ProCD, Inc. v. Zeidenberg

United States Court of Appeals for the Seventh Circuit · 1996 · Contracts

Contractsshrinkwrap contractsrolling contractacceptance by conductshrinkwrap licensesoftware licenseUCC 2-204UCC 2-606

Facts

ProCD sold its SelectPhone consumer software in boxes stating that the software was subject to restrictions contained in an enclosed license. The license was printed in the manual, encoded on the CD-ROM, appeared on the user's screen every time the software ran, limited use to noncommercial purposes, and allowed return for a refund if the terms were unacceptable. Zeidenberg bought the consumer version, formed a corporation, and resold the database information over the Internet for a fee in disregard of the noncommercial-use restriction. ProCD sued to enjoin dissemination beyond the license terms.

Issue

Whether a shrinkwrap software license is enforceable when the detailed terms are provided inside the box and on-screen after purchase, with an opportunity to return the product if the buyer rejects those terms. Whether enforcement of that license is preempted by 17 U.S.C. § 301(a) as equivalent to rights within the general scope of copyright.

Rule

Under the UCC, a contract for the sale of goods may be made in any manner sufficient to show agreement, and a vendor may invite acceptance by conduct after the buyer has an opportunity to review the terms and reject the goods. A shrinkwrap license is enforceable unless its terms are objectionable on grounds generally applicable to contracts. A simple two-party contract restricting use is not equivalent to copyright's exclusive rights and is therefore not preempted by § 301(a).

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nora Patel bought a photo-editing program at a retail store in Columbus, Ohio. The outside of the box stated that use of the software was subject to an enclosed license, and the software displayed the license on screen before installation; the package also stated that buyers dissatisfied with the license could return the program within 30 days for a refund. Nora read the license, which prohibited commercial studio use, kept the software, and used it in her paid wedding-photography business.

If the software publisher sues to enforce the commercial-use restriction, what is the strongest argument that the restriction is enforceable?

Explanation. Under the majority rule, a vendor may invite acceptance by conduct and may specify that acceptance occurs when the buyer uses the software after having an opportunity to review the enclosed terms and reject the goods by return. Notice on the box that the sale is subject to an enclosed license, on-screen display of the terms, and a refund right support enforcement. The UCC does not require all terms to be disclosed before payment, and no separate signature is generally required for ordinary license terms.