Clickwrap

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A clickwrap or clickthrough agreement is a prompt that offers individuals the opportunity to accept or decline a digitally-mediated policy. [1] [2] Privacy policies, terms of service and other user policies, as well as copyright policies commonly employ the clickwrap prompt. Clickwraps are common in signup processes for social media services like Facebook, Twitter or Tumblr, connections to wireless networks operated in corporate spaces, as part of the installation processes of many software packages, and in other circumstances where agreement is sought using digital media. The name "clickwrap" is derived 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". [3]

Contents

The content and form of clickwrap agreements vary widely. Most clickwrap agreements require the end-user to indicate their 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. If the user opts to reject the terms, they cannot use or purchase the product or service. Classically, such a take-it-or-leave-it contract is 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. [4]

United States

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:

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.). [6] [7]

More recently, in the 2017 opinion Meyer v. Uber Technologies, the Second Circuit of the United States Court of Appeal held that users were on fair notice of the arbitration provision in Uber's registration process, because Uber presented the app's terms of service via hyperlink. "While it may be the case that many users will not bother reading the additional terms, that is the choice the user makes," Judge Chin wrote. "The user is still on inquiry notice." The Court further held that "[w]hen considering the perspective of a reasonable smartphone user, we need not presume that the user has never before encountered an app or entered into a contract using a smartphone..." Instead, the Court explained that "[a] reasonable user would know that by clicking the registration button, he was agreeing to the terms and conditions accessible via the hyperlink, whether he clicked on the hyperlink or not." [8] [9]

European Union

On 21 May 2015, the European Court of Justice decided in the case of El Majdoub v. CarsOnTheWeb.Deutschland GmbH (case n°C-322/14), on a referral from a German court, [10] that click-wrap agreements are acceptable under certain circumstances as a "durable record" of the acceptance of general conditions within the meaning of Regulation 44/2001 (now replaced by Regulation 1215/2012, also known as the 'Brussels I Recast Regulation'). [11]

Research

Clickwraps have been shown to have an agenda-setting function, wherein aspects of clickwraps like prominent join buttons are easier to notice than the links to the privacy policies. [12]

See also

Related Research Articles

<span class="mw-page-title-main">End-user license agreement</span> Software License Agreements

An end-user license agreement or EULA is a legal contract between a software supplier and a customer or end-user.

<i>Step-Saver Data Systems, Inc. v. Wyse Technology</i>

Step-Saver Data Systems, Inc. v. Wyse Technology was a case in the U.S. Court of Appeals for the Third Circuit primarily concerned with the enforceability of box-top licenses and end user license agreements (EULA) and their place in U.S. contract law. During the relevant period, Step-Saver Data Systems was a value-added reseller, combining hardware and software from different vendors to offer a fully functioning computer system to various end users. Step-Saver's products included software produced by Software Link, Inc (TSL), computer terminals produced by Wyse Technology, and main computers produced by IBM. The fundamental question raised in this case was whether the shrinkwrap licenses accompanying TSL's software were legally binding, given that different terms were negotiated over the phone with Step-Saver prior to receiving physical copies of the software. The case was first heard in the United States District Court for the Eastern District of Pennsylvania, where the court ruled that the shrinkwrap licenses were legally binding. However, the U.S. Court of Appeals for the Third Circuit subsequently reversed this decision, ruling that the shrinkwrap licenses were not legally binding.

<span class="mw-page-title-main">Software license</span> Governs the use and/or redistribution of software

A software license is a legal instrument governing the use or redistribution of software.

Terms of service are the legal agreements between a service provider and a person who wants to use that service. The person must agree to abide by the terms of service in order to use the offered service. Terms of service can also be merely a disclaimer, especially regarding the use of websites. Vague language and lengthy sentences used in these terms of service have caused concerns about customer privacy and raised public awareness in many ways.

Shrinkwrap contracts or shrinkwrap licenses are boilerplate contracts packaged with products; use of the product is deemed acceptance of the contract.

<i>ProCD, Inc. v. Zeidenberg</i>

ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, was a court ruling at the United States Court of Appeals for the Seventh Circuit. The case is a significant precedent on the matter of the applicability of American contract law to new types of shrinkwrap licenses that arose with home computing and the Internet in the 1990s, and whether such licenses are enforceable contracts.

