Protecting Proprietary Information: The Power of Agreement
Shrinkwrap, Clickwrap, and Browsewrap Agreements and Database Protection
by Kerri Smith
I. DATABASE PROVIDERS CLAIM INADEQUATE LEGAL PROTECTION FOR
DATABASES, YET CONTINUE TO THRIVE. ........................................................................... 1
II. CONTRACT LAW CAN EFFECTIVELY PROTECT THE INFORMATION IN
DATABASES FROM COMMERCIAL AND COMPETITIVE USE. .......................................... 2
A. Agreements that Restrict Uses of Information in Databases are Enforceable under Contract
Law ................................................................................................................................................. 3
1) Courts Liberally Construe Notice and Assent ........................................................................ 3
2) Courts Routinely Uphold Contractual Provisions that Restrict Commercial or Competitive
Use .............................................................................................................................................. 6
B. Agreements Have Been Enforced Even When They Protect Uncopyrightable Materials or
Restrict “Fair Uses” of Information ................................................................................................ 8
III. WHEN COMBINED WITH TECHNICAL MEASURES, CONTRACTS CAN PROVIDE
EXTREMELY POWERFUL PROTECTION FOR DATABASES ............................................ 10
I. DATABASE PROVIDERS CLAIM INADEQUATE LEGAL PROTECTION FOR
DATABASES, YET CONTINUE TO THRIVE.
The Coalition Against Database Piracy (CADP) argues that existing laws provide
inadequate protection for databases.1 Yearly, its members lobby for new legislation, advocating
for tighter controls to protect their economically lucrative investment in data.2 Database
providers maintain that without additional legislation, businesses risk the misappropriation of
their investment by free-riding competitors, which in turn creates disincentives to invest in
development and maintenance of high-quality databases.3 This risk is greater in the digital era
because “technologies have also enhanced the ability of users to copy and sell databases, thereby
increasing the vulnerability of database producers to piracy.”4 Accordingly, they warn that
“[w]ithout statutory protection, database producers can be expected to underprovide their
products in easily-copyable formats (such as CD-ROM).”5
In particular, proponents of database legislation argue that the U.S. Supreme Court’s
1991 decision in Feist Publications, Inc. v. Rural Telephone Services, Co.6 effectively
eviscerated practical protection for databases.7 Feist confirmed that, by constitutional mandate,
facts, and unoriginal compilations of facts, cannot be copyrighted.8 However, the Court held that
“original” factual compilations are entitled to protection, and that the originality threshold is lowrequiring only independent selection or arrangement of facts, plus a minimal level of creativity.9
In the Court’s words, “the vast majority of compilations” will presumably pass this test.10
Although database proprietors claim that “no meaningful legal protection of databases
currently exists,”11 the database industry continues to thrive.12 Notably, since Feist, the number
of databases in the United States has grown at a remarkable rate, and database providers have
1
Coalition Against Database Piracy, Why Existing Law Does Not Protect Against Database Piracy,
http://cadp.net/piracy/why_exist_laws_dont.asp (last visited September 1, 2004).
2
Coalition Against Database Piracy, http://cadp.net/ (last visited September 1, 2004).
3
See generally Corey W. Roush, Database Legislation: Changing Technologies Require Revised Laws, 28 DAYTON
L. REV. 269, 274-75 (2002).
4
See Laura D’Andrea Tyson and Edward F. Sherry, Statutory Protection for Databases: Economic & Public Policy
Issues (unpublished report for the Information Industry Association, 1997), available at
http://www.house.gov/judiciary/41118.htm (last visited September 1, 2004) (hereinafter “Tyson and Sherry
Report”).
5
Id.
6
499 U.S. 340 (1991).
7
See Tyson and Sherry Report, supra note 4. For a detailed rebuttal of the argument that Feist was a landmark shift
in copyright law, see accompanying article by Caleb Groos, Pre-Feist Protection of Compilations under U.S.
Copyright Law.
8
Id. at 351; see also U.S. CONST. art. I, § 8, cl. 8; 17 U.S.C. §§ 101, 102. Accordingly, the “garden variety” white
pages at issue in Feist was not copyrightable. Id. at 359, 362.
9
Id. at 345, 348, 358.
10
Id. at 358-59.
11
Coalition Against Database Piracy, Why Existing Law Does Not Protect Against Database Piracy, supra note 1.
12
Dov S. Greenbaum, Commentary, The Database Debate: In Support of an Inequitable Solution, 13 ALB. L.J. SCI.
& TECH. 431, 437-38 (2003).
1
enjoyed high profit margins.13 If there is a lack of legal protection for databases, why has the
