I’m not an expert but I have just completed first year law up here in Canada and I did sleep at a Holiday Inn Express last night (OK, the Holiday Inn bit is a lie). The nature of a EULA is a contract between a party in a strong bargaining position (the vendor) and one in a weaker position (the user). As such, courts generally do not uphold such agreements where the contract is an abuse of power by the stronger party - hence the earlier statements made by some that EULAs do not override consumer protection laws. However, where such agreements are reasonable, the courts will uphold them as it would be inefficient to force corporations to individually negotitate such “standard form contracts” with each potential customer.
Courts have upheld EULA agreements in Canadian courts, notably in Kanitz v. Rogers Cable Inc. (http://www.dww.com/decisions/kanitz_v_rogers_cable_inc.pdf). However, that was a bit of a special case in that the Defendant, Rogers Cable, modified the EULA that had been agreed to by the Plaintiffs as part of their contract with the prior cable provider (Rogers and Shaw swapped huge regions of Canada at one point, Shaw taking over Rogers operations in B.C. for example, and Rogers taking over Shaw operations in Ontario where this case arose). Rogers added an arbitration clause to the contract for dispute handling and notified their customers of it, admittedly in a somewhat non-obvious manner, and further indicated that continued use of their service meant the customers agreed to the altered terms of the contract. In other words, had Rogers not made an effort to notify customers of this change, it seems unlikely the courts would have found in their favour. However, as they did place a notification on the home page which all service users were asked to check periodically, the courts found that notice was given.
What is perhaps, to me, most interesting about the Kanitz case is that it illustrates that the courts, with respect to matters of software, often make decisions that don’t really make that much sense to those of us with software training. Software is a complex business with complex issues that take many people their whole lives to understand (and we still often fail to grok these issues). When you take such a complex issue before a judge who likely does not have a software background, the judge will make decisions based upon what (s)he understands and that may or may not mesh well with the software realities. It will take time for the courts to iron things out - until then, expect erratic rulings regarding EULAs with the courts sometimes coming down in favour of the vendors and sometimes in favour of the clients. These decisions will be further complicated by the international nature of the software industry and the “conflict of laws” that occurs when parties to a dispute operate in different countries or make agreements in different countries.
Consider the landmark English Court of Appeal case in Parker v. South Eastern Railway Co. (1877). Here the plaintiff checked a bag in excess of 10 Pounds Sterling (English money) which was lost. A disclaimer on the ticket stub indicated the railway would not be responsible for the loss of any bags over that amount. The judge’s ruling, I believe, sets the tone for these types of agreements with “The plaintiff was certainly under no obligation to read the ticket, but was entitled to leave it unread if he pleased … the real question, namely, whether the railway company did what was reasonably sufficient to give the plaintiff notice of the condition”.
A more current case, Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd. (again, English Court of Appeal) contains the statement “The defendants [clients] are not to be relieved of that liablility because they did not read the condition, although doubtless they did not; but in my judgment they are to be relieved because the plaintiffs did not do what was necessary to draw this unreasonable and extortionate clause fairly to their attention”.
At least in England, Canada and other commonwealth nations, it would seem that EULA agreements are, like any contract, subject to assessments of what is reasonable and fair. Those in power cannot abuse that power and those in power must make sure that they bring to the attention of the other party particularly onerous clauses. The question that, to my knowledge, has not been properly addressed although is alluded to in Kanitz is whether a simple click on an accept button for an entire EULA is sufficient evidence that the vendor brought onerous conditions to the clients’ attention. I would suggest that it is not sufficient but I am not the court and have no idea how a court will eventually rule, if one has not already.
I am sorry to U.S. readers that I have little information on U.S. cases but, as the U.S. courts pay little attention and give little deference to foreign courts, it is not unsurprising that foreign courts give little deference and pay little attention to the decisions in U.S. courts.
DISCLAIMER; This information is provided merely as background information and is not intended as legal advice in any way, shape or form. The author does not claim it to be either an accurate or even adequate coverage of the issues at hand.
