SCN: Assent

[patrick]

That's a shocking ruling. It is as if they are following the "letter of the
law", rather than the spirit of the law.

Patrick


--- Steve <steve at advocate.net> wrote:
> x-no-archive: yes
> 
> =============================
> 
> (Carl S. Kaplan, NY Times)---Finding that "the timeless issue of 
> assent" has continuing vitality in the realm of cyberspace, a federal 
> judge has ruled that Internet users who downloaded free software 
> from a Web site were not bound by the terms of a software licensing 
> agreement because they never consented to it.  
> 
> The ruling, which was issued on July 5th, is one of the first 
> decisions to directly address whether a person's mere use of a Web 
> site -- without first reading legal fine print and clicking an "I agree" 
> button -- can constitute consent to an agreement governing the use 
> of the site or its products.  
> 
> The decision, which may influence other courts, is a boon to some 
> consumers who may have been surprised to discover that by 
> downloading a software program or surfing through a Web site they, 
> without knowing it, agreed to a contract.  
> 
> The decision also casts some doubt on a widespread Internet 
> practice. Many Web sites state in their "Terms of Service" or 
> "Conditions of Use" pages that a consumer's use of the Web site 
> constitutes his acceptance of a contract. The Web sites rely on 
> terms in those contracts to protect them.  
> 
> Judge Alvin K. Hellerstein of the United States District Court in 
> Manhattan ruled in his decision that Netscape Communications 
> Corporation, which is owned by America Online, Inc., did not form a 
> contract with individuals who downloaded free software from 
> Netscape's Web page. Accordingly, the court said that the users 
> were not obliged to honor an arbitration clause in the software 
> agreement. Judge Hellerstein ordered the parties to appear before 
> him for a case status conference on July 26.  
> 
> AOL may appeal the ruling to the U.S. Court of Appeals for the 
> Second Circuit, in Manhattan. Nicholas J. Graham, a spokesperson 
> for AOL, said, "We disagree strongly with the decision that was 
> handed down last week, and we are in the process of considering 
> our options."  
> 
> Joshua Rubin, a lawyer representing the plaintiffs in the case and a 
> partner at Abbey Gardy, a New York law firm, said that he thought 
> the court's decision was well reasoned and correct. "It applies an 
> ancient and fundamental principle in a novel context. That is, you 
> can't be bound to that which you don't agree to," he said.  
> 
> In related complaints filed last year, six individuals in three cases 
> alleged that Netscape's freely available software, SmartDownload, a 
> service that assists in the of downloading files from the Internet, 
> surreptitiously tracked private information about a user's file 
> transfer activity on the Internet. The plaintiffs, who are seeking class 
> action status, claim that by offering the software, Netscape and AOL 
> violated two federal statutes, the Electronic Communications Privacy 
> Act and the Computer Fraud and Abuse Act.  
> 
> In previous statements to the press, AOL said that the lawsuit was 
> without merit. In any case, the company announced last August that 
> new editions of the software program would not contain the alleged 
> consumer-tracking device.  
> 
> Earlier, Netscape argued that its licensing agreement with the 
> plaintiffs mandated that the case be thrown out of court and referred 
> to an arbitration panel. That set the stage for the court's ruling 
> whether the software licensing agreement was valid in the first 
> place.  
> 
> In his decision, Hellerstein repeated the age-old rule of contract law 
> that a necessary ingredient in making a promise binding between 
> two people is consent, a meeting of the minds. "So it was at King's 
> Bench in common law England; so it was under the common law in 
> the American colonies; so it was through more than two centuries of 
> jurisprudence in this country; and so it is today," he wrote.  
> 
> Consent can be indicated by any number of things, including a 
> signature or a handshake, said Judge Hellerstein. Indeed, any sign, 
> symbol or action, or even willful inaction, can amount to consent and 
> create a contract.  
> 
> But in the Netscape case, there was no required action on the part of 
> a user that could signal his consent to a licensing agreement. In 
> support of his view, Hellerstein observed that when the plaintiffs 
> wished to obtain SmartDownload from Netscape's Web site, they 
> viewed a download page that had a tinted box, or button, labeled 
> "Download." By clicking on the box, a visitor initiated the download.  
> 
> The sole reference to the existence of a licensing agreement 
> appeared in text at the bottom of the download page. That text read: 
> "Please review and agree to the terms of the Netscape 
> SmartDownload software license agreement before downloading and 
> using the software." By clicking on some words in the sentence, a 
