Shrink wrap agreements

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Shrink wrap agreements

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Facts Plaintiff Meridian Project Systems provides software solutions to manage construction projects, including the project management software Prolog Manager. The EULA sets forth the terms of use, which a purchaser can reject by returning the software.

Defendant Hardin Construction had purchased and used Prolog Manager in connection with its business since and had never returned any copies or objected to the terms of the EULA. Meridian brought suit, among other things, for breach of contract and copyright infringement when Hardin violated terms of the EULA by copying and sending Prolog help file text to a competing software company.

Decision The Court acknowledged that, although shrinkwrap licenses are widely used in the software industry, there remains a dispute across Federal Circuits about their validity. Some courts have found such licenses invalid as unconscionable or unacceptable contracts of adhesion, while other courts have held that these types of licenses are valid and enforceable contracts.

The Meridian court found the EULA to be enforceable here notwithstanding the fact that Hardin could not review the license until it had already opened the package.

In ProCD, the Seventh Circuit found shrinkwrap licenses enforceable against end-users, basing its conclusion on policy considerations specific to the software industry, an industry in which many purchases are made over the Internet by consumers who never see a box. The ProCD court noted that the reality of the software industry is such that a license should not be unenforceable simply because the consumer was not able to read it before purchasing the product.

The Seventh Circuit provided several examples in other areas where contracts are enforceable in a "pay first, agree later" form, including travel and concert tickets. Hardin could have returned the software if it did not agree with the license terms, but it chose not to do so.

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Under these facts, the Court concluded that the EULA was neither an unconscionable contract nor an unacceptable contract of adhesion. Impact While the issue of enforceability of such agreements has not been decided by the Ninth Circuit, this case adds to the growing body of case law in California District Courts suggesting that shrinkwrap agreements are enforceable, even when they are not visible to customers at the time of purchase.

Shrink wrap agreements

If you have questions about the issues raised in this alert, please contact: Premo, Partner, Litigation Group.shrink-wrap agreements Shrink-wrap agreements are usually found printed on the back of, or included (notice of this may be provided on the outside), computer software packaging.

By breaking the cellophane shrink-wrap packaging, the purchaser or user agrees to be bound by the terms of the agreement. Shrink-wrap and click-wrap agreements are the fine print you see, among other things, when you click through terms and conditions in accessing an online service (e.g., in connection with a cloud.

Shrink-wrap and click-wrap agreements are the fine print you see, among other things, when you click through terms and conditions in accessing an online service (e.g., in connection with a cloud computing service) or as part of the installation of a piece of software.

A clickwrap agreement is a type of contract that is widely used with software licenses and online transactions in which a user must agree to terms and conditions prior to using the product or service.

shrink-wrap agreements Shrink-wrap agreements are usually found printed on the back of, or included (notice of this may be provided on the outside), computer software packaging.

By breaking the cellophane shrink-wrap packaging, the purchaser or user agrees to be bound by the terms of the agreement. While the issue of enforceability of such agreements has not been decided by the Ninth Circuit, this case adds to the growing body of case law in California District Courts suggesting that shrinkwrap agreements are enforceable, even when they are not visible to customers at the time of purchase.

Shrink-Wrap Agreements - New York Essays