Designer Skin LLC v. S & L Vitamins, Inc., et al.
Browse-Wrap Agreements - Internet Library of Law and Court Decisions - Updated April 2, 2008
Civ. Act. No. 07-0293 (E.D. Va., March 11, 2008)
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.
Case No. 3D05-144 (Florida Dist. Crt. App., August 31, 2005)
Plaintiff held bound by Amendment to telephone services contract which obligated plaintiff to arbitrate disputes with the telephone service company, the terms of which Amendment were posted online. Plaintiff was held bound as a result of her receipt of an invoice that gave her both notice of the Amendment and a location on the Internet at which its terms could be viewed, as well as the opportunity to cancel her contract if she did not wish to be bound thereby. Plaintiff was held bound despite the fact that she neither read the terms of the Amendment, nor in any way affirmatively indicated her assent to be bound thereby. Because the Amendment obligated plaintiff to arbitrate her dispute with defendant Sprint, the Florida District Court of Appeals affirmed the lower court's grant of defendant's motion to compel arbitration.
No. C04-04825 (JW) (N.D. Ca., April 1, 2005)
359 Ill. App. 3d 976, 835 N.E.2d 113 (Ill App 5 Dist., August 12, 2005) app. denied, 217 Ill. 2d 601, 844 N.E.2d 965 (Ill. 2006)
Reversing the court below, an Illinois intermediate appellate court, applying Texas law, holds purchasers of Dell computers bound by Terms and Conditions of Sale posted and available on Dell’s website at the time of purchase. Importantly, the court held plaintiffs bound by these terms notwithstanding the fact that they were only available via hyperlink on Dell’s site, and further, that the consumer did not have to affirmatively click an “I accept” icon to indicate his assent to be bound thereby. The Court held that by purchasing their computers online, plaintiffs entered into an online contract which included the Terms and Conditions, because they were advised on Dell’s website that their purchases were subject thereto.
As a result, the court held plaintiffs bound by the arbitration clause contained in the Terms, which mandated that they arbitrate disputes arising out of the purchase of their computers before the National Arbitration Forum. In reaching this result, the court rejected plaintiffs’ claims that such a clause was procedurally and substantively unconscionable.
505 F.Supp.2d 755, Civ. No. 06-cv-01726-LTB-CBS (D. Colo., Feb. 13, 2007)
The Court did dismiss so much of defendant's counterclaims that advanced claims for conversion, civil theft and RICO arising out of the same copying activities. The Court dismissed the conversion claims both because Internet Archive did not exercise sufficient dominion over defendant's property merely by copying her site and displaying it online, and because Internet Archive removed defendant's site, and thereby ceased exercising any dominion over it, promptly upon her request.
The Internet Archive did not move to dismiss copyright infringement claims defendant asserted arising out of its copying activities, which will also go forward.
109 Cal. App. 4th 583 (Cal. Crt. App., June 9, 2003)
356 F.3d 393 (2d Cir. 2004)
The Second Circuit also found both that Verio's use of a search robot to gather Whois data likely constituted a trespass to chattels, and that certain of Verio's promotional activities violated the Lanham Act.
As a result, the Second Circuit affirmed the District Court's issuance of a preliminary injunction, enjoining Verio from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information obtained from that database to assist in the transmission of mass unsolicited advertising by telephone, direct mail or e-mail.
126 F. Supp. 2d 238 (S.D.N.Y., December 12, 2000) (Jones, J.) aff'd. 356 F.3d 393 (2d Cir. 2004)
Civ. Act. No. 3:06-CV-0891-B (N.D. Texas, September 12, 2007)
Finding defendant Boardfirst violated the terms of a browsewrap agreement entered into by its use of plaintiff Southwest Airlines’ website, the Court issued a permanent injunction, enjoining Boardfirst from accessing Southwest Airlines’ website on behalf of its customers to obtain boarding passes. Southwest Airlines’ passengers engaged Boardfirst to obtain such boarding passes in the hopes of getting better seat assignments on Southwest Airlines flights. Southwest Airlines has no assigned seating. Those passengers who are the first to seek boarding passes within the designated time period are awarded “A” boarding passes, which, in turn, allow them to board the plane, and select their seat, first. In reaching this result, the Court held that Boardfirst had the requisite knowledge that its use of plaintiff’s site would form a valid browsewrap contract by virtue, inter alia, of its receipt of cease and desist letters from Southwest Airlines apprising it of that fact.
The Court denied so much of Southwest Airline’s motion for summary judgment which sought to hold Boardfirst liable for violating of the Computer Fraud and Abuse Act, 18 U.S.C. Section 1030. The Court held that issues of fact as to whether Southwest Airlines sustained the injury needed to sustain such a claim precluded an award of summary judgment. The Court further held that it could not, at this time, determine whether Boardfirst accessed Southwest Airline’s site “without authorization” or in excess of authorization, an additional prerequisite to a CFAA claim.
