†1998 Robert W. Gomulkiewiz.
† Mr. Gomulkiewicz is a senior corporate attorney for Microsoft Corporation. He also chairs the Article 2B Working Group of the Business Software Alliance. The views expressed in this article are the personal views of the author, not those of Microsoft or the Business Software Alliance. The author would like to thank J.D. Fugate, Hosea Harvey, John Lange, Robert B. Mitchell, and Martin F. Smith for their contributions to this Article.
1. Mark A. Lemley,
Beyond Preemption: The Federal Law and Policy of Intellectual Property Licensing,
87 CALIF. L. REV.
113, 114 (forthcoming 1999) ("Proposed Uniform Commercial Code Article
2B will remake the law of software and intellectual property licensing in a
radical way."). See also Dennis J. Karjala, Federal Preemption
of Shrinkwrap And On-Line Licenses, 22 U. DAYTON L.
REV. 511 (1997) (arguing Article 2B is unconstitutional);
David A. Rice, Digital Information As Property And Product: U.C.C. Article
2B, 22 U. DAYTON L. REV.
621 (1997); J. Thomas Warlick, A Wolf In Sheep's Clothing? Information Licensing
and De Facto Copyright Legislation in UCC 2B, J. COPYRIGHT
SOC'Y U.S.A.
158, 172 (1997) ("2B appears poised to be the impetus for a deluge of oppressive
licenses and litigation against hapless licensees."). Software and information
licensing has been around for a long time (Dunn & Bradstreet has been licensing
information for over one hundred years) and needs no further impetus, though
licensing law could certainly benefit from more clarity. While Article 2B does
not represent new licensing law or practice, it is different than Article
2. As explained infra, therein lies much of the promise of Article 2B.
2. Until ProCD v. Zeidenberg,
86 F.3d 1447 (7th Cir. 1996), no reported case had determined the enforceability
of a mass market license agreement between a software publisher and an end user.
The cases that touched on mass market licenses involved contracts between a
software publisher and a distributor. In those cases, the software publisher
tried (without success) to use the end user license to amend or alter the distribution
agreement between the parties. See Step-Saver Data Sys., Inc. v. Wyse
Tech., 939 F.2d 91 (3d Cir. 1991); Arizona Retail Sys., Inc. v. Software Link,
Inc., 831 F. Supp. 759 (D. Ariz. 1993). Arizona Retail, however,
actually anticipates the court's ruling in ProCD. In Arizona Retail,
the distributor, a value-added retailer, initially acquired an evaluation version
of the software that was accompanied by an "evaluation license." In
this context, the retailer was more like an end user than a distributor of the
software. The court held that the retailer was bound by the terms of the evaluation
license. See Arizona Retail, 831 F. Supp. at 766
.
3. But see Jeffery
Dodd, Art. 2B Offers Jurisprudence for All Forms, NAT.
L.J., Sept. 21, 1998, at B13, B16 (criticizing the "mechanistic
approach" to contract formation rules that makes "choreography"-timing
and sequence-all-important); Robert B. Mitchell, Restoring Realism in Software
Licensing Law, MULTIMEDIA & TECH.
LICENSING L. REP.,
Apr. 1996, at 4, 7 (arguing that courts have departed from the "legal realist"
roots of the U.C.C. when applying it to software licenses).
4. The ProCD ruling may have
surprised some scholars because they mistakenly believed that the body of critical
commentary on mass market licenses was more compelling than the overwhelming
industry practice and the economics that drive the industry. See Robert
W. Gomulkiewicz & Mary L. Williamson, A Brief Defense of Mass Market
Software License Agreements, 22 RUTGERS COMPUTER
& TECH. L.J.
335 (1996) (describing the importance of mass market licenses for both publishers
and users, and citing critical commentary); Wayne D. Bennett, Legal and Blinding,
CIO MAGAZINE (Oct. 1, 1998) (visited Nov. 23,
1998) <http://www.cio.com/archive/webbusiness/100198_gray_content.html>
(criticizing the critics of Article 2B who claim that it represents new legal
principles).
5. The goal of uniform law makers
should be, as Grant Gilmore put it, "to be accurate and not to be original."
