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, unconscionable, and/or unacceptable pursuant to the U.C.C.—see, for instance, Step-Saver Data Systems, Inc. v. Wyse Technology, Vault Corp. v. Quaid Software Ltd.. Other courts have determined that the shrinkwrap license agreement is valid and enforceable: see ProCD, Inc. v. Zeidenberg, Microsoft v. Harmony Computers, Novell v. Network Trade Center, and Ariz. Cartridge Remanufacturers Ass'n v. Lexmark Int'l, Inc. 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 (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 (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 decision of Baystate v. Bowers.
Read more about this topic: End-user License Agreement
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