The Law and Business of Social Media
June 01, 2020 - Contracts, Terms of Use, Online Contracts

Court Discovers Rare and Elusive “Enforceable Browsewrap”

Court Discovers Rare and Elusive “Enforceable Browsewrap”

As we have noted many times in prior articles, courts often refuse to enforce “browsewrap” agreements where terms are presented to users merely by including a link on a page or screen without requiring affirmative acceptance. Courts typically look more favorably on “clickwrap” agreements where users agree to be bound by, for example, checking a box or clicking an “I accept” button.

The problem is that many implementations of online contracts do not fit neatly into one category or the other. The result is that courts, seemingly unable to resist the siren song of the “-wrap” terminology, find themselves struggling to shoehorn real-life cases into the binary clickwrap/browsewrap rubric, and often resort to inventing new terminology such as the dreaded “hybridwrap.”

HealthplanCRM, LLC v. Avmed, Inc., a case out of the Western District of Pennsylvania, illustrates this phenomenon. Plaintiff Cavulus licensed certain CRM software to defendant AvMed. AvMed decided to replace Cavulus software with a different CRM product and engaged defendant NTT to assist AvMed in transitioning its data to the successor product. Cavulus alleged, among other things, that NTT misappropriated its trade secrets in the course of doing this work. Cavulus sought to compel NTT to arbitrate these claims based on an arbitration clause contained in an “End-User Agreement” that was referenced in a link on the log-in page of the Cavulus software.

NTT was not a party to the original license agreement between Cavulus and AvMed and, in fact, NTT never executed any agreement at all with Cavulus. NTT argued, therefore, that it had not agreed to arbitrate disputes with Cavulus. Cavulus argued, however, that NTT was bound by the arbitration provision in Cavulus’ End-User Agreement. NTT never signed the End-User Agreement, but NTT employees were presented with a link to the End-User Agreement when they logged into the Cavulus software in the course of performing the data transition work for AvMed. This is a screenshot of the Cavulus log-in page (Note: Socially Aware editors added the red arrow for the readers’ benefit. It did not appear on Cavulus’s web page).

The log-in page includes a statement “Use of Cavulus constitutes acceptance of the End User License Agreement” with the underlined text functioning as a hyperlink to the actual End User License Agreement. Cavulus argued that NTT was bound by the agreement because its employees accessed and used the Cavulus software in order to do their work for AvMed. Specifically, Cavulus alleged that nine NTT employees accessed the Cavulus software more than 75 times, each time logging in on the page with the link to the End User License Agreement.

NTT argued that the link to the End-User License Agreement was not conspicuous enough to be enforced, due to the size of the text and its placement below the log-in boxes. The court rejected this argument, however, noting that the link was “not concealed at the bottom of a web page or hidden in fine print,” as is often the case with browsewrap implementations that are held to be unenforceable. The court cites James v. Global TelLink Corp. for the proposition that continued use of a website will constitute “sufficient manifestation of intent” to be bound where the website contains an “explicit textual notice” that such use constitutes acceptance of the applicable terms.

The court’s analysis harkens back to – and, indeed, cites to – older cases, such as Ticketmaster Corp. v., which held that Ticketmaster’s website terms of use were enforceable against, despite the fact that had never expressly agreed to be bound, where Ticketmaster “placed in a prominent place on the home page the warning that proceeding further binds the user to the conditions of use.”

But rather than forthrightly declaring that the Cavulus End-User License Agreement was a browsewrap agreement but nonetheless enforceable in the circumstances, the court goes on to muddy the waters by observing that because the explicit warning that “use” of the software ‘constitutes acceptance’ appears directly below the log-in button, the language arguably functions more like a “clickwrap” agreement than a traditional browsewrap agreement—perhaps falling somewhere between the two. That is, while Cavulus does not ask its users to check an “I Accept” box, as is the case with a typical clickwrap agreement, the placement of an explicit warning directly below a log-in button has a similar psychological effect. And clickwrap agreements are routinely enforced by the courts.

Once the court’s analysis devolves to theorizing that perhaps the agreement that we thought was a browsewrap is actually somewhat like a clickwrap because it has a “similar psychological effect,” one has to wonder whether the whole enterprise of classifying online contracts into one or another category of “-wrap” is really helpful.

As we have written before, the key considerations in forming an online contract with a user are whether the terms were conspicuously presented so that the user had notice of the terms, and whether the user took some action to accept the terms. A well-implemented clickwrap meets both of these criteria, while a typical browsewrap likely meets neither. But, as HealthplanCRM, LLC v. Avmed, Inc. and many other cases illustrate, the line between “clickwrap” and “browsewrap” is not always clear, and therefore it is often unhelpful to force a particular implementation of an online contract into one or the other of these two categories (or some tortured “hybrid” category). In many cases, an analysis based on the underlying contract formation principles rather than the “-wrap” terminology will make more sense.