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An end-user license agreement or EULA () is a legal contract between a software supplier and a customer or
end-user In product development, an end user (sometimes end-user) is a person who ultimately uses or is intended to ultimately use a product. The end user stands in contrast to users who support or maintain the product, such as sysops, system administrato ...
, generally made available to the customer via a retailer acting as an intermediary. A EULA specifies in detail the rights and restrictions which apply to the use of the software. Form contracts for digital services (such as terms of service and privacy policies) were traditionally presented on paper (see
shrink-wrap agreement Shrinkwrap contracts or shrinkwrap licenses are boilerplate contracts packaged with products; usage of the product is deemed acceptance of the contract. Web-wrap, click-wrap and browse-wrap are related terms which refer to license agreements in ...
) but are now often presented digitally via
browsewrap Browsewrap (also Browserwrap or browse-wrap license) is a term used in Internet law to refer to a contract or license agreement covering access to or use of materials on a web site or downloadable product. In a browse-wrap agreement, the terms and ...
or
clickwrap A clickwrap or clickthrough agreement is a prompt that offers individuals the opportunity to accept or decline a digitally-mediated policy. Privacy policies, terms of service and other user policies, as well as copyright policies commonly employ ...
formats. As the user may not see the agreement until after they have already purchased or engaged with the software, these documents may be
contracts of adhesion A standard form contract (sometimes referred to as a ''contract of adhesion,'' a ''leonine contract'', a ''take-it-or-leave-it contract'', or a '' boilerplate contract'') is a contract between two parties, where the terms and conditions of the co ...
. Software companies often make special agreements with large businesses and government entitles that include support contracts and specially drafted warranties. Many EULAs assert extensive liability limitations. Most commonly, an EULA will attempt to
hold harmless In contract law, an indemnity is a contractual obligation of one party (the ''indemnitor'') to compensate the loss incurred by another party (the ''indemnitee'') due to the relevant acts of the indemnitor or any other party. The duty to indemni ...
the software licensor in the event that the software causes damage to the user's computer or data, but some software also proposes limitations on whether the licensor can be held liable for damage that arises through improper use of the software (for example, incorrectly using tax preparation software and incurring penalties as a result). One case upholding such limitations on
consequential damages Consequential damages, otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation, a breach of contract. From a legal standpoint, an enforceable contrac ...
is ''M.A. Mortenson Co. v. Timberline Software Corp., et al.'' Some EULAs also claim restrictions on venue and applicable law in the event that a legal dispute arises. Some copyright owners use EULAs in an effort to circumvent limitations the applicable copyright law places on their copyrights (such as the limitations in sections 107–122 of the
United States Copyright Act The copyright law of the United States grants monopoly protection for "original works of authorship". With the stated purpose to promote art and culture, copyright law assigns a set of exclusive rights to authors: to make and sell copies of thei ...
), or to expand the scope of control over the work into areas for which copyright protection is denied by law (such as attempting to charge for, regulate or prevent private performances of a work beyond a certain number of performances or beyond a certain period of time). Such EULAs are, in essence, efforts to gain control, by contract, over matters upon which copyright law precludes control.


Comparison with free software licenses

A free software license grants users of that software the rights to use for any purpose, modify and redistribute creative works and software, both of which are forbidden by the defaults of copyright, and generally not granted with proprietary software. These licenses typically include a disclaimer of warranty, but this feature is not unique to free software.
Copyleft Copyleft is the legal technique of granting certain freedoms over copies of copyrighted works with the requirement that the same rights be preserved in derivative works. In this sense, ''freedoms'' refers to the use of the work for any purpose, ...
licenses also include a key addition provision that must be followed in order to copy or modify the software, that requires the user to provide source code for the work and to distribute their modifications under the same license (or sometimes a compatible one); thus effectively protecting derivative works from losing the original permissions and being used in proprietary programs. Unlike EULAs, free software licenses do not work as contractual extensions to existing legislation. No agreement between parties is ever held, because a copyright license is simply a declaration of permissions on something that otherwise would be disallowed by default under copyright law.


