Internet Library of Law
and Court Decisions

Contract - Internet Library of Law and Court Decisions - Updated May 19, 2008

Affirming the court below, a Florida District Court of Appeals holds that the plaintiff is not bound by the terms of an online user agreement, despite the fact that the written contract between that parties expressly states that it was "subject to all of SkyNetWeb's terms, conditions, user and acceptable use policies" located at a designated website.  As a result, the District Court of Appeals affirmed the denial of defendant's motion to compel arbitration, given that the arbitration provisions on which defendant relied were only contained in the Online User Agreement held not to be part of the parties' contract.

Affirming the court below, Florida District Court of Appeal holds that America Online's ("AOL") forum selection clause, which mandates that all claims relating to the use of AOL be brought in Virginia, is unenforceable with respect to a class action lawsuit brought under two Florida consumer protection statutes - the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and the Florida Free Gift Advertising Law (FFGAL).  The Appellate court accordingly affirmed the denial of AOL's motion to dismiss for improper venue.

Court upholds validity of exculpatory clause in the parties’ contract, which bars plaintiff from recovering consequential damages as a result of defendant’s alleged breach of the agreement.  As a result, the Court granted defendant’s motion for summary judgment, and dismissed plaintiff’s claims for consequential damages.  These claims arose out of defendant’s termination of the parties’ agreement, and refusal to provide plaintiff with internet connectivity services, due to complaints received by defendant that plaintiff was engaged in ‘spamming other customers’ in violation of defendant’s acceptable use policy.

Plaintiff held bound by Amendment to telephone services contract which obligated plaintiff to arbitrate disputes with the telephone service company, the terms of which Amendment were posted online.  Plaintiff was held bound as a result of her receipt of an invoice that gave her both notice of the Amendment and a location on the Internet at which its terms could be viewed, as well as the opportunity to cancel her contract if she did not wish to be bound thereby.  Plaintiff was held bound despite the fact that she neither read the terms of the Amendment, nor in any way affirmatively indicated her assent to be bound thereby.  Because the Amendment obligated plaintiff to arbitrate her dispute with defendant Sprint, the Florida District Court of Appeals affirmed the lower court's grant of defendant's motion to compel arbitration.

The court, following the decisions of the Seventh Circuit in Hill and ProCd, holds that contract terms shipped to the consumer along with computer products form the contract between the consumer and supplier, where these terms clearly state that they will be binding on the consumer if she retains the products for 30 days, and the consumer so retains the products. The court further holds that inclusion in this contract of a clause mandating arbitration in Chicago of all disputes arising out of the parties' transactions does not render the contract an unenforceable contract of adhesion. However, requiring that such disputes be arbitrated in accordance with the rules of the International Chamber of Commerce ("ICC"), which requires the payment by the consumer of a $4000 fee, of which $2000 is non-refundable even if the consumer prevails, is unconscionable. This is true because this fee exceeds the price of most of the products defendant sells, and therefor effectively denies plaintiff any forum in which to resolve disputes arising out of the purchase of the product. The court accordingly directed the parties to arbitrate their dispute before an arbitrator to be selected by the court, as opposed to the ICC, as had been designated in the parties' contract.

Court holds Terms of Use on defendant's websites constitute binding agreements between website operator and website user, where notices on the sites provide that the Terms  will create such an agreement if a user continues to utilize the site, and plaintiff used the sites with both actual knowledge of the Terms, and with imputed knowledge arising out of repeated use of the sites via a "robot."  Court accordingly dismisses plaintiff's declaratory judgment action for improper venue, as the Terms of Use mandated suit be brought in Illinois, and plaintiff commenced suit in California.

