ProCD, Inc. v. Zeidenberg

United States Court of Appeals, Seventh Circuit, 1996.

86 F.3d 1447.

Dawson, pp. 430-435


Facts: ProCD sold telephone directories on CD-ROM.Their product had a shrinkwrap license on the non-commercial version of their software that made the buyer agree not to resell the information.The defendant ignored this and resold the information.Zeidenberg argues that only the text written on the outside of the package counts as part of the contract offered by placing the product on the shelf and agreed to by purchasing the product.The district court agreed and found for Zeidenberg.ProCD appealed.


Issue: Are shrinkwrap licenses enforceable upon software buyers?


Rule: Shrinkwrap licenses are just as enforceable as contracts in general.


Analysis: The court starts with the proposition that licenses are covered by the UCC and common law just like ordinary contracts.The court finds that one of the terms that the consumer agrees to upon purchase of this software is assent to a license.Some of the terms of that license may be inside the package.


The court ends up finding more or less that it canít be the case that only the outside box can have the full license.The contract between ProCD and Zeidenberg wasnít formed when he paid for the CD-ROM, but rather when he read and accepted the enclosed license terms.He had an opportunity to reject the terms once he had read them but he failed to do so.That effectively means he accepted the terms.


Conclusion: The Seventh Circuit reverses the judgment of the district court.


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