industry been so successful?
First, many databases easily achieve the modicum of originality described in Feist, and
thereby merit copyright protection. Beyond copyright protection, however, proprietors can avail
themselves of many additional legal schemes that insulate their databases from objectionable
appropriations. One such scheme is the ability to create binding, limiting contracts that restrict
uses of databases and the information within them.
In this paper I will focus on increasingly ubiquitous “shrinkwrap,” “clickwrap” and
“browsewrap” agreements that effectively automate contract protection for electronic databases,
which database proprietors warn are especially vulnerable to misappropriation. These
agreements have been criticized because they bind users to (often highly restrictive) terms and
conditions without giving them an opportunity to negotiate. Nevertheless, they have been
routinely enforced, and held valid even when they provide protection in excess of that provided
by copyright law. Moreover, database providers can layer these contract protections with
technological safeguards (such as passwords and encryption), which are themselves protected by
laws that prohibit their circumvention. This combination of safeguards potentially affords
database owners powerful protection against commercial and competitive uses of the information
within their databases.
II. CONTRACT LAW CAN EFFECTIVELY PROTECT THE INFORMATION IN
DATABASES FROM COMMERCIAL AND COMPETITIVE USE.
Within the last twenty years, a new legal trend has emerged, whereby information
providers turn to private law to establish the terms of use of their products rather than relying on
the public law of copyright.14 This trend accelerated with the advent of the “shrinkwrap”
agreement, which was originally developed to protect software products. Typically, these
agreements are included on a piece of paper placed inside the plastic, or shrinkwrap, enclosing
the product. Purchasers consent to a “contract” by opening the box in which a device is
marketed or performing some affirmative act such as installing the product.15
Whereas shrinkwrap agreements apply to physical products, “clickwrap” and
“browsewrap” agreements apply to electronic transactions. Clickwrap agreements provide terms
and conditions that appear on a computer screen and usually require a user to click on an “I
agree” button to assent to them. Without clicking on the agreement, users generally cannot
obtain the website’s goods or services. Browsewrap agreements are less direct: they typically
provide a hyperlink that reads, for example, “terms of use” or “site license,” and links the user to
Id. Among other statistics, the article notes that “Reed Elsevier, the publisher of Lexis as well as other databases,
had a profit margin in 1996 of 42%, higher even than Microsoft's 35.5%.”
14
See Maureen A. O’Rourke, Copyright Preemption After the ProCD Case: A Market-Based Approach, 12
BERKELEY TECH. L.J. 53, 78 (1997).
15
But if there has been evidence of prior course of dealings, pre-delivery oral communications, or an exchange of
written purchase orders and invoices then a court is likely to view the contract made earlier than at the time of
opening the shrinkwrap. Therefore the shrinkwrap elements are analyzed as additional terms under U.C.C. § 2-207
or U.C.C. § 2-209 and are generally not enforceable. See Step-Saver Data Systems, Inc. v. Wyse Technology, 939
F.2d 91 (3d Cir. 1991); Arizona Retail Systems, Inc. v. Software Link, Inc., 831 F. Supp. 759 (D. Ariz. 1993).
13
2
terms and conditions on another page, or in a remote location on the same page.16 Users assent
to browsewrap agreements through some conduct expressed therein, such as browsing the
interior pages of a website, using the search function, or conducting other transactions.
Under existing contract law, shrinkwrap, clickwrap and browsewrap agreements can
protect the information in databases—whether these databases are online or stored on a device
such as a CD-ROM—from commercial and competitive use.
A. Agreements that Restrict Uses of Information in Databases are Enforceable
under Contract Law
1) Courts Liberally Construe Notice and Assent
The law treats shrinkwrap, clickwrap and browsewrap agreements as types of mass
market licenses, which are governed by Article 2 of the Uniform Commercial Code (U.C.C.).
Under the U.C.C., the touchstones of valid contract formation are notice and assent. For better
or worse, since the mid-1990s, shrinkwrap and clickwrap agreements have been deemed
enforceable by the majority of courts.17 Courts have also enforced browsewrap agreements that
did not ask for explicit assent, where they conclude that the user was put on notice of the terms
of the agreement, and implied assent through an affirmative act.18
The following examples of notice and assent have been held sufficient to establish
contract formation with shrinkwrap and clickwrap agreements.