Court holds that both PayPal's User Agreement, and the arbitration clause found therein, are unconscionable under California law.  The Court accordingly denies motions by PayPal to compel users who commenced putative class action suits arising out of PayPal's allegedly inappropriate handling of customer accounts and/or complaints to resolve their claims via arbitration.  The Court held that the User Agreement and the arbitration clause therein are unconscionable because they: (1) permit PayPal to issue binding amendments to the User Agreement at any time without notice to users; (2) obligate users to arbitrate their disputes pursuant to the commercial rules of the AAA, which is cost prohibitive in light of the average size of a PayPal transaction; (3) obligate users who reside nationwide to arbitrate in Santa Clara county, California, where PayPal is located; (4) permit PayPal to freeze and maintain possession of the funds in customer accounts until any dispute is resolved; and (5) require users to pursue their claims individually, and not via a class action.  Taken together, the Court held these provisions made the User Agreement unconscionable, and appear to represent an attempt by PayPal "to insulate itself contractually from any meaningful challenge to its alleged practices."

Court holds that plaintiff entered into a binding online click-wrap agreement by clicking an 'I Agree' icon, which indicated he had read, understood and agreed to the terms of the parties' contract.  The contract's terms were available for review online by clicking on a link which appeared on the Register.com website just above the 'I Agree' icon.  As a result, the Court dismissed the claims advanced by plaintiff, because plaintiff commenced suit in a forum other than the exclusive jurisdiction specified in the forum selection clause contained in the parties' contract; asserted state law claims under the laws of a state which were rendered inapplicable by the contract's choice of law provisions, and asserted claims that failed in light of the contract's terms.

Court dismisses plaintiffs' claims that Northwest Airlines violated the Electronic Communications Privacy Act ("ECPA") by disclosing personal information about plaintiff passengers to governmental authorities.  The Court grounded its decision on its determination that the ECPA did not apply because Northwest, by virtue of its operation of a web site at which consumers can purchase airline tickets, was not a provider of "electronic communication services" within the meaning of the ECPA.  The Court also dismissed plaintiffs' claims that this disclosure constituted a breach of the parties' agreement, as reflected in the privacy policy Northwest posted on its web site, not to disclose such personal information, finding that the posting of such a policy did not create an enforceable agreement between the parties.

Affirming the court below, the District of Columbia Court of Appeals holds that plaintiff entered into a binding contract online with Verizon Internet Services ("VIS") by clicking an "Accept" icon, indicating his assent to be bound by the contract.  This icon appeared directly below a "scroll box" on VIS's website which contained the terms of the contract.  The terms were not all visible online when the user initially viewed the web page on which the "scroll box" was found.  Rather, to review all of the contract's terms, the user was required to use the "scroll box" to scroll through them. 

The Court of Appeals also affirmed the dismissal of a putative class action commenced by plaintiff arising out of his dissatisfaction with VIS's DSL service, because the suit was not commenced in Virginia, the jurisdiction specified in the contract's forum selection clause as the exclusive jurisdiction in which disputes could be heard.

(Contract terms shipped along with computer to customer govern parties' relationship, where the customer receives a notice that informs her that the terms govern the parties' relationship unless the product is returned within 30 days, and the customer fails to return the product within that time period.)

Court holds plaintiff bound by a click-wrap agreement entered into by her travel companion with defendant Expedia Inc. (“Expedia”) when she purchased tickets and hotel accommodations on plaintiff’s behalf.  The travel companion was acting as plaintiff’s agent, and by her acceptance of the agreement, bound plaintiff to its terms.  As such, the Court dismissed plaintiff’s claims against Expedia for personal injuries sustained at the hotel she visited when her sandal broke, causing her to fall down stairs and into an ornamental pond, holding them barred by the liability disclaimer contained in the parties’ agreement.  The Court further held that plaintiff’s claims against Expedia failed because it owed her no duty to warn of dangerous conditions that allegedly existed at the resort in question.

The Court did deny defendant Gap Inc.’s (“Gap”) motion for summary judgment, and allowed plaintiff to proceed with her claims that a defective sandal she purchased from Old Navy, owned by the Gap, failed, causing her to fall and sustain the injuries at issue.  The Court rejected the Gap’s motion that such claims should be barred by application of the spoliation doctrine, as plaintiff had not preserved the sandal in question.  The Court held plaintiff could not be held responsible for the absence of the sandal, as she had left it at the resort at the time of the injury, while she was rushed to the hospital, and was unable to locate it subsequently.  Issues of fact as to whether the Gap actually manufactured the sandal in question would await trial for resolution.

