Who is liable under an End-User Agreement?

photo3.jpgYou download the software…you click “I accept”.  Now, who is on the hook? 

Two recent cases illustrate the different ways that End-User License Agreements (EULAs) will be upheld by the courts.

  • Canada: In Bérubé v. Rational Entertainment Limited, 2010 ONSC 5545 (CanLII), a user in Ontario clicked through a license agreement when she opened an account with PokerStars, an online gaming site. The user later sued the site operator, claiming various damages. The user attempted to avoid the terms of the end-user license agreement by arguing that it was a standard-form contract that was against public policy because it was an online gambling site. (Online gambling is not legal in Ontario…though governments in Ontario and BC are getting into the business themselves). The court disagreed. A clause in the EULA was clear that “…the Software is not for use by …individuals connecting to the Site from jurisdictions from which it is illegal to do so.  PokerStars is not able to verify the legality of the Service in each jurisdiction and it is the User’s responsibility to verify such matter.” The case was dismissed based on the terms of the EULA, to which the user had assented.
  • US:  A software vendor hired a subcontractor to install its software at the offices of the end-user – in this case, the US Air Force. The subcontractor allegedly made unauthorized copies of the software, so the software vendor sued the subcontractor, claiming breach of the terms of the EULA. The subcontractor denied that it was bound by the EULA. In BMMSoft Inc. v. White Oaks Techology Inc., 2010 WL 3340555 (N.D.Cal. August 25, 2010), the court decided that the subcontractor was not bound by the EULA, since it had clicked acceptance on behalf of the end user – the US Air Force – not on its own behalf.  The subcontractor had clicked through the EULA as agent for the end-user customer.

Software vendors and online service providers can take comfort that properly-worded end-user terms are binding. They also need to get advice so they know who will be bound by those terms.

Calgary – 09:00 MT

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