Consumer Law

Nancy S. Kim on the Effect of Clickwrap and Similar Licenses

By Jeff Sovern

Nancy S. Kim of California Western School of Law has authored "Clicking and Cringing," available at http://ssrn.com/abstract=1003921, on the effect of shrinkwrap, clickwrap, and browsewrap licenses.  Here's the abstract:

Shrinkwrap, clickwrap and browsewrap licenses have complicated contract law by introducing non-traditional methods of contracting to govern the use of software. The retention of the underlying intellectual property by the licensor, and the malleable qualities of software, give rise to the ability and the need to set parameters of use. The courts have tended to defer to the ownership rights of licensors by claiming that there is valid contract formation, even in "rolling contract" situations. Some commentators have argued that existing contract law doctrines--such as unconscionability and good faith--are sufficient to address digital-era contracting dilemmas. While such arguments have their place in discussions about contract enforcement, because these doctrines are standard contract defenses, they fail to explain a finding of contract formation. In this Article, I propose a theory for non-negotiated software licenses. A consumer's assent to a transaction should not be transmuted into blanket assent to each individual term of a non-negotiated contract. Instead, the concept of "assent" should be bifurcated into two parts, actual assent and presumed assent. Actual assent means express agreement, not simply to the transaction, but to each of the individual material terms. Presumed assent means that the licensee, by expressly agreeing to the transaction, may also be presumed to have assented to certain of the contract terms. The licensee should not be presumed to have assented to all contract terms, however, as is currently the case under the "blanket assent" approach to contracts. Whether the licensee's assent to a given term may be presumed depends upon the operative effect of the term. The licensee may be presumed to have assented to provisions governing the "scope of license" or the "terms of use" (as further defined) to the software or website because such terms establish the conditions upon which the licensor has agreed to make the digital information available. The licensee's performance under the contract, however, would be conditioned upon notice. Furthermore, the caption heading of "scope of license" or "terms of use" would not be determinative. The licensee should not be presumed to have assented to provisions that impose affirmative obligations or purport to take away the licensee's legal rights. Part I of this Article introduces the doctrinal problems related to non-negotiated software licenses. Part II proposes a 2-part methodology that first analyzes whether the putative licensee has assented and the nature of that assent (i.e. whether it is general assent to engage in a transaction or whether it manifests assent to the disputed term). The second step examines what terms govern the activity and determines enforceability according to the nature of the assent. Part III summarizes and analyzes the current case law using my proposed methodology, and applies the methodology to a sample license agreement. Part VI concludes that a presumption of assent to license terms and a requirement of actual assent to other material terms both respects the integrity of contract doctrine and accommodates business realities. A requirement of active assent affects the consumer experience and is therefore likely to influence contracting behavior.

Full post as published by CL&P Blog on January 20, 2008 (boomark / email).