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Careful Where You Click: End User License Agreements Contain Information You Need To Know

By Ashley Balestrieri

How many people actually read the "fine print" of product license agreements before opening a new software package or deploying the radio button next to "I Agree" and going about their business? Doing so on a regular basis before unwrapping new acquisitions or utilizing new software would be prudent for anyone, even when downloading seemingly innocuous shareware or dealing with well-established and renowned corporations such as Microsoft. Although courts have recently started to relax their strict enforcement of these End User License Agreements ("EULA") or Software Agreements, for the most part people are still bound to abide by the terms to which they so quickly and thoughtlessly acquiesce.

While taking the time to parse trough the often tiny font and circular, technical language of such agreements may seem an undertaking The Breakfast Club?s Brian Johnson would pursue in his spare time, it should enter the behavioral parlance of popular society. Such agreements can contain nasty language, and impose burdens upon the user that they did not know existed but to which they must adhere. Internet surfers seeking free content or services need to employ particular caution, especially when playing online computer games or accessing free fonts or shareware, as the companies have no obligation to provide a service and are thus more likely to exploit any modicum of authorization they obtain in the form of, for example, downloading spyware and cookies on the user?s computer.

Terms contained in EULAs seem almost removed from daily life, recounting contingencies in complicated language that most people will never challenge or find cause to consider even if a facet of their product goes awry. But the virtual alternatives to hitherto everyday activities are rapidly replacing the old standbys of purchasing CDs from record stores and renting movies from Blockbuster to become the most important and prominent pillars of the entertainment industry. Consider the ever-increasing usage of digital music downloading software like Napster and Rhapsody, not to mention iTunes? latest innovation enabling twenty-four hour movie rentals and the increasingly common practice of purchasing and downloading software directly from the internet. Given the lengths that record labels and movie corporations will traverse to protect their intellectual property rights, some license agreements have achieved paramount import in the average citizen?s daily existence. The language in these agreements is worth considering.

To offer perhaps the most prominent example, Apple?s iTunes will not process a purchase unless a potential user accepts the terms of their lengthy license agreement. Users tend to flick their mouse?s scroll wheel and whisk past the small army of text in a rush to proceed with their plans, but the language contains some very pertinent terms that potential users should be apprised of. Among other things, it specifically states that the company is not responsible for any of the information it provides through the service (so, effectively, there is no guarantee that any of the songs attributed to a particular CD are correct, not to mention the CD?s artist and title) and that the software may not be employed to violate copyright law (so if users develop a way to circumvent the digital rights management protections distributed with the songs, they will pay, not the company). [1]

In addition, the latest version of iTunes? EULA states that "Apple and its licensors reserve the right to change, suspend, remove, or disable access to any Products, content, or other material comprising a part of the Service at any time without notice . . . Apple may also impose limits on the use of or access to certain features or portions of this Service, in any case and without notice or liability." [2] In other words, the company can oust particular users or deny them the right to, for example, download podcasts without informing the hapless user or even proffering a viable reason. Said user has no matter of recourse, naturally, because he has also agreed to "indemnify and hold Apple, its directors, officers, employees, affiliates, agents, contractors, and licensors harmless with respect to claims" arising out of contentions about the agreement. [3] Oh, and by the way: if you should dare to challenge this megalomania incarnate, you have agreed to venue in the State of California. [4] Good luck grappling with the California legal system from halfway across the country.

Mercifully, courts have started to side with the hapless consumers in the case of The Giant Corporation v. The Innocent and Uninformed Consumer. Last fall, the 9th Circuit Court of Appeals ruled that a customer will not be bound to new terms in a license agreement to which he has previously agreed, even by continuing to use a service, unless he is given notification that the terms have changed. [5] Thus, a service provider (such as America Online or the host of a multi-user online game) may not alter license terms and impute customers with this knowledge simply by posting those changes on its website unless it specifically notifies the customer. This provides a small but strident step on behalf of the public, who can no longer be expected to repeatedly frequent their software?s website to determine whether the applicable contract language has altered.