> visitor was transported to another page that warned the user to read 
> and agree to a licensing agreement before acquiring the software 
> product. The warning contained a link to the licensing agreement. 
> Among other things, the agreement stated that by installing or using 
> SmartDownload, the user "is consenting to be bound by and is 
> becoming a party to this agreement."  
> 
> Judge Hellerstein reckoned that visitors were not required to 
> affirmatively indicate their assent to the license agreement, or even 
> to view the license agreement, before downloading the software. 
> "Netscape's failure to require users of SmartDownload to indicate 
> assent to its license as a precondition to downloading and using its 
> software is fatal to its argument that a contract has been formed," he 
> wrote.  
> 
> In his opinion, Judge Hellerstein acknowledged that users could 
> signal their consent to software licensing agreements by a minimal 
> action or willful inaction if the user has sufficient notice of the 
> contract. For example, in "shrink-wrap" licenses, which have been 
> upheld by some courts, software is packaged in a container or 
> wrapper that advises the purchaser that the use of the software is 
> subject to the terms of a license agreement tucked inside the 
> package. The license agreement generally states that if the 
> purchaser does not wish to enter into a contract, he must return it for 
> a refund, and that his failure to return within a period of time will 
> constitute assent to the license terms.  
> 
> In addition, in so-called "click-wrap" or "click-thru" licenses, which 
> also have been upheld by many courts, a user is presented with a 
> message on his computer screen, requiring that he signify his 
> assent to the terms of an agreement by clicking on an "I agree" 
> button. Generally, the product or service cannot be obtained or used 
> until the button is clicked.  
> 
> In contrast to those scenarios, said Judge Hellerstein, Netscape's 
> SmartDownload allowed a user to download and use the software 
> "without taking any action that plainly manifests assent to the terms 
> of the associated license or indicates an understanding that a 
> contract has been formed."  
> 
> Sometime after the lawsuit was filed, Netscape changed its 
> SmartDownload page. Now, next to the download button, reads the 
> sentence: "By downloading, I agree to the terms of the following 
> agreement." The licensing agreement is printed in a window next to 
> the download button.  
> 
> Michael H. Sproule, a lawyer who specializes in intellectual property 
> matters at Akabas & Cohen, a New York law firm, said that Judge 
> Hellerstein's ruling has ramifications far beyond software licensing 
> agreements. "I think this is something that Web sites have got to 
> consider," he said. "Almost every Web site out there has a Terms of 
> Service page. Generally it's not very prominent. It governs the use 
> of the Web site and typically requires users of the site to bring suit 
> or an arbitration proceeding in a land far away. It also often contains 
> the famous phrase: 'If you continue to use this service you are 
> bound by these terms.' At least according to the logic of Judge 
> Hellerstein's decision, those Terms of Service contracts are 
> dubious," said Sproule.  
> 
> The upshot, he added, is that those Web sites relying on the legality 
> of a Terms of Service Use contract and the viability of an arbitration 
> and forum selection clause may, in fact, be subject to lawsuits in all 
> 50 states and foreign jurisdictions.  
> 
> Martin H. Samson, a lawyer who specializes in Internet Law at 
> Phillips, Nizer, Benjamin, Krim & Ballon, a New York law firm, said 
> that he believed that Judge Hellerstein may have left open the 
> possibility that a user could assent to a contract by merely using a 
> site if the user had prominent notice that his use signified consent. 
> "If I put a license agreement right in front of a user's face, and the 
> agreement said your use of the site constitutes consent, that might 
> be okay," said Samson. The problem, he said, is that the legal rules 
> are not clear. "Until some judge says use-based contracts are 
> enforceable, they are iffy," he said.  
> 
> Ian C. Ballon, a Palo Alto, California-based Internet lawyer and editor 
> of the treatise, "E-Commerce and Internet Law" (Glasser 
> LegalWorks, 2001), said it was not surprising that a judge looked at 
> the issue of use-based Internet contracts and found them to be a 
> problem. Other judges, however, might have reached different 
> conclusions in light of the "widespread" custom of conditioning a 
> person's use of a Web site to posted Terms and Conditions, he 
> said.  
> 
> "The decision does underscore that it's the better practice not to 
> take a chance," said Ballon. "It's prudent for Web sites to have click-
> thru agreements," he said.  
> 
> That way, neither the Web site company nor the consumer would be 
> in for a legal surprise.  
> 
> 
> Copyright 2001 The New York Times Company
> 
> 
> 
> 
> 
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