[comp.sys.ibm.pc.misc] Shrinkwrap licensing

mroussel@alchemy.chem.utoronto.ca (Marc Roussel) (11/16/90)

In article <1990Nov15.200548.18846@isis.cs.du.edu> kreme@isis.UUCP (Fred Zeats
IV) writes:
>In article <1990Nov15.000626.25016@elroy.jpl.nasa.gov>
>stevo@uniblab.Jpl.Nasa.Gov (Steve Groom) writes:
>>However, some software packages clearly state that you are not purchasing
>>a copy of the software, but that you are purchasing a license
>>to use the software.
>This is know as "shrinkwrap licensing" and the legality of the has not been
>settled (or tested).  The argument against them is that you can't have someone
>agree to a contract just be telling them they agree.  Without a signature
>or something there is no agreement.

     Fred went on to mention that the legality of shrinkwrap licensing may
depend on the jurisdiction.  Indeed it may.  The common law in Canada
and the U.S. are not terribly different however and I suspect that my
comments (which reflect only my imperfect knowledge of Canadian law)
will apply almost equally well in any common law jurisdiction.  I should
also like to say that I am not a lawyer, but my sister is a law student
and we discussed a very similar point of law recently.
     Although it is true that (as Fred mentioned) the shrinkwrap
licensing agreements have never been challenged, I believe that such a
challenge would fail because of the common law concept of precedent.
"But you just told us there's no precedent", you object.  There is no
precedent in software, but there certainly are precedents in other areas
of contract law.  Consider for instance the obligatory contracts on
airplane tickets.  If you want to fly with an airline, you have no power
to refuse the terms of these contracts.  These contracts have been
challenged in court on precisely the grounds that Fred objects to
shrinkwrap licensing: the consumer is powerless to seek alternative
arrangements with the airline.  There is no form to sign, but purchasing
and using the ticket is taken to imply consent to the terms.  (The same
goes in many other industries.  I'm only picking on the airlines because
they happen to be a convenient target.)  The courts (in Canada) have
consistently upheld these contracts stating that, in effect,
if you don't like it you can always either swim to Europe, or not go.  (These
implicit contracts always carry disclaimers that say something like
"except where the local laws say we can't screw you like this".  I would
be most curious to know in what jurisdictions the power of the companies
has been limited by some sensible laws.)
     In summary, I suspect that the reason that there hasn't been a
challenge to shrinkwrap licensing is that, at least in most
jurisdictions, there are no grounds on which to proceed that wouldn't
immediately run up against this embarrassing precedent: shrinkwrap
licensing is just a type of implicit contract and these have
consistently been found to be legal and valid.  Anyone approaching a
lawyer with a view to challenging the license agreement would probably
just get told that it's futile.

				Marc R. Roussel
                                mroussel@alchemy.chem.utoronto.ca

joeh@oakhill.UUCP (Joe Hollinger) (11/16/90)

In article <1990Nov15.214511.19914@alchemy.chem.utoronto.ca>, mroussel@alchemy.chem.utoronto.ca (Marc Roussel) writes:
>      Although it is true that (as Fred mentioned) the shrinkwrap
> licensing agreements have never been challenged, I believe that such a
> challenge would fail because of the common law concept of precedent.
> "But you just told us there's no precedent", you object.  There is no
> precedent in software, but there certainly are precedents in other areas
> of contract law.  Consider for instance the obligatory contracts on
> airplane tickets.  If you want to fly with an airline, you have no power
> to refuse the terms of these contracts.  These contracts have been
> challenged in court on precisely the grounds that Fred objects to
> shrinkwrap licensing: the consumer is powerless to seek alternative
> arrangements with the airline.  There is no form to sign, but purchasing
> and using the ticket is taken to imply consent to the terms.  (The same
> goes in many other industries.  I'm only picking on the airlines because
> they happen to be a convenient target.)  The courts (in Canada) have
> consistently upheld these contracts stating that, in effect,
> if you don't like it you can always either swim to Europe, or not go.  (These
> implicit contracts always carry disclaimers that say something like
> "except where the local laws say we can't screw you like this".  I would
> be most curious to know in what jurisdictions the power of the companies
> has been limited by some sensible laws.)
> 
> 				Marc R. Roussel
>                                 mroussel@alchemy.chem.utoronto.ca


