A recent case in the Northern District of California, Cairo, Inc. v. Crossmedia Services, Inc.,Download file, has held that repeated use of a web site can result in imputed knowledge of the terms of use of the site, thus forming a binding contract, even without any proof that the user had actual knowledge of the terms.
Cairo’s business includes compilation of sales information from retailers’ web sites, including many hosted by Crossmedia (CMS). Cairo uses automated means to crawl these sites to obtain relevant information, and sought declaratory relief that its conduct was not actionable by Crossmedia on a number of legal theories, including breach of its terms of use, which expressly prohibited use of robots or other automated processes on its site.
The Court found that “Cairo’s repeated and automated use of CMS’s web pages can form the basis of imputing knowledge to Cairo of the terms on which CMS’s services were offered even before Cairo’s notice of CMS’s cease and desist letter.” The Court followed the ruling in Register.com, Inc. v. Verio, Inc., decided in 2004 by the Second Circuit, which also held that knowledge and acceptance of a web site’s terms of use resulted from the use of robot software.
Cairo had urged the Court to follow the ruling in Specht v. Netscape Communications Corp., another Second Circuit case from 2002, in which terms of use were not binding because they were not noticeable by the end user at the downloading of software from the web page, but rather were visible only after scrolling down to the bottom of the page.
These cases seem to reflect that courts will be more protective of consumers and less tolerant of commercial entities including those using spidering software. In this case, the Court held that Cairo was bound by Crossmedia’s forum selection clause, so it would have to litigate its declaratory relief action in Chicago rather than San Francisco. The Court found that the forum selection clause was enforceable because it was not unreasonable or invalid for reasons such as fraud or overreaching.
However what if the terms of use included a more onerous clause such as a covenant not to assert patents or liquidated damages for breach? If my recollection serves me, there was a Dilbert cartoon a good while back in which a shrinkwrap license included assent to enter servitude to Bill Gates. Certainly if terms are unconscionable or against public policy they will not be enforced. If a user has actual knowledge, he can make the choice of assenting to the terms or refraining from use of the site. If repeated use will result in imputed knowledge, this would present the risk of being bound to unknown, unfavorable terms that might be upheld by a court.
Clearly the ruling is a good result for web site operators seeking greater certainty about how to ensure enforceability of their terms of use. The Court noted that the terms of use used by Crossmedia included a statement that: “By continuing past this page and/or using this site, you agree to abide by the Terms of Use for this site, which prohibit commercial use of any information on this site.” The Terms of Use notice was underlined and highlighted to indicate a hyperlink to access them. They stated that “ These terms of use constitute a binding legal agreement . . . If you do not accept the terms stated here, do not use the Website.”
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