Intellectual Property - Shrinkwrap Licenses  



Overview of Shrinkwrap Licenses

    The term shrinkwrap licenses refers to the licenses which most users simply click through when installing a new piece of software. These licenses, also referred to as End-User License Agreements (or EULAs), have become a means for software vendors to force users to unknowingly accept unusual terms of use for their software. In extreme cases, vendors have tried to use EULAs to side-step the legal ramifications of software failures.

Problems with Shrinkwrap Licenses

    1. Users have no way of seeing them until they install their software

    IF a user finds a problem in the EULA, they can either try to return the software if they do not agree to the terms of the license, or attempt to use the software, and hope that the controversial terms of the contract never become an issue.
    Unfortunately, shrinkwrap licenses have become a problem for some businesses trying to recover losses caused by faulty software.

    2. Most users do not even read shrink-wrap licenses

    Generally speaking, most users do not read shrinkwrap licenses. The assumption here is that the only purpose of these licenses is to re-enforce laws against making illegal copies of software, and that nothing pertaining to the functionality of the software itself is contained in the license agreement. 

Ethical Issues

    1. Legal rights of the software vendor
      The software vendor should, ideally, be able to communicate to the user the intended use of the software and any known problems. The vendor should be excused from culpability in this case (if the user has been made fully aware of the problem, they should not be able to collect damages for it). By the same token, this information should not be buried in a complex legal document in an attempt to trick users into purchasing buggy software.
    2. The uninformed consumer
      The average consumer is not a legal expert. They may not have the time or the patience (let alone the knowhow) to digest complex legal jargon every time they want a new piece of software. Furthermore, the fact that users cannot even read EULAs until after a purchase is made makes it unacceptable to impose unfair or unnatural terms within a shrinkwrap license. 

Related Issues

    There are several issues, some of which have their own section on this site, which are very closely related to shrinkwrap licenses.

    The Uniform Computer Information Transactions Act (UCITA) is a law which gives shrinkwrap licenses virtually unconditional validity.

    Clickwrap licenses are also closely related to shrinkwrap licenses. These are the licenses which we click through when subscribing to an on-line service or agreeing to terms of use for a website.

    Index    Study Guide