Grant Gilmore, On the Difficulties of Codifying Commercial Law, 57 Y
(Mar. 1998 Draft). Though Article
2B is not new law, it is fair to say it has caused a new focus on software and
information licensing.
6. The Article 2B project did not
begin at the behest of the software industry. Indeed, software industry trade
associations voiced their disapproval of such a project. Once the project began,
however, initially as part of the Article 2 re-write and then as a separate
U.C.C. article, the software industry as well as other information product industries
began to participate in the process. See U.C.C. Article 2B, Prefatory
Note at 5-7 (July 24-31, 1998 Draft) (describing the history of the Article
2B project); Raymond T. Nimmer et al., License Contracts Under Article 2
of the Uniform Commercial Code: A Proposal, 19 RUTGERS COMPUTER
& TECH. L.J.
281 (1993); Thom Weidlich, Commission Plans New U.C.C. Article, NAT.
L.J., Aug. 28, 1995, at B1.
7. See generally Marianne
B. Culhane, The UCC Revision Process: Legislation You Should See in the Making,
26 CREIGHTON L. REV.
29 (1992).
8. Software licensing is often divided
into two general categories: upstream licensing and downstream licensing. Upstream
licensing refers to licenses a publisher receives to create its product. Downstream
licensing refers to licenses a publisher gives to users or distributors of its
product. An example of an upstream license would be a license for spell checking
software that a publisher receives to include the spell checking software in
the publisher's word processing product. An example of downstream licensing
would be an end user license or a license with a computer manufacturer to install
and distribute system software on its computers. Article 2B applies to both
types of licenses.
9. See Brenda Sandburg, Commercial
Code Upgrade May Fall Apart, THE RECORDER,
Sept. 28, 1998, at 1 (describing the qualms of the entertainment and communications
industries about a contract statute with one set of rules for all transactions
in information).
10. The Free Software Foundation
does not make its software "free" by placing it in the public domain.
Rather, it does so via mass market licensing. See Free Software Foundation,
What is Copyleft? (visited Nov. 5, 1998) <http://www.fsf.org/copyleft/copyleft.html>.
According to the Debian organization, publisher of the Debian GNU/Linux "free
software" operating system, "[t]ruly free software is always free.
Software that is placed in the public domain can be snapped up and put into
non-free programs, and be free no more. To stay free, software must be copyrighted
and licensed." Debian GNU/Linux, What Does Free Mean? or What Do You
Mean By Open Software? (visited Nov. 5, 1998) <http://www.debian.org/intro/free>.
11. See Consumer Reports
ONLINE, User Agreement (visited Nov. 11, 1998) <http://www.consumerreports.org/Functions/Join/tos.html>.
12. See U.C. Berkeley Office
of Technology Licensing, Software Copyright Notice and Disclaimer (visited
Nov. 5, 1998) <http://www.socrates.berkeley.edu/~otl/Copnoti.html>.
13. Relatively new, however, are
court decisions clearly articulating the value of mass market licensing. See
Hill v. Gateway 2000, 105 F.3d 1147 (7th Cir. 1997), cert. denied
118 S.Ct. 47 (1997) (upholding contract terms presented to the user post-payment
in a mixed software and computer hardware transaction); ProCD v. Zeidenberg,
86 F.3d 1447 (7th Cir. 1996); Hotmail v. Van$ Money Pie, Inc., 47 U.S.P.Q.2d
1020 (N.D. Cal. 1998) (assuming enforceability of mass market license); Arizona
Retail Sys. v. Software Link, 831 F. Supp.759, 766 (D. Ariz. 1993) (holding
a mass market license enforceable in the initial transaction between a value
added reseller and a software publisher, but unenforceable in a subsequent transaction);
Brower v. Gateway 2000, 676 N.Y.S.2d 569 (1998) (upholding contract terms presented
to the user post-payment in a mixed software and computer hardware transaction).
14. Standard form contracts are
not an innovation of software publishers. The use of standard form contracts
is commonplace in virtually all lines of business. See 3 LAWRENCE
A. CUNNINGHAM & ARTHUR
J. JACOBSON, CORBIN
ON CONTRACTS § 559A(B) (rev.
ed. Supp. 1998); 1 E. A. Farnsworth, FARNSWORTH ON CONTRACTS
§ 4.26 (1990). Software publishers have been innovative, however, in the various
ways they allow users to manifest assent to the terms. See Gomulkiewicz
& Williamson, supra note 4, at 339-41. Software publishers have also
been unique in their efforts to actually draw contract terms to the user's attention
and require manifestation of assent. Id. at 352.
15. See id.
16. See ProCD, 86
F.3d at 1453 ("In the end, the terms of the license are conceptually identical
to the contents of the package."). The use of mass market licenses enables
the publisher to tailor a collection of rights to particular types of uses,
so that the license, rather than merely the underlying software, becomes the
product acquired by the user. This practice has analogies to other industries,
such as the airline industry. An airline ticket is nothing more than a right
to ride on a given flight, in a certain class of seat, on a certain day and
time, to a certain location. The ticket price and associated rights vary from
passenger to passenger, depending on the ticket the passenger acquired. For
example, one passenger in coach may have paid twice as much as the passenger
sitting across the aisle, but the higher priced ticket may entitle the passenger
to a confirmed seat on another flight in case the airline cancels the regularly
scheduled flight.
17. 86 F.3d 1447 (7th Cir. 1996).
18. See, e.g., Karjala,
supra note 1; Apik Minassian, The Death of Copyright: Enforceability
of Shrinkwrap Licensing Agreements, 45 UCLA L. REV.
567 (1997); Kell Corrigan Mercer, Note, Consumer Shrink-Wrap Licenses and
Public Domain Materials; Copyright Preemption and Uniform Commercial Code Validity
in ProCD v. Zeidenberg, 30 CREIGHTON L.
REV. 1287 (1997). Some commentators disparage
the ProCD decision by saying that it has been severely criticized or
that most commentators disagree with the court's opinion. See, e.g.,
David A. Rice, Memorandum to Article 2B Drafting Committee (Mar. 18, 1998) (on
file with author) (Professor Rice is a member of the Article 2B Drafting Committee).
This count-up-the-law-review-article method of evaluating ProCD is a
poor basis to judge the merits of the decision. Most commentators write to critique
cases, not to praise them, so seeing more criticism than accolades is normal
in legal scholarship. Even at that, one might quarrel with whether particular
articles are, on balance, supportive or critical. See Maureen A. O'Rourke,
Copyright Preemption After the ProCD Case, a Market-Based Approach,
12 BERKELEY TECH.
L.J. 53 (1997) (agreeing with the court on contract grounds,
while offering criticism on preemption grounds). Another mode of criticizing
ProCD is to call it, pejoratively one would suppose, an Easterbrook decision,
implying that the court's opinion was the work of one rogue judge. Both ProCD
and the Gateway case that followed, were unanimous opinions of the court,
neither of which the 7th Circuit reconsidered en banc. See Hill
v. Gateway 2000, 105 F.3d 1147 (7th Cir. 1997).
19. See Joel Rothstein Wolfson,
Contracts and Copyright are not at War: A Reply to "The Metamorphosis
of Contract into Expand," 87 CALIF.
L. REV. 79 (forthcoming 1999).
20. In Article 2B nomenclature,
many of these contracts would be called "Access Contracts" rather
than "Mass Market Licenses," although they are every bit mass market
licenses in the normal sense of the term. Article 2B distinguishes between the
two types of contracts so that the statute can apply context-specific rules
to access contracts. Compare U.C.C. § 2B-102(1) (July 24-31, 1998 Draft),
with U.C.C. § 2B-102(31) (July 24-31, 1998 Draft) and see U.C.C. § 2B-102,
Reporter's Note 28 (July 24-31, 1998 Draft).
21. See supra note
11.
22. See Consumer Net, Consumer
Net Rules of Operation (visited Sept. 17, 1998) <http://www.consumernet.org/html/online_rules.html>.
23. See supra note
12.
24. See Jim Matthews, BlitzMail
(visited Nov. 5, 1998) <http://www.dartmouth.edu/pages/softdev/blitz.html>;
Jim Matthews, Fetch-Licensing (visited Nov. 5, 1998) <http://www.dartmouth.edu/pages/softdev/fetch.html>.