Finally, the Court found that Boardfirst’s conduct violated Section 33.02 of the Texas Penal code, which makes it an offense to “knowingly access a computer network, or computer system without the effective consent of the owner.” The Court reserved for trial the issue of whether such violation caused Southwest Airlines recoverable damages.
2000 U.S. Dist. Lexis 4553 (C.D. Ca., March 27, 2000)
The court, in granting defendant's motion to dismiss plaintiffs' breach of contract claim, held that a contract is not created simply by use of a web site on which is posted at the bottom of the site's home page terms and conditions that provide that such use constitutes the user's assent to be bound by the site's Terms and Conditions. The court left open the possibility, however, that use of a web site, coupled with knowledge of Terms and Conditions which declare such use evidence of assent to be bound thereby, could create a binding contract, and granted plaintiffs leave to replead their claim.
The court further held that "hyperlinking [without framing] does not itself involve a violation of the Copyright Act ... since no copying is involved." In addition, the court held that "deep linking by itself (i.e. without confusion of source) does not necessarily involve unfair competition."
The court refused at the outset of a litigation, however, to dismiss plaintiffs' claim that defendant, by deep linking, was tortuously interfering with plaintiffs' prospective business advantage, by depriving them of advertising revenue that might otherwise be achieved if the user were forced first to go to the site's home page (with the necessary increase in traffic that would generate) before he could proceed to an event page.
Lastly, the court held that defendant did not infringe plaintiffs' copyright in their site by extracting data concerning concert and other entertainment events from plaintiffs' web site (such as location, date and time of the event) and presenting it on defendant's web site in its own format. The court further held that plaintiffs could not attempt to recast such a claim into either state law misappropriation, trespass, unfair business practice or unjust enrichment claims, as those claims, to the extent they prohibited conduct permitted under the copyright act, were preempted thereby.
2003 U.S. Dist. Lexis 6483 (C.D. CA., March 7, 2003)
Court holds that a binding agreement can be formed by the use of a web site, without more, if the user has actual knowledge that the site's Terms and Conditions so provide. As a result, the Court denied defendant Tickets.com's summary judgment motion, which sought dismissal of breach of contract claims arising out of Tickets.com's use of a search robot to obtain information about concerts from plaintiff Ticketmaster's web site. The Court held that issues of fact as to defendant's knowledge of the site's Terms and Conditions at the time it used plaintiff's site precluded a determination as to the binding nature of such Terms.
The Court did grant so much of Tickets.com's summary judgment motion which sought dismissal of trespass to chattels claims Ticketmaster asserted as a result of such activity. These claims failed because of the absence of evidence that "the use or utility" of Ticketmaster's computers were being adversely affected by Tickets.com's use of a search robot to gather information from plaintiff's site.
Finally, the Court dismissed several copyright infringement claims brought by Ticketmaster. These included infringement claims arising out of the temporary copying into the RAM of defendant's computers of data from plaintiff's site, including materials in which plaintiff held a copyright. These materials were copied as an intermediate step to obtaining, and displaying on Tickets.com's own site, factual information contained therein. The Court held such copying was a protectable fair use given the only materials retained at the end of the process were the facts -- as to concert locations, dates and times -- contained therein, which facts were not protected by copyright. Infringement claims arising out of deep linking to interior pages of plaintiff's website were dismissed because, by deep linking into plaintiff's site, Tickets.com was not showing or displaying plaintiff's copyrighted materials (which instead were being displayed by plaintiff itself). Finally, infringement claims arising out of copying the URLs from such interior pages were dismissed because such URLs did not have sufficient originality to be copyrightable.
507 F.Supp.2d 1096 (C.D. Ca., October 16, 2007)
This case arises out of the use of automated devices by ticket brokers and others to purchase tickets from plaintiff Ticketmaster, and thereby prevent the public from purchasing those tickets themselves.
Finally, the Court held that plaintiff Ticketmaster was likely to prevail on claims that defendant, by distributing its software application, violated the Digital Millennium Copyright Act, because it trafficked in a device designed both to circumvent technological measures that control access to, and protect, a copyrighted work – namely plaintiff’s website.
The Court held that defendant’s conduct was likely to cause plaintiff irreparable injury. Because it constituted infringement of plaintiff’s copyright, such irreparable harm was presumed. In addition, plaintiff submitted evidence that the use of automated devices on its site by ticket brokers and others was injuring its reputation and good will with the public, who attributed their inability to obtain tickets to events to misdeeds in which plaintiff and its employees were involved.
As a result, the Court issued a preliminary injunction, enjoined defendant from further trafficking in or using its software application.
American Airlines, Inc. v. Farechase, Inc.