Well I don't really know what goes on up in Canada, but down here the type
of contracts you are referring to, are not consistently upheld. In fact,
many of these type of agreements, know as adhesion contracts, are *not*
enforceable. For example, the Supreme Court of New Jersey refused to uphold
a clause releaving an automobile manufacturer of liability contained in
a sales contract. To quote the court:

	From the standpoint of the purchaser, there can be no arms length
	negotiating on the subject. Because his capacity for bargaining
	is so grossly unequal, the inexorable conclusion which follows is
	that he is not permitted to bargain at all. He must take or leave
	the automobile on the warranty terms dictated by the maker. He 
	cannot turn to a competitor for better security. Henningsen v.
	Bloomfield Motors, 32 N.J. 403, 161 A.2d 94 (1960)

Other U.S. courts have refused to uphold adhesion contracts involving 
residential leases, valet parking, health insurance and many more. It really
turns on weather the courts believe that the parties fairly bargained for
the contract that resulted. Factors such as market conditions at the time
the contract was made, economic power of the parties, impact on public policy
of the term sought to be enforced, all influence the decision.

As applied to shrinkwrap though, the whole argument is probably irrelevant.
Manufacturers of software are under no obligation to sell you software.
If you want to own software there is nothing stopping you from bargaining
with the seller for that type of contract ( I'll bet it will cost a lot
more though :-) ).  In fact, such bargains are not unknown ( source 
licensing ).

klaus@diku.dk (Klaus Ole Kristiansen) (11/16/90)

mroussel@alchemy.chem.utoronto.ca (Marc Roussel) writes:

>In article <1990Nov15.200548.18846@isis.cs.du.edu> kreme@isis.UUCP (Fred Zeats
>IV) writes:
>>In article <1990Nov15.000626.25016@elroy.jpl.nasa.gov>
>>stevo@uniblab.Jpl.Nasa.Gov (Steve Groom) writes:
>>>However, some software packages clearly state that you are not purchasing
>>>a copy of the software, but that you are purchasing a license
>>>to use the software.
>>This is know as "shrinkwrap licensing" and the legality of the has not been
>>settled (or tested).  The argument against them is that you can't have someone
>>agree to a contract just be telling them they agree.  Without a signature
>>or something there is no agreement.

>     Fred went on to mention that the legality of shrinkwrap licensing may
>depend on the jurisdiction.  Indeed it may.  The common law in Canada
>and the U.S. are not terribly different however and I suspect that my
>comments (which reflect only my imperfect knowledge of Canadian law)
>will apply almost equally well in any common law jurisdiction.  I should
>also like to say that I am not a lawyer, but my sister is a law student
>and we discussed a very similar point of law recently.
>     Although it is true that (as Fred mentioned) the shrinkwrap
>licensing agreements have never been challenged, I believe that such a
>challenge would fail because of the common law concept of precedent.
>"But you just told us there's no precedent", you object.  There is no
>precedent in software, but there certainly are precedents in other areas
>of contract law.  Consider for instance the obligatory contracts on
>airplane tickets.  If you want to fly with an airline, you have no power
>to refuse the terms of these contracts.  These contracts have been
>challenged in court on precisely the grounds that Fred objects to
>shrinkwrap licensing: the consumer is powerless to seek alternative
>arrangements with the airline.  There is no form to sign, but purchasing
>and using the ticket is taken to imply consent to the terms.  (The same
>goes in many other industries.)

