Designer Skin LLC v. S & L Vitamins, Inc., et al.
Specht v. Netscape Communications Corp.
2001 WL 755396, 150 F. Supp. 2d 585 (S.D.N.Y., July 5, 2001), aff'd. -- F.3d -- (2d Cir., Oct. 1, 2002)
Court holds that act of downloading software does not indicate assent to be bound by terms of license agreement, where a link to such terms appears on, but below that portion of the web page that appears on the user's screen when such downloading is accomplished. As a result, the Court holds that under California law, plaintiffs are not bound by the terms of such license agreement, or the arbitration clause contained therein, despite language in the license agreement which provides that by installing or using the software, the user consents to be bound by the terms of the license agreement.
Netscape offers for free to members of the public a version of its Smart Download software. One of the places a user can obtain such software is from a page on the Netscape website. By clicking the "download" icon found on that page, the user will obtain the software. The portion of this web page that appears on the user's screen when he is presented with the download icon does not contain any reference to a software license agreement. If the user scrolls to the bottom of the page, however, he will see the following text:
This text contains a link which takes the user to a separate web page titled "License & Support Agreements." This page, in turn, contains the following text
This page also contains a link to the full text of the Smart Download software license. This license agreement provides that by using or installing the Smart Download software, the user agrees to be bound by the terms of this license agreement. The software license provides, in part:
Importantly, a user can download the Smart Download software without ever clicking an "I Agree" icon, indicating his assent to be bound by the terms of the software license.
Netscape argued that under the circumstances present in this case, the user's act of downloading the Smart Download software, or using and installing it on their PCs, indicated their assent to be bound by the terms of the software license, and hence created a binding contract in accordance with its terms. The Court disagreed, and held that plaintiffs were not bound by the term of the License Agreement. The Court described this form of contracting as a "browse wrap."
Applying California law, the Court held that "in order for a contract to become binding, both parties must assent to be bound." Under the circumstances of this case, the Court held that plaintiffs had not indicated their assent to be bound by the terms of the license agreement. In reaching this result, the Court pointed to the fact that a user could complete his download of the software in question without ever becoming aware that the use of the software may be subject to the terms of a software license, or that the act of downloading would be considered by Netscape as an assent to be bound by such terms.
Said the court:
The court distinguished those cases which upheld the enforceability of click-wrap and shrink-wrap agreements on the grounds that in those settings, the user must "perform an affirmative action unambiguously expressing assent before they may use the software," such as clicking on "I agree" icon.
The full text of the court's decision can be found on a web site maintained by the United States District Court for the Southern District of New York and CourtWeb.