Cause No. 067-194022-02 (Texas, 67th Dist., Mar. 8, 2003)
Mary Defontes and Nicholas Long v. Dell Computers Corp., et al.
C.A. No. P.C. 03-2636 (R.I. Superior Crt., Jan. 29, 2004).
Court held plaintiffs, purchasers of Dell computers and related service agreements, are not bound by the Terms and Conditions Agreement that accompanied such machines on shipment. The Court held that a browse-wrap agreement was not created upon the initial ordering of the machines, because the link to the Terms and Conditions Agreement at issue was found “inconspicuously” at the bottom of the web page of Dell’s website at which such products were ordered. According to the Court “this was not sufficient to put plaintiffs on notice of the terms and conditions of the sale of the computer. As a result, a browse wrap agreement found on Dell’s webpage cannot bind the parties to the arbitration agreement” found in the Terms and Conditions.
The Court further held that a shrink-wrap agreement was not formed between Dell and the plaintiff purchasers, binding plaintiffs to the Terms and Conditions, notwithstanding the fact that those Terms accompanied the computers on shipment to plaintiffs, and were also sent with acknowledgements of plaintiffs’ orders. The Court reached this conclusion because the Terms at issue did not give plaintiffs the option to reject them by returning the computer to Dell. Said the Court:
Because the plaintiffs were not party to the Terms and Conditions, the court denied Dell’s motion to stay this action and compel plaintiffs to arbitrate their claim that Dell improperly charged tax on both the sale of ancillary services plaintiffs purchased with their Dell computers, as well as associated transportation costs.
Applying Texas law, the Court also held that the arbitration provision found in Dell’s Terms and Conditions was in any event an unenforceable illusory contract. Thus, the Terms and Conditions provided that “these terms and conditions are subject to change without prior written notice at any time, in Dell’s sole discretion …”. Because Dell retained such an unfettered right to modify or terminate the contract at any time, the Court held that “the language in the Terms and Conditions Agreement fails to bind Defendants in any genuine way. Accordingly, this Court finds that the arbitration agreement is illusory and therefore unenforceable.”
Of note, the court held that the fact that the arbitration provision, if binding, would bar plaintiffs from pursing their claims as a class action was not, by itself, a ground to invalidate such a clause under Texas law or render it unconscionable.
Joe Douglas v. Talk America Inc.
No. 06-75424 (9th Cir., July 18, 2007)
Ninth Circuit holds that customer is not bound by contractual amendments to service contract posted by long distance company on its website of which customer had no notice.
Talk America undertook to provide phone services to customers previously serviced by AOL. Thereafter, Talk America attempted to change the terms of its contracts with these customers by including in the parties’ contracts provisions that increased applicable service charges and compelled customers to arbitrate any disputes they may have with the company. These new amendments also included a class action waiver, and a New York choice of law provision. These changes were posted on defendant Talk America’s website. However, according to plaintiff, a former AOL customer who continued to use Talk America’s services after the changeover, he was given no notice of these contractual changes. He alleged that he had no need to visit Talk America’s site as he had set-up his account so that applicable charges were automatically billed to, and paid by, his credit card.
In these circumstances, the Ninth Circuit held that plaintiff could not be compelled to arbitrate his disputes with Talk America arising out of these contractual revisions, and particularly the rate increases they mandated. The Ninth Circuit accordingly granted plaintiff’s writ of mandamus, holding that the District Court clearly erred in granting Talk America’s motion to compel arbitration.
Michael Motise v. America Online, Inc.
04 Civ. 2121 (SCR) (S.D.N.Y., Nov. 30, 2004).
Court holds that an individual who access America Online’s (“AOL”) services via the account of another is not bound by its Terms of Service merely as a result of such use, absent notice that the Terms provide that by such use, he is agreeing to be bound thereby. The Court stated that “the Second Circuit seems to require that the license terms appear on the screen, in view of the user, for the user to be on notice of them.” In this case, the user claims that he was able to access AOL’s services via his step-father’s account without either being presented with AOL’s Terms of Service, or being asked to accept them.
As a result, the Court held that plaintiff was bound by the Forum selection clause contained in AOL’s Terms of Service, and accordingly transferred the case to Virginia, where the clause mandated all disputes be litigated.
Pollstar v. Gigmania Ltd.
170 F. Supp. 2d 974 (E.D. Cal. 2000)
Court denies motion to dismiss, and allows Pollstar to proceed with common law misappropriation and unfair competition claims arising out of Gigmania's alleged copying and reposting on its own website of factual concert listings found on Pollstar's site. The complaint alleged that this information was "hot news" which is protected against misappropriation if plaintiff can show that it "(i) generates or collects information at some cost or expense (ii) the value of the information is highly time-sensitive; (iii) the defendant's use of information constitutes free-riding on the plaintiff's costly efforts to generate or collect it' (iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff; (v) the ability of the other party to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened."