Shrinkwrap and Clickwrap Agreements: 2B or Not 2B?

I. INTRODUCTION According to a survey conducted in 1997 for the National Science Foundation, over forty percent of Americans own personal computers. Although nearly every one of these computer owners at some point will purchase and install software, most of them likely will never take the time to read the agreements that accompany the software.(2) Humorist Dave Barry provides insight into the reason for such apathy in his satirical take on the typical software agreement: By breaking this seal, the user hereinafter agrees to abide by all the terms and conditions of the following agreement that nobody ever reads, as well as the Geneva Convention and the U.N. Charter and the Secret Membership Oath of the Benevolent Protective Order of the Elks[,] and such other terms and conditions, real and imaginary, as the Software Company shall deem necessary and appropriate, including the right to come to the user's home and examine the user's hard drive, as well as the user's underwear drawer if we feel like it, take it or leave it, until death do us part, one nation indivisible, by the dawn's early light, in the name of the Father, the Son, and the Holy Ghost, finders keepers, losers weepers, thanks you've been a great crowd, and don't forget to tip your servers.(3) This "contract" inadvertently highlights two key problems inherent in the typical mass-market software licensing agreement: (1) the public is powerless to negotiate; and (2) the terms often are perceived as exceedingly broad and restrictive. The Uniform Computer Information Transactions Act (UCITA) purports to resolve these issues by establishing the general enforceability of such agreements, with certain qualifications related to unconscionability, assent, and other caveats.(4) UCITA, however, does not resolve, or even purport to resolve, another important issue: the tension between federal copyright law and state contract law. Computer software falls within the purview of the Copyright Act of 1976.(5) Under the Act, software users are entitled to rights that often exceed those granted by software agreements. For example, under the Act and federal case law interpreting the Act, users are entitled to make a copy of the software for archival purposes or as necessary to use the software; to reverse engineer software within certain limits; and to have at least limited rights to transfer the software.(6) Yet, software agreements often attempt to place more narrow limits on these rights. Thus, a tension between the federal Copyright Act and state contract law frequently arises. The question then becomes which law, state or federal, should prevail, or more specifically, should federal law preempt state law? UCITA suggests that in general, state contract law should prevail, but it also concedes that federal preemption remains a possibility. This Note addresses UCITA's attempt to resolve the enforceability issue; argues for an approach to preemption that promotes clarity and preserves the objectives of Congress established by the Copyright Act; discusses whether UCITA remains relevant in light of the preemptive power of copyright law; and proposes that additional federal legislation is a more appropriate solution to the problems surrounding computer software reproduction and use. Part II discusses briefly the enforceability of shrinkwrap and clickwrap agreements, particularly in light of UCITA. Part III outlines the two approaches to federal copyright law preemption of state contract law and argues that section 301 of the Copyright Act is not the appropriate vehicle for preemption.(7) Part IV explores the preemption of such agreements under general principles derived from the Supremacy Clause. Part V addresses the relevance of UCITA in light of the preemption issue and widespread criticism of UCITA. II. ENFORCEABILITY OF SHRINKWRAP AND CLICKWRAP AGREEMENTS UNDER UCITA. …