Reversing the court below, an Illinois intermediate appellate court, applying Texas law, holds purchasers of Dell computers bound by Terms and Conditions of Sale posted and available on Dell’s website at the time of purchase.  Importantly, the court held plaintiffs bound by these terms notwithstanding the fact that they were only available via hyperlink on Dell’s site, and further, that the consumer did not have to affirmatively click an “I accept” icon to indicate his assent to be bound thereby.  The Court held that by purchasing their computers online, plaintiffs entered into an online contract which included the Terms and Conditions, because they were advised on Dell’s website that their purchases were subject thereto.

As a result, the court held plaintiffs bound by the arbitration clause contained in the Terms, which mandated that they arbitrate disputes arising out of the purchase of their computers before the National Arbitration Forum.  In reaching this result, the court rejected plaintiffs’ claims that such a clause was procedurally and substantively unconscionable.

Court allows pro se litigant to proceed with breach of contract claims against the Internet Archive, operator of the Way Back Machine, arising out of the Internet Archive's reproduction and display of historical versions of defendant's website without her consent.  Defendant alleged that such copying of her site constituted an acceptance of the site's terms of use, which require the payment of exorbitant fees for such copying, and even greater amounts as liquidated damages should the copier fail to pay the required copying fees.  The court denied plaintiff's motion to dismiss this claim, holding the counterclaims stated a viable cause of action for breach of contract.  In reaching this result, the court noted it could not determine if the Internet Archive knew at the time it copied defendant's site that that act constituted an acceptance of the site's terms of use.  The court could not resolve that question on the instant motion because the record before it was unclear both as to the manner in which such terms of use were displayed on defendant's site, as well as to whether Internet Archive received any notice thereof, given  its claim to only have accessed the site via a web crawler, and not via an individual.

The Court did dismiss so much of defendant's counterclaims that advanced claims for conversion, civil theft and RICO arising out of the same copying activities.  The Court dismissed the conversion claims both because Internet Archive did not exercise sufficient dominion over defendant's property merely by copying her site and displaying it online, and because Internet Archive removed defendant's site, and thereby ceased exercising any dominion over it, promptly upon her request.

The Internet Archive did not move to dismiss copyright infringement claims defendant asserted arising out of its copying activities, which will also go forward.

Reversing the decision of the court below, an intermediate California appellate court holds that plaintiff had adequately plead a breach of contract claim arising out of defendant's failure to deliver a domain name put up for auction on the Internet.  The court accordingly allows plaintiff to proceed with his claim, and seek redress as a result of defendant The.TV corporation's failure to register plaintiff as the owner of the domain name golf.tv.

Court holds that the purported dispute resolution provisions contained in auction company’s online Terms and Conditions are unconscionable, and unenforceable against an individual dissatisfied with an auction in which she participated.  The dispute resolution provision mandated that the parties’ dispute be resolved in a binding proceeding before a representative of ‘In House Attorneys, P.C.’ in which each side was permitted only one hour to present their case, and could not call fact or expert witnesses nor be represented by counsel. 

As a result, the Court allowed plaintiff to proceed with claims against the defendant Hot Jewelry Auctions.com - who ran the auction - grounded on claims that defendant engaged in ‘shill bidding.’ 

