Judge Wisdom for president

greenspun.com : LUSENET : Lessig's Contracts : One Thread

There was, apparently, a decision on shrinkwrap licenses prior to Easterbrook's in the ProCD case. Judge Wisdom (no less!) ruled in 1991 along the lines that the license was ineffective. Easterbrook i guess decided to ignore it (cf. the part about no-precedent at 1452). I am pasting (fair use) par of an article on intellectual property from September's Atlantic Monthly that deals with UCC 2 and the issue. The whole article is relatively interesting, and this part seems to apply relevantly. (If you read the article on paper, find the reference to Lessig). You can also find it at www.TheAtlantic.com, under the technology section. So here it is:

The primary body of commercial law in the United States, the UCC traces its origins to the late nineteenth century, when representatives of the states, worried that Washington would pre-empt local governmental power, convened and agreed to draft standardized laws that would settle many interstate confusions and also keep Uncle Sam away. Since 1974 the Uniform Commercial Code has held sway in every state (Louisiana hasn't endorsed all of it). Article 2 of the UCC governs sales. If a customer in a store selects and pays for a shirt without exchanging a word with the salesclerk, can the shirt be returned because of a defect? Yes, because the transaction is covered by an implied contract, and the terms of that contract are set out in Article 2. Buyers automatically get an "implied warranty of merchantability" -- a promise that the merchandise is fit for ordinary use.

To avoid Article 2, businesses must disavow the warranty of merchantability. Conspicuous signs saying ALL SALES "AS IS" will do the trick. Note the "conspicuous" -- the disclaimer can't be hidden. The annals of state courts are littered with suits in which sneaky sellers hid disclaimers in the glove compartments of cars or within packages of seeds. Invariably, the merchants lost.

Now consider a customer who selects and pays for a computer program without exchanging a word with the salesclerk. Thinking that the software can be returned if defective, the customer drives home, opens the shrink-wrapped box, and -- what's this? Inside the box is a limited warranty and a license agreement. The warranty for my copy of Windows95, for instance, disclaims all "implied warrants of merchantability." Does this absolve Microsoft from Article 2?

In 1991 the federal appellate judge John Wisdom said no. "Shrinkwrap licenses," as they are called, change the terms of the implied contract after it has been negotiated, violating the Uniform Commercial Code.

Manufacturers hide licenses inside the box because shopkeepers and customers alike would rebel against such terms if they were clearly stated at the time of sale. Despite the potential for alienating customers, the industry believes that the licenses are an essential weapon in the war against piracy. ("Nonsense," Nimmer says. "This law called the Copyright Act gives them all the protection they need.") [Nimmer is a big copyright guy. his father was even bigger (as a copyright guy)]

Software producers also say that programs are so complex that they cannot be offered at a reasonable price with warranties of usability. Hence the dismay with which software companies greeted Judge Wisdom's decision against shrinkwrap licenses. In 1996 another federal judge, Frank Easterbrook, ruled that the licenses were legitimate. But the conflicting decisions left the companies keen to overhaul Article 2.

An additional motive was the emergence of "clickwrap" licenses -- the interposition of an onscreen disclaimer and an attendant "OK" button that users must click to accept its terms before downloading intellectual property from the Web. Clickwrap licenses, too, are controversial, because buyers cannot conceivably negotiate their terms. Such contracts have frequently been ruled invalid. Although a federal judge in California, relying on Easterbrook's shrinkwrap decision, decided last April that clickwrap agreements are enforceable, the software industry wanted the new Article 2B to remove all doubts. [[In intellectual-property "Article 2B" is shorthand for proposed changes in that portion of the Uniform Commercial Code.]]

In plain language, the proposed Article 2B legitimizes both shrinkwrap and clickwrap licenses. This in itself upsets consumer advocates. What dismays David Nimmer and other experts is that the licenses have already been used to claim such wide-reaching rights that their general application could have a major impact on the culture as a whole. "People don't understand what's going on, because it's software, and software is strange stuff to them," says Cem Kaner, a software developer and lawyer in Santa Clara, California. "But it's exactly the same as buying a book and being told that you can read it only in one room of the house and can't lend it to friends."

Microsoft Agent is a program that makes cute little animated figures. The license not only tells customers they can't "rent, lease or lend" the program but also informs them that they have no right to make the figures "disparage" Microsoft. McAfee VirusScan, the leading anti-virus software, has a license term that is every writer's dream: nobody may publish a review of the program "without prior consent" from the company. But even that is surpassed by Digital Directory Assistance, maker of PhoneDisc, a CD-ROM containing millions of phone numbers and addresses. According to the license, the software can't be "used ... in any way or form without prior written consent of Digital Directory Assistance, Inc."

If agreements like these govern intellectual property in the future, the )-chip inside [an anti-piracy mechanism that blocks unauthorized transfers of information] will not permit the text to be transmitted unless the customer first accepts the clickwrap license. Because current licenses typically forbid copying or lending intellectual property, Nimmer fears that copyright owners will end up with all the protections of copyright while the public is forced to surrender its benefits -- especially the right to lend privately or copy within the limits of fair use the expressions of others. Any reader who wants to challenge the licenses for overreaching copyright will be forced into litigation -- a situation that inevitably redounds to the benefit of large companies that can afford to pay legal fees.

hope it was worth the time and it put ProCD in some context,


-- Anonymous, November 25, 1998

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