End-user license agreement

Last updated

An end-user license agreement or EULA ( /ˈjlə/ ) is a legal contract between a software supplier and a customer or end-user, generally made available to the customer via a retailer acting as an intermediary. A EULA specifies in detail the rights and restrictions which apply to the use of the software. [1]


Form contracts for digital services (such as terms of service and privacy policies) were traditionally presented on paper (see shrink-wrap agreement) but are now often presented digitally via browsewrap or clickwrap [2] [3] formats. As the user may not see the agreement until after they have already purchased or engaged with the software, these documents may be contracts of adhesion.

Software companies often make special agreements with large businesses and government entitles that include support contracts and specially drafted warranties.

Many EULAs assert extensive liability limitations. Most commonly, an EULA will attempt to hold harmless the software licensor in the event that the software causes damage to the user's computer or data, but some software also proposes limitations on whether the licensor can be held liable for damage that arises through improper use of the software (for example, incorrectly using tax preparation software and incurring penalties as a result). One case upholding such limitations on consequential damages is M.A. Mortenson Co. v. Timberline Software Corp., et al. [4] Some EULAs also claim restrictions on venue and applicable law in the event that a legal dispute arises.

Some copyright owners use EULAs in an effort to circumvent limitations the applicable copyright law places on their copyrights (such as the limitations in sections 107–122 of the United States Copyright Act), or to expand the scope of control over the work into areas for which copyright protection is denied by law (such as attempting to charge for, regulate or prevent private performances of a work beyond a certain number of performances or beyond a certain period of time). Such EULAs are, in essence, efforts to gain control, by contract, over matters upon which copyright law precludes control. [5]

Comparison with free software licenses

A free software license grants users of that software the rights to use for any purpose, modify and redistribute creative works and software, both of which are forbidden by the defaults of copyright, and generally not granted with proprietary software. These licenses typically include a disclaimer of warranty, but this feature is not unique to free software. [6] Copyleft licenses also include a key addition provision that must be followed in order to copy or modify the software, that requires the user to provide source code for the work and to distribute their modifications under the same license (or sometimes a compatible one); thus effectively protecting derivative works from losing the original permissions and being used in proprietary programs.

Unlike EULAs, free software licenses do not work as contractual extensions to existing legislation. No agreement between parties is ever held, because a copyright license is simply a declaration of permissions on something that otherwise would be disallowed by default under copyright law. [5]

Shrink-wrap and click-wrap licenses

The term shrink-wrap license refers colloquially to any software license agreement which is enclosed within a software package and is inaccessible to the customer until after purchase. Typically, the license agreement is printed on paper included inside the boxed software. It may also be presented to the user on-screen during installation, in which case the license is sometimes referred to as a click-wrap license. The inability of the customer to review the license agreement before purchasing the software has caused such licenses to run afoul of legal challenges in some cases.

Whether shrink-wrap licenses are legally binding differs between jurisdictions, though a majority of jurisdictions hold such licenses to be enforceable. At particular issue is the difference in opinion between two US courts in Klocek v. Gateway and Brower v. Gateway . Both cases involved a shrink-wrapped license document provided by the online vendor of a computer system. The terms of the shrink-wrapped license were not provided at the time of purchase, but were rather included with the shipped product as a printed document. The license required the customer to return the product within a limited time frame if the license was not agreed to. In Brower, New York's state appeals court ruled that the terms of the shrink-wrapped license document were enforceable because the customer's assent was evident by its failure to return the merchandise within the 30 days specified by the document. The U.S. District Court of Kansas in Klocek ruled that the contract of sale was complete at the time of the transaction, and the additional shipped terms contained in a document similar to that in Brower did not constitute a contract, because the customer never agreed to them when the contract of sale was completed.

Further, in ProCD v. Zeidenberg , the license was ruled enforceable because it was necessary for the customer to assent to the terms of the agreement by clicking on an "I Agree" button in order to install the software. In Specht v. Netscape Communications Corp., however, the licensee was able to download and install the software without first being required to review and positively assent to the terms of the agreement, and so the license was held to be unenforceable.

Click-wrap license agreements refer to website based contract formation (see iLan Systems, Inc. v. Netscout Service Level Corp.). A common example of this occurs where a user must affirmatively assent to license terms of a website, by clicking "yes" on a pop-up, in order to access website features. This is therefore analogous to shrink-wrap licenses, where a buyer implied agrees to license terms by first removing the software package's shrink-wrap and then utilizing the software itself. In both types of analysis, focus is on the actions of end user and asks whether there is an explicit or implicit acceptance of the additional licensing terms.

Product liability

Most licenses for software sold at retail disclaim (as far as local laws permit) any warranty on the performance of the software and limit liability for any damages to the purchase price of the software. One well-known case which upheld such a disclaimer is Mortenson v. Timberline.


In addition to the implied exhaustion doctrine, the distributor may include patent licenses along with software.

Reverse engineering

Forms often prohibit users from reverse engineering. This may also serve to make it difficult to develop third-party software which interoperates with the licensed software, thus increasing the value of the publisher's software through decreased customer choice. In the United States, EULA provisions can preempt the reverse engineering rights implied by fair use, c.f. Bowers v. Baystate Technologies.

Some licenses such as the Microsoft .NET Framework redistributable EULA purport to prohibit a user's right to release data on the performance of the software, but this has yet [ when? ] to be challenged in court.

Enforceability of EULAs in the United States

The enforceability of an EULA depends on several factors, one of them being the court in which the case is heard. Some courts that have addressed the validity of the shrinkwrap license agreements have found some EULAs to be invalid, characterizing them as contracts of adhesion, unconscionable, and/or unacceptable pursuant to the U.C.C.—see, for instance, Step-Saver Data Systems, Inc. v. Wyse Technology , [7] Vault Corp. v. Quaid Software Ltd. . [8] Other courts have determined that the shrinkwrap license agreement is valid and enforceable: see ProCD, Inc. v. Zeidenberg , [9] Microsoft v. Harmony Computers , [10] Novell v. Network Trade Center, [11] and Ariz. Cartridge Remanufacturers Ass'n v. Lexmark Int'l, Inc. [12] may have some bearing as well. No court has ruled on the validity of EULAs generally; decisions are limited to particular provisions and terms.

The 7th Circuit and 8th Circuit subscribe to the "licensed and not sold" argument, while most other circuits do not [ citation needed ]. In addition, the contracts' enforceability depends on whether the state has passed the Uniform Computer Information Transactions Act (UCITA) or Anti-UCITA (UCITA Bomb Shelter) laws. In Anti-UCITA states, the Uniform Commercial Code (UCC) has been amended to either specifically define software as a good (thus making it fall under the UCC), or to disallow contracts which specify that the terms of contract are subject to the laws of a state that has passed UCITA.

Recently[ when? ], publishers have begun to encrypt their software packages to make it impossible for a user to install the software without either agreeing to the license agreement or violating the Digital Millennium Copyright Act (DMCA) and foreign counterparts.[ citation needed ]

The DMCA specifically provides for reverse engineering of software for interoperability purposes, so there was some controversy as to whether software license agreement clauses which restrict this are enforceable. The 8th Circuit case of Davidson & Associates v. Jung [13] determined that such clauses are enforceable, following the Federal Circuit decision of Baystate v. Bowers . [14]


Jerry Pournelle wrote in 1983, "I've seen no evidence to show that ... Levitical agreements — full of "Thou Shalt Nots" — have any effect on piracy". He gave an example of an EULA that was impossible for a user to comply with, stating "Come on, fellows. No one expects these agreements to be kept". Noting that in practice many companies were more generous to their customers than their EULAs required, Pournelle wondered "Why, then, do they insist on making their customers sign 'agreements' that the customer has no intention of keeping, and which the company knows won't be kept? ... Must we continue making hypocrites out of both publishers and customers?" [15]

One common criticism of end-user license agreements is that they are often far too lengthy for users to devote the time to thoroughly read them. In March 2012, the PayPal end-user license agreement was 36,275 words long [16] and in May 2011 the iTunes agreement was 56 pages long. [17] News sources reporting these findings asserted that the vast majority of users do not read the documents because of their length.