25. See MIT Information
Systems, MIT Information Systems (visited Nov. 5, 1998) <http://web.mit.edu/is/help/maczephyr/license.html>.
26. See Texas Classroom
Teachers Association, TCTH Internet Site Disclaimer: Terms and Conditions
(visited Sept. 17, 1998) <http://www.tcta.org/disclaimer.htm>.
27. See Shop PBS, Terms
and Conditions for Use of Shop PBS (visited Sept. 17, 1998) <http://www.pbs.org/insidepbs/rules/shop.html>.
28. See supra note 10.
29. See The Robert Wood
Johnson Foundation, Terms and Conditions of Use (visited Sept. 17, 1998)
<http://www.rwjf.org/trmscon.htm>.
30. See The Partnership
for Food Safety Education, Usage Guidelines (visited Sept. 17, 1998)
<http://www.fightbac.org/word/guidelines.html>.
31. See National Pediatric
Family HIV Resource Center, Terms and Conditions of Use: Liability Statement
(visited Sept. 17, 1998) <http://www.pedhivaids.org/disclaimer.html>.
32. See National Institutes
of Health Library, Copyright, Disclaimers and Access Restrictions (visited
Sept. 17, 1998) <http://libwww.ncrr.nih.gov/disclaim.html>.
33. See, AM.
J. KIDNEY DISEASES,
Terms and Conditions of Use (visited Sept. 17, 1998)
<http://www.ajkdjournal.org/terms.html>.
34. See Solomon R. Guggenheim
Museum, Internet Legal Page (visited Sept. 17, 1998) <http://www.guggenheim.org/legal.html>.
35. See The State Bar of
Wisconsin, State Bar of Wisconsin Web Site: Terms, Conditions and Disclaimers
(visited Sept. 17, 1998) <http://www.wisbar.org/gendisclaimer.html>.
36. See First Baptist Church,
Legal Information (visited Sept. 17, 1998) <http://www.firstb.org/copyright.html>.
37. See Catholic Online,
Catholic Online WebMail/EdgeMail User Agreement (visited Nov. 5, 1998)
<http://webmail.catholic.org/terms.htm>.
38. See RESTATEMENT
(SECOND) OF
CONTRACTS § 211 cmt. A (1981).
39. See 3 CUNNINGHAM
& JACOBSON, supra
note 14, § 559A(B).
40. Even publishers of market-leading
products are susceptible to the wrath of end users in controversies over mass
market license terms. See Gomulkiewicz & Williamson, supra
note 4, at 345 n.40 (user objections to WordPerfect license); Micalyn Harris,
Decloaking Development Contracts, 16 J. MARSHALL J.
OF COMPUTER &
INFO. LAW 403,
407 (1997) (user objections to Borland license); DAVID BRIN,
THE TRANSPARENT SOCIETY
165-70 (1998) (explaining the potentially valuable effects of "flame mail").
41. See Lauren Paul, Tug-of-War-User
Groups Leverage Clout to Influence Agreements, PC WK.,
Nov. 7, 1994, at 21-24. Librarians have established a website setting out their
views on preferred terms and conditions for acquiring information products.
See International Coalition of Library Consortia, Statement of Current
Perspective and Preferred Practices for the Selection and Purchase of Electronic
Information (visited Sept. 17, 1998) <http://www.library.yale.edu/consortia/statement.html>;
Liblicense, Licensing Digital Information: a Resource for Librarians
(visited Nov. 5, 1998) <www.library.yale.edu/~llicense/index.shtml>.
42. See GARTNER
GROUP INTERACTIVE
(visited Nov. 5, 1998) <http://gartner12.gartnerweb.com/public/static/home/home.html>.
43. See, e.g., Randy Weston,
Microsoft profits from license changes (visited Nov. 5, 1998) <http://www.news.com/News/Item/0,4,26061,00.html?st.ne.ni.lh>.
44. See the Appendix to this Article,
which sets forth a sampling of the rich assortment of license terms being offered
today for software and information products.
45. See Gomulkiewicz &
Williamson, supra note 4, at 352-56, 361-65.
46. See The Apache Group,
Apache HTTP Server Project (visited Sept. 17, 1998) <http://www.apache.org>.