ProCD v. Zeidenberg19: A shrinkwrap agreement was enforced against the purchaser of a
CD-ROM containing a telephone directory, even though the purchaser had not seen the
terms at the time of paying for the product. In this seminal shrinkwrap case, the Seventh
Circuit found that notice was sufficient because the outside of the box indicated that the
transaction was subject to a license, and this license appeared in an enclosed manual that
came with the software.20 In addition, the license appeared on the screen when the
consumer used the software, and the software would not allow the user to proceed
16
One commentator suggests five purposes for terms of use clauses: 1) to expressly delineate the ways in which
web site content can be used; 2) to prevent the creation of an implied license; 3) to avoid application of the first-sale
doctrine; 4) to expand the scope of existing intellectual property rights; 5) and to prevent certain activities
considered to be invasive or destructive. Sharon K. Sandheen, The Sense and Nonsense of Web Site Terms of Use
Agreements, 26 HAMLINE L. REV. 499, 524 (2003).
17
A number of courts have even assumed without discussion that the terms of a shrinkwrap or clickwrap license are
binding upon a purchaser. See Hotmail Corp v. Van$ Money Pie, Inc. 47 U.S.P.Q.2d (BNA) 1020 (N.D. Cal. 1998);
Stomp, Inc v. NeatO, LLC, 61 F. Supp. 2d 1074 (C.D. Cal. 1999); Comb v. PayPal, Inc., 218 F. Supp. 2d 1165
(N.D. Cal. 2002); Hughes v. McMenamon, 204 F. Supp. 2d 178 (D. Mass. 2002) (Internet service provider’s terms
of service apply); Microsoft Corp. v. Harmony Computers & Electronics, Inc., 846 F. Supp. 208 (E.D.N.Y. 1994);
Compuserve, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996); Kilgallen v. Network Solutions, Inc., 99 F. Supp. 2d
125 (D. Mass. 2000).
18
Register.com v. Verio, 126 F. Supp. 2d 238 (S.D.N.Y. 2000), aff’d, 356 F.3d 393 (2d Cir. 2004).
19
86 F.3d 1447 (7th Cir. 1996).
20
Id. at 1450.
3
without indicating assent.21 Acceptance occurred when the defendant used the software
after having the opportunity to read the license.22