Some critics highlight the hidden privacy implications of end-user license agreements. Many include clauses that allow the computer or device to provide information to third parties on a regular basis without notifying the consumer. [18]

Several companies have parodied this belief that users do not read the end-user-license agreements by adding unusual clauses, knowing that few users will ever read them. As an April Fool's Day joke, Gamestation added a clause stating that users who placed an order on April 1, 2010 agreed to irrevocably give their soul to the company, which 7,500 users agreed to. Although there was a checkbox to exempt out of the "immortal soul" clause, few users checked it and thus Gamestation concluded that 88% of their users did not read the agreement. [19] The program PC Pitstop included a clause in their end-user license agreement stating that anybody who read the clause and contacted the company would receive a monetary reward, but it took four months and over 3,000 software downloads before anybody collected it. [20] During the installation of version 4 of the Advanced Query Tool the installer measured the elapsed time between the appearance and the acceptance of the end-user license agreements to calculate the average reading speed. If the agreements were accepted fast enough a dialog window “congratulated” the users to their absurdly high reading speed of several hundred words per second. [21] South Park parodied this in the episode "HumancentiPad", where Kyle had neglected to read the terms of service for his last iTunes update and therefore inadvertently agreed to have Apple employees experiment upon him. [22]

End-user license agreements have also been criticized for containing terms that impose onerous obligations on consumers. For example, Clickwrapped, a service that rates consumer companies according to how well they respect the rights of users, reports that they increasingly include a term that prevents a user from suing the company in court. [23]

In a 2019 article published by Kevin Litman-Navarro for The New York Times, titled We Read 150 Privacy Policies. They Were an Incomprehensible Disaster, [24] the complexity of 150 terms from popular sites like Facebook, Airbnb, etc. were analyzed and comprehended. As a result, for example, the majority of licenses require college or higher-level degrees: "To be successful in college, people need to understand texts with a score of 1300. People in the professions, like doctors and lawyers, should be able to understand materials with scores of 1440, while ninth graders should understand texts that score above 1050 to be on track for college or a career by the time they graduate. Many privacy policies exceed these standards." [24]

The United Kingdom's National Consumer Council undertook a study published in 2008 which found issues with the way 17 major IT businesses had been using EULA's and asked the Office of Fair Trading to undertake an investigation. [25]

See also

Related Research Articles

<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.

The first-sale doctrine is an American legal concept that limits the rights of an intellectual property owner to control resale of products embodying its intellectual property. The doctrine enables the distribution chain of copyrighted products, library lending, giving, video rentals and secondary markets for copyrighted works. In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder puts the products on the market. In the case of patented products, the doctrine allows resale of patented products without any control from the patent holder. The first sale doctrine does not apply to patented processes, which are instead governed by the patent exhaustion doctrine.

Software copyright is the application of copyright in law to machine-readable software. While many of the legal principles and policy debates concerning software copyright have close parallels in other domains of copyright law, there are a number of distinctive issues that arise with software. This article primarily focuses on topics particular to software.

A software license is a legal instrument governing the use or redistribution of software. Under United States copyright law, all software is copyright protected, in both source code and object code forms, unless that software was developed by the United States Government, in which case it cannot be copyrighted. Authors of copyrighted software can donate their software to the public domain, in which case it is also not covered by copyright and, as a result, cannot be licensed.

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 the terms of use have brought concerns on customer privacy and raised public awareness in many ways.

<span class="mw-page-title-main">Standard form contract</span> Type of contract between two parties

A standard form contract is a contract between two parties, where the terms and conditions of the contract are set by one of the parties, and the other party has little or no ability to negotiate more favorable terms and is thus placed in a "take it or leave it" position.

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

A clickwrap or clickthrough agreement is a prompt that offers individuals the opportunity to accept or decline a digitally-mediated policy. 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".

<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 software licenses under contract law. The court held that merely clicking on a download button does not show assent to 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.

Proprietary software is software that is deemed within the free and open-source software community to be non-free because its creator, publisher, or other rightsholder or rightsholder partner exercises a legal monopoly by modern copyright and intellectual property law to exclude the recipient from freely sharing the software or modifying it, and—in some cases, as is the case with some patent-encumbered and EULA-bound software—from making use of the software on their own, thereby restricting their freedoms. It is often contrasted with open-source or free software. For this reason, it is also known as non-free software or closed-source software.

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.

<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>MDY Industries, LLC v. Blizzard Entertainment, Inc.</i> Court case in the United States

MDY Industries, LLC v. Blizzard Entertainment, Inc and Vivendi Games, Inc., 629 F.3d 928, is a case decided by the United States Court of Appeals for the Ninth Circuit. At the district court level, MDY had been found liable under theories of copyright and tort law for selling software that contributed to the breach of Blizzard's End User License Agreement (EULA) and Terms of Use (ToU) governing the World of Warcraft video game software.
The court's ruling was appealed to the United States Court of Appeals for the Ninth Circuit, which reversed the district court in part, upheld in part, and remanded for further proceedings. The Court of Appeals ruled that for a software licensee's violation of a contract to constitute copyright infringement, there must be a nexus between the license condition and the licensor’s exclusive rights of copyright. However, the court also ruled, contrary to Chamberlain v. Skylink, that a finding of circumvention under the Digital Millennium Copyright Act does not require a nexus between circumvention and actual copyright infringement.