If a company buys a product with the "opening this envolope means
that you agree to our terms" type license, how do you know who
opens the envolope? As a programmer at DTH it might well be me
who opens the package when DTH buys some software. If I were to
sign a contract on behalf of DTH, DTH would not be bound by it, I
do not have that authority (what is prokura in English?). Can I then
bind DTH by opening an envolope?

Klaus Kristiansen

wnp@iiasa.ac.at (wolf paul) (11/16/90)

In article <1990Nov15.214511.19914@alchemy.chem.utoronto.ca> mroussel@alchemy.chem.utoronto.ca (Marc Roussel) writes:
>     In summary, I suspect that the reason that there hasn't been a
>challenge to shrinkwrap licensing is that, at least in most
>jurisdictions, there are no grounds on which to proceed that wouldn't
>immediately run up against this embarrassing precedent: shrinkwrap
>licensing is just a type of implicit contract and these have
>consistently been found to be legal and valid.  Anyone approaching a
>lawyer with a view to challenging the license agreement would probably
>just get told that it's futile.

But there is a good common law argument against shrinkwrap licenses:

If someone advertises something for sale, and you buy it, you have a
legal right to expect that what you get is what was advertised.

The people who sell software (stores, mailorder places) usually offer
PROGRAMS for sale, not LICENSES to USE PROGRAMS; and unless it is clearly
apparent that what they are selling is not what they are advertising
before you hand over your money and they hand over the product,
you have BOUGHT a PROGRAM, not a license.

If you buy in a store, and the license is on the outside of the
package, they could argue that you accepted the license by buying the
package; however, if the license is INSIDE the package, or if you buy
sight unseen from a mailorder place which advertised a PROGRAM for
sale, they have no way of arguing that what you were sold is what
the license states rather than what the advertising and the resulting
implicit purchase contract states.

--
Wolf N. Paul, UNIX SysAdmin, IIASA, A - 2361 Laxenburg, Austria, Europe
PHONE: +43-2236-71521-465     FAX: +43-2236-71313      UUCP: uunet!iiasa!wnp
INTERNET: wnp%iiasa@relay.eu.net      BITNET: tuvie!iiasa!wnp@awiuni01.BITNET

reg@Unify.Com (Russell Grau) (11/16/90)

In article <4206@oakhill.UUCP> joeh@oakhill.UUCP (Joe Hollinger) writes:

items about the airline & Canada deleted...

>
>Well I don't really know what goes on up in Canada, but down here the type
>of contracts you are referring to, are not consistently upheld. In fact,
>many of these type of agreements, know as adhesion contracts, are *not*
>enforceable. For example, the Supreme Court of New Jersey refused to uphold
>a clause releaving an automobile manufacturer of liability contained in
>a sales contract. To quote the court:
>
>	From the standpoint of the purchaser, there can be no arms length
>	negotiating on the subject. Because his capacity for bargaining
>	is so grossly unequal, the inexorable conclusion which follows is
>	that he is not permitted to bargain at all. He must take or leave
>	the automobile on the warranty terms dictated by the maker. He 
>	cannot turn to a competitor for better security. Henningsen v.
>	Bloomfield Motors, 32 N.J. 403, 161 A.2d 94 (1960)

Sounds like what software companies are doing though with their
shrink wrapped contracts.

>
>As applied to shrinkwrap though, the whole argument is probably irrelevant.
>Manufacturers of software are under no obligation to sell you software.
>If you want to own software there is nothing stopping you from bargaining
>with the seller for that type of contract ( I'll bet it will cost a lot
>more though :-) ).  In fact, such bargains are not unknown ( source 
>licensing ).

Neither are car manufacturers.  Both do what they do so they can make lots
of money.  I think that what bothers me most about the "shrink-wrapped"
contracts is that you do not even have a chance to read the contracts
before purchase.  They are not printed on the outside of the shrink-wrapped
box.  Typically, you cannot get a hold of them at a normal shop for software.

