LWN: A test of shrink-wrap licensing

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January 3, 2000
Nathan C. Myers
www.cantrip.org

(Finally!) A Test of Shrink-wrap Licensing

All the analyses I've seen of the DVD DeCSS hearing have missed a key event: this is the first widely-publicized case where somebody has tried to enforce a "shrink-wrap" license. Corporate lawyers until now have avoided testing such licenses in court because they would risk having a judge declare for all to hear that shrink-wrap licenses aren't worth the pixels they're printed on.
Why is a shrink-wrap license, and its on-line relative, the contract-o-matic, meaningless? After all, it reads like a contract. The contract-o-matic even has an "I Agree" button. Surely, if you click the button, you have legally agreed to something?
Under the Uniform Commercial Code, when you buy something in a store, you own it. That means you have the absolute right to use the product, to the full extent supported by law. A paper you haven't even had a chance to read before you paid, and anyway haven't signed, isn't a legal contract, no matter what the paper says. Nothing that comes in the box can take away your right to use the product as the law permits. Once you've paid, and the vendor has accepted your money, the vendor doesn't get to change the rules on you.
Why do software companies put scraps of paper that say "End User License Agreement" in with their products? They are simply hoping you will read it and believe it. It's a cheap way to persuade people to give up the rights they have under the law as paying customers, without making a fuss.
What about a contract-o-matic, where you have to click an "I Agree" button before the program will run? Under the Uniform Commercial Code, the contract-o-matic runs too late: they have already accepted your money, so have already extended the right to full use of the product. The only way to use the product you paid for is to click the button, so clicking the button is just part of getting to use the product, and legally meaningless; you have no obligation to read the "agreement", and you haven't legally agreed to anything.
There is a movement afoot, called UCITA, to change the Uniform Commercial Code to take away many of your rights as a paying customer, and allow vendors to turn any piece of paper they drop in the box into a binding contract that you sign by buying the product. It's not the law of the land yet -- but may be soon, if UCITA isn't stopped.
What makes this case interesting is that the lawyers for the DVD Copy Control Association have based their claim that they can still enforce their Trade Secret rights on the text of a contract-o-matic. They told the judge that since the text in the contract-o-matic claims you have no right to reverse-engineer the code on the CD, you really have no such right.
How the judge rules on the shrink-wrap license question, if he does, will have far wider implications than the free-speech issues also raised. There's plenty of free-speech case law, but very little precedent to help dismiss shrink-wrap license cases. Absent such precedent, it still seems risky for individuals to flout such an "agreement", no matter how outrageous. If the DVD CCA's lawyers press the issue, we may come out of this case with a useful precedent -- until the states pass UCITA laws.
Acknowledgement: Thanks to Robin D. Gross, Cyberspace Attorney @ Law & EFF Counsel, for reviewing a draft this article for accuracy. Any errors I have since introduced are my own.