Plaintiff was also allowed to proceed with claims against eBay as a result of her participation in this auction, via eBay’s Live Auction service.  In promoting this service, eBay claimed that “bidding on eBay Live Auctions is very safe.  All live auctions are run by reputable international auction houses, which are carefully screened by eBay before being authorized to sell to you.”  Notwithstanding the fact that eBay was responsible for this content, and derived a profit by promoting use of its Live Auction service, the Court held that it was immunized by application of the Communications Decency Act (“CDA”) from fraud and other claims arising out of so much of its promotional materials that advised consumers that eBay ‘carefully screened’ the auction houses allowed to participate in Live Auction.  The Court reasoned that to allow plaintiff to pursue such claims would expose eBay to “liabil[ity] for its exercise of a publisher’s traditional editorial functions” which is barred by the CDA.  As such, the Court barred plaintiff from pursuing claims that this representation was false because eBay allegedly did not ‘screen’ auction houses before permitting them to participate in such Live Auctions or because it knew that the auction house was engaged in illegal conduct – such as shill bidding – and failed to take appropriate steps in light thereof.   

The Court did permit plaintiff to proceed with claims arising out of eBay’s representation that such auctions were ‘safe,’ holding the same were not barred by application of the CDA because ‘eBay’s statements regarding safety affects and creates an expectation regarding the procedures and manner in which the auction is conducted and consequently goes beyond traditional editorial discretion.’  Nor were such claims barred by application of eBay’s Live Auction User agreement, which immunized eBay from any disputes a consumer might have with the auction house itself, as this dispute arose out of eBay’s own purported misconduct – namely misrepresenting that the auction was ‘safe.’  Because plaintiff had failed to plead with the requisite particularity that she relied on this statement in deciding to participate in the auction in question, however, her fraud claim was dismissed with leave to replead.

Court holds that plaintiff entered into a valid agreement by clicking on an icon indicating its assent to be bound to displayed software license terms, and thereafter using defendant's software and services.  As a result, the Court, honoring a forum selection clause found in the parties' agreement, transferred the case before it from Kansas to California, the venue for suit designated in the forum selection clause.  In reaching this result, the Court rejected plaintiff's claim that it was not bound to the agreement because its assent had been given by an individual who lacked the authority to bind it to such an agreement.  The Court found that plaintiff had failed to establish this contention due to its failure to identify the individual(s) who give their assent.  In any event, plaintiff was bound because it had ratified its agent's acts by using the software and associated services for a period of six years.

Court holds that defendant’s creation and use of 95 MySpace accounts to transmit unsolicited commercial email promoting its communications products runs afoul of both the CAN-SPAM Act, and California Business and Professions Code Section 17529.5, and violates MySpace’s Terms of Service.  Defendant created these accounts without identifying itself as the account holder.  The emails violated CAN-SPAM because they failed to contain either a valid physical address for defendant the Globe.com, or instructions on how to avoid receiving further email solicitations.  In addition, they were impermissibly sent to MySpace user email addresses generated by use of a script software program, another violation of CAN-SPAM.  They were also sent from email accounts obtained through false or fraudulent pretenses, as a result of defendant’s failure to accurately identify itself as the account holder.   

The Court found that these emails also violated California B & P Code Section 17529.5, both because they contained false header information that failed to identify the Globe.com as their source, and because they contained misleading subject lines that failed to accurately describe the emails’ contents.

Finally, the Court found defendant’s conduct violated MySpace’s Terms of Service, which prohibited the use of MySpace accounts both for commercial purposes and to transmit spam, and prohibited the use of scripts to generate email addresses for the transmission of commercial email to MySpace account holders.  As such, the Court held defendant liable for liquidated damages of $50 for each email sent as mandated by the Terms of Service.  In reaching this result, the Court rejected defendant’s challenge to such clause on the ground that it was an unenforceable penalty provision.

In this mandamus proceeding, California's Court of Appeals, by a two to one vote, holds a party suing as a private Attorney General subject to the same forum selection clause as the consumers it is seeking to protect.  As such consumers would be bound as a result of their use of Net2Phone's website to the provisions of its Terms of Use, so too is their private advocate.  The Court of Appeals accordingly directed that the action Consumer Cause commenced on the consumers' behalf in California be stayed because the Terms of Use contained a forum selection clause which mandated suit in New Jersey.  The Court upheld the forum selection clause notwithstanding the fact that New Jersey, unlike California, does not permit private advocates such as plaintiff to pursue claims on behalf of injured consumers.

