Tuesday, February 28, 2006

Are shrinkwrap contracts pre-empted by copyright law?

In a continuing theme of contract v. copyright, the author of Bubble-Wrap: Why the Contractual Protection of Ideas is Preempted by Federal Copyright argues that shrink-wrap licenses are pre-empted by copyright law:

Another way in which courts attempt to avoid the preemption issue is through the extra element test: “Courts generally hold that because contract rights depend on extra elements that distinguish them from section 106's exclusive rights—essentially the presence of a bargained-for exchange--section 301 does not preempt breach of contract claims….

However, this extra element test fails under a shrink wrap theory, because the extra element, the bargained for exchange, is markedly absent in such a contract.40 Here, the breach of contract action serves as nothing other than a subterfuge to control the exclusive rights of works within the subject matter of copyright for a work which failed to meet the federal act's standards for protection.

Can this be right? The only “extra element” in a contract claim is the bargained for deal? I am not an expert in this area, however, it seems that to win on a contract case one would need to prove a valid, enforceable contract. Thus, offer, acceptance, and consideration seem to be “additional elements”.

Follow-up question: One more thing, I doubt that in fact one could in fact argue that a shrinkwrap license, in fact, was not bargained for. The fact that you have little ability, or desire, to negotiate a "better" deal is not dispositive of whether the deal was "bargained for". In fact, one could presumably seek a better deal, but what incentive do most content owners have to negotiate with you or grant to you "better" terms?

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