<i>Specht v. Netscape Communications Corp.</i> American legal case

Specht v. Netscape, 306 F.3d 17, is a ruling at the United States Court of Appeals for the Second Circuit regarding the enforceability of clickwrap licenses under contract law. The court held that merely clicking on a download button does not show consent with license terms, if those terms were not conspicuous and if it was not explicit to the consumer that clicking meant agreeing to the license.

Rudder v Microsoft Corp. [1999] OJ No 3778. is an Ontario Superior Court case that is the leading decision on clickwrap licenses and forum selection clauses in Canada.

Browsewrap is a term used in Internet law to refer to a contract or license agreement covering access to or use of materials on a web site or downloadable product. In a browse-wrap agreement, the terms and conditions of use for a website or other downloadable product are posted on the website, typically as a hyperlink at the bottom of the screen. Unlike a clickwrap agreement, where the user must manifest assent to the terms and conditions by clicking on an "I agree" box, a browse-wrap agreement does not require this type of express manifestation of assent. Rather, a web-site user purportedly gives their consent simply by using the product — such as by entering the website or downloading software.

<span class="mw-page-title-main">United States contract law</span>

Contract law regulates the obligations established by agreement, whether express or implied, between private parties in the United States. The law of contracts varies from state to state; there is nationwide federal contract law in certain areas, such as contracts entered into pursuant to Federal Reclamation Law.

<i>Register.com v. Verio</i> American legal case

Register.com v. Verio, 356 F.3d 393, was a decision of the United States Court of Appeals for the Second Circuit that addressed several issues relevant to Internet law, such as browse wrap licensing, trespass to servers, and enforcement of the policies of the Internet Corporation for Assigned Names and Numbers (ICANN). The decision upheld the ruling of a lower court which prevented a provider of web development services from automatically harvesting publicly available registration data from a domain name registrar's servers for advertising purposes.

<i>Bragg v. Linden Research, Inc.</i> 2007 United States civil action

Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593, was a ruling at the United States District Court for the Eastern District of Pennsylvania. The case resulted in an important early ruling on the enforceability of an online End User License Agreement (EULA) under American contract law, though it did not ultimately gain influence as a precedent. The ruling also clarified the matter of personal jurisdiction for a dispute involving a user of a website that originates in a different region.

Data General Corp. v. Digital Computer Controls, Inc. was a 1971 case in which the Delaware Court of Chancery determined that widespread, confidential disclosure of trade secrets does not necessarily compromise their secrecy. Data General Corporation distributed design documentation with its Nova 1200 minicomputer, notifying owners of the confidentiality of these design drawings through contractual agreements and explicit text on the drawings. After acquiring drawings with a Nova 1200 purchase, Digital Computer Controls designed its own nearly identical minicomputer. Digital Computer Controls maintained that its use of the documentation was proper because Data General Corporation inadequately maintained the secrecy of the design drawings by distributing them to many customers. The court found that Data General Corporation had sufficiently protected the secrecy of the drawings and that Digital Computer Controls was thus in violation of trade secret law for improperly using confidential information.

<i>Lasercomb America, Inc. v. Reynolds</i>

Lasercomb America, Inc. v. Reynolds, 911 F.2d 970 is an appeal filed in the United States Court of Appeals for the Fourth Circuit. Initially, Lasercomb filed an action against Holiday Steel for breach of contract, copyright infringement, misappropriation of trade secrets, fraud, unfair competition, and false designation of origin. The United States District Court ruled in favor of Lasercomb, awarding them punitive damages and actual damages for fraud, rejecting the defense of copyright misuse. On appeal, based on a recognition of the similarity to patent misuse, the holding was reversed, deeming the language contained in the license agreement unreasonable.

In the middle of 2009 the Federal Trade Commission filed a complaint against Sears Holdings Management Corporation (SHMC) for unfair or deceptive acts or practices affecting commerce. SHMC operates the sears.com and kmart.com retail websites for Sears Holdings Corporation. As part of a marketing effort, some users of sears.com and kmart.com were invited to download an application developed for SHMC that ran in the background on users' computers collecting information on nearly all internet activity. The tracking aspects of the program were only disclosed in legalese in the middle of the End User License Agreement. The FTC found this was insufficient disclosure given consumers expectations and the detailed information being collected. On September 9, 2009 the FTC approved a consent decree with SHMC requiring full disclosure of its activities and destruction of previously obtained information.