It would make more sense if you could see the "contract" before you purchased
the software.  Hopefully, someone, someday will really understand that you
do "own" the software and drop all the silliness.  I mean, when was the last
time any author of a book came into your home and threatened to take his
book off your shelf?  (Yes, I know different portion of copyright law.  Read
last sentence with extreme sarcasm......)

Russell
-- 
/*****************************************************************************/
/*   Russell Grau            (916) 920-9092                 reg@unify.com    */
/* Disclaimer - "I speak for myself, not my company"                         */
/* {{ucdavis,csun,lll-crg}!csusac,pyramid,sequent}!unify!reg                 */

jcmorris@mwunix.mitre.org (Joe Morris) (11/16/90)

klaus@diku.dk (Klaus Ole Kristiansen) writes:

>mroussel@alchemy.chem.utoronto.ca (Marc Roussel) writes:

  [lotsa discussion of shrink-wrap licenses in a l-o-n-g message thread]

>>In article <1990Nov15.200548.18846@isis.cs.du.edu> kreme@isis.UUCP (Fred Zeats
>>IV) writes:
>>>This is know as "shrinkwrap licensing" and the legality of the has not been
>>>settled (or tested).  The argument against them is that you can't have some-
>>>one agree to a contract just be telling them they agree.  Without a signature
>>>or something there is no agreement.

>>     Although it is true that (as Fred mentioned) the shrinkwrap
>>licensing agreements have never been challenged, I believe that such a

Try Vault v. Quaid.  Memory says (and I am NOT a lawyer...thank God) that
the Court held in this case (where plaintiff alleged that the copy-protection
breaking code written by defendant could not have been created without 
violating the shrink-wrap license prohibition against reverse engineering)
that the relevent terms of the license were unenforcable.  The citations
I've seen (none of which were really authoritative) reported that the Court
so held in part because the terms of the contract were non-negotiable (a
so-called "contract of adhesion") and they interfered with the purchaser's
ability to use the product.

>>"But you just told us there's no precedent", you object.  There is no
>>precedent in software, but there certainly are precedents in other areas
>>of contract law.  Consider for instance the obligatory contracts on
>>airplane tickets.  If you want to fly with an airline, you have no power
>>to refuse the terms of these contracts.  These contracts have been
>>challenged in court on precisely the grounds that Fred objects to
>>shrinkwrap licensing: the consumer is powerless to seek alternative
>>arrangements with the airline.  There is no form to sign, but purchasing
>>and using the ticket is taken to imply consent to the terms.  (The same

But this isn't excatly a parallel example.  The terms you find in the
microscopic type on the back of your ticket in many cases are either
mandated or explicitly permitted by law; most of the rest of them involve
questions of liability and not the immediate use by the customer of the
services of the airline.  They are still contracts of adhesion, but they
don't interfere with your ability to use the service (transportation)
of the airline.  In some cases, of course, you could argue that using
the word "service" in an airline context is false advertising, but that's
another issue for a different newsgroup...

>If a company buys a product with the "opening this envolope means
>that you agree to our terms" type license, how do you know who
>opens the envolope? As a programmer at DTH it might well be me

I've always wondered how many lawyers could get rich by litigating a license
violation case where a minor purchases a program with a shrink-wrap license
and subsequently violates its terms.  Since by law the minor cannot enter
into a contractural relationship it would seem that the license terms are
unenforcable; on the other hand a minor is still subject to the relevent
laws.  This isn't quite the same as your example because an employer
is responsible for the acts of its employees; as long as the package
was opened by an employee then the company would probably be considered
to have the responsibility for complying with whatever license terms
are enforcable.  Several software vendors have extracted extremely large
payments from major corporations who have been found to be using illegally
copied software.  The employer is held responsible to the vendor, although
I wouldn't be surprised if some employees lost their jobs over the issue
because they embarrassed their employer.

Does anyone know of any cases more recent than Vault?

Joe Morris