Specht v. Netscape Commc'ns Corp. - 306 F.3d 17 (2d Cir. 2002)

Rule:

Where consumers are urged to download free software at the immediate click of a button, a reference to the existence of license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.

Facts:

Plaintiff internet users downloaded two free software programs from defendants' websites to enable internet browsing. One program, a "plug-in," allegedly transmitted private information about the internet users' online activities to defendants without the internet users' knowledge. The District Court denied defendants' motion to compel arbitration of the action pursuant to the arbitration clause contained in the software licensing agreements. On appeal, the judgment was affirmed.

Issue:

Were plaintiff's bound by the arbitration clause of defendant's license terms?

Answer:

No.

Conclusion:

The court determined that a reasonably prudent internet user would not have known or learned of the existence of the license terms before responding to defendants' invitation to download free software, and therefore defendants did not provide reasonable notice of the license terms. The license agreements were located on a submerged screen that the user would have needed to scroll through in order to read the full agreement and arbitration clause. As a consequence, the internet users' act of downloading the software did not unambiguously manifest assent to the arbitration provision in the license terms.