ProCD v. Zeidenberg (1996) — Shrink-Wrap License

Quick Summary

ProCD sold a CD-ROM database with a license that limited “consumer” use. The buyer, Zeidenberg, bought the cheaper consumer version and used it commercially. The box warned of restrictions; the full license was inside and on-screen. The court said: when a buyer can read terms after opening and return the product if they disagree—but keeps using it—the buyer accepts those terms. The license bound him, and injunctive relief could be used to enforce it.

Issues

• Do shrink-wrap license terms become part of the contract?
• Can the court grant an injunction to enforce those terms?

Rules

• If the buyer gets terms with a fair chance to reject and return, but does not return and uses the product, the buyer accepts those terms.
• Courts may use injunctions to stop ongoing or likely breaches of valid license terms.

Arguments

The appellate court reversed. The buyer had notice of restrictions and a chance to reject by returning the product. He used the software anyway. That use showed acceptance. The license was binding, and injunctive relief could be used to enforce it.

Ratio Decidendi

Where terms arrive with the product and the buyer may review and reject by returning, keeping and using the product is acceptance. Such licenses can set lawful limits on use.

Why It Matters

• Supports enforceability of shrink-wrap and click-through terms when return rights exist.
• Protects tiered pricing and business models for software and data.
• Signals that conduct (use) can equal assent under modern contracting.

Key Takeaways

Mnemonic + 3-Step Hook

Mnemonic: “OPEN • READ • KEEP = BOUND”

1. Open: Terms arrive with the product or on-screen.
2. Read: You get a fair chance to review and decide.
3. Keep: Keeping/using means you accept the license.

IRAC Outline

Issue

Do shrink-wrap terms bind a buyer who can return the product but chooses to keep and use it? Can an injunction enforce such terms?

Rule

Post-purchase terms may become part of the contract when the buyer has notice, a right to return, and keeps/uses the product. Breach can be enjoined.

Application

Box warned of limits; license appeared inside and on-screen; buyer did not return and used the software commercially. Conduct showed assent; limits applied.

Conclusion

The license bound the buyer; injunction could issue to stop further violation.

Glossary

Shrink-Wrap License

Terms supplied inside packaging or on-screen, accepted by keeping/using.

Assent by Conduct

Agreement shown by actions, like continued use after notice.

Injunction

Court order to stop or compel actions to prevent ongoing harm.

FAQs

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