ProCD, Inc. v. Zeidenberg
86
F.3d 1447.
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 can’t be the case that only the
outside box can have the full license.
The contract between ProCD and Zeidenberg wasn’t 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.