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A.V., et al. v. IParadigms, Limited Liability Company

Civ. Act. No. 07-0293 (E.D. Va., March 11, 2008)

Minors Held Bound By Terms Of Click-Wrap Agreement

Court holds that minors entered into valid ‘click wrap’ agreement with defendant IParadigms LLC (“IParadigms”) by clicking an “I agree” icon which appeared directly below an online Usage Agreement, and indicated their assent to be bound thereby.  Plaintiffs were high school students that were directed by the schools they attended to submit class work to defendant IParadigm’s “Turnitin” website to check for plagiarism.  As part of this submission process, plaintiffs were obligated to assent to the site’s Usage Agreement.  Because the Usage Agreement contained a limitation of liability clause precluding liability to plaintiffs as a result of their use of the Turnitin site, the Court rejected plaintiffs’ copyright infringement claims, which arose out of defendant’s storage of plaintiffs’ class work in a database used to check student homework for plagiarism.

In reaching this result, the Court rejected plaintiffs’ claims that, as minors, they were not bound by the terms of the site’s Usage Agreement.  Because they had accepted the benefits of the agreement – the ability to submit their class work for grade to their respective schools was dependent upon their use of the site – they could not escape the contractual conditions upon which such benefits were rendered.

The Court further held that plaintiffs’ copyright infringement claims failed because defendant had made a permissible fair use of their works.  In reaching this result, the Court relied on the fact that Turnitin’s use of plaintiffs’ school work was highly transformative of the original works, in that it added plaintiffs’ school work to a non-publicly available database used only to check for plagiarism by students.  The Court also rested its holding of fair use on the fact that defendant’s use did not impact the market for plaintiffs’ works, as the copies Turnitin made thereof were not available to the public, but rather maintained in a non-public database.

The Court rejected the counterclaims advanced by defendant iParadigms, including a claim for indemnification as a result of the commencement of this action.  This claim was based on a separate “Usage Policy” found on the Turnitin site.  The Court held that plaintiffs were not bound by this policy, which was not linked or otherwise referenced in the Usage Agreement to which plaintiffs were in fact bound.  There was no evidence that plaintiffs were aware of this separate “usage policy,” which was contained in a link on each page of the Turnitin site.  As a result, and because the parties’ contract stated that it constituted the full agreement between the parties, the plaintiffs’ use of the site was held not to create a valid browse wrap agreement, and the claim for indemnification, predicated on the Usage Policy, was dismissed.

The remaining counterclaims advanced by iParadigms arose out of the use of the site by one of the plaintiffs to submit class work to an institution he did not attend.  These claims for trespass to chattels, and violations of both the Computer Fraud and Abuse Act and Virginia Computer Crimes Act, failed due to the absence of the requisite damage.

Schools Mandate Students’ Use Of Turnitin Service To Combat Plagiarism

Defendant iParadigms operates Turnitin.  Schools contract with Turnitin to evaluate the originality of student class work.  Turnitin compares the class work to materials available on the Internet, commercial databases of journals and periodicals, and a database of student works previously submitted to Turnitin.  If Turnitin’s investigation reveals that a student has plagiarized another work, the school is informed and can take such action as it deems appropriate.

Schools contract with iParadigm to utilized Turnitin’s service.  The Schools, in turn, compel their students to submit their class work to Turnitin.  If they fail to do so, the student will receive a 0 for the assignment.  Some schools, including those at issue, permit Turnitin to incorporate the student class work they receive into a database to be used for future comparison/plagiarism checks. 

Plaintiffs are minor high school students attending two different schools that elected to utilize Turnitin to combat plagiarism problems they were facing.  To utilize Turnitin, plaintiffs were required to register with the site.  Part of this registration process required the plaintiffs to agree to be bound by the site’s Usage Agreement, the terms of which were displayed on the Turnitin site.  To do so, plaintiffs had to click on an “I agree” icon, which appeared at the foot of these terms.

Also on the site was a separate Usage Policy, which could be found by clicking on a link on each page of the site.  The Usage Policy provided that it would be binding on those who used the Turnitin site.  Importantly, however, there was no reference, or link to the Usage Policy in the Usage Agreement.

Each of the plaintiffs registered to submit their class work to Turnitin, and clicked on the “I agree” icon.  Each also included, however, on the class work they submitted, a disclaimer precluding its use by Turnitin in its database of student works.  When Turnitin nonetheless elected to include these works in its database, plaintiffs commenced this suit for copyright infringement.  Turnitin counterclaimed, seeking, inter alia, indemnification for the costs of its defense of this action pursuant to the Usage Policy, which it claimed was binding on the plaintiffs.  Turnitin also advanced additional claims against one of the plaintiffs, because of his use of the service to submit works to a school he did not attend.