<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.

<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.

This is a list of articles about terms of service and privacy policies. These are also called terms of use, and are rules one must agree to, in order to use a service. The articles fall in two main categories: descriptions of terms used for specific companies or products, and descriptions of different kinds of terms in general. Articles on companies vary widely in the amount of detail they give on terms of service. Annotations show what is available in the article on each company, and need to be updated as those articles are improved.


  1. Linux Foundation, EULA Definition, published 28 February 2006, accessed 10 August 2019
  2. Obar, Jonathan A.; Oeldorf-Hirsch, Anne (2018). "The Clickwrap: A Political Economic Mechanism for Manufacturing Consent on Social Media". Social Media + Society. 4 (3). doi: 10.1177/2056305118784770 .
  3. Obar, Jonathan (June 23, 2022). "The Clickwrap and The Biggest Lie on the Internet". YouTube. Retrieved 30 June 2022.
  4. "FindLaw's Supreme Court of Washington case and opinions". Findlaw. Retrieved 2021-03-06.
  5. 1 2 Eben Moglen (10 Sep 2001). "Enforcing the GNU GPL". gnu.org. Free Software Foundation, Inc. Archived from the original on 26 April 2013. Retrieved 20 May 2013. Licenses are not contracts: the work's user is obliged to remain within the bounds of the license not because she voluntarily promised, but because she doesn't have any right to act at all except as the license permits. … [C]ompanies say their software is "licensed" to consumers, but the license contains obligations that copyright law knows nothing about.
  6. Con Zymaris (5 May 2003). "A Comparison of the GPL and the Microsoft EULA" (PDF). pp. 3, 12–16. Archived (PDF) from the original on 6 October 2008. Retrieved 19 July 2013.
  7. 939 F.2d 91 (3rd Cir., 1991)
  8. 847 F.2d 255 (5th Cir., 1988)
  9. 86 F.3d 1447 (7th Cir., 1996)
  10. 846 F. Supp. 208 (E.D.N.Y., 1994)
  11. 25 F.Supp.2d 1218 (D. Utah, 1997)
  12. 421 F.3d 981 (9th Cir., 2005)
  13. 422 F. 3d 630 (8th Cir., 2005)
  14. 302 F.3d 1334 (Fed. Cir., 2002)
  15. Pournelle, Jerry (June 1983). "Zenith Z-100, Epson QX-10, Software Licensing, and the Software Piracy Problem". BYTE. p. 411. Retrieved 20 October 2013.
  16. Heathen (23 March 2012). "No One Reads the "Terms And Conditions" and Here's Why". 102.5 KISSFM. Retrieved 24 November 2012.
  17. Pidaparthy, Umika (May 6, 2011). "What you should know about iTunes' 56-page legal terms". CNN. Retrieved 24 November 2012.
  18. "Dangerous Terms: A User's Guide to EULAs". Electronic Frontier Foundation. 2005-02-17. Retrieved 2021-04-09.
  19. "7,500 Online Shoppers Unknowingly Sold Their Souls". FoxNews.com. April 15, 2010. Retrieved 24 November 2012.
  20. Magid, Larry. "PC Pitstop" . Retrieved 24 November 2012.
  21. Willmott, Don. "Backspace (v22n08)". PCMag.com. Retrieved 8 June 2013.
  22. O'Grady, Jason D. "South Park parodies iTunes terms and conditions". ZDNet. Retrieved 24 November 2012.
  23. Jamillah Knowles. Clickwrapped report tells you which sites claim ownership of your content, and you'll be surprised. TheNextWeb. August 21, 2012. Accessed July 29, 2013.
  24. 1 2 Litman-Navarro, Kevin (2019-06-12). "Opinion | We Read 150 Privacy Policies. They Were an Incomprehensible Disaster". The New York Times. ISSN   0362-4331 . Retrieved 2019-06-23.
  25. BBC News, Computer software terms 'unfair', published 19 February 2008, accessed 6 December 2022