Court holds that plaintiff, by clicking an "I accept" icon agreeing online to be bound by the Terms of Service governing use of an online discussion group set forth in a scrollable window, viewable ten lines at a time, was bound by the forum selection contained therein.  Finding such a clause enforceable, the Court dismissed a claim brought by plaintiff asserting that defendant Google breached this agreement, because this claim was not brought in the designated forum.

The Court also held that Section 230 of the Communications Decency Act ("CDA") immunized an ISP hosting an online discussion group from claims that its failure to remove objectionable content posted on the discussion group's web page gave rise to claims of tortious interference with contractual relations. 

Finally, the Court denied the motions of two additional defendants to dismiss the claims asserted against them for want of personal jurisdiction.  The Court held that the first defendant was subject to specific jurisdiction in New York because of its operation of a commercial website via which it sold $6000 of products a year to New York residents.  The second defendant was similarly subject to suit because he had entered into a contract with a New York company, which contract allegedly gave rise to the claims asserted against him.

Court dismisses plaintiffs' claim for $3 million in lost profits arising out of Ameritech's failure to register plaintiffs' website with search engines, holding such claims barred by the limitation of liability clauses contained in the parties' contracts.  These clauses limited recoverable damages to the $1,600 in fees paid by plaintiffs to Ameritech under the parties' agreements in this case.  In reaching this result, the Court rejected plaintiffs' claim that these limitation of liability provisions were unconscionable, and hence unenforceable.  This claim failed because the services provided by Ameritech that were the subject of the parties' agreements were available from multiple sources and hence Ameritech had the right to offer its services on such terms as it saw fit.  This claim also failed because the limitation on liability contained therein did not 'shock the conscience', particularly in light of the fact that plaintiffs themselves could have performed the very services defendants failed to provide - the registration of their website.

Affirming the court below, the Second Circuit holds that Register.com is likely to prevail on breach of contract claims arising out of Verio Inc.'s use of data obtained from Register.com's Whois database in violation of the database's Terms of Use, which prohibit use of that information for unsolicited advertising.  In reaching this conclusion, the Second Circuit held that Register.com's Terms of Use are likely to create a contract between Register.com and Verio, because Verio repeatedly used Register.com's Whois database with actual knowledge that the Terms provided that such use would constitute assent to be bound by the data use restrictions contained in the Terms.  Notably, the Second Circuit reached this result notwithstanding the fact that Verio did not click an "I Agree" icon indicating its agreement to be so bound.  More importantly, the Court found Register.com likely to prevail despite the fact that Verio did not see these Terms until after it had already completed the act - using the Whois database - which purportedly indicated its assent to be bound thereby. 

The Second Circuit also found both that Verio's use of a search robot to gather Whois data likely constituted a trespass to chattels, and that certain of Verio's promotional activities violated the Lanham Act.

As a result, the Second Circuit affirmed the District Court's issuance of a preliminary injunction, enjoining Verio from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information obtained from that database to assist in the transmission of mass unsolicited advertising by telephone, direct mail or e-mail.

Court issues a preliminary injunction enjoining Verio, Inc. from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information derived from that database for mass unsolicited advertising by telephone, direct mail or electronic mail. Court holds that Verio's actions will likely constitute a breach of plaintiff's Terms of Use, as well as a violation of both the Computer Fraud and Abuse Act and the Lanham Act and a trespass to chattels. In reaching this conclusion, the court holds that Register.com's Terms of Use are likely to create a contract between Register.com and the users of its Whois database, notwithstanding the fact that these users are not required to click an "I Agree" button indicating their agreement to be so bound.

Court holds that e-mail sent by defendant accepting plaintiff's offer to purchase real property, upon which defendant typed his name, satisfies the requirement of the Statute of Frauds that contracts for the transfer of an interest in real property be evidenced by a writing.  The Court nonetheless dismissed plaintiffs' claim, seeking specific performance of the parties' alleged agreement, because the e-mails the parties exchanged failed to contain all of the essential terms of a contract for the sale of real property.

