The Software IP Report

A Reminder That Website Agreements Are Usually Enforceable

By Charles Bieneman

Categories: Copyright, Software Licenses, The Software IP Report

Long before the Internet, courts were not reluctant to enforce adhesion contracts. This willingness is one thing the Internet age has not changed.  A good reminder – and lessons for parties seeking to enforce, as well as users wary of, website agreements – comes in a recent case in which a U.S. district court enforced a rather draconian transfer of copyright in a browsewrap agreement. Small Justice LLC v. Xcentric Ventures LLC, No. 13-cv-11701, (D. Mass March 27, 2015). The court here granted summary judgment for the defendant, enforcing its browsewrap agreement that gave the defendant an exclusive license to the copyright in material that a user posted to its site.

Christian DuPont posted negative comments about attorney Richard Goren on (“ROR”), a website operated by Xcentric. The website included terms and conditions including the following, which would only have been seen by a user who scrolled through a text box: “[b]y posting information or content to any public area of [the ROR], you automatically grant and you represent and warrant that you have the right to grant to Xcentric an irrevocable, perpetual, fullypaid, worldwide exclusive license to use, copy, perform, display and distribute such information and content . . . .” Before submitting his posts, Goren checked a box accepting these terms.

Goren then sued DuPont in state court, alleging libel and intentional interference with prospective contractual relations. After obtaining a default judgment against DuPont, and having himself appointed DuPont’s attorney-in-fact, Goren assigned DuPont’s copyrights in the posts to himself, and then in turn assigned the copyrights to Small Justice LLC. Goren and DuPont then sued Xcentric, “seeking declaratory judgment as to the ownership of copyright and alleging copyright infringement.” Xcentric moved for summary judgment.

The court began its analysis by distinguishing between “clickwrap” and “browsewrap” agreements. Clickwrap agreements require a user to “select a check box or radio button to indicate that they agree to the website’s terms and conditions.” In a browsewrap agreement, by contrast , a user need not “manifest assent to the terms and conditions expressly,” but rather assent is implied by a user’s use of a web site. The agreement here, the court said, was a browsewrap agreement, because the user checking the box assented only to terms in the box – there was no language stating “’I agree to the terms and conditions’ or other such language indicating express accord.”

One suspects that the court may have characterized the agreement as a browsewrap agreement to give the web site owner the benefit of the doubt, and to avoid an appeal arguing that the court had mischaracterized the agreement, which certainly bore characteristics of a clickwrap agreement. In any case, the court then proceeded to hold that the terms of the browsewrap agreement were enforceable. The court explained that

a reasonably prudent user was on inquiry notice of the terms and conditions associated with the ROR, and, therefore, the transfer of copyright ownership was valid. The screen where users submitted their reports prominently featured a portion of the terms in the center of the screen, above the “continue” button that the users clicked to conclude the posting process. That screen, along with at least two of the other screens used in the posting process, also contained blue links to the terms of service at the bottom of the page which were conspicuously visible without scrolling beyond the “continue” button used to progress to the subsequent screen. The conspicuousness of the terms is supported by the contrasting color of the link to them coupled with the placement of the terms themselves on the final screen prior to submission.

In this case, unlike cases holding browsewrap agreements unenforceable, the website owner provided notice of terms and conditions beyond links at the bottom of a web page (hence my comment above that the agreement bears at least resemblance to a clickwrap agreement). The additional terms were presented with a scroll bar. The plaintiffs probably did not help themselves by arguing that a reasonable user would not have understood the purpose of the scroll bar, an argument the court dismissed. Thus, the notice box coupled to the text box was effective to create an enforceable agreement. As the court further explained:

The notice next to the check box has two consequences. First, a user who has any hesitation regarding the grant of an irrevocable right to display his post is prompted to investigate further, either by reading the terms and conditions placed prominently over the check box, or by clicking on the link to the terms of service at the bottom of the screen. Second, even if the browsewrap agreement were somehow invalid, a user’s assent by means of the checkbox granted to Xcentric, at the very least, a non-exclusive license to publish the Reports. A copyright owner who grants a license to his work waives his right to sue the licensee for copyright infringement provided that the licensee’s use does not go beyond the scope of the non-exclusive license.

Accordingly, the court concluded that “DuPont transferred copyright ownership to Xcentric by means of an enforceable browsewrap agreement.” The court therefore granted summary judgment to Xcentric on the claims for copyright ownership and copyright infringement. (The court also rejected the plaintiffs’ other arguments unrelated to the browsewrap issue.)