At the end of my last post I returned to a frequent theme, the unfairness of “clickwrap” licenses and the fear that they are over-enforced by courts, in spite of the inability of users to negotiate the terms or avoid enforcement of these one-sided deals.
So I was rather pleased to find an exception — actually a series of exceptions– to this over-enforcement in a recent case out of the federal district court in the northern district of Texas. While this line of cases does not accomplish what I have wished for, a ruling that copyright law and its exceptions should preempt non-negotiable contracts, they do show that, in some circumstances, courts will reject a clickwrap agreement when the seller takes too much advantage of its powerful position.
Cathryn Harris agreed to a clickwrap license when she signed up for a particular online program run by Blockbuster. Such licenses, of course, condition service or access on agreeing to a set of terms that is wholly non-negotiable; all the user can do is click “I Accept” or forgo the service entirely. I have complained about enforcement of a similar licenses in the Turnitin case by a court in Virginia, where the students were compelled by their school to sign up with Turnitin. In this case, when a dispute arose and Ms. Harris filed suit against Blockbuster, the company tried to enforce the clause in the clickwrap licenses that sends all disputes to arbitration (which is much less expensive). Ms. Harris opposed the motion to compel arbitration, and the Texas court sided with her, ruling that the entire agreement, including the arbitration provision, was invalid.
The reason the court rejected the license was that it contained a provision saying the Blockbuster could change the terms of the agreement at any time, without notice. Such provisions are not uncommon in clickwrap licenses, because the nature of the agreement makes it impossible for the seller to contact everyone who agrees to the terms of use. But here the court said that such a clause makes the contract “illusory.” Contracts, after all, are an exchange of promises, and a one-sided, “we can change the terms anytime” clause really means that the side that drafted the agreement has not made any promise at all that it is bound to stick to. When an apparent promise really is just statement of discretion — “I will pay you $20 to wash my car if I decide it was worth it” — courts call those contracts illusory because there is no real exchange of promises.
As this analysis of the case shows, there have been several cases in which such clauses allowing one-sdied changes have caused a clickwrap agreement to be found illusory. It is interesting that they are all about arbitration. I suspect this is because arbitration is something that must be based on mutual agreement, and courts are reluctant to limit a person’s access to the legal system based on a promise they could not undertake voluntarily.
For the purposes of our concerns here, this case is a small indication that clickwrap licenses must be drafted carefully, and that the fact that users seldom read such agreements is not an excuse to overreach too far. When the issue is important enough, a court will occasionally void a one-sided agreement rather than enforce terms that put one party at too great a disadvantage. Perhaps we will soon see such a willingness to reexamine clickwrap agreements when the disadvantage caused is a loss of those user rights that Congress so clearly intended when it drafted the copyright law.