I.Lan Systems, Inc. v. Netscout Service Level Corp.23: A clickwrap agreement was
enforced against the purchaser of software, even though the terms of the agreement did
not appear on the website until after the purchase was completed. Here, the court held
that I.Lan Systems had explicitly consented to the agreement when it clicked on the “I
Agree” box, and reasoned: “[I]f ProCD was correct to enforce a shrink-wrap license
agreement, where any assent is implicit, then it must also be correct to enforce a clickwrap license agreement, where the assent is explicit.”24 Generally, courts will find that
clickwrap agreements provide adequate notice and assent because the terms are
conspicuous and assent is explicit.25
The following examples of notice and assent have been held sufficient to establish
contract formation with browsewrap agreements.

Register.com v. Verio Inc.26: A browsewrap agreement was enforceable even though the
user was not asked to click on an icon indicating acceptance of the terms. 27 Register’s
website, which contains the WHOIS database, posted a short statement of terms of use
that concluded with the following: “By submitting this [WHOIS] query, you agree to
abide by these terms.”28 Verio argued that merely submitting queries was insufficient to
constitute assent. The district court disagreed: “…in light of this sentence at the end of
Register.com’s terms of use, there can be no question that by proceeding to submit a
WHOIS query, Verio manifested its assent to be bound by Register.com’s term of
use...”29 In affirming this decision, the Court of Appeals emphasized that Verio visited
Register’s computers daily to access WHOIS data and each day saw the terms of use, and
Verio admitted that it was fully aware of the terms on which Register offered the
access.30

Pollstar v. Gigmania Ltd.31: A browsewrap agreement may be enforceable even when
terms were published on the interior pages of its website, and the user was alerted to this
agreement only by the phrase “use is subject to license agreement” in small gray print on
21
Id.
Id. at 1452-53. The court believed that U.C.C. § 2-204 was controlling, in that it permits the vendor to invite
acceptance in any way, and the buyer to accept by conforming to the specified method of acceptance. In addition,
U.C.C. § 2-206 reinforces this result, for it deems acceptance of goods to have occurred when a buyer fails to reject
after an opportunity to inspect.
23
183 F. Supp. 2d 328 (D. Mass. 2002).
24
Id. at 338.
25
See, e.g., Siedle v. Nat'l Assoc. of Sec. Dealers, Inc., 248 F. Supp. 2d 1140 (M.D. Fla. 2002) (discussed infra);
Hotmail Corp., 1998 U.S. Dist. LEXIS 10729.
26
126 F. Supp. 2d 238 (S.D.N.Y. 2000), aff’d, 356 F.3d 393 (2d Cir. 2004).
27
Id. at 246.
28
The WHOIS database lists the contact information for all domain name registrants in Top Level Domains for
which Register.com acts as a registrar.
29
126 F. Supp. 2d at 248.
30
Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 402 (2d Cir. 2004).
31
170 F. Supp. 2d 974 (E.D. Cal. 2000).
22
4
a gray background, and clicking on this text did not take the user to the text of the
agreement.32 The court, citing examples from ProCD, refused to declare that the
agreement was invalid and unenforceable.33 They reasoned that consumers sometimes
enter into a contract by using a service without first seeing the terms.34
Other courts have been more reluctant to enforce browsewrap agreements when these
agreements do not require the consumer to view the agreement’s terms or explicitly manifest
assent. However, a database provider could likely avoid the inadequacies of contract formation
found in these cases by providing clear and visible presentation of both the contractual terms and
the means of accepting them. In Specht v. Netscape Communications Corp.,35 the court found
inadequate notice where Netscape claimed that visitors to its website assented to an agreement
by pressing a button to download software. The terms of this agreement were not visible when
the button was pressed, but at the bottom of the page was an invitation to read the agreement,
along with a link. The court reasoned that there was no basis for imputing knowledge of these
terms to the users of Netscape’s website because they would not have seen the terms without
scrolling down their computer screens, and there was no reason to do so.36 The problem of notice
in Specht may be surmountable by layout changes that would reasonably predict that users will
be aware of contract terms before they assent.37
Another court that initially invalidated a browsewrap agreement eventually allowed a
breach of contract claim based on that agreement to proceed to trial. In Ticketmaster Corp. v.
Tickets.com, Inc.,38 a California district court found insufficient proof of assent to support a
preliminary injunction against Tickets.com where it had not been required to check an “I agree”
box .39 Ticketmaster.com had placed a notice on its website stating that anyone going beyond
that point into the interior pages accepted certain conditions, which included that information
obtained from the website could not be used for commercial purposes.40 However, in March
2003, the Ticketmaster court, which had previously denied the injunction against Tickets.com,
then denied Tickets.com’s motion for summary judgment and ordered that the contract claim
proceed to trial. The court found that “a contract can be formed by proceeding into the interior
web pages after knowledge (or in some cases, presumptive knowledge) of the conditions
accepted when doing so.”41 While noting that it would prefer a rule that required explicit assent,
the court was nevertheless unwilling to strike down the agreement on summary judgment.42
32
Id. at 981.
Id. at 982.
34
Id. The court uses the analogy of a person purchasing an airline ticket stamped with terms and conditions.
35
306 F.3d 17 (2d Cir. 2002).
36
Id.
37
See also Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 402 (2d Cir. 2004). Analyzing Specht, the court
suggested that if users had actual notice of the terms because of frequent visits, the court would have been more
likely to find the agreement valid.
38
2000 U.S. Dist. LEXIS 12987 (C.D. Cal. Aug. 10, 2000).
39
Id. at *5.
40
Id. at *7.
41
Ticketmaster Corp. v. Tickets.com, 2003 U.S. Dist. LEXIS 6483 *9 (C.D. Cal. March 6, 2003).
42
Id. at *8.
33
5
2) Courts Routinely Uphold Contractual Provisions that Restrict Commercial or
Competitive Use
Courts regularly enforce agreements in which proprietors of information restrict
commercial or competitive uses of information extracted from their databases. 43 This is true
even if the information in question is uncopyrightable.
The following decisions have enforced, or refused to invalidate, contractual restrictions
on the use of information products.

