Technology Law Update

Court Enforces Browsewrap Agreement in Airline "Bot" Case

There has been a lot of press attention in the last few days to the lawsuit brought last April by Ticketmaster against a "ticketbot" software company that enabled scalpers to corner the market on highly sought-after tickets to events such as the Bruce Springsteen and Hannah Montana tours. The Wall Street Journal profiled the lawsuit last Friday. The case is captioned Ticketmaster LLC v. RMG Technologies Inc and Does, No. 2:2007cv02534 (C.D. Cal. complaint filed Apr. 17, 2007).

No decision has yet issued in the Ticketmaster lawsuit, but Professor David Sorkin in his Law Blog recently profiled a decision in a similar lawsuit , Southwest Airlines v. BoardFirst L.L.C.,  No. 3:06-cv-00891 (N.D. Tex. Sept. 12, 2007).  As related by Prof. Sorkin, Southwest Airlines brought the action against BoardFirst, a company that utilizes software to access the Southwest Web site to obtain preferred boarding passes for airline passengers. The court enforced the Southwest browsewrap agreement, ruling that the agreement, which prohibits the use of the Soutwest site for commercial purposes, was enforceable.

Here are some excerpts from the decision, which discusses the circuit court decisions in Specht v. Netscape and Register.com v. Verio (among others) at some length:

As browsewraps have become more prevalent in today’s increasingly e-driven commercial landscape, the courts have been called upon to determine their enforceability. Though the outcomes in these cases are mixed, one general principle that emerges is that the validity of a browsewrap license turns on whether a website user has actual or constructive knowledge of a site’s terms and conditions prior to using the site. See Mark A. Lemley, Terms of Use, 91 MINN. L. REV. 459, 477 (Dec. 2006) (“Courts may be willing to overlook the utter absence of assent only when there are reasons to believe that the defendant is aware of the plaintiff’s terms.”); Tarra Zynda, Note, Ticketmaster Corp. v. Tickets.com, Inc.: Preserving Minimum Requirements of Contract on the Internet, 19 BERKELEY TECH. L. J. 495, 507 (2004) ([“S]o far, courts have held browsewrap agreements enforceable if the website provides sufficient notice of the license.”).

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There is no dispute that BoardFirst has had actual knowledge of Southwest’s Terms at least since Kate Bell received from Southwest the December 20, 2005 cease-and-desist letter in which Southwest informed Bell that the Terms forbid the use of the Southwest website for commercial purposes. (Pl. App. 14, 94, 106-07). Despite having actual knowledge of the Terms, BoardFirst has continued to use the Southwest site in connection with its business. In so doing BoardFirst bound itself to the contractual obligations imposed by the Terms.

Archiving of Web Site’s Contents May Breach Posted Terms of Use

A company that uses an automated Web crawler to archive the contents of a Web site multiple times may have formed a contract with the Web site owner via the site’s terms of use and then breached the contract when it then failed to pay the prescribed copying fees as outlined under the terms of that contract.    Internet Archive v. Shell, No. 1:06-cv-1726, 2007 U.S. Dist. LEXIS 10239 (D. Colo. Feb. 13, 2007).

Implied-In-Fact Contract May Arise From Access To And Use Of Password-Protected Online Data Processing System

An implied-in-fact contract between a technology provider and a potential customer may be established by the customer's use of a provider-supplied access code and password to access and use the provider's online data processing system. QSRSoft, Inc. v. Restaurant Technology, Inc., No. 06 C 2734, 2006 U.S. Dist. LEXIS 80729 (N.D. Ill. Nov. 2, 2006).

Pattern Of Use And Expressed Preference For E-Mail Constitutes Agreement To Contract By Electronic Means Under UETA

A lessee's  repeated communications with a landlord by e-mail and her complaint of delay when the landlord communicated by certified letter manifested an intent to do business by e-mail under the Uniform Electronic Transactions Act (UETA). Crestwood Shops, L.L.C. v. Hilkene, WD65694, 2006 Mo. App. LEXIS 1188 (Ct. App. W.D. Aug. 8, 2006).

Agreement To Deliver Source Code Does Not Require Delivery Of Already Commented Version

A software development agreement that required the company producing the software to deliver the "unencrypted source code" to another party does not require the delivery of the source code version that includes the programmer's comments. Automated Solutions Corp. v. Paragon Data Systems, Inc., No. 86067, 2006 Ohio App. LEXIS 3446 (Ohio Ct. App. July 6, 2006).

E-Mail Offer Of Sum To Create Choreography May Have Created Contract Accepted By Performance

An e-mail offer of a specific sum to create choreography  for a theatrical production may have given the choreographer the power to accept the offer by performance. Einhorn v. Mergatroyd Productions, No. 05 Civ. 8600, 2006 U.S. Dist. LEXIS 20645 (S.D.N.Y. Apr. 17, 2006) (corrected opinion).

Telecom Rates Posted On Provider Web Site Are Effective To Modify Prior Agreement With Another Provider

Where a telecommunications services agreement contained unambiguous language allowing the provider to modify its rates by a posting to its Web site, the posted rates are effective to modify an agreement with another provider. Wholesale Telecom Corp. v. ITC Deltacom Communications, No. 05-13404, 2006 U.S. App. LEXIS 9304 (11th Cir. Apr. 14, 2006) (unpublished).

"In-Box" Software License Agreement May Be Enforceable Under California Law

The terms of an end user license agreement included in a box along with a CD containing plaintiff's software may be enforceable against the purchaser of the software under California law. Meridian Project Systems, Inc. v. Hardin Construction Co., No. S-04-4278, 2006 U.S. Dist. LEXIS 16751 (E.D. Cal. April 6, 2006).

Court Rules Amazon Breached Exclusive Rights Contract With Toys R Us

The court concluded that Amazon.com breached the ten-year Strategic Alliance Agreement concluded between the parties in 2000, and ruled that the Agreement be terminated and wound up according to its provisions. Toys R.Us.Com.LLC vs. Amazon.com, Docket No.: C-96-04 (N.J. Super. Ct. Ch. Div. March 1, 2006).


Ruling: http://www.judiciary.state.nj.us/toysrus/toysrus.pdf

Parties Not Bound By E-Mailed Settlement Agreement Where Execution Of Paper Document Was Contemplated

Parties who were in the process of negotiating a settlement agreement are not bound by an e-mailed version of the agreement where the evidence showed that the e-mailed version was a preliminary draft and the execution of a final paper document was contemplated. Poly USA, Inc. v. Trex Company, Inc., No. W.D. Va. 5:05-CV-00031 (W.D. Va. March 1, 2006).