When internet users clicked to download software they got more than they bargained for, but could they be bound by terms and conditions when they had to scroll to the next page to see them?
Who: Specht and Others –v- Netscape Communications Corporation and America Online, Inc.
Where: United States Court of Appeals fort he Second Circuit
When: October 2002
Netscape offered visitors to its site the opportunity of downloading its “Smart Download software”. What Mr Specht and other individuals had not realised was that the downloading process resulted in their PCs transmitting to Netscape private information about their downloading of files from the Internet generally. The individuals raised a claim in the US Courts, but Netscape said that arbitration was the proper course to follow. This, they said, was because the individuals had agreed to go to arbitration and not to court, as part of the contract by which they downloaded the Smart Download software in the first place.
Mr Specht and his colleagues disagreed. They said the terms and conditions which included the arbitration reference had been located on the site BELOW the “download” button and not just below the download button, on the next page. There, before the eyes of the determined downward scroller, against the link to the terms and conditions, it was stated “please review and agree to the terms of the Netscape Smart Download Software Licence Agreement before downloading and using this software”.
Was this enough to incorporate the arbitration provision into the downloading contract? “No” said the US Second Circuit Court of Appeals. Because they were on the next page and not referred to before the “download” button could be clicked on, a reasonably prudent Internet user would not have known or learned of the existence of the licensing terms before responding to the invitation to download the free software. This meant that the arbitration clause did not apply, so the court proceedings could continue.
Why this matters
For those operating on-line in the US, this case sends a clear message as to the extreme care that must be taken with the physical positioning of potentially crucial contractual terms and conditions applying to digital offerings. The key aspect in the thinking of the Court was clearly the fact that not only did one have to scroll down on to the next page beyond that containing the “download” button to find a link to the terms and conditions. Also, the page containing the “download” button did not make any reference whatsoever to terms and conditions.
Would it be the same story in the UK? The recently introduced Electronic Commerce (EC Directive) Regulations 2002 impose on e-commerce traders a statutory duty to ensure that terms and conditions applicable to promotional offers operated on-line are “easily accessible, clear and unambiguous”. The Specht case is of course about the incorporation of contractual terms and conditions, not about compliance with particular regulations. However, it has to be likely that an on-line trader who complies with the 2002 Regulations is going to find the Court sympathetic if it comes to an argument as to whether particular terms and conditions appearing on line have been brought to the notice of the site visitor.
The “bottom line” so far as marketinglaw.co.uk is concerned is that the UK verdict might well be the same on similar facts and that all those operating on-line should take great care in the physical location of terms and conditions applicable to offers on line. Clearly the counsel of perfection has to be full disclosure, without having to click on a link, before the point at which the individual is asked to click to order or accept. A just-acceptable midway point may be the incorporation of a link to terms and conditions before the “download” or “order” button,” with perhaps separate wording or even a separate button to click to confirm that the terms and conditions have been read and understood. On the other hand, to first mention the existence of terms and conditions at a point after the equivalent of the “download” button is clearly not a place to be, as this case underlines.