As a career software developer, I have written quite a bit of code for my employers and for myself. Countless hours have been spent in front of a computer monitor pounding out complex sequences of characters to produce software programs. Occasionally software developers decide to share their work with the greater community and publish their works through such formats as The Code Project.
Part of the process of sharing my work was to select an End User License Agreement or EULA. During the submission process of my work, I was presented with 16 different boiler place EULAs (“Code Project”). I had never given a second thought to those documents, but figured something was going on. There must be a good reason why I would be presented with so many choices of how to license my submission. Each article submitted to the code sharing website prominently displays the EULA selected by the author.
After researching about EULAs, I want to present my findings so that you may better understand why a EULA is important. There are some questions and myths about their enforceability. Most documents have some basic provisions and there is always room for industry/entity specific clauses to protect the owners of the software.
Basics of a EULA
The software EULA is a legal document designed to protect the owners of the software. EULA documents generally contain information for company rights, user rights, and penalties for violations (Langdon). The document is designed to explain to the consumer of the software what their rights and obligations are for using the software.
Company rights are stated and protected by the use of a EULA. Many companies even depend on their customers not reading the licensing agreement. eWallet from Gain Publishing has a statement in their EULA telling users that installing eWallet gives Gain Publishing permission to install internet tracking software on your computer (Magid). This is spy software that virtually nobody would agree to, but is installed because people do not read the agreement.
To prove a point about users not reading EULA agreements, PC Pitstop included a provision to pay their customers money for reporting that they read a specific item in a EULA for one of their software offerings. It took over 3,000 downloads and four months before somebody responded to the agreement and was awarded $1,000 for their efforts (Magid).
EULA documents are often several pages long with lots of legal writing. Many people just want to use software and will agree to nearly anything. Companies use this to their advantage, creating items in the agreements that favor them. Software users generally do not take the time to carefully read each EULA, opting instead to click through and get to the software they are installing. Most people are guilty of this practice!
One of the biggest myths out there about EULAs is that they are not enforceable. Many backyard forum posters will state that they are not enforceable and to ignore them. This could not be further from the truth. EULA agreements are often defined as click-wrap and are as good as putting a pen to paper and signing your name.
Software EULAs are presented to the users of the software via a shrink-wrap or click-wrap method. Shrink-wrap is the act of opening a package to accept the license agreement. Click-wrap on the other hand is the act of clicking and accepting a license agreement during the software installation process. Starting in 1996, the US court system set the precedent that click-wrap licenses are a legal defense and protection of software (“ProCD v. Zeidenberg.”). The court case focused on Zeidenberg copying non-copyrightable material that he purchased from ProCD. Because he clicked and accepted the EULA, he was bound to the terms of the agreement which prohibited him from copying ProCD’s work.
Backyard forum posters have also asserted that if they don’t click on the EULA, then it is not enforceable. The court system has disagreed with this statement in many cases. Recently in Vernor v. Autodesk, Vernor purchased a second-hand license and tried to resell it on eBay. Autodesk stated that it violated the EULA as the license had been previously purchased via another entity.
Minors are also not exempt from EULA agreements. In A.V, et al. v. IParadigms, Limited Liability Company, the court ruled in favor of IParadigms that minors entered into a valid contract for the use of a website (Samson). In this case, students were forced to use a website to turn in their homework to automatically check for plagiarism. Even with the forced usage, the court still ruled in favor of the click-wrap contract.
I mentioned that I was presented with 16 different boiler plate EULA agreements for publishing software. Each of these 16 agreements had different provisions for protecting the software. With that many EULAs offered from one site, a person might wonder why any organization would ever have to write their own EULA for their software. There are actually many provisions in the EULA that deal specifically with a particular software offering and how to protect a company that offers it. I want to explore a couple of provisions to demonstrate the necessity of customizing a EULA to fit your specific software offering.
Today, software is distributed on a global level with the use of the Internet. The selection of legal forum and the set of laws that govern the EULA should be specified, each as their own provision (Foust, and Cardon). Foust contends that separating the provisions allows extra protection should either of the provisions be struck down. The use of a specific forum allows companies to operate on their home turf. Occasionally, suits will be dismissed before they are started due to jurisdictional issues, like the case of Groff v. America Online Inc. (Samson).
The agreement should present a strong representation of ownership in relationship to the software and any associated servers or software that it interacts with. This provision should include the intended purposes of use. This provision will help protect against reverse engineering. Reverse engineering can often lead to a loss of revenue as critical server software is copied. This was the case in Blizzard v. BnetD (“IGN Entertainment Games”).
Modification of the EULA is an important provision. Should a company have to go to court and the court system strike down any portion of the EULA, a company would not want to be continually bound to the “broken” EULA. Instead, there should be a provision to state where modifications of the EULA will be placed and that they can change at any time. It should be up to the end user to check for any changes and abide by the modified agreement.
I hope I have demonstrated the need for a quality EULA to protect your software, whether it is free software, specialty software produced for an organization, or high end boxed software. EULAs are very enforceable agreements that should be carefully read before the user agrees to them. Excuses and advice from Internet forum lawyers are no excuse for not reading and abiding by the agreement. Specific provisions must be placed inside the EULA to protect the owner of the software from legal threats. Simply copying and pasting an agreement from a different organization and changing a few words could provide an agreement that is not enforceable or relevant to your organization. Please contact a lawyer if you have something valuable you want to protect with a EULA.
“Blizzard Wins BnetD Case.” IGN Entertainment Games. IGN Entertainment, Inc., 06 Oct 2004. Web. 20 May 2011. <http://pc.ign.com/articles/554/554686p1.html>.
Callahan, Consuelo. “Vernor v. Autodesk.” Ninth Circuit Court of Appeals. UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT, 10 Sep 2010. Web. 21 Apr 2011. <http://www.ca9.uscourts.gov/datastore/opinions/2010/09/10/09-35969.pdf>.
Foust, Shawn, and Craig Cardon. “Global Games. Global EULA?.” Law of the Level. Sheppard Mullin Richter & Hampton LLP, 25 Jan 2010. Web. 20 May 2011. <http://www.lawofthelevel.com/2010/01/articles-1/eula/global-games-global- eula/>.
Langdon, Jonathon. “About EULA Agreements.” eHow Trusted advice for the curious life. Demand Media, Inc., n.d. Web. 19 May 2011. <http://www.ehow.com/facts_5931323_eula-agreements.html>.
“Licenses.” The Code Project. The Code Project, n.d. Web. 19 May 2011. <http://www.codeproject.com/info/Licenses.aspx>.
Magid, Larry. “It Pays To Read License Agreements.” PC Pitstop. PC Pitstop LLC, n.d. Web. 19 May 2011. <http://www.pcpitstop.com/spycheck/eula.asp>.
“ProCD v. Zeidenberg.” Wikipedia The Free Encyclopedia. Wikimedia Foundation, Inc., 07 May 2011. Web. 20 May 2011. <http://en.wikipedia.org/wiki/ProCD_v._Zeidenberg>.
Samson, Martin. “A.V., et al. v. IParadigms, Limited Liability Company.” Internet Library of Law and Court Decisions. Martin H. Samson, 11 Mar 2008. Web. 20 May 2011. <http://www.internetlibrary.com/cases/lib_case577.cfm>.
Samson, Martin. “Groff v. America Online, Inc..” Internet Library of Law and Court Decisions. Martin H. Samson, 27 May 1998. Web. 20 May 2011. <Groff v. America Online, Inc.>.