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Shrinkwrap Licenses: An Epidemic Of Lawsuits Waiting To Happen

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3 Responses to “Shrinkwrap Licenses: An Epidemic Of Lawsuits Waiting To Happen”

1. eric says:

   February 3, 2007 at 11:41 am

   Very interesting screed. But you don't address something important, I think (not that I actually would expect you to in that venue, but you must have knowledge or at least an opinion on this): Are those EULA provisions actually valid?

   E.g., can Microsoft lawfully reserve the right to disable your computer? Can Amazon reserve the right to change the terms of their agreement at any time?

   Are there not limitations on what can be specified?

   If there are, of course, that doesn't make the situation a hell of a lot better, since we don't have a reasonable way of knowing what could be enforced and what couldn't. (Which I'm sure you would point out...)
2. Michael T says:

   February 4, 2007 at 10:59 am

   Disclaimer first - I am an attorney but in this post I am not trying to offer legal advice, just some thoughts.

   There is - presently - no good solution to the problem of shrinkwraps. What began as a way to disseminate low cost items without entering into expensive negotiations has - as Cory points out - become a celebration of corporate overreaching. But a mechanism such as a shrinkwrap license is absolutely essential to keep electronic, Internet and computer commerce running smoothly. Imagine going to the iTunes store, selecting a $0.79 track and hitting the download button:

   "Thank you for making an offer to buy at a cost of $0.79. We at iTunes are enabled to sell you this piece of music for certain purposes, as long as you agree to certain terms. Attached to this message is a file that contains these terms in the form of a contract proposal. Please have your attorneys review this proposal and make any changes you feel are necessary, then email it to the address contained in the file. Our attorneys will, in turn, review your changes and contact your attorneys. We will try to do this as quickly as possible, but given that we are handling over 10,000,000 of these negotiations a day, it might be some time before we get back to you."

   And that's before you figure in the costs of attorneys for both sides.

   So why don't we do this when we purchase other stuff? Well, the answer is that we do. As Cory points out, shrinkwraps make a mockery of the law when they become a turgid excuse for imposing unreasonable terms on buyers. Historically much the same thing happened when people entered into commerce. The classic law school example:

   "Sirrah, I wish to buy you rowboat that I believe is thine."

   "I shall sell it to thee for 2 groats."

   "Done."

   Of course you know what happens next - the boat has a hole in it, or it didn't actually belong to the putative seller, or the local feudal lord had imposed a "rowboat sales impost." For centuries all of that would be the buyer's problem - surely you've heard of it "Caveat Emptor - Let The Buyer Beware." Or to put it in modern terms: "By making this purchase thee agreest to the terms of my shrinkwrap, towit, I hast no liability whatsoever to you." Over time (centuries), and hundreds (thousands? tens of thousands?) of such transactions, many of which ended up in the courts, a body of custom came up called the common law containing protections for the buyer, or at least imposing some limits on the seller. Contract law embodied in statutes supplemented or superceded common law. For example, the most famous addition is called the "Statue of Frauds," a fancy way of saying "If you're selling something worth more than a pencil, you've got to put it in writing and provide some way for the buyer to be reassured that you're for real." But also warranties, representations, liability disclaimers, limitations, caps and so on. So now you can go into Long's Drugs, and buy that pencil for $0.29, and not worry about negotiating a contract that ensures, among other things, that: (a) Long's has the right to sell it to you, (b) the pencil really is a pencil, (c) it won't explode when you try to use it, (d) and if it turns out to be defective you can return it.

   So why don't we have something similar for software, or online commerce? A bunch of people tried about ten years ago, resulting in a proposal called UCITA, an acronym for a bunch of laws to control computer transactions. But the process got hijacked by commercial interests and UCITA was essentially a bunch of laws which, if enacted, would have made shrinkwrap excesses legal. To date, the only countervailing force on extreme shrinkwraps is the courts. Sue a vendor over an unreasonable shrinkwrap term, and there's actually a good chance that the term (and by extension, the entire contract) will be found to be illegal. Some of the things that upset the courts are shrinkwraps that attach with little or know affirmative action on the buyer's part (e.g., by walking into the store you have agreed...), that reach beyond the software itself (e.g., by using this software, all patents you ever own are mine), that limit or make extremely difficult protecting your rights (e.g., all lawsuits must occur in the court of No Hope, in the county of You're Kidding, in Uzbekistan).

   It ain't perfect. In fact, it's far from perfect. For one thing, going to court to discover your rights and the contract's limits is not an avenue open to most buyers. And complex issues like how many copies can I make of the downloaded song, who can I give them to, and so on are not addressed at all. But then neither was it perfect when you had to petition the Church for a hearing in Equity because Farmer Badman had sold you a horse with 3 legs. Eventually the "system" will adapt itself to the changing conditions. It's actually pretty amazing to see a legal system more suited to reacting in decades cope with the kind of changes that have occurred in just the last 10 years. Meanwhile, we have to stay vigilant and continue to point out the flaws to keep the pressure on, as well as making it clear to vendors (corporations) that imposing ugly contracts by fiat is only going to result in public embarassment, and expensive enforcement actions.
3. BUILDING LINKAGE | HADTO.NET says:

   September 13, 2008 at 2:08 pm

   [...] control of how their online presence or generated content is used in various exchanges. see also: http://craphound.com/?p=1753 ]. My objective is to work on ways of thinking that may help individuals through localized [...]

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