The parties cross-moved for summary judgment.

Minors Entered Into Valid Click-Wrap Agreement That Barred Their Copyright Infringement Claims

The Court held that plaintiffs had entered into a valid ‘click wrap’ agreement by clicking on the ‘I agree’ icon at the foot of the Usage Agreement, and hence were bound by its terms.  Because that agreement contained a limitation of liability clause, it barred plaintiffs from pursuing their copyright infringement claims.  Said the Court:

In order to submit a paper to Turnitin, a student must first register by creating a profile on the Turnitin website.  The final step in the profile creation process requires that the student click “I Agree” to the terms of the ‘user agreement” … which is displayed directly above the “I Agree” link that the student must click. … [M]any courts have found clickwrap agreements to be enforceable … The Court finds that the parties entered into a valid contractual agreement when Plaintiffs clicked “I Agree” to acknowledge their acceptance of the terms of the Clickwrap Agreement.  The first line of the Clickwrap agreement, which appears directly above the “I Agree” link, states:  “Turnitin and its services … are offered to you, the user, conditioned on your acceptance without modification of the terms, conditions and notices contained herein.”  Also the Clickwrap Agreement provides that iParadigms will not be liable for any damages ‘arising out of the use of this web site.’  By clicking “I Agree” to create a Turnitin profile and enter the Turnitin website, Plaintiffs accepted iParadigm’s offer and a contract was formed based on the terms of the Clickwrap Agreement.  Because a limitation of liability clause was among the terms of the Agreement, the court finds that iParadigms cannot be held liable for any damages arising out of plaintiffs’ use of the Turnitin website, which includes the submission and archiving of their written works.

Minors Could Not Avoid Click-Wrap Agreement Because They Accepted And Retained Contractual Benefits

In reaching this result, the Court rejected plaintiffs’ claims that the clickwrap agreement was not enforceable because they were minors.  Because plaintiffs received a benefit from Turnitin – their ability to receive a grade other than zero for their class work was dependent on their agreement to submit it to Turnitin for review – they were bound by the conditions under which such benefits were conferred.  Said the Court:

‘if an infant enters into any contract subject to conditions or stipulations, he cannot take the benefit of the contract without the burden of the conditions or stipulations.’  5 Williston on Contracts Section 9:14 (4th ed. 2007).  Plaintiffs received benefits from entering into the agreement with iParadigms.  They received a grade from their teachers, allowing them the opportunity to maintain good standing in the classes in which they were enrolled. … Plaintiffs cannot use the infancy defense to void their contractual obligations while retaining the benefits of the contract.  Thus, plaintiffs’ infancy defense fails.

The Court also rejected plaintiffs’ attempt to invalidate the contract on the grounds of duress.  To invalidate an agreement on the grounds of duress, there must exist an “overbearing of a person’s free will by an unlawful or wrongful act or by threat such that the party’s consent to a contractual agreement is involuntary.”  While plaintiffs were compelled by their respective schools to use Turnitin to participate in class, they were not compelled to do so by Turnitin.  As such, they could not invalidate their agreement with Turnitin.  In any event, no party compelled plaintiffs to enter into the contract by use of an unlawful or wrongful act.  Quite the contrary, held the Court, the schools had every right to attempt to combat plagiarism by utilizing Turnitin’s service.

Finally, the Court held that the disclaimer plaintiffs inserted on their class work did not save their copyright infringement claim.  These disclaimers purported to prohibit Turnitin from including plaintiffs’ class work in the database of student class work it maintained as part of its effort to prevent student plagiarism.  The Court held that Turnitin’s offer – as reflected in its User Agreement – was a take it or leave it proposition.  If one wanted to use Turnitin’s services, it had to be in accordance with the terms as set out in the User Agreement.  No modifications were permitted.  By agreeing to be bound by the user Agreement, plaintiffs accepted these terms.  As such, their attempts to modify them were ineffectual.  Said the Court:

The existence of disclaimers on the written works indicating that plaintiffs did not consent to the archiving of their works does not modify the Agreement or render it unenforceable.  The Clickwrap Agreement itself provides that the terms of the Agreement are not modifiable.  Plaintiffs had the option to “Agree” or “Disagree;” no third option was available to allow plaintiffs to modify the Agreement. … Any attempted disclaimers written onto papers submitted after clicking “I agree” did not change the terms of the Agreement.

As a result, the Court dismissed plaintiffs’ copyright infringement claims.

Turnitin Makes A Permissible Fair Use Of Plaintiffs’ Copyrighted Works

The Court further held that such claims failed because Turnitin was making a permissible fair use of plaintiffs’ class work when it copied these works and included them in a non-public database used to check other students’ class works for plagiarism.

