Packets: Vol. 2, No. 3

Forum Selection Clause in Clickwrap Software Licensing Agreement Upheld Where Software Was Bundled With Essential Services
by Lauren Gelman, posted on November 17, 2004 - 11:20am

Plaintiff Mortgage Plus, Inc., a Kansas mortgage lender, sought to utilize defendant's DocMagic, Inc.'s proprietary software and services to assist in the prepararation and management of loan-closing documents. DocMagic shipped a CD-ROM containing its software to Mortgage Plus, which subsequently installed the software. To complete the installation process, a Mortage Plus employee had to click through a window displaying a Software License and User Agreement. A forum selection clause contained in this agreement designated Los Angeles, California as the forum for “any cause of action arising under this Agreement.” Six years after first installing the software, Mortgage Plus sued DocMagic in Kansas state court for breach of contract and negligent misrepresentation on the grounds that the latter’s software failed to produce documents which met the standards of the federal Truth in Lending Act. The plaintiff removed the suit to Kansas federal court, which issued the current opinion. Mortgage Plus argued that the “click-wrap agreement” was not a binding contract but an unaccepted proposal for modification of the terms of an earlier, oral contract between the parties. In Klocek v. Gateway, this Court invalidated a “shrink-wrap” licensing agreement bundled with a computer sold to the plaintiff under Kansas’ implementation of Uniform Commercial Code § 2-207. (A shrink-wrap agreement is similar to a click-wrap agreement in that the seller asserts that its terms become binding upon some action necessary to use the product, here, opening the box. Also, the terms in both shrink-wrap and click-wrap agreements are not necessarily available to the buyer until after the product is delivered.) Although § 2-207 regulates contractual acceptances between two merchants, Comment 2 of the Kansas implementation at K.S.A. 84-2-207 protects consumers by providing that if there is an earlier binding contract between two parties and either one of the parties is not a merchant, then additional terms contained in a later written acceptance are not valid unless the other side expressly accepts them. The Court in Klocek found the plaintiff consumer orally offered to buy, and the defendant Gateway Inc. accepted by shipping the computer. The shrinkwrap agreement bundled with the computer thus purported to add additional terms to this contract for sale of goods. Because the plaintiff did not expressly agree to its terms, the court refused to enforce the shrinkwrap terms. Analogizing to this case, Mortgage Plus argued that its original offer with DocMagic occurred when the parties agreed on prices, and DocMagic accepted this offer when they shipped the CD-ROM containing DocMagic software.

District Court holds that fair use allows copying of computer source code to extract embedded data for the purpose of improving
by Lauren Gelman, posted on November 17, 2004 - 11:17am

Evolution, a Kansas software development firm, created software (PF32) for STSC, a predecessor in interest to SunTrust, a Georgia bank, and PAC, a wholly-owned subsidiary of SunTrust that provides financial services. The parties executed a Software License Agreement, a Source License Agreement, and a Data Door License Agreement.STSC and PAC encountered various problems with PF32 and after nearly two years of negotiations, decided to change their vendor. In preparation for the move, STSC and PAC extracted PAC’s data stored in the PF32 software and converted the data for use in the new vendor’s software. Three new programs (ABCNotes, LNSNotes and QTR.exe) were written to extract the buyers’ data from PF32 and another one (MIDAS) to create data reports by utilizing elements of developer’s PF32 source code. Furthermore, STSC and PAC stopped payments of the annual maintenance fees billed by Evolution because they were using an old version of PF32 that Evolution has ceased to update.

EDPA Allows Record Companies' Case to Go Forward With Limitations
by Lauren Gelman, posted on November 17, 2004 - 11:15am

The District Court of the Eastern District of Pennsylvania granted a motion by the major record companies to subpoena the names and information of University of Pennsylvania Internet users accused of violating record company copyrights by uploading or downloading music over the Internet. The motion was granted with a limitation that requires the record company to allow University of Pennsylvania to issue a “Court Directed Notice Regarding Issuance of Subpoena” to those University of Pennsylvania Internet users before information is disclosed to the record companies.
The two page directed notice informs the defendant that he is being sued as a “John Doe” by the plaintiffs in the District Court and that the ISP, in this case, University of Pennsylvania, has been asked for the defendant's information to identification for purposes of the suit. The defendant is told that he is able to contest the charges and prevent the release of the information from the university within 21 days from the issuance of the subpoena. The defendant can challenge the court's jurisdiction or can attempt to settle with the record companies before they are personally named in the suit. The defendants are then given information about lawyers and resources in the Pennsylvania area to contact to determine their legal options.