<i>Bowers v. Baystate Technologies, Inc.</i>

Bowers v. Baystate Technologies, 320 F.3d 1317, was a U.S. Court of Appeals Federal Circuit case involving Harold L. Bowers and Baystate Technologies over patent infringement, copyright infringement, and breach of contract. In the case, the court found that Baystate had breached their contract by reverse engineering Bower's program, something expressly prohibited by a shrink wrap license that Baystate entered into upon purchasing a copy of Bower's software. This case is notable for establishing that license agreements can preempt fair use rights as well as expand the rights of copyright holders beyond those codified in US federal law.

<i>Harris v. Blockbuster, Inc.</i>

Harris v. Blockbuster, Inc., 622 F. Supp. 2d 396, established precedent in the district that when a contract has a clause that authorizes one party to make changes to the "contract" without notification, that it is illusory and hence the entire "contract" is void.

<i>In re Zappos.com, Inc., Customer Data Security Breach Litigation</i>

In re Zappos.com, Inc., Customer Data Security Breach Litigation, 893 F. Supp. 2d 1058, was a United States District Court for the District of Nevada case in which the Court held that Zappos.com's customers were not held to the browsewrap terms of use because of their obscure nature. The courts also held that the agreement was unenforceable because Zappos had reserved the right to change it at any time without informing the customers. This court decision set a precedent for businesses that use browsewrap agreements and/or include a clause in their agreements that allow them to change the agreements at any time. The decision encouraged conversation on how a business should most fairly display its terms of use and how to avoid unfairness and ambiguity when writing them.

<i>Nguyen v. Barnes & Noble, Inc.</i>

Nguyen v Barnes & Noble, Inc., 763 F.3d 1171, was a United States Court of Appeals for the Ninth Circuit decision in which the Court ruled that Barnes & Noble's 2011 Terms of Use agreement, presented in a browsewrap manner via hyperlinks alone, was not enforceable since it failed to offer users reasonable notice of the terms. The decision set an important precedent on the future design and presentation of online contracts for consumer-facing e-commerce sites.

<i>Feldman v. Google, Inc.</i> 2007 United States civil action

Feldman v. Google, Inc., 513 F.Supp.2d 229, was a ruling at the United States District Court for the Eastern District of Pennsylvania. The case has become a defining precedent on the enforceability of clickwrap agreements for Internet services.

References

  1. ↑ Obar, Jonathan A.; Oeldorf-Hirsch, Anne (2018). "The Clickwrap: A Political Economic Mechanism for Manufacturing Consent on Social Media". Social Media + Society. 4 (3): 205630511878477. doi: 10.1177/2056305118784770 .
  2. ↑ Obar, Jonathan (June 23, 2022). "The Clickwrap and The Biggest Lie on the Internet". YouTube. Retrieved 30 June 2022.
  3. ↑ Murdoch University Electronic Journal of Law
  4. ↑ A Nicol. Clickwrapped: Who Respects Your Rights Online? Accessed July 30, 2013.
  5. ↑ 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.
  6. ↑ FindLaw Article
  7. ↑ Loundy, David (February 8, 1996). "'Shrink-wrap' licenses don't shrink access to data". Chicago Daily Law Bulletin. p. 5.
  8. ↑ "Meyer v. Uber Techs, Inc., Nos. 16-2750, 16-2752, 2017 WL 3526682 (2d Cir. Aug. 17, 2017)" (PDF). Archived (PDF) from the original on 2020-04-22.
  9. ↑ Frankel, Alison (2017-08-17). "2nd Circuit's Uber arbitration ruling huge win for app industry". Reuters. Retrieved 2021-01-31.
  10. ↑ Court of Justice of the European Communities, El Majdoub (Judgment) (2015) EUECJ C-322/14 (21 May 2015), accessed 1 May 2021
  11. ↑ El Majdoub v CarsOnTheWeb.Deutschland GmbH: ECJ 21 May 2015, accessed 1 May 2021
  12. ↑ Obar, J. A.; Oeldorf-Hirsch, Anne (2020). "The biggest lie on the internet: Ignoring the privacy policies and terms of service policies of social networking services". Information, Communication & Society. 23 (1): 128-147.

YouTube Video: The Clickwrap and The Biggest Lie on the Internet

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


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