The court denied defendants' motion to dismiss plaintiff's complaint, which sought to enforce a contract for the sale of real property between the parties based on e-mails they exchanged.  The court rejected defendants' claim that this contract was unenforceable by virtue of the Statute of Frauds, holding that e-mails typed and sent by defendant containing a salutation consisting of defendant's name can constitute writings sufficient to satisfy the statute of frauds.

Affirming the decision of the court below, the Second Circuit Court of Appeals holds that plaintiffs are not bound by the terms of a license agreement purporting to govern the use of a software product they downloaded because plaintiffs neither had reasonable notice thereof, nor adequately manifested their assent to be bound thereby.  The software in question could be downloaded from a page on defendant Netscape's web site by clicking on a button which said "download".  The terms of the license agreement in question were not contained on this web page, however, and the only notice the user received of the license agreement was found on a portion of the web page below the download button.  Typically, this notice appeared "below the fold" and was not on that portion of the page which first appeared on the user's screen when he went to download the program.  This notice informed the user that his use of the software would be governed by the terms of a license agreement, which terms could be seen by clicking on a link provided on the web page.  Once the program was downloaded, the user received no further notice of either the license agreement or its terms.  The Court held that this procedure did not create a binding contract between the parties.

The Second Circuit further held that the terms of a license agreement plaintiffs did agree to, governing their use of Netscape's browser, did not obligate them to arbitrate the claims they raised in this litigation.  These included claims that Netscape violated both the Electronic Communications Privacy Act and the Computer Fraud and Abuse Act by causing Netscape's Smart Download software, a Netscape browser 'plug in', to send information to Netscape about plaintiffs' downloading activities.

Court holds that act of downloading software does not indicate assent to be bound by terms of license agreement, where a link to such terms appears on, but below that portion of the web page that appears on the user's screen when such downloading is accomplished. As a result, the Court holds that under California law, plaintiffs are not bound by the terms of such license agreement, or the arbitration clause contained therein, despite language in the license agreement which provides that by installing or using the software, the user consents to be bound by the terms of the license agreement.

Court holds that a binding agreement can be formed by the use of a web site, without more, if the user has actual knowledge that the site's Terms and Conditions so provide.  As a result, the Court denied defendant Tickets.com's summary judgment motion, which sought dismissal of breach of contract claims arising out of Tickets.com's use of a search robot to obtain information about concerts from plaintiff Ticketmaster's web site.  The Court held that issues of fact as to defendant's knowledge of the site's Terms and Conditions at the time it used plaintiff's site precluded a determination as to the binding nature of such Terms.

The Court did grant so much of Tickets.com's summary judgment motion which sought dismissal of trespass to chattels claims Ticketmaster asserted as a result of such activity.   These claims failed because of the absence of evidence that "the use or utility" of Ticketmaster's computers were being adversely affected by Tickets.com's use of a search robot to gather information from plaintiff's site.

Finally, the Court dismissed several copyright infringement claims brought by Ticketmaster.  These included infringement claims arising out of the temporary copying into the RAM of defendant's computers of data from plaintiff's site, including materials in which plaintiff held a copyright.  These materials were copied as an intermediate step to obtaining, and displaying on Tickets.com's own site, factual information contained therein.  The Court held such copying was a protectable fair use given the only materials retained at the end of the process were the facts -- as to concert locations, dates and times -- contained therein, which facts were not protected by copyright.  Infringement claims arising out of deep linking to interior pages of plaintiff's website were dismissed because, by deep linking into plaintiff's site, Tickets.com was not showing or displaying plaintiff's copyrighted materials (which instead were being displayed by plaintiff itself).  Finally, infringement claims arising out of copying the URLs from such interior pages were dismissed because such URLs did not have sufficient originality to be copyrightable.

