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Web site operators who wish to bind site visitors to certain terms should probably do more than simply display those terms on the Web site. Rather, as a precondition to further action on the site, users should be required to click their assent to those critical terms that are sought to be enforceable. This issue came home to roost in the recent case Sprecht v. Netscape Communications Corp.In that case, the plaintiffs complained that as a result of usage of SmartDownload software, Netscape and its parent company, America Online, Inc., wrongfully transmitted private information about users’ file transfer activity in violation of the Electronic Communications Privacy Act and the Computer Fraud and Abuse Act. Netscape sought to compel arbitration of the case, arguing that binding arbitration was required by the relevant software licensing agreement. The plaintiffs responded that they were not bound to arbitrate the case because the manner in which the license agreement was presented did not lead to consent to arbitration or other terms in the agreement. A federal trial judge in New York agreed with the plaintiffs. Internet users who wanted to obtain Smartdownload from Netscape’s Web site arrived at a page pertaining to the download of the software. There appeared a tinted button on this page labeled “Download.” By clicking on this button, the user started the download. The only reference on this page to a license agreement appeared in the text only if the user scrolled down the page to the next screen. If a user did this, he would see an invitation to “please review and agree to the terms of the Netscape SmartDownload license agreement before downloading and using the software.” If a user clicked on this text, the user then would be taken to a page containing the license agreement, and by clicking through this agreement the user ultimately could find the language requiring arbitration of disputes. Critical to the judge’s decision that arbitration could not be required was the fact that Internet users were not required affirmatively to indicate their assent to the license agreement (and its arbitration terms), or even view the license agreement, before proceeding with the download of the software. This was different from a “click-wrap” license that requires the user to manifest assent by clicking on an icon; the product cannot be obtained unless the icon is clicked. The judge noted that the few other courts to have considered click-wrap contracts have upheld them as valid and enforceable. Netscape tried to argue that there had been sufficient contractual assent simply by the mere act of downloading. The judge strongly disagreed: “downloading hardly is an unambiguous indication of assent”; “the primary purpose of downloading is to obtain a product, not to assent to an agreement.” In contrast, “clicking on an icon stating ‘I assent’ has no other meaning or purpose than to indicate such assent.” Thus, Netscape’s failure to require users of SmartDownload to explicitly assent to the license agreement containing the arbitration requirement as a precondition to downloading its software was deemed “fatal” by the judge to Netscape’s argument that a contract requiring arbitration had been formed. The now obvious lesson is that if you want to make certain terms stick, require Internet users to affirmatively click their assent to critical terms before they can proceed further on the site. Eric J. Sinrod is a partner in the San Francisco office of Duane Morris, where he focuses on technology and litigation matters. His Web site is sinrodlaw.com and his firm’s site is Duane Morris.Mr. Sinrod may be reached by e-mail at [email protected]

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