In order to decide if a contract is procedurally unconscionable, courts consider factors such as how the contract was entered into, whether the parties had adequate time to read and understand the contract, and whether important terms in the contract are conspicuous. Under the Uniform Commercial Code of many states, a term in a contract is conspicuous if it is presented in a manner “that a reasonable person against which it is to operate ought to have noticed it.” Courts interpreting this definition have looked to see whether the presentation of contract terms include any means to set it, or its heading, apart from the rest of the content displayed, such as difference in color, size, or font.

Here are some simple steps you can follow to ensure that your contract will be seen by your customers and enforced by the court if a problem does arise:

1. Don’t Hide Your Terms

This step should be fairly obvious but too many website operators choose to bury their terms of service either on unrelated pages that customers are unlikely to visit, or at the very bottom of a page in a small font. No matter what size font you use, if your users have to scroll way down a page to view the terms (and they don\’t have to do the same amount of scrolling to make a purchase) chances are you’re running an unnecessary risk

2. Have Plenty of Links

This step is really a continuation of your efforts NOT to hide the terms of a website. If you have multiple pages required to finalize an order, have a link to the terms on each page, and have each link be visible. This doesn’t mean that your website needs to be plastered with links but one visible link per page should suffice without disrupting the look and feel of your site.

3. Use Blue, Underlined Links

This may sound silly, but courts like consistency and precedent and while you may like the look of a yellow hyperlink for your terms in italic, courts are familiar with standard blue, underlined links. Chances are your customers are familiar with blue links as well so make it as easy as possible for them to recognize the links to your terms by showing them the convention they’re used to.

4. Consider a Clickwrap Agreement

Clickwrap agreements require a user to check a box or push a button signifying that they have seen and read the terms before making a sale. Browsewrap on the other hand, assumes that users have read and agreed to terms because they have been conspicuously posted. While both types of agreements will be enforced under the right conditions, if the organization and structure of your site permits a clickwrap agreement it is always best to have an affirmative action that shows a manifestation of intent to enter into an agreement.

For more information about e-commerce and online contracts visit the WLF Lawyers website: http://www.wlflawyers.com.

Two district court decisions were handed down recently regarding the online auction site eBay that may be of interest to any eBay sellers out there. The first comes from the Western District of Washington and concerns the sale of copyrighted software, and the second is from the Eastern District of Pennsylvania and deals with the validity of eBay’s “forum selection” clause.

The First Sale Doctrine – Sales of Copyrighted Software Online

Copyright protection gives exclusive control over the sale and distribution of copyrighted works to the copyright holder. Sales by an unauthorized party are considered piracy. There is an exception to this protection, which applies to rightful purchasers of a work, called the “first sale doctrine.” Under this theory, if you buy a book, for example, while you don’t own any portion of the copyright, you are the exclusive owner of that copy, and are free to keep it or sell it as you wish. The entire “used goods” market, which is a large portion of the eBay marketplace, is dependent on the first sale doctrine.

Many “purchasers” of software are aware that when they buy software what they are actually buying is a license for its use from the seller. Software is handled that way to allow developers to have more control over the use of their products once they are transferred. In 2007 Autodesk, Inc., the developer of the AutoCAD software package, sent a takedown notice to eBay after discovering the sale of several AutoCAD packages by Timothy Verner. Mr. Verner acquired the software packages from a Seattle architecture firm (CTA), and not Autodesk, Inc.

According to Autodesk, it still owned the AutoCAD packages in Mr. Verner’s possession because it never transfered ownership to CTA and under the terms of the software license CTA was barred from transferring rights to a third party. Thus, Verner’s sales constituted copyright infringement, or at least contributory infringement, according to Autodesk. The District Court attempted to reconcile two lines of precedent regarding this issue but was ultimately unable leading it to side with the oldest precedent among the competing options. Ultimately Mr. Verner’s sale was held to be privileged by the first sale doctrine regardless of how restrictive Autodesk’s “license” was because the intent of the parties had been to transfer ownership. Autodesk never sought to reclaim ownership of any of its software packages, the packages were merely licensed to extend unenforceable control over its products in the stream of commerce.

Forum Selection Clause – Plan Your Trip to California

In Tricome v. eBay, Inc., the plaintiff argued that eBay’s forum selection clause naming California as the forum for disputes is unconscionable and should not be enforced. The plaintiff further argued that as a “form contract,” eBay’s terms of use constituted a procedurally and/or substantively unconscionable agreement.

While plaintiff contended that the user agreement containing the forum selection clause was a contract of adhesion since the plaintiff never had the opportunity to discuss or negotiate its terms, numerous courts have held that not to be the standard for deeming a contract to be one of adhesion. Additionally, even the terms of an admitted adhesion contract are enforced unless they are “so one-sided as to be oppressive.” eBay operates worldwide and it is not shocking for it to focus its legal defense in a particular forum rather than having to litigate in potentially hundreds or thousands of other jurisdictions.

So, if you’re an eBay seller, selling software in compliance with eBay’s terms is probably not going to cause you any trouble with the copyright holder but if you run afoul eBay’s rules prepare for a trip to California.