Shrink-wrap and click-wrap licenses

The term shrink-wrap license refers colloquially to any software license agreement which is enclosed within a software package and is inaccessible to the customer until after purchase. Typically, the license agreement is printed on paper included inside the boxed software. It may also be presented to the user on-screen during installation, in which case the license is sometimes referred to as a click-wrap license. The inability of the customer to review the license agreement before purchasing the software has caused such licenses to run afoul of legal challenges in some cases. Whether shrink-wrap licenses are legally binding differs between jurisdictions, though a majority of jurisdictions hold such licenses to be enforceable. At particular issue is the difference in opinion between two US courts in
Klocek v. Gateway
' and

'. Both cases involved a shrink-wrapped license document provided by the online vendor of a computer system. The terms of the shrink-wrapped license were not provided at the time of purchase, but were rather included with the shipped product as a printed document. The license required the customer to return the product within a limited time frame if the license was not agreed to. In ''Brower'', New York's state appeals court ruled that the terms of the shrink-wrapped license document were enforceable because the customer's assent was evident by its failure to return the merchandise within the 30 days specified by the document. The U.S. District Court of Kansas in ''Klocek'' ruled that the contract of sale was complete at the time of the transaction, and the additional shipped terms contained in a document similar to that in ''Brower'' did not constitute a contract, because the customer never agreed to them when the contract of sale was completed. Further, in ''
ProCD v. Zeidenberg ''ProCD, Inc. v. Zeidenberg'', 86 F.3d 1447 (7th Cir., 1996), was a court ruling at the United States Court of Appeals for the Seventh Circuit. The case is a significant precedent on the matter of the applicability of American contract law to new ...
'', the license was ruled enforceable because it was necessary for the customer to assent to the terms of the agreement by clicking on an "I Agree" button in order to install the software. In
Specht v. Netscape Communications Corp. ''Specht v. Netscape'', 306 F.3d 17 (2d Cir. 2002),''Specht v. Netscape Communications Corp.''306 F.3d 17(2d Cir. 2002). is a ruling at the United States Court of Appeals for the Second Circuit regarding the enforceability of clickwrap software l ...
, however, the licensee was able to download and install the software without first being required to review and positively assent to the terms of the agreement, and so the license was held to be unenforceable. Click-wrap license agreements refer to website based contract formation (see iLan Systems, Inc. v. Netscout Service Level Corp.). A common example of this occurs where a user must affirmatively assent to license terms of a website, by ''clicking'' "yes" on a pop-up, in order to access website features. This is therefore analogous to shrink-wrap licenses, where a buyer implied agrees to license terms by first removing the software package's shrink-wrap and then utilizing the software itself. In both types of analysis, focus is on the actions of end user and asks whether there is an explicit or implicit acceptance of the additional licensing terms.


Product liability

Most licenses for software sold at retail disclaim (as far as local laws permit) any warranty on the performance of the software and limit liability for any damages to the purchase price of the software. One well-known case which upheld such a disclaimer is Mortenson v. Timberline.


Patent

In addition to the implied
exhaustion doctrine The exhaustion of intellectual property rights constitutes one of the limits of intellectual property (IP) rights. Once a given product has been sold under the authorization of the IP owner, the reselling, rental, lending and other third party comme ...
, the distributor may include patent licenses along with software.


Reverse engineering

Forms often prohibit users from reverse engineering. This may also serve to make it difficult to develop third-party software which interoperates with the licensed software, thus increasing the value of the publisher's solutions through decreased customer choice. In the United States, EULA provisions can preempt the reverse engineering rights implied by fair use, c.f. Bowers v. Baystate Technologies. Some licenses such as th
Microsoft .NET Framework redistributable EULA
purport to prohibit a user's right to release data on the performance of the software, but this has yet to be challenged in court.


