Friday, October 5, 2012

ProCD, Inc. v. Zeidenberg case brief

ProCD, Inc. v. Zeidenberg
86 F.3d 1447

Case Synopsis:
-Appellant sought review of the order of the United States District Court for the Western District of Wisconsin, which declined to issue appellant an injunction on the basis that its license was ineffectual since it was contained within packaged software.

-Appellant included a shrink-wrap license in its packaged software.
-Appellant also chose to discriminate in its pricing of the software between commercial and non-commercial users.
-Appellee purchased a consumer package of the software, but chose to ignore the license restricting its use to non-commercial purposes.
-Seeking to enforce the license, appellant filed for an injunction. The trial court denied the injunction, holding that the license was ineffectual because the terms did not appear on the outside of the package.

On appeal, the court held that the license was to be treated as an ordinary contract accompanying the sale of products. While the terms of the license were included within the package, its terms afforded the purchaser an opportunity to review the product and its terms before being bound. Since the license agreement was a two-party contract, it was not equivalent to the rights of copyright.

-A buyer accepts goods when, after an opportunity to inspect, he fails to make an effective rejection

  • License agreements that are included in shrink-wrapped software packages are enforceable unless their terms are objectionable on grounds applicable to contracts in general, that is, if they violate a rule of positive law, or if they are unconscionable.
  • A contract includes only the terms on which the parties have agreed. One cannot agree to hidden terms.
  • Under U.C.C. § 2-204(1), a contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. A vendor, as master of the offer, may invite acceptance by conduct, and may propose limitations on the kind of conduct that constitutes acceptance. A buyer may accept by performing the acts the vendor proposes to treat as acceptance.
  • A buyer accepts goods under U.C.C. § 2-606(1)(b) when, after an opportunity to inspect, he fails to make an effective rejection under U.C.C. § 2-602(1).
  • A disclaimer of the implied warranty of merchantability must be “conspicuous” under U.C.C. § 2-316(2), incorporating U.C.C. § 1-201(10). Promises to make firm offers, or to negate oral modifications, must be “separately signed” under U.C.C. §§ 2-205, 2-209(2).
-Court reversed the denial of the injunction since under ordinary contract principles, appellant’s license was binding because appellee had the opportunity to review its terms before being bound.

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