Company Not Liable for the Unauthorized Spam of an Independent Promoter Marketing the Company’s Products
by Lauren Gelman, posted on November 17, 2004 - 11:13am

In September 2002, the plaintiffs received unsolicited email messages advertising software products of Redmond Venture, Inc. (Redmond). The plaintiffs brought suit against Redmond alleging violations of the Utah’s Unsolicited Commercial and Sexually Explicit Email Act (the Act) (repealed effective May 3, 2004) in the District Court of Utah. Redmond filed a motion for summary judgment, arguing that the email messages were unauthorized and that Redmond, therefore, is not liable under the Act because it did not “cause” the email messages to be sent. The district court granted summary judgment and denied the plaintiff’s subsequent motion for discovery under rule 56(f) of the Utah Rules of Civil Procedure. The Court of Appeals of Utah affirmed.The plaintiffs alleged that the Act imposes liability upon Redmond for the unsolicited email messages sent on its behalf. The Act requires that unsolicited commercial email include certain information in the subject line and body of the message. A person “who sends or causes to be sent” a noncompliant message is subject to civil liability. Redmond submitted an affidavit indicating that it did not directly market its products but rather entered into contracts with independent promoters. These contracts contained an “Anti-Spam Agreement” forbidding the use of unsolicited email messages. The court looked to the four corners of the contract to determine whether Redmond “caused” the emails to be sent. The court found that the agreements unambiguously prohibited the promoters to send the messages. Redmond, therefore, did not “cause” the emails to be sent and is not liable under the Act. The court rejected plaintiffs argument that in evaluating Redmond’s motion for summary judgment, the court should infer that the Anti-Spam Agreements were a sham and that Redmond encouraged the promoters to send the illegal messages. The court refused to make such a presumption because the plaintiffs presented no supporting evidence.

Sixth Circuit Orders Cybersquatter to Transfer Domain Name “” to DaimlerChrysler under ACPA
by Lauren Gelman, posted on November 17, 2004 - 11:12am

Plaintiff DaimlerChrysler has been using the “DODGE” trademark in the automobile sales and service industry since 1924. In 1994 DaimlerChrysler began advertising the toll-free telephone number “1-800-4-A-DODGE.” In 1995 DaimlerChrysler registered the domain “” and directed visitors to the main homepage.Defendant The Net, Inc. is an “unincorporated association” between defendants Keith Maydak and Michael Sussman. In December of 1996 defendants registered the domain name “” and concealed the true identity of the registrants. Defendants also registered domain names similar to other corporate trademarks and governmental agencies, including “,” “,” “,” and “” Defendants proceeded to point the “” domain name at a pornographic website. Defendant Maydak claims that he intended to use the “” domain name to describe asset protection and tax avoidance services under what he considered to be the general subject of “dodging,” however he had not taken any steps to accomplish this goal at the time that suit was filed.

Online Gaming Company Ordered to Transfer Ownership of “” to Donald Trump
by Lauren Gelman, posted on November 17, 2004 - 11:10am

Real estate developer Donald Trump filed a complaint with the World Intellectual Property Organization (WIPO) Arbitration and Mediation Center against Fountainhead Entertainment, challenging their registration of the domain name “” The complaint asserted that (1) the domain name in question is identical to Complainant’s TRUMP ICE brand of bottled water; and (2) Respondent has no “rights or legitimate interests” in the domain name, and (3) that it purchased the domain name in “bad faith.”

The Respondent did not contest the first assertion. However, Respondent argued that it had a legitimate interest in the domain name in connection with creating and marketing a new online bridge game it had not yet released, called “Trump Ice: Grand Slam 32.” Furthermore, Respondent claimed that the fact that the name of its planned service was similar to Complainant’s mark was “strictly coincidental.”

Internet Archive's Web Page Snapshots Held Admissible as Evidence

by Lauren Gelman, posted on November 17, 2004 - 11:09am

The Internet Archive (IA) is a non-profit effort to preserve Internet sites and other digital media and make them available online. IA’s spiders regularly crawl the World Wide Web, making copies of web pages and storing them permanently in an enormous digital archive. Using the "Wayback Machine", one of the Archive's popular services, users can input the address of a web page and call up a series of dated copies, allowing them to see what the page contained at the times it was accessed by the IA spider.
Polska is the American provider of TV Polonia, a Polish-language television channel. According to its pleadings in the case, it had reached a deal with EchoStar, which operates the Dish Network satellite TV service, to provide TV Polonia to Dish Network. The contract included marketing rights, giving EchoStar the right to use Polska’s trademarks to sell subscriptions to its television service. The deal was scheduled to expire in stages: absent a renewal, EchoStar’s marketing rights would expire in April of 2001, and programming would stop a year afterwards. The deal was not renewed, and Polska alleges that EchoStar continued to use the “TV Polonia” name to market its satellite service after its rights to exploit that trademark had expired. EchoStar pointed out that Polska seemed to have no problem with advertisements stating that TV Polonia could be found on the Dish Network, since Polska had one on its own website after the expiration of marketing rights. EchoStar offered IA snapshots dated to various times in 2001 as proof of the past content of Polska’s website. As part of a series of motions in limine, Polska attempted to suppress the snapshots on the grounds of hearsay and unauthenticated source.