47. See Sendmail Consortium,
Welcome to Sendmail.org (visited Sept. 17, 1998) <http://www.sendmail.org>.
48. See Robert Lemos, Linux
maker lands big investors, ZDNN (visited Nov. 5, 1998) <http://www.msnbc.com/news/200767.asp>;
Josh McHugh, Linux: the making of a global hack, FORBES
(Aug. 10, 1998) <http://www.forbes.com/forbes/98/0810/6209094s1.html>;
Glyn Moody, The Greatest OS that (N)ever Was, WIRED 5.08
(Aug. 1997) <http://www.wired.com.wired/5.08/linux.html>; Sebastian Rupely,
Linux builds momentum, PC MAGAZINE (Sept.
15, 1998) <http://www.zdnet.com/zdnn/stories/zdnn_smgraph_display/0,4436,2137588,00.html>;
Randy Weston, Linux gaining respect, CNET NEWS.COM
(visited Nov. 5, 1998) <http://www.news.com/News/Item/0,4,24436,00.html?st.ne.ni.rel>.
49. See Eric S. Raymond,
The Cathedral and the Bazaar (visited Feb. 4, 1998) <http://www.redhat.com/redhat/cathedral-bazaar/>;
Eric S. Raymond, Homesteading the Noosphere (visited Aug. 15, 1998) <http://www.sagan.earthspace.net/esr/writings/homesteading/>.
50. See Josh McHugh,
For the Love of Hacking: A Band of Rebels Think Software Should be as Free as
the Air We Breathe, F
ORBES, Aug. 10, 1998, at 94; Debian GNU/Linux,
What Does Free Mean? or What Do You Mean By Open Software? (visited Nov.
5, 1998) <http://www.debian.org/intro/free>.
51. See generally Cem Kaner,
A Bad Law For Bad Software (visited Sept. 10, 1998) <http://lwn.net/980507/a/ucc2b.html>
[hereinafter Kaner, A Bad Law] (quoting a non-disclosure agreement for
a McAfee anti-virus product: "The customers will not publish reviews of
the product without prior consent from McAfee."); Cem Kaner, Bad Software:
What to do When Software Fails (visited Nov. 23, 1998) <http://www.badsoftware.com/uccindex.htm>
(highlighting objectionable license terms); Letter from Jean Braucher &
Peter Linzer to Members of the American Law Institute (May 5, 1998), available
at <http://www.ali.org/ali/Braucher.htm> (visited Nov. 22, 1998) (moving
ALI to return Article 2B to the drafting committee for fundamental revision).
Some license terms seem more reasonable than their critics might suggest when
viewed in context, such as the terms for the Microsoft Agent software product.
See Charles C. Mann, Who Will Own Your Next Good Idea, ATLANTIC
MONTHLY, Sept. 1998, at 80 (criticizing
the license for Microsoft Agent). The Agent software grants the user the right
to use certain "cutesy" animated figures, which are copyrighted by
Microsoft. These figures are akin to Mickey Mouse or Barney. You can be certain
that Disney would never license a third party to use Mickey Mouse in a product
in which Mickey says disparaging things about Disney. Cf. Deere &
Co. v. MTD Prod.s, Inc., 41 F.3d 39 (2d Cir. 1994) (holding that an attempted
parody of Deere's deer character constituted trademark dilution).
52. Customer satisfaction with
software products is quite high. See, e.g., John Morris, Readers Rate
Software & Support Satisfaction, PC MAG.,
July 1997, at 199 ("As in previous years, the results were generally positive.
Most respondents give the products they use ratings of 8 or higher on a scale
of 1 to 10 for satisfaction, and-with a few exceptions-give vendors solid ratings
for technical support as well."); Peggy Watt, How Happy Are You...Really?,
PC MAG., July 1993, at 311-12 ("Are customers
satisfied? You Bet.").
53. See U.C.C. § 2-302 (West
1989); U.C.C. § 2B-110 (July 24-31, 1998 Draft); 1 E.A. F
ARNSWORTH, FARNSWORTH ON CONTRACTS
§ 4.28 (1990).
54. See RESTATEMENT
(SECOND) OF
CONTRACTS § 206 (1981); 1 FARNSWORTH,
supra note 53, § 4.24.
