0.9 Activism  (Page 4/11)

In 1994, the ALI began work with the NCCUSL to craft an addendum to the existing UCC that would address the enforceability of “click wrap” licenses.

"click wrap" licenses

Since the 1980’s, many software companies had been encasing the boxes containing physical copies of their products in plastic wrappers called “shrink wrap.” Often they would include in the packages documents setting forth provisions that purchasers of the products would be obliged to obey. Sometimes these terms were printed on the boxes themselves (and thus visible through the plastic wrapping); at other times, they were printed on separate pieces of paper (and thus invisible prior to purchase). Invariably, among the list of terms was a provision indicating that, by tearing open the wrapping, the purchaser agreed to abide by all of the other terms -- unless he or she returned the product to the seller. Software companies referred to this practice as “shrink wrap” licensing.

Later, it became customary to distribute proprietary software, not through the sale of physical copies, but by enabling consumers, after paying a fee, to download the product from the Internet. When they shifted to this new approach, the software firms altered their licensing strategy somewhat. Instead of including a set of terms in a physical document, the firms presented the same terms on a web page. To download the product, a consumer had to "click" a box indicating that he or she agreed to the terms. This modified strategy came to be known as “click wrap” licensing.

As these practices spread, academics and consumer groups increasingly challenged the enforceability of these licenses. Their objections were rooted in part in formal contract law. Breaking the plastic wrapping or "clicking" a box was insufficient, they argued, to constitute "acceptance" of the contract terms, particularly in light of the onerous character of many of those terms. Their objections also drew strength from the apparent unfairness of the practice. Consumers had no real options but to agree to a set of provisions that deprived them of many of the rights they would otherwise enjoy under copyright law and under state tort and contract law.

In light of these objections, whether the licenses were binding on consumers remained uncertain.

The ali addresses the issue

The ALI and the NCCUSL set out to resolve the uncertainty. They assigned the task of drafting a new “click wrap” addendum to the UCC to the Drafting Committee on Revision of U.C.C. Article 2. The drafting committee published an initial set of draft model laws, in which it suggested that "click wrap" licenses were valid contracts and should therefore be enforceable. Members of the American Law Institute realized that this was a controversial position. The ALI invited potential critics of the draft to a series of committee meetings, and also solicited comments via memoranda and letters.

Criticism from copyright scholars

An important groups of academics -- led by Cem Kaner, Pamela Samuelson, and David Nimmer -- accepted the invitation. In their submissions to the committee and in a series of articles published in legal periodicals, they argued that the licenses should not be enforceable and that the UCC should not be modified to lend them support. Their submissions mingled legal and economic arguments.