Australia: Good Rap For Browsewrap in USA: Register.com Inc v Verio Inc

In a landmark decision affirming the enforceability of browsewrap licences, the United States Court of Appeal for the Second Circuit has upheld a preliminary injunction issued against Verio Inc. (Verio), a website developer and hosting firm, for breaching the browsewrap-style terms of use for the services of the plaintiff, Register.com (Register): Register.com Inc v Verio Inc. 356 F. 3d 393 (2d Cir. N.Y. 2004), 2004 U.S. App. LEXIS 1074.

Register, a provider of domain name registration services, derived its authority to act as a registrar for the issuance of domain names from a standard form agreement with the Internet Corporation for Assigned Names and Numbers (ICANN), a public benefit corporation established by the United States Government to administer the domain name system.

Under the agreement (ICANN Agreement), Register was required to maintain and update a publicly available 'WHOIS' database of registrants' contact information, and was not to impose restrictions on the use of this data, except in relation to the electronic spamming of the registrants.

Register established a WHOIS database, which it updated on a daily basis, and provided a free public inquiry service for the information contained therein. Register's responses to WHOIS queries were captioned by a 'legend' stating that by submitting a query, the user agreed to refrain from using the data to conduct mass solicitations of business by email, direct mail or telephone (a more stringent restriction than that envisaged under the ICANN Agreement, which was only in relation to the restriction of mass solicitation by email).

In an aggressive marketing campaign, Verio developed an automated software program or 'robot' (Robot) to access the WHOIS database and compile massive lists of new domain name registrants whom Verio then subjected to a barrage of unsolicited marketing by email, direct mail and telephone.

Register demanded that Verio stop, however Verio only partially complied with this demand, ceasing the email solicitations, but continuing to market by direct mail and telephone. Register proceeded to charge Verio with violating the terms, forbidding use of WHOIS data for mass solicitation, that were displayed in Register's legend each time it provided WHOIS data.

Verio argued that it did not become contractually bound to Register because it never received legally enforceable notice of Register's conditions as the restrictive legend did not appear until after Verio had submitted the query and received the WHOIS data. Accordingly, Verio contended that it had never assented to Register's contract terms and therefore should not be deemed to have taken the WHOIS data from Register's systems subject to these conditions.

The Court upheld the preliminary injunction granted at first instance, concluding that online contracts do not always require formal acceptance by the offeree. In the circumstances, Register's browsewrap-type terms of use, combined with Verio's actions in repeatedly accessing the WHOIS database constituted a valid offer and acceptance, thereby resulting in a legally enforceable contract with Verio.

In its judgment, the Court distinguished the present case from the facts in the Specht browsewrap decision.¹ Importantly, the Court also disagreed with the Ticketmaster² terms of use decision, expressly rejecting the argument that the terms were unenforceable due to the fact that the user had not clicked an 'I agree' icon:

Particular significance was attached to the fact that Verio was a commercial entity that was making numerous, successive inquiries of Register's database, as a result of which it had become well aware of the terms exacted by Register. Accordingly the Court dismissed Verio's contention that:

although the Court noted that this argument may have been persuasive had Verio's queries been sporadic and infrequent.

The decision also canvasses issues in relation to ICANN policy and trespass to chattels, but these are beyond the scope of this article.

As electronic commerce has developed, courts have been confronted with the task of applying age-old principles of contract law to various online permutations of the classic idea of agreement between parties. While, in recent years, courts have become comfortable with enforcing agreements supported by 'clickwrap' procedures, up until now there has been no authority in relation to the enforceability of 'browsewrap' or 'Web wrap' agreements.

This case helps to elucidate contract principles as they apply to browsewrap agreements and, in particular, clarifies the circumstances in which the provisions of browsewrap agreements will be held to be enforceable.

Although Australian courts are not bound by American case law, the decision in Verio provides a useful guide as to how an Australian court might deal with the issue

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