Licences under scrutiny following US court ruling

A recent appeal court ruling in the US could shake up the way New Zealand websites display their terms and conditions.

A recent appeal court ruling in the US could shake up the way New Zealand websites display their terms and conditions.

In the case of Specht versus Netscape, the 2nd US Circuit Court of Appeals found that Netscape erred by providing software for download without requiring users to check a terms and conditions page first, according to Breon Gravatt, intellectual property lawyer with law firm Baldwin Shelston Waters.

"It says 'click here to see our terms and conditions' and you click on that and it takes you to another page. That one says ‘if you download anything from the site you're bound by the terms and conditions and click here for terms relating to the product you're looking at’," says Gravatt.

Such a lengthy process made it unlikely, in the court's opinion, that any user would follow such a path even if they knew about it; the original link was at the bottom of the page.

"It was quite easy to click on the download button without even seeing the 'click here for terms and conditions' link."

This puts the so-called "browse wrap" licence under the microscope and draws attention to the habits of software companies and their end user licences, says Gravatt.

There are three basic types of software licence in use today - the so-called "browse wrap" licence, the "click wrap" and the "shrink wrap".

Click wrap licences ensure a user at least checks a box that says they have read the terms and conditions before allowing the download to take place - something that Gravatt says at least ensures you know there are terms and conditions in the first place.

"There people are having to do something that demonstrates their acceptance of the terms and conditions. You've said you read them and if you haven't that's your problem."

Shrink wrap licences are those included in boxed software where the buyer is informed that opening the wrapper indicates they have agreed to be bound by the terms and conditions. That presents its own challenge, says Gravatt, especially when software makers put the terms and conditions inside the box.

"You can't agree to terms and conditions you don't know exist. If you haven't had the opportunity to read them then it's difficult for anyone to force you to rely on them, which is why they came up with shrink wraps where the licence is visible."

If the licence is inside the box but includes a clause that says if you open the box then you've agreed to the licence, then enforcing the licence becomes problematic.

"If you open the box, read the licence and decide you don't like the terms and conditions you could arguably take it back to the retailer for a full refund."

Further problems are caused by pre-installing software that has a shrink-wrap licence.

"Presumably somebody has installed the software on your new computer and has at some point clicked 'I accept' but if it wasn't the person buying the software then it raises interesting questions."

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