures using clickwrap; T-Mobile uses clickwrap for online phone purchases

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