ProCD v. Zeidenberg

Plaintiff (ProCD) complied from more than 3,000 telephone directories a database that was effectual in returning queries for companies and for individuals in a program called SelectPhone.

ProCD sold to companies at a price higher than individuals, because of the benefits of price discrimination. Every box containing the consumer product declares that the software comes with restrictions stated in an enclosed license, but the terms themselves do not appear on the outside of the package.

Defendant (Mr. Zeidenberg) bought a consumer package of SelectPhone, but decided to ignore the license and re-sold the consumer version to commercial customers for cheaper over the Web.

Inside the consumer version, there was a shrink-wrap license because the customer had to open the box & shrink-wrap to read it.

ProCD sued Zeidenberg & his company. The federal district court in Wisconsin ruled that the licenses were ineffectual because their terms do not appear on the outside of the packages.

Whether a notice of a license on the outside of a package with the terms of the license printed on the inside of the package constitutes a binding contract.

Can a shrink-wrap contract be a valid contract between a buyer & a seller of goods?

Reversed and remanded.

Yes. Shrink-wrap licenses are generally valid & enforceable.

Plaintiff extended an opportunity to reject if a buyer should find the license terms unsatisfactory; defendant inspected the package, tried out the software, learned of the license, and did not reject the goods.

Pro-CD's shrink-wrap license was an offer for the sale of goods; thus, it should be examined pursuant to the UCC.