"Terms of Use" vs EULAs

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Wilf, Frederic M." <fwilf () morganlewis com>
Date: June 23, 2009 5:21:35 PM EDT
To: "dave () farber net" <dave () farber net>, "alukaszewski () acm org" <alukaszewski () acm org 
>
Subject: RE: "Terms of Use" vs EULAs

Dave and Albert,

This area of law continues to develop.  Moreover, it changes somewhat  
from country to country.  Since Albert is based in Scotland, Albert  
should check with counsel in Scotland.

Generally speaking, in the U.S., contractual terms bind a person if  
the person "manifests assent" to be bound to the contractual terms.  A  
person may manifest her assent by signing a hard copy document in ink,  
or by clicking a button that is emblazoned "I Agree," or by submitting  
a search to a search engine.

Online agreements are the subject of a federal law called the  
Electronic Signatures in Global and National Commerce ("E-SIGN") and  
state statutes based on the Uniform Electronic Transactions Act  
("UETA").  Essentially, these statutes provide that online agreements  
will not be denied enforcement merely because they are electronic.   
However, these laws do not make electronic agreements more enforceable  
than a hard copy agreement, and they still allow the enforceability of  
other laws that provide that certain types of agreements (e.g., for  
the sale of land) must be in hard copy.  So, in the U.S. online  
agreements are as enforceable as hard copy agreements, except when  
they are not.

As with hard copy agreements, it must be reasonably clear to the  
person that by taking an action that manifests assent, the user is  
binding herself to a particular set of contractual terms.  You can't  
hide the terms on another page or another part of the same page.  For  
example, see Specht v. Netscape (http://cyber.law.harvard.edu/stjohns/Specht_v_Netscape.pdf 
), in which the Hon. Sonia Sotomayor addresses the thorny issue of  
whether a user who clicks on a button on one part of a web page binds  
herself to contractual terms that are referenced by a link on another  
part of the same web page.

It's a harder question if a person visits a web site, takes some  
action, and then is provided with contractual terms.  Several courts  
have upheld this approach.   For example, see Register.com v. Verio  
Inc. (http://www.icann.org/en/registrars/register.com-verio/decision-23jan04.pdf 
), in which the contractual terms were presented after the submission  
of a Whois request.

Even where an online agreement or "clickwrap" may be enforceable, a  
court may decide that some or all of the terms of the agreement are  
not enforceable.  For example, in a number of consumer cases, courts  
have refused to require a consumer to travel far to enforce a warranty  
claim over a small amount of money.  These issues apply to online and  
hard copy agreements alike.

As noted above, Albert should check with his own counsel in Scotland  
so that they may craft an approach that achieves his objectives.

All the best,

Fred Wilf


Frederic M. Wilf
Morgan, Lewis & Bockius LLP

1701 Market Street | Philadelphia, PA 19103-2921
Direct: 215.963.5453 | Main: 215.963.5000 | Fax: 215.963.5001
Assistant: Lucy M. Spivey | 215.963.5035 | lspivey () morganlewis com

502 Carnegie Center | Princeton, NJ 08540-6241
Direct: 609.919.6646 | Main: 609.919.6600 | Fax: 609.919.6701
Assistant: Ferial Abbas | 609.919.6638 | fabbas () morganlewis com

fwilf () morganlewis com | www.morganlewis.com

-----Original Message-----
From: David Farber <dave () farber net>
Subject: "Terms of Use" vs EULAs
Date: Sun, 21 Jun 2009 19:36:37 -0400

Begin forwarded message:

From: Albert Lukaszewski <alukaszewski () acm org>
Date: June 21, 2009 3:39:50 PM EDT
To: David Farber <dave () farber net>
Subject: For IP: "Terms of Use" vs EULAs

Dear Dave,

In preparing to launch a web service, I have been looking into sites'
"Terms of Use" with particular regard to database copyright.  Most
sites tend to render their terms with much the same restrictions and
framework as EULAs.  However, as far as I can tell, the legal status
of "Terms of Use" pages are not established.  I am familiar with ProCD
Inc. v. Zeidenberg, wherein breach of contract was assessed because of
the EULA involved.  But website terms do not seem to naturally follow
- particularly when they would be binding on the web visitor (as
opposed to limiting the liability of the publisher).  Can one truly be
bound to "Terms of Use" simply by visiting a website? I would
appreciate your passing this message on to IP in the hope that the
legal expertise on the list might be able to shed light on this
question.

Many thanks in advance for your consideration and for administering
such a helpful list.

Albert Lukaszewski


Albert Lukaszewski, PhD
St Andrews, Scotland

Mit Arbeit kommt gut Glück.


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