ProCD compiled a large electronic database of telephone listings and sold it on CD-ROM. It marketed a cheaper consumer version subject to a license restricting use to noncommercial purposes, with the terms contained inside the software package and presented again during installation. Zeidenberg bought the consumer version, ignored the license restrictions, and used the data commercially through a business called Silken Mountain Web Services. ProCD sued to enforce the license after Zeidenberg continued the commercial use.
Is a shrinkwrap software license, presented inside the box and accepted by use of the software after an opportunity to review and return it, enforceable under state contract law and not preempted by federal copyright law?
Under the UCC, a vendor may invite acceptance by conduct after the buyer has an opportunity to review terms, and a contract can be formed when the buyer uses the product instead of returning it. A private contractual restriction on use is generally not preempted by copyright law because contract rights run only between the parties and are not equivalent to exclusive rights against the world.
Yes. The shrinkwrap license was enforceable, and Zeidenberg was bound by its noncommercial-use restriction because he used the software after having the opportunity to read the terms and return the product. The contract claim was not preempted by the Copyright Act.
The court reasoned that transactions often proceed with money paid first and detailed terms supplied later, and the UCC permits sellers to structure acceptance in that way. Because the package and software gave Zeidenberg notice that terms governed use and allowed him to reject the deal by returning the product, his decision to use the software constituted acceptance. The court also rejected preemption, explaining that copyright law regulates exclusive rights against the public at large, while a contract creates voluntary obligations only between contracting parties. Enforcing the license therefore did not create rights equivalent to copyright.
ProCD is a foundational case upholding shrinkwrap and later clickwrap-style mass-market software licenses when users have notice and an opportunity to reject by return. It strongly influenced software and online contracting doctrine, especially in the Seventh Circuit, and is frequently discussed alongside Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir. 1997), and contrasted with Klocek v. Gateway, Inc., 104 F. Supp. 2d 1332 (D. Kan. 2000). On preemption, it is also important for distinguishing contract claims from copyright claims because contractual promises contain an extra element beyond rights protected by the Copyright Act.
Hill v. Gateway, 105 F.3d 1147 (7th Cir. 1997) |
Abstain |
Klocek v. Gateway, 104 F. Supp. 2d 1332 (D. Kan. 2000) |
Abstain |
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