ProCD v. Zeidenberg44: ProCD compiled and sold a CD-ROM telephone directory. It
offered two databases, one for personal use to consumers, and the other at a higher price
for commercial use. The purchaser bought a consumer package and formed a company
to resell the information in the database. ProCD alleged a breach of the terms of the
shrinkwrap agreement, which prohibited any commercial use of the product.45 The court
held that the purchaser was bound by the contractual restrictions.46

Information Handling Services, Inc. v. LRP Publications, Inc. 47: A database provider
published a computerized database known as PERSONNET that contained, among other
things, decisions of the Equal Employment Opportunity Commission (EEOC). A
competitor published a competing database called cyberFEDS, and was accused of
breaching the shrinkwrap agreement that prohibited the copying database contents.48 The
court held that this agreement was enforceable against a competitor even though the
database contained uncopyrightable elements.49

Matthew Bender & Co. v. Jurisline.com, LLC50: A competitor obtained access to portions
of the database owner’s compilation of court decisions and used these to create their own
rival database. Although the database was of uncopyrightable material, the court held
that a shrinkwrap agreement that prohibited copying of these decisions was enforceable
against the competitor.51

Siedle v. National Ass’n of Securities Dealers, Inc.52: A database provider maintained a
website that included a clickwrap agreement prohibiting users from copying and
As examples of these restrictions, users of eBay must agree to a seven page contract and click on an “I accept”
button at the end of the agreement. See eBay Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058, 1060 (N.D. Cal
2000). And Register.com publishes terms of use for its WHOIS database on the home page of its Internet website
and conditions entry into the WHOIS database on assent to those terms. See Register.com, 126 F. Supp. 2d at 248.
44
86 F.3d 1447, 1449 (7th Cir. 1996).
45
Id. at 1450.
46
Id. at 1454.
47
2000 U.S. Dist. LEXIS 14531 (E.D. Pa. 2000).
48
Id. at *3.
49
Id. at *4-*5 (stating “if I make publicly available a compilation of uncopyrightable material, I cannot prevent
another from copying it simply because it took time and effort to create it; there is no protection for the ‘sweat of the
brow’ under copyright law... However, there is no law that requires me to make my product publicly available; nor
is it permissible to break into my house and steal it in order to copy the material it contains.”).
50
991 F. Supp. 2d 677 (S.D.N.Y. 2000).
51
Id. at 678.
52
248 F. Supp. 2d 1140 (M.D. Fla. 2002).
43
6
republishing website content for commercial purposes. A competitor who was in fact
copying and republishing this content for a commercial purpose asked the court to enjoin
the database providers from interfering with this activity.53 The court held that the
clickwrap agreement was valid and clear in its prohibition, and therefore granted the
database provider’s motion to dismiss.54

Register.com v. Verio, Inc.55: Verio, a competitor, had used software robots to repeatedly
copy information about customers from Register.com’s WHOIS database, and used this
information for mass-marketing