Please Read Before You Click "I ACCEPT"
Posted Wednesday, February 10, 2010 by Janet Croswell
SaaS litigation, software service level agreement, cloud computing lawHow many times have you signed up for a service on-line, scrolled past all the legal jargon, and clicked "I Accept" or "I Agree" without taking the time to actually read the terms and conditions you're agreeing to? 

Admit it.  We all do it.  

But, just as a warning to be careful the next time you're purchasing that new mp3, or more importantly signing your company up for something on-line... those shrink-wrap and click-wrap agreements have been held by the courts to be binding.

Contracting in cloud computing law doesn't necessarily require a signature these days.  An affirmative acceptance of the provisions of a software service level agreement by an authorized agent can be given with a click of a button.

Take the recent trademark infringement case of Appliance Zone, LLC v. Nextag, Inc. for instance.  Although this case was dismissed on grounds of jurisdiction (which, incidentally, was a term of the shrink-wrap agreement that was held by the court to be an effective document) the court discussed some important software litigation surrounding click-through agreements within it.

In essence, if the facts support a claim that a person (a) is authorized to enter into such a contract, and (b) had the intent to enter into it, then they will be held to terms of service they signed up for, including basic contracting terms such as jurisdiction, venue, etc, etc.

The court in this case cited Gallent Ins. Co. v. Isaac in ruling that there was authorized conduct that clearly demonstrated the acceptance of a valid contract by the 19 year old website manager of Appliance Zone who registered the company as a merchant on Nextag's website and clicked "I accept the Nextag Terms of Service" as part of the process.

While the enforceability of a contract can be destroyed with factors that make it unconscionable (such as inequality of bargaining power, or unreasonable or unknown terms) the court did not find those arguments sustainable in this case for a number of reasons, including the fact that clickable acceptance has become commonplace for on-line retail, and the registration process could not have been completed without the click-through acceptance.

The court in this Indiana technology litigation case fell back on Paper Exp., Ltd., Micrometl Corp. v. TranzAct Technologies, Inc. with the "fundamental principle of contract law that a person who signs a contract is presumed to know its terms and consents to be bound by them." 

Next time, before you click "I Accept" make sure you really do.

Comments (0)

The upside to cooperation in ESI data mining
Posted Tuesday, December 8, 2009 by Chris Stephen
A colleague of mine brought to my attention two recent federal cases in which the courts elected to deny motions to compel electronically stored information (ESI).  In Kay Beer Distributing v. Energy Brands, Inc., the Eastern District of Wisconsin determined that, among other things, Kay's request for every e-mail with their name in it was too broad.  The court also considered in its determination  the fact that Energy Brand's counsel had offered to work with Kay to do more directed keyword searching of the e-mail engine, but Kay declined. 

In my opinion, these cases are indicative of a trend that you'll see more prevalent in litigation, whether you're talking about technology litigation or run of the mill commercial litigation.  When ESI discovery came onto the scene, judges were more prone to let the parties just duke it out and allowed for more expansive discovery requests.  In my opinion, as the frequency of requests increase and judges are exposed to more and more decisions related to ESI, they are becoming more educated on technological capacity and will become less and less likely to allow for expansive discovery.  

This leads me to the actual point of this post.  For the entrepreneur, there can be significant benefits to cooperation in discovery related to ESI.  Long before I became involved with Indiana technology litigation, I was fortunate enough to participate in some large scale discovery productions that involved searches electronically stored information.  One of the pivotal points of the production involved the necessity to explain to the Court and the opposing party what they search system would and would not do.  Much to the chagrin of my boss at the time, I suggested that we allow the opposing party to have direction in their search by doing it in conjunction with us.  The Court called this an "organic search" (a term that I hated, but that ultimately stuck to what were were doing).  It involve the opposing counsel conducting the searches with us and then directing further searches based on those results.  With a limit on the time to conduct the search, we were able to minimize defense cost on the issue, appease plaintiff's counsel, and make the judge happy.  And all we, as defense attorneys, had to do was the searches that we would have had to do anyway.

My point is that with technological capabilities comes a necessity to think outside of the box.  As a business owner, you may be able to minimize your exposure and costs by simply allowing the other side into your office while you're doing their search.  As an attorney, our jobs are to make sure that the appropriate safeguards are in place to protect our client, but also must be willing to effectuate for them the best result.  Obviously, some areas of law, like privacy litigation, medical records, etc. are going to be less viable for this type of solution, but overall, there can be an upside to cooperation.  Think about it.

Comments (0)

Who Owns My Website?
Posted Tuesday, December 1, 2009 by Janet Croswell
Indiana Internet Litigation, Indiana Technology CounselSo you've launched your company and hired a web-developer to breathe life into the idea you've poured your heart and soul into developing over the past several months, perhaps even years...

Maybe you never even thought to ask the question, but at the end of the day who actually owns "your" website?  You or the web designer?

Indiana software litigation in a ruling by the Supreme Court of Indiana, Conwell v. Gray Loon Outdoor Marketing Group, points to the fact that hiring a contractor for the development of content and programming of a website is considered a service rather than a purchase of a good.

In this case, the Indiana Supreme Court ruled that the independent contractor owns the property, while the hiring party owns a non-exclusive and perpetual license to use such property, unless of course, there is an agreement specifying otherwise.

Looking towards prior Indiana technology litigation the Supreme Court applied the definition of an implied non-exclusive license to the development of a website:

An implied non-exclusive license is granted when (i) a person (the licensee) requests the creation of a work; (ii) the creator (the licensor) makes that particular work and delivers it to the licensee; and (iii) the licensor intends that the licensee copy and distribute the work.

This definition applied to the facts surrounding the website development in this particular case ultimately led the court to its conclusion.  

So, expect this to be the case (at least in Indiana) the next time you hire a webdesigner for your next project: upon final payment, the webdesigner owns the property, while you own the right to use it... forever. 

(Unless, of course, you involve technology legal counsel first and negotiate otherwise.)

For an example of a newly developed Indiana-based website check out: GlobalToaster



Comments (0)