55. See, e.g., DSC Communications
v. DGI Techs., 81 F.3d 597 (5th Cir. 1996); Lasercomb v. Reynolds, 911 F. 2d
970 (4th Cir. 1990).
56. See generally Raymond
T. Nimmer, Breaking Barriers: The Relation Between Contract and Intellectual
Property Law 13 B
ERKELEY TECH.
L.J. 827 (1998).
57. See, e.g., Lemley,
supra note 1, at 23; David A. Rice, Public Goods, Private Contract
and Public Policy: Federal Preemption of Software License Prohibitions Against
Reverse Engineering, 53 U. PITT. L. REV.
543 (1992).
58. For criticism of the private
legislation theory, see Tom W. Bell, Fair Use vs. Fared Use: The Impact of
Automated Rights Management on Copyright's Fair Use Doctrine, 76 N.C. L.
REV. 557, 607 n.226 (1998) (criticizing "private
legislation" as a metaphor that tends to mislead); Richard Epstein, Notice
and Freedom of Contract in the Law of Servitudes, 55 S. CAL.
L. REV. 1353, 1359 (1982). Contrary
to the assumptions underlying the term "private legislation," contract
diversity in mass market software licenses is rampant, and software publishers
actively attempt to bring terms to the user's attention rather than burying
them. See Gomulkiewicz & Williamson, supra note 4, at 348-50.
59. See Bell, supra
note 58, at 591.
60. See infra Appendix of
Selected License Terms; Gomulkiewicz & Williamson, supra note 4,
at 352-56, 361-65. Another objection seems to be to license terms that prohibit
reverse engineering or de-compiling software. While some may have philosophical
objections to these terms, they have been standard industry practice for many
years among companies of all sizes. Article 2B is not the proper place to resolve
this debate-Article 2B should not dictate the enforceability of any given contract
term, except an unconscionable or otherwise unenforceable one. In some cases,
courts have upheld prohibitions on reverse engineering as reasonable, and in
others, such as when the user's goal is merely to achieve interoperability,
courts have refused to uphold them on various grounds. See, e.g.,
ProCD v. Zeidenberg, 86 F.3d 1447, 1454-55 (7th Cir. 1996) (enforcing prohibition
on reverse engineering); DSC Communications v. DGI Techs., 81 F.3d 597 (5th
Cir. 1996) (copyright misuse); Vault Corp. v. Quaid Software, 847 F.2d 255 (9th
Cir. 1988) (preemption). In reality, reverse engineering is seldom critical
to the innovation necessary to advance the state of the art for personal computer
software. See Gomulkiewicz & Williamson, supra note 4, at
359 n.97. The feature set and other characteristics of a software product are
readily ascertainable in the normal use of the product or via publicly available
information. The information one can glean from de-compiling is of limited use
in any event. See Andrew Johnson-Laird, Software Reverse Engineering
in the Real World, 19 U. DAYTON L. REV.
843, 902 n.4 (1994); Pamela Samuelson et al., Symposium: A Manifesto Concerning
the Legal Protection of Computer Programs, 94 COLUM.
L. REV. 2308, 2336 n.90 (1994).
61. The software publisher holds
the exclusive right to copy, create derivatives, distribute, and publicly perform
or display its software. The end user can only acquire these rights by license,
as users do in numerous mass market licenses. See infra Appendix of Selected
License Terms.
62. See Pro CD, 86
F.3d at 1451 (discussing the inefficiencies of requiring a signature on every
contract); RESTATEMENT (SECOND)
OF CONTRACTS
§ 211 cmt. A (1981) (describing the benefits of standard forms); 1 JOSEPH
M. PERILLO, CORBIN
ON CONTRACTS
§ 1.4, at 13-15 (rev. ed. 1993) (noting that we could not function as a fast-paced,
industrialized nation if every contract had to be negotiated); Gomulkiewicz
& Williamson, supra note 4, at 341-56; Maureen A. O'Rourke, Drawing
the Boundary Between Copyright and Contract: Copyright Preemption on Software
License Terms, 45 DUKE L.J.
479, 495 (1995).
63. 1 FARNSWORTH,