Enforceability of EULAs in the United States

The enforceability of an EULA depends on several factors, one of them being the court in which the case is heard. Some courts that have addressed the validity of the shrinkwrap license agreements have found some EULAs to be invalid, characterizing them as
contracts of adhesion A standard form contract (sometimes referred to as a ''contract of adhesion,'' a ''leonine contract'', a ''take-it-or-leave-it contract'', or a '' boilerplate contract'') is a contract between two parties, where the terms and conditions of the co ...
,
unconscionable Unconscionability (sometimes known as unconscionable dealing/conduct in Australia) is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining ...
, and/or unacceptable pursuant to the U.C.C.—see, for instance, ''
Step-Saver Data Systems, Inc. v. Wyse Technology ''Step-Saver Data Systems, Inc. v. Wyse Technology'' was a case in the U.S. Court of Appeals for the Third Circuit primarily concerned with the enforceability of box-top licenses and end user license agreements (EULA) and their place in U.S. cont ...
'', ''
Vault Corp. v. Quaid Software Ltd. '' Vault Corporation v Quaid Software Ltd.'' 847 F.2d 255 (5th Cir. 1988) is a case heard by the United States Court of Appeals for the Fifth Circuit that tested the extent of software copyright. The court held that making RAM copies as an essen ...
''. Other courts have determined that the shrinkwrap license agreement is valid and enforceable: see ''
ProCD, Inc. v. Zeidenberg ''ProCD, Inc. v. Zeidenberg'', 86 F.3d 1447 (7th Cir., 1996), was a court ruling at the United States Court of Appeals for the Seventh Circuit. The case is a significant precedent on the matter of the applicability of American contract law to new ...
'', '' Microsoft v. Harmony Computers'', ''Novell v. Network Trade Center'', and ''
Ariz. Cartridge Remanufacturers Ass'n v. Lexmark Int'l, Inc. ''Arizona Cartridge Remanufacturers Association Inc. v. Lexmark International Inc.'', 421 F.3d 981 ( 9th Cir. 2005) was a decision by the United States Court of Appeals for the Ninth Circuit which ruled that an End User License Agreement on a phys ...
'' may have some bearing as well. No court has ruled on the validity of EULAs generally; decisions are limited to particular provisions and terms. The 7th Circuit and 8th Circuit subscribe to the "licensed and not sold" argument, while most other circuits do not . In addition, the contracts' enforceability depends on whether the state has passed the
Uniform Computer Information Transactions Act ''Uniform Computer Information Transactions Act'' (UCITA) was an attempt to introduce a Uniform Act for the United States to follow. As a ''model law'', it only specifies a set of guidelines, and each of the States should decide if to pass it or no ...
(UCITA) or Anti-UCITA (UCITA Bomb Shelter) laws. In Anti-UCITA states, the Uniform Commercial Code (UCC) has been amended to either specifically define software as a good (thus making it fall under the UCC), or to disallow contracts which specify that the terms of contract are subject to the laws of a state that has passed UCITA. Recently, publishers have begun to encrypt their software packages to make it impossible for a user to install the software without either agreeing to the license agreement or violating the
Digital Millennium Copyright Act The Digital Millennium Copyright Act (DMCA) is a 1998 United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or s ...
(DMCA) and foreign counterparts. The DMCA specifically provides for reverse engineering of software for interoperability purposes, so there was some controversy as to whether software license agreement clauses which restrict this are enforceable. The 8th Circuit case of ''Davidson & Associates v. Jung'' determined that such clauses are enforceable, following the
Federal Circuit The United States Court of Appeals for the Federal Circuit (in case citations, Fed. Cir. or C.A.F.C.) is a United States court of appeals that has special appellate jurisdiction over certain types of specialized cases in the U.S. federal court ...
decision of '' Baystate v. Bowers''.


