ProCD v. Zeidenberg

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ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir., 1996), is a United States contract case involving a "shrink wrap license". The issue presented to the court was whether a shrink wrap license was valid and enforceable. Judge Easterbrook wrote the opinion for the court and found such a license was valid and enforceable. The Seventh Circuit's decision overturned a lower court decision.

[edit] Facts

The case involved a graduate student, Matthew Zeidenberg, who purchased a telephone directory, SelectPhone, on CD-ROM produced by ProCD. After opening the packaging and installing the software on his personal computer, Zeidenberg created a website and offered the information originally on the CD to visitors for free.

At the time of purchase, Zeidenberg was not aware of any prohibited use because the license was contained, in full, on the CD. The package itself stated that there was a license enclosed. Zeidenberg was presented with this license when he installed the software, which he accepted by clicking assent at a suitable dialog box—commonly known as a click-through license or clickwrap.

[edit] Holding

This case actually involved a number of legal issues.

The court first held that copyright law did not preempt contract law. Under the Supreme Court case, Feist Publications v. Rural Telephone Service, the court held that a telephone directory was not protectable through copyright. In this case, the court assumes that a database of a telephone directory was equally not protectable. However, the court held that a contract could confer among the parties similar rights since those rights are not "equivalent to any of the exclusive rights within the general scope of copyright".

The court then held the license valid and enforceable as a contract. The court relied primarily on the Uniform Commercial Code (or UCC) sections 2-204 (describing a valid contract) and 2-606 (describing acceptance of a contract). There was little doubt that ProCD, in fact, offered use of the software as described by UCC section 2-606. The court examined more closely the question of acceptance.

The court held that Zeidenberg did accept the offer by clicking through. The court noted, "He had no choice, because the software splashed the license on the screen and would not let him proceed without indicating acceptance." The court stated that Zeidenberg could have rejected the terms of the contract and returned the software. The court, in addition, noted the ability to and "the opportunity to return goods can be important" under the UCC.