After a lengthy trial, the Court found that defendant Amazon.com had breached an agreement it had entered into with plaintiff ToysRUs.com LLC ("Toys R Us"), by permitting third parties to sell toys on Amazon's web site.  Finding that this breach went to the substance of the parties' agreement - which as interpreted by the Court provided that Toys R Us was to be the sole third party toy retailer on Amazon's web site - the Court granted Toys R Us's request that the agreement be terminated.  Notwithstanding its finding that such a breach had occurred, the Court did not award Toys R Us damages.  The Court also rejected counterclaims asserted by Amazon, arising out of Toys R Us's alleged failure to maintain levels of inventory sufficient to meet customer demand.

Affirming the court below, the Eleventh Circuit holds plaintiff bound by online amendments to its agreement with defendant posted to defendant's website.  As those amendments raised the rates due for defendant's services, which increased rates plaintiff refused to pay, the Eleventh Circuit affirmed the District Court's grant of summary judgment to defendant on its breach of contract claim.  The Court found support for its decision in the parties' agreement, which bound plaintiff to tariffs "as the same may exist or be modified in the future [by defendant] . . . and/or as the same may appear on [defendant's] website."

Court denies defendant AOL's motion to dismiss complaint, which motion was brought on the ground that plaintiffs commenced the instant action in an improper forum in violation of a forum selection clause contained in AOL's Terms of Service. Finding, inter alia, that the injury alleged in the complaint occurred before the plaintiffs were asked to agree to be bound by AOL's Terms of Service, the court denied AOL's motion.

Quick Hits

Download PDF of Court Decision

Court upholds the validity of the forum selection clause in YouTube’s Terms of Use, which mandates that disputes arising out of the use of the YouTube website be litigated exclusively in courts located in San Mateo County, California.  As a result, the Court granted defendant YouTube’s motion to dismiss plaintiff’s complaint, because it was brought in Washington, rather than in a court located in San Mateo County, California.

The Court further held that it lacked personal jurisdiction over the defendant because “no conduct has been alleged [by plaintiff] to provide the ‘something more’ necessary [under the effects test] for rendering YouTube subject to jurisdiction in the Western District of Washington.”

It should be noted that plaintiff was proceeding pro se.

Download PDF of Court Decision

Court held that plaintiff, by clicking a “continue” icon in the course of completing a user profile for an online dating service, was bound by the site’s Terms of Use, available via a hyperlink on the webpage he was viewing.  The “continue” icon appeared at the foot of the initial webpage the user saw in the course of completing his profile, and just to the right of a sentence that read “I am 18 years old and I have read and agree to the True Terms of Use and Code of Ethics.”  The phrase ‘Terms of Use’ were linked to the site’s Terms of Use, which appeared in a pop-up window when a user clicked on this link.  The Terms of Use advised the user that “once you click on the ‘continue’ button at the end of this sign-up form, you are agreeing to be bound by the Terms of this Agreement.”

Importantly, the Court found plaintiff bound despite his claim that he was not asked to agree to be bound by the Terms of Use as part of the sign-up process.  This evidence was effectively refuted by that supplied by the defendant, which demonstrated that all users, to obtain a profile, must click the ‘continue’ icon.

Similarly, the fact that the Terms were available via a hyperlink did not prevent plaintiff from being bound thereby.  Said the Court:

Respondents presented substantial evidence that appellant had to click on the ‘continue’ button in order to register for his trial membership on the Web site, and that doing so constituted an agreement to the ‘Terms of Use’ on the Web site.  Appellant may not have read the ‘Terms of Use’ but they were readily available to him on the True.com Web site if he clicked on the ‘Terms of Use’ link near the ‘Continue’ button.  Under these circumstances, where appellant obviously had access to the Internet and was entering into a contract on the Internet, there was nothing inherently unfair in requiring him to access contractual terms via hyperlink, which is a common practice in Internet businesses.  The trial court did not abuse its discretion in finding that appellant agreed to the forum selection clause contained in the ‘Terms of Use.’

