The problem of online contracts
Three cases decided recently came to different conclusions on the still open questions of whether click-wrap licenses are enforceable and what actions can they legitimately bind. In BnetD v. Blizzard, the 8th Circuit Court of Appeals held that click-wrap and browse-wrap licenses are enforceable to prevent reverse engineering (and the DMCA prevents reverse engineering). In Sotelo v. DirectRevenue LLC, a federal district court in the Northern District of Illinois held that users did not consent to the browse-wrap contract used by an adware company (and that downloading adware on a user's computer can be trespass to chattels). In Arizona Cartridge Remanufacturers Ass’n Inc. v. Lexmark International the 9th Circuit ruled that manufacturers can use a click-wrap to create a “single use only” device.
Donna Wentworth's analysis of BnetD, Eric Goldman's analysis of Sotelo and Michael J. Madison's analysis of Arizona Cartridge raise the two problems that I see with these sorts of contracts. To date, most of the decisions and analysis on this issue have focused on whether the contracts are enforceable -- was there mutual assent, mostly? This is an important process question. There should be norms for online contract formation, and eventually, we will come to ones that we can all agree are fair. But this wouldn't really be an issue except for the fact that companies are purposely making contracts difficult to find and read to bind users to terms they ordinarily would disagree with. That is why I believe the second problem is the one we need to answer first, which is: What is the appropriate scope of online contracts? Should the fact that we know that users don't read them (or can't understand them) inform the scope of what we allow the contracts to bind?
Stanford's cyberlaw clinic is going to be investigating this problem this school year, so stay tuned here.
Posted by LaurenGelman on September 2, 2005 at 01:38 PM | Permalink
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Arizona Cartridge Remanufacturers Assn. v. Lexmark Intl. (9th Cir. 2005). ACRA sued Lexmark for unfair business practices based on Lexmarks prebate program that allows customers to receive $30 off the price of a printer cartridge if they agree to return [Read More]
Tracked on Sep 5, 2005 1:11:48 PM