Winn on Adware Contracts

By Eric Goldman

The Berkeley Technology Law Journal has published Jane K. Winn, Contracting Spyware by Contract, 20 Berkeley Tech. L.J. 1345 (2005), a follow-up to her presentation at the Boalt Spyware Conference in April 2005.

Jane details the phenomenon that I’ve described as the “crisis of contract” online. People may manifest assent to adware from a legal formalities perspective, but we don’t really believe that they manifested assent. She thinks it would be a mistake to develop a one-off “solution” to the crisis of adware contracts (she analogizes such responses to the “dismal failure” of ad hoc solutions in the privacy context). Instead, she favors an across-the-board change in American contract law to incorporate the principles of the EU’s Unfair Contract Terms Directive.

Unlike many other adware commentators, Jane carefully distinguishes between existing law (adware contracts usually enforceable) and her preferred policy result (adware contracts should usually be invalid as “unfair marketing”). Thus, although she doesn’t like the existing contracting practices, she acknowledges that “in the absence of a conflict between contract terms and fundamental public policy of the forum, or evidence of misconduct so egregious that it might rise to the level of unconscionable, courts are likely to find that adware EULAs are enforceable contracts.”

The abstract:

The question of what constitutes “spyware” is controversial because many programs that are adware in the eyes of their distributors may be perceived as spyware in the eyes of the end user. Many of these programs are loaded on the computers of end users after the end user has agreed to the terms of a license presented in a click-through interface. This paper analyzes whether it might be possible to reduce the volume of unwanted software loaded on end users’ computers by applying contract law doctrine more strictly. Unwanted programs are often bundled with programs that the end user wants, but the disclosure that additional programs will be downloaded is usually buried deeply within dense form contracts. Even though this makes it difficult for end users to recognize that they are agreeing to have multiple programs installed at once and that some of those programs may be objectionable, US courts are unlikely to invalidate those disclosures. This is because in business to consumer online contracting cases in the US, courts have tended to be very deferential to the intentions of the merchants in designing the contract interfaces. In the EU, by contrast, such conduct by software distributors would not be binding on consumers. Under unfair contract terms laws in place in EU member states, consumer objections to bundled software could not be overridden by terms hidden in standard form contracts.