Several special-purpose machines, such as the Hollerith tabulating machine, did sell on the market in the late 19th and early 20th century. The first computers in the modern sense only became available in the s, thanks to ground-breaking research by John von Neumann and Alan Turing in particular. Customers would pay for continued support and new programs as part of the deal, but no one would consider buying or selling computer programs by themselves. This was actually encouraged by most vendors, as it stimulated the sale of hardware that could use this software.
Well, at least most users have seen them, if not actually strained their eyes to read their small-print terms and conditions. The shrink-wrap license agreement purports to create a binding legal agreement so it says between the software vendor and the user.
The agreement is usually found inside the box containing the software, printed on the envelope containing the CD-ROM or disks, or stated in the user manual. At the beginning appears the usual statement warning the user not to open the software envelope or use the software if he or she does not agree with the terms and conditions of the agreement.
Use of this type of agreement has become the legal licensing paradigm of the software industry for consumer mass-market software. Recently, however, a federal district court in Wisconsin provided clear guidance on the circumstances under which a shrink-wrap agreement will be held invalid and unenforceable.
The defendant, a computer science Ph.
He then copied the telephone listings from the CD-ROM onto his computer, created a software search engine, and uploaded the whole thing onto a World Wide Web site that soon generated over 20, hits a day. The court said no. Relying on a U.
Supreme Court decisions only a few years old, Feist Publications, Inc. Rural Telephone Service Co. Therefore, Zeidenberg could copy the telephone listings and further distribute them from his Web site.
Did Zeidenberg violate the terms of the shrink-wrap license agreement, which expressly stated that copying of the software and the data the telephone listings may be done only for individual or personal use and that distribution, sublicense or lease of the software or the data was prohibited?
The court again said no. Copying of the data was clearly prohibited by the license agreement. But the court refused to enforce the agreement. The court stated that the terms of the Select Phone license agreement were not presented to Zeidenberg or any other purchaser at the time of sale.
The only reference to the agreement was a statement in small print at the bottom of the package that said users were subject to the terms and conditions of the enclosed license agreement.
Zeidenberg did not have the opportunity to inspect or consider the terms of the license. The court did not think that mere reference to the terms at the time of the initial contract formation — forking over payment at the check-out counter — presented Zeidenberg with an adequate opportunity to decide whether the license terms were acceptable or not.
Zeidenberg had to have been given the opportunity to read and consider the terms in their entirety at the time of initial contract formation, which the court said was the time the retail transaction was consummated.
Under Section of the Uniform Commercial Code, the court held that the license agreement terms contained inside the Select Phone package constituted additional terms to which Zeidenberg did not agree, nor have the opportunity to agree to, upon the initial agreement — payment at the check-out counter in exchange for the copy of the software.
Further, the court held, even if the agreement were enforceable, copyright law would pre-empt the provision of the agreement prohibiting copying of the uncopyrightable telephone listings. This case is currently on appeal before the U.
Court of Appeals for the Seventh Circuit. While the enforceability of shrink-wrap software license agreements, as currently used by the software industry, may be dubious, users should not by any means assume that software is freely copyable.
The ProCD case involved uncopyrightable data — the telephone listings. Software vendors can take away from this decision some useful tips. Vendors may want to consider giving users the opportunity to review their license terms and conditions by printing them on the outside of their software packaging or otherwise making them available at retail outlets where their products are sold.
For phone orders, vendors may consider providing purchasers copies of the license agreement in advance of consummating a transaction, or at least informing purchasers at the time of purchase that the transaction is subject to the terms of the license agreement.
This article is provided for general informational purposes only and does not constitute legal advice.
Each factual situation is different and requires specific analysis. Attorney Eric Freibrun specializes in Computer law and Intellectual Property protection, providing legal services to information technology vendors and users.Court Strikes Down Shrink-Wrap License Agreement.
The shrink-wrap license agreement purports to create a binding legal agreement (so it says) between the software vendor and the user. had to have been given the opportunity to read and consider the terms in their entirety at the time of initial contract formation, which the court said.
Legal quicksand: Shrink-wrap and click-wrap agreements You see shrink-wrap and click-wrap agreements when you click through terms . A contract consists of voluntary promises between competent parties to do, or not to do, something, which the law will enforce.
These are binding promises, which may be oral or written. Depending on the situation, a contract could obligate someone even if he or she wants to call the deal off before receiving anything from the other side. Shrinkwrap Agreement Definition. A standard form indicating additional terms and conditions to a contract for the sale of goods that is included by the merchant in the product's packaging; typically, the buyer may accept the terms by keeping the goods or reject the terms by returning the goods for a refund within a reasonable period of time.
8 Clickwrap and shrinkwrap agreements are generally enforceable 9 If an offer from LAW at California State University, Dominguez Hills A promise is normally binding only if it is supported by reasonable time, geographic area, and scope of activity.
In an employment contract, such a clause is considered reasonable—and enforceable. Shrinkwrap agreements include a broad range of objects from computer software to, in the case of ProCD v.
Zeidenburg, databases. The licensing conditions for the object are placed, in paper form, inside the box or are noted on the outside of the box.