As explained by the Court:

In determining whether a particular use is a fair use, the following four factors must be considered:

(1) the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes:
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyright work.  17 USC Section 107.

In finding defendant made a fair use of plaintiffs’ copyrighted class work, the Court relied heavily on the transformative nature of defendant’s use of plaintiffs’ work.  The parties use the work for entirely different purposes – plaintiffs for education and creative expression, and defendant to protect against plagiarism.  iParadigm achieves this end by incorporating plaintiffs’ works into a non-public database – a transformative use – which is not used for creative expression, but rather, to prevent plagiarism.

The Court also rested its holding of fair use on the fact that defendant’s use of plaintiffs’ work in no way impacted the market therefore.  The inclusion of plaintiffs’ works in a non-public database did not affect plaintiffs’ ability to market their works to the public.

The Court reached this conclusion notwithstanding the fact that defendant included plaintiffs’ entire work in its database.  Said the Court: “the Supreme Court and the Fourth Circuit have indicated that a new work’s complete and entire use of the original work does not automatically preclude a finding of fair use.”  Because of the highly transformative and limited nature of defendant’s use, the Court found the defendant’s inclusion of plaintiffs’ works in its database in their entirety was a permissible fair use.

Plaintiffs Not Bound By Site’s Usage Policy

The Court did dismiss defendant’s counterclaims.  Defendant sued plaintiffs for indemnification to recover the costs incurred in defending this lawsuit.  Defendant’s claim was predicated on a separate Usage Policy, found via a link on each page of the Turnitin site.  Defendant claimed that, in addition to its User Agreement, plaintiffs were also bound by this Usage Policy a result of their use of the site.  As it included an indemnification provision, plaintiffs were obligated to reimburse defendant for the costs of suit.

The Court rejected this claim, holding that plaintiffs were not bound by the Usage Policy.  There was no evidence that plaintiffs were aware of this separate policy.  As such, held the Court, their use of the site did not create a valid browse wrap agreement between the parties, because such use did not indicate assent to be bound by the Usage Policy.  Importantly, the Usage Policy was not contained, or referenced in the User Agreement by which plaintiffs were in fact bound.  This later agreement provided that it constituted the “entire agreement” between the parties.  Said the Court:
[T]he Usage Policy is not binding on Plaintiffs as an independent contract because Plaintiffs did not assent to the usage Policy. … There is no evidence that Plaintiffs viewed or read the Usage Policy and there is no evidence that Plaintiffs ever clicked on the link or were ever directed by the Turnitin system to view the Usage Policy.  There is no evidence to impute knowledge of the terms of the usage Policy to plaintiffs. …  There is no evidence that the terms of the Usage Policy were presented to plaintiffs beyond the existence of the Usage Policy link that appeared on each page.  And, as discussed above, the terms of the usage Policy were not incorporated into the Clickwrap Agreement to which plaintiffs assented.

Trespass To Chattels Claims Fail Due To Lack Of Requisite Injury

The Court dismissed defendant’s remaining claims due to defendant’s failure to establish that it had sustained the requisite injury.  These claims arose out of the use of defendant’s service by one of the plaintiffs to send works to a school he did not attend.  Turnitin claimed that such a use constituted an impermissible trespass to chattels.  Trespass to chattels occurs when one “intentionally uses or intermeddles with personal property in rightful possession of another without authorization.”  According to the Court, the owner of a chattel can recover either for damages sustained “if the chattel is impaired as to its condition, quality or value” or “for actual damages suffered by reason of loss of [the chattel’s] use.” 

The Court held that defendant sustained no such damages as a result of the conduct complained of.  Accordingly, the Court dismissed defendant’s claim for trespass to chattels.  In reaching this result, the Court rejected defendant’s claim that it sustained the requisite damages as a result of the funds it expended in addressing the conduct complained of.  Said the Court:

iParadigms has only presented evidence of consequential damages resulting from the steps taken by iParadigms in response to A.V.’s submissions.  This evidence fails to establish any actual damage or impairment to the Turnitin system as a result of A.V.’s allegedly unauthorized submissions to UCSD.  Because there is no evidence of damage, iParadigms’ counterclaim for trespass to chattels fails.

The Court dismissed defendant’s remaining counterclaims for the same reason.  To establish a claim for violation of the Computer Fraud and Abuse Act, 18 USC section 1030, the defendant must show ‘loss to 1 or more persons during any 1 year period … aggregating at least $5000 in value …’.  Because defendant failed to produce evidence that it sustained such a loss, its Computer Fraud and Abuse Act claim was dismissed.  For the same reason, defendant’s Virginia Computer Crimes Act claim failed as well.

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