The courts are also taking mercy on large companies. In a case filed by concert ticket printing service Tickemaster against its rival online vendor tickets.com, the court to distinguished particular types of EULAs and their relative enforceability. So-called "shrink-wrap license" agreements, where the packaging on the outside of a CD clearly states that opening the package constitutes adherence to the applicable license agreement, are legal and enforceable by the courts. However, this principle cannot be applied to users of websites if the terms and conditions are displayed in such a way that the customer needs to scroll down the page to locate them and there is no requirement to click an "I Agree" or similar button before using the site?s services. [6] However, these so-called "click-wrap" contracts can prove binding even when not prominently displayed if users are provided an opportunity to review the terms by clicking on a link to the text. [7] Free online entertainment seekers beware: if you visit a website or download a program and have to click something to affirm your agreement of the presented terms, it is worth your time to read them. They could come knocking on your like trick-or-treaters in a legal horror film, all decked out as the notice of an impending lawsuit.

Thankfully, every so often the consumer will prevail, even after clicking "I do." A man who purchased a Gateway computer filed suit against the company after it refused to fix or replace his defective machine or refund his money. This act directly defied the terms of Gateway?s sales agreement, which contained a standard arbitration clause traditionally and routinely slipped into scroll-down boxes on computer screens and sales contracts, requiring disputes to be settled in a private forum of the company?s choosing. Gateway argued no one can use one of the their machines without accepting the terms and conditions, since they pop up on the screen upon the computer?s first startup. The man countered that the agreement?s text had appeared as a series of unrecognizable graphics and characters that, unable to decipher, he had simply bypassed. The court sympathized. [8]

Despite the hardships upholding user agreements? language might present to the consumer, holding shrink-wrap licenses universally unconscionable and thus unenforceable would be patently unfair to software companies and manufacturers. They must retain some manner with which to regulate how users employ their product, and license agreements are often the only way to inform customers of the provisions to which they are bound. In all fairness, some companies deliver their products with giant sheets of paper that, in glaring, capital red letters, silently mandate that customers must read particular terms before unwrapping their new acquisition. In such cases, it seems reasonable to uphold the contract language, seeing as the company did everything short of sending one of the Harry Potter "howlers" to screech the agreement?s terms at the new customer, or follow the package to the customer?s door and deliver them in person.

But software that users download from the internet or which arrives accompanied by a lengthy scroll of tiny print merits close scrutiny. It is sensible for the courts to question the enforceability of terms the company has hidden within large blocks of text that ordinary customers could reasonably be expected to skim or ignore. However, it is similarly sensible for the ordinary member of the public to read the licenses and attempt to parse apart the language to see what terms the company is attempting to camouflage. One click could mummify you in Reynolds® wrap alongside whole host of rules and obligations with which you would rather not associate or abide.

[1] See Chad Denton, iTunes: The Software, SmartComputing.com, July 2006, http://www.smartcomputing.com/editorial/article.asp?article=articles%2Farchive%2Fr1004%2F10r04%2F10r04.asp&articleid=31748&guid=&searchtype=0&WordList=&bJumpTo=True.
[2] See Apple.com, iTunes Store Terms of Service, http://www.apple.com/legal/itunes/us/service.html (last visited Feb. 4, 2008).
[3] Id. at §19.
[4] Id at §22.
[5] Jennifer Granick, Courts Turn Against Abusive Clickwrap Contracts, Wired, Aug. 1, 2007, http://www.wired.com/politics/law/commentary/circuitcourt/2007/08/circuitcourt_0801?currentPage=all.
[6] See Ticketmaster Co. v. Tickets.com, Inc., 54 U.S.P.Q.2d 1344, 1346 (C.D.Cal., 2000).
[7] See DeJohn v. The TV Co., 245 F.Supp.2d 913, 919 (N.D.Ill., 2003).
[8] Hudson Sangree, ?Stubborn? PC owner takes on Gateway, The Sacramento Bee, Jun. 7, 2007, http://www.sacbee.com/101/v-print/story/209144.html.

Full post as published by The Journal of the Business Law Society on February 05, 2008 (boomark / email).