Copyright And The Internet

Copyright and the internet

Are shrink wrap licenses worth the paper they are printed on? Table of contents Introduction 1. A brief history of Shrinkwrap license 2. What constitutes a binding contract? 3. Statutory intervention 4. Conclusion Footnotes Bibliography Introduction The plastic wrap found around the software packet is called the shrinkwrap .Inside the shrink-wrap are user instructions accompanied with a license which proportes to grant the user permission to use the software subject to certain term and conditions in the license. Hence the name shrinkwrap likeness. The user is deemed to have accepted all the terms of the license by breaking and opening the shrink-wrap. This paper will attempt to define what constitutes a valid contract. After which it will consider whether shrinkwrap licenses falls within the parameters of the definition. It will also look at the effect of legislation on these licenses There are several methods a software producer might use to incorporate a Shrink-wrap license. One is to insert a paper containing the license into the software box. Another is to have the license printed on the back cover of the label of the software box and yet another method is to have the license appear on the screen once the software is loaded into the computer. The later is usually referred to as a "click wrap" license. The software producers would then word the shrinkwrap in such a way inviting the user to break the shrinkwrap seal if he agrees to the terms and conditions of the license. Whether this type of agreement is enforceable has been the centre of much debate. 1. A brief history of Shrinkwrap license. A brief look at the origins of the shrinkwrap license is in order if one is to try and understand the rational behind the use of these types of agreements. The shrink wrap concept originated in the United state of America in order to avoid the federal copyright law first sale doctrine. Under the first sale doctrine once the copyright holder had sold a copy of the protected work, the owner of the copy could then "sell or otherwise dispose of the possession of the copy" without the copyright holders consent. See Bobbs-Merrill Co. v Straus 20 U.S. 339, 350, 52L. Ed.1086, 28 S Ct 722 (1908). Under the first sale doctrine, software producers were concerned that companies would spring up that would be able to purchase a copy of a computer program and then lease it or lend it, like a video tape rental store, to the consumer without infringing the copyright on the program. Consumers would then be able to duplicate the programs without having to purchase them and thus infringe the copyright . It would be far too expensive for the copyright holder to identify and sue each individual copier. Software producers, therefore, wanted to be able to sue directly the companies that were renting the copies of the programs to individual consumers. The first sale doctrine stood as a wall between the software producers and their ability to successfully sue the software rental companies for infringement . Therefore by making the license personal and non-transferable and characterizing the original transaction between the software producer and the software rental company as a license rather than a sale , software producers attempted to circumvent the first sale doctrine and establish a basis in contract law for suing the software rental companies directly. In 1990, recognizing the problem, the American Congress amended the first sale doctrine as it applies to computer programs and phono records. See Computer software Rental Amendment Act of 1990, Pub.L. No. 101-650, 104Stal. 5134 (codified at 17 U.S.C.A. 109 (b) (West Supp.1991)) Subsequently, only non-profit libraries and educational institutions were allowed to lend or lease copies of software and phono records, See 17 U.S.C.A. 109(b)(1)(A) (West Supp. 1991) However, the software users insisted that they had an implied right to copy the software because most software programs could not be used unless they were copied onto the hard drive of a computer. Therefore, in an attempt to protect themselves the software producers included the shrink-wrap agreements into the software package. However, are these agreements binding on the purchaser of the software ? 2. What constitutes a binding contract? Under common law four basic essentials are required in order to create a binding contract; they are contractual intention , offer , acceptance and consideration. The question to ask is whether there has been a definite offer by one party and an unqualified acceptance by the other? An offer is defined as an expression of willingness to contract made with the intention that it shall become binding on the offeror as soon as it is accepted by the person to whom it is addressed. An offer may be made in writing , by words or conduct. However, the terms of the offer must be clear. Looking at the situation between the software producer and the software purchaser, there seems to be no problem as to whether an offer exists. The software producer puts the software on a shelf or advertise its availability for a fixed price thus an offer is made. The discrepancy in the transaction between the software producer and the software purchaser lie with the acceptance. An acceptance can be defined as a final and unqualified acceptance of the terms of an offer. Unless it can be shown that there was such an acceptance, then there is no contract. Acceptance can be evidenced in writing, verbally or by conduct. The words unqualified acceptance are used because under common law it is assumed that if the acceptance does not mirror the offer there is no acceptance of that offer. Moreover, the failed attempt at acceptance may be taken as an addition of new terms and therefore deemed a counter offer . Therefore, the question is whether the act of breaking a shrink wrap is sufficient to constitute an acceptance that would bind the consumer to the software producers offer. If placing the package or software on the shelf constitutes an "offer" which the customer "accepts" by paying the asking price and leaving the store with the goods a contract could then exist between the software producer and purchaser (Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1952] 2 All ER 456; [1953] All ER 482.). If this is so, the major point of concern is the fact that the terms of the license only comes to the attention of the purchaser after the apparent point of sale (i.e. when the software purchaser removes the shrinkwrap once he has left the store). (Footnote i) In the Canadian cases of Gillette v Rea (1909) 1 O.W.N. 448 (Ch.) , the Ontario appeals court held that the manufacturers license notice to customers attached to a package of patented razors was valid. In contrast in North American System Shop Ltd. V King et al (1989), 68 Alta L.R. (2d) 149, the Alberta Queens