Criticism

Jerry Pournelle wrote in 1983, "I've seen no evidence to show that ... Levitical agreements — full of "Thou Shalt Nots" — have any effect on piracy". He gave an example of an EULA that was impossible for a user to comply with, stating "Come on, fellows. No one expects these agreements to be kept". Noting that in practice many companies were more generous to their customers than their EULAs required, Pournelle wondered "Why, then, do they insist on making their customers sign 'agreements' that the customer has no intention of keeping, and which the company ''knows'' won't be kept? ... Must we continue making hypocrites out of both publishers and customers?" One common criticism of end-user license agreements is that they are often far too lengthy for users to devote the time to thoroughly read them. In March 2012, the PayPal end-user license agreement was 36,275 words long and in May 2011 the
iTunes iTunes () is a software program that acts as a media player, media library, mobile device management utility, and the client app for the iTunes Store. Developed by Apple Inc., it is used to purchase, play, download, and organize digital mu ...
agreement was 56 pages long. News sources reporting these findings asserted that the vast majority of users do not read the documents because of their length. Some critics highlight the hidden privacy implications of end-user license agreements. Many include clauses that allow the computer or device to provide information to third parties on a regular basis without notifying the consumer. Several companies have parodied this belief that users do not read the end-user-license agreements by adding unusual clauses, knowing that few users will ever read them. As an
April Fool's Day April Fools' Day or All Fools' Day is an annual custom on 1 April consisting of practical jokes and hoaxes. Jokesters often expose their actions by shouting "April Fools!" at the recipient. Mass media can be involved in these pranks, which may ...
joke,
Gamestation Gamestation was a chain of retail shops in the United Kingdom selling used and new video games, and was the second largest specialist video game retailer in the United Kingdom until it was acquired by Game in May 2007, a group which owns many ...
added a clause stating that users who placed an order on April 1, 2010 agreed to irrevocably give their soul to the company, which 7,500 users agreed to. Although there was a checkbox to exempt out of the "immortal soul" clause, few users checked it and thus Gamestation concluded that 88% of their users did not read the agreement. The program ''PC Pitstop'' included a clause in their end-user license agreement stating that anybody who read the clause and contacted the company would receive a monetary reward, but it took four months and over 3,000 software downloads before anybody collected it. During the installation of version 4 of the Advanced Query Tool the installer measured the elapsed time between the appearance and the acceptance of the end-user license agreements to calculate the average reading speed. If the agreements were accepted fast enough a dialog window “congratulated” the users to their absurdly high reading speed of several hundred words per second. ''
South Park ''South Park'' is an American animated sitcom created by Trey Parker and Matt Stone and developed by Brian Graden for Comedy Central. The series revolves around four boysStan Marsh, Kyle Broflovski, Eric Cartman, and Kenny McCormickand their ...
'' parodied this in the episode "
HumancentiPad "HumancentiPad", stylized as "HUMANCENTiPAD", is the first episode of the fifteenth season of the American animated television series ''South Park'', and the 210th episode of the series overall. It originally aired on Comedy Central in the United ...
", where
Kyle Kyle or Kyles may refer to: Places Canada * Kyle, Saskatchewan, Canada Ireland * Kyle, County Laois * Kyle, County Wexford Scotland * Kyle, Ayrshire, area of Scotland which stretched across parts of modern-day East Ayrshire and South Ayrshi ...
had neglected to read the terms of service for his last iTunes update and therefore inadvertently agreed to have Apple employees experiment upon him. End-user license agreements have also been criticized for containing terms that impose onerous obligations on consumers. For example, Clickwrapped, a service that rates consumer companies according to how well they respect the rights of users, reports that they increasingly include a term that prevents a user from suing the company in court. In a 2019 article published by Kevin Litman-Navarro for ''The New York Times'', titled ''We Read 150 Privacy Policies. They Were an Incomprehensible Disaster'', the complexity of 150 terms from popular sites like Facebook, Airbnb, etc. were analyzed and comprehended. As a result, for example, the majority of licenses require college or higher-level degrees: "To be successful in college, people need to understand texts with a score of 1300. People in the professions, like doctors and lawyers, should be able to understand materials with scores of 1440, while ninth graders should understand texts that score above 1050 to be on track for college or a career by the time they graduate. Many privacy policies exceed these standards." The United Kingdom's
National Consumer Council National may refer to: Common uses * Nation or country ** Nationality – a ''national'' is a person who is subject to a nation, regardless of whether the person has full rights as a citizen Places in the United States * National, Maryland, c ...
undertook a study published in 2008 which found issues with the way 17 major IT businesses had been using EULA's and asked the Office of Fair Trading to undertake an investigation.BBC News
Computer software terms 'unfair'
published 19 February 2008, accessed 6 December 2022


See also

*
Abandonware Abandonware is a product, typically software, ignored by its owner and manufacturer, and for which no official support is available. Within an intellectual rights contextual background, abandonware is a software (or hardware) sub-case of the g ...
* Clickwrap license *
Free software license A free-software license is a notice that grants the recipient of a piece of software extensive rights to modify and redistribute that software. These actions are usually prohibited by copyright law, but the rights-holder (usually the author) ...
* Glossary of legal terms in technology ** Good faith (law) ** Contra proferentem *
Index of Articles Relating to Terms of Service and Privacy Policies This is a list of articles about terms of service and privacy policies. These are also called terms of use, and are rules one must agree to, in order to use a service. The articles fall in two main categories: descriptions of terms used for spec ...
*
License manager A software license manager is a software management tool used by Independent software vendors or by end-user organizations to control where and how software products are able to run. License managers protect software vendors from losses due t ...
*
List of software licenses This comparison only covers software licenses which have a linked Wikipedia article for details and which are approved by at least one of the following expert groups: the Free Software Foundation, the Open Source Initiative, the Debian Project and ...
* Shrink wrap contract * Software Asset Management * Software license * Terms of service * ''
Vernor v. Autodesk, Inc. ''Vernor v. Autodesk, Inc.'' was a case in the United States District Court for the Western District of Washington regarding the applicability of the first-sale doctrine to software sold under the terms of so-called " shrinkwrap licensing." The c ...
''


References


External links

*YouTube Video:''
The Clickwrap and The Biggest Lie on the Internet


{{DEFAULTSORT:End-user license agreement Terms of service Software licenses Contract law