Click With Caution: User Licenses Get Tough

Licenses Get More Complex

Virtually all software programs, and most Web sites that require registration, offer consumers a EULA or TOS contract. These contracts are legally binding documents that provide information about how the publisher will support the product, and include a disclaimer of liability.

They're similar to shrink-wrap licenses for packaged software. Those state that by opening a shrink-wrapped package, you've agreed to abide by the license agreement within. On the Web and in downloaded software, so-called click-wrap agreements require you to click an "I Accept" button located at the end of the agreement before you can use the service or install the software.

"Mass-market click-wrap license agreements are inherently 'contracts of adhesion,' meaning the consumer's negotiating power is limited to 'take it or leave it,'" says CPT's Bushnell. He notes that "if you scrutinize the legalese governing many Internet services, the owner is often allowed the ability to change contractual terms without notice to the consumer."

Click-wrap has its place, however. Consumers want to download software, and vendors want some way to secure their own licensing rights.

"Online agreements are enforceable if they're done right," says Brian Burr, a technology transactions lawyer with the law firm Orrick, Herrington & Sutcliffe. And just in case there was a lawsuit, software companies have tweaked the user interface of EULA mechanisms to force you to at least try to look at the text. Many EULAs now require a user to scroll through the document to get to the "I Accept" button; some companies require users to click on checkboxes or otherwise indicate that they've read--or at least lingered near--the clauses within.

Microsoft's Backlash

Microsoft denies any devious intentions in its reviled EULA policy, which granted the company and its unspecified affiliates the right to "use, modify, copy, distribute, transmit, publicly display" and take other actions with any messages, files, or data entered by users into the Passport Web site.

Microsoft simply hadn't updated the terms of use to be appropriate for its new Passport service, which is intended to make life easier for frequent Web shoppers. Using Passport, you can register a single name and password that works at numerous Web sites, eliminating the need to re-register at every site. But the Passport EULA policy seemed to go far beyond the functions of the service.

"We were in error for having that up there," says Tom Pilla, a Microsoft spokesperson. Microsoft hadn't updated the Passport terms of use to reflect its business policies, or even to be compatible with Passport's current privacy statement, he says.

But Microsoft's Passport terms of service had contained the user-unfriendly language since the service launched in October 1999. Only after a few well-read Netizens brought up the issue did anyone take note. They raised a din, and Microsoft changed the fine print, dodging a negative PR bullet.

Because Passport will be an integral part of Microsoft's proposed HailStorm application- and data-hosting service, critics charge Microsoft was positioning itself to take control of anything you stored on its servers, from business plans to fiction writing to financial records.

Other Offenders Chastened

Not that Microsoft is alone in its contractual expectations. Terms of service for Web sites run by Disney, for example, maintain a similarly strict policy. It states that Disney "shall exclusively own all now known or hereafter existing rights to the Submissions of every kind and nature throughout the universe and shall be entitled to unrestricted use of the Submissions for any purpose whatsoever."

However, Disney representatives note that its TOS agreement pertains to its message boards alone.

Some companies, like Adobe, suffered a much quicker backlash. Last December, when Adobe released its free Glassbook Reader software, it included a free copy of Lewis Carroll's Alice In Wonderland.

The software had been available for only a few days when a careful reader, Art Medlar, noted that the EULA accompanying the book prohibited users from reading the famous children's tale aloud. Customers complained, and within a day Adobe reworked its license agreement. Now, it permits reading the story aloud privately, but still prohibits users from selling admission to a public reading.