The Appellate Court nonetheless reversed the lower court’s decision, which had dismissed plaintiff’s claims because of the forum selection clause contained in True’s Terms of Use.  The clause in question, held the Appellate Court, only provided that disputes arising out of a party’s use True.com’s online dating service may be brought in the Texas.  Because this clause did not mandate that such suits must brought in Texas, the lower court needed to analyze, under traditional forum non conveniens analysis, whether California or Texas was the appropriate forum in which the suit should proceed.  The forum selection clause at issue provided “you agree to personal jurisdiction by and venue in the State of Texas and the U.S. District Court for the Northern District of Texas.”  The case was remanded to the lower court for the performance of this analysis.

Download PDF of Court Decision

Ninth Circuit holds that customer is not bound by contractual amendments to service contract posted by long distance company on its website of which customer had no notice.

Talk America undertook to provide phone services to customers previously serviced by AOL.  Thereafter, Talk America attempted to change the terms of its contracts with these customers by including in the parties’ contracts provisions that increased applicable service charges and compelled customers to arbitrate any disputes they may have with the company.  These new amendments also included a class action waiver, and a New York choice of law provision.  These changes were posted on defendant Talk America’s website.  However, according to plaintiff, a former AOL customer who continued to use Talk America’s services after the changeover, he was given no notice of these contractual changes.  He alleged that he had no need to visit Talk America’s site as he had set-up his account so that applicable charges were automatically billed to, and paid by, his credit card.

In these circumstances, the Ninth Circuit held that plaintiff could not be compelled to arbitrate his disputes with Talk America arising out of these contractual revisions, and particularly the rate increases they mandated.  The Ninth Circuit accordingly granted plaintiff’s writ of mandamus, holding that the District Court clearly erred in granting Talk America’s motion to compel arbitration.

Download PDF of Court Decision

Court holds that an individual who access America Online’s (“AOL”) services via the account of another is not bound by its Terms of Service merely as a result of such use, absent notice that the Terms provide that by such use, he is agreeing to be bound thereby.  The Court stated that “the Second Circuit seems to require that the license terms appear on the screen, in view of the user, for the user to be on notice of them.”  In this case, the user claims that he was able to access AOL’s services via his step-father’s account without either being presented with AOL’s Terms of Service, or being asked to accept them.
 
The Court further held, however, that by accessing AOL’s service via the account of another, plaintiff became a sublicensee, with no greater rights to use AOL’s service than the actual account holder himself.  As that account holder himself had agreed to be bound to AOL’s Terms of Service when he signed up for its service, plaintiff too was bound by those Terms of Service.

As a result, the Court held that plaintiff was bound by the Forum selection clause contained in AOL’s Terms of Service, and accordingly transferred the case to Virginia, where the clause mandated all disputes be litigated.

Court denies motion to dismiss, and allows Pollstar to proceed with common law misappropriation and unfair competition claims arising out of Gigmania's alleged copying and reposting on its own website of factual concert listings found on Pollstar's site.  The complaint alleged that this information was "hot news" which is protected against misappropriation if plaintiff can show that it "(i) generates or collects information at some cost or expense (ii) the value of the information is highly time-sensitive; (iii) the defendant's use of information constitutes free-riding on the plaintiff's costly efforts to generate or collect it' (iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff; (v) the ability of the other party to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened."

The Court also allowed Pollstar to proceed with claims the Gigmania's conduct breached a browse-wrap license agreement between the parties, which prohibits the acts complained of.  The Contract provides that use of the information found on the site constitutes acceptance of the contract's terms.  Notably, the court allowed this claim to proceed despite the fact that notice of such terms were given "in small gray text on a gray background" which, in turn, contained a link to the actual contract terms, without the usual "underlining" signifying such a link.

Download PDF of Court Decision

Affirming the court below, a California intermediate appellate court holds that an auction's sites customer cannot be compelled pursuant to the terms of an online agreement to arbitrate claims seeking a "public injunction" under California state statutes prohibiting unfair competition and false advertising.  Plaintiff brought claims under Section 17200 and 17500 of California's Business and Professions Code, charging uBid with overcharging him for shipping costs by overstating the weight of the item he purchased.

For additional cases, see the Click-Wrap Agreement.