service, EULA. Just what are we talking about and how did we get
In Nguyen v. Barnes & Noble,
Inc., 2014 WL 4056549 (9th Cir. Aug. 18, 2014)
the US Ninth Circuit wades into the subject of online contracting.
Law professor Eric Goldman (ericgoldman.org) argues that these
terms we're accustomed to using, to describe ecommerce
agreements, only contribute to the confusion. The
term "browsewrap" derives from
"clickwrap", which is itself a portmanteau derived
the concept of a shrinkwrap license. As one court described it in
1996: "The 'shrinkwrap license' gets its name from the
fact that retail software packages are covered in plastic or
cellophane shrink wrap, and some vendors... have written licenses
that become effective as soon as the customer tears the wrapping
from the package."
The enforceability of a browsewrap - it is argued - is based not
on clicking, but on merely browsing the webpage in question.
However, the term browsewrap is often used in
the context of an online retailer hoping to
enforce its terms, in a situation where they should have
used a proper click-through agreement.
In Nguyen, the court dealt with a claim by a customer
who ordered HP TouchPad tablets from the Barnes & Noble site.
Although the customer entered an order through the shopping cart
system, Barnes & Noble later cancelled that order.
The customer sued. The resulting litigation turned on the
enforceability of the online terms of service (TOS). The court
reviewed the placement of the TOS link and found a species of
unenforceable browsewrap - the TOS link was somewhere near the
checkout button, but completion of the sale was not conditional
upon acceptance of the TOS.
There is a whole spectrum upon which online terms can be placed.
At one end, a click-the-box agreement (in which completion of the
transaction is conditional upon acceptance of the TOS) is generally
considered to be valid and enforceable. At the other end, we see
passive terms that are linked somewhere on the website, usually
from the footer, sometimes hovering near the checkout or download
button. In Nguyen, the terms were passive and
required no active step of acceptance. The court concluded that:
conspicuous hyperlink on every page of the website but otherwise
provides no notice to users nor prompts them to take any
affirmative action to demonstrate assent, even close proximity of
the hyperlink to relevant buttons users must click on
—without more — is insufficient..."
This leaves open the possibility that browsewrap terms (where no
active step is required) could be enforceable if the user
has notice (actual or constructive) of those terms.
In Canada, the concept was most recently addressed by the court
in Century 21 Canada Limited Partnership
v. Rogers Communications Inc., 2011 BCSC 1196
(CanLII). In that case, there was no active click-the-box terms of
use, but the "browsewrap" terms were nevertheless upheld
as enforceable, in light of the circumstances. Three particular
factors convinced the court that it should uphold the terms: 1. the
dispute did not involve a business-to-consumer dispute (as it did
in Nguyen). Rather the parties were "sophisticated
commercial entities". 2. The defendants had actual notice of
the terms. 3. The defendants employed similar terms on their own
The lessons for business?
The "browsewrap" is a passive attempt to impose
terms on a site visitor or customer. Such passive terms should not
be employed where the party seeking to enforce those terms requires
certainty of enforceability. Even where there is a
"conspicuous hyperlink" or "notice to users" or
"close proximity of the hyperlink", none of these
factors should be relied upon, even if they
might create an enforceable contract in special
cases. Maybe it is time to retire the term "browsewrap"
and replace it with "probably unenforceable".
Now, do you still want to rely on a browsewrap agreement?
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Software license agreements generally require the customer to pay fees for the software license and related services, which fees are usually based upon the duration of the license and the manner in which the customer is allowed to use the software, together with applicable taxes and withholdings.
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