Sunday, 10 June 2007

"Clickwrap" arbitration terms under fire

The BNA E-Commerce and Tech Law Blog reports that in a decision that could have far-reaching implications the U.S. District Court for the Eastern District of Pennsylvania has held that the California arbitration clause in the 'take it or leave it' clickwrap Terms of Service (TOS) agreement on the Second Life website is unconscionable, and therefore unenforceable. Judge Eduardo C. Robrino wrote the opinion in Bragg v. Linden Research, Inc., No. 06-4925 (E.D. Pa. May 30, 2007), : "Taken together, the lack of mutuality, the costs of arbitration, the forum selection clause, and the confidentiality provision that (Second Life) unilaterally imposes through the TOS demonstrate that the arbitration clause is not designed to provide Second Life participants an effective means of resolving disputes with (Second Life); rather, it is a one-sided means which tilts unfairly, in almost all situations, in (Second Life's) favor."

The Sacramento Bee reports on another case filed by a California man filed against Gateway computer company in small claims court. A trial was scheduled but Gateway responded with a Bay Area lawyer and a 2-inch thick stack of legal documents.The company had the case moved to a higher court and then tried to compel private arbitration on its own terms. Sheehan argued in a court filing that he had never accepted Gateway's "clickwrap" arbitration agreement. In a tentative ruling on May 24, Superior Court Judge Daniel Proud sided with Sheehan and said the dispute should remain in small claims court. On June 4, Gateway tried to persuade Proud to change his ruling and send the case to arbitration. The judge urged the parties to settle their case, but said he would take the matter under submission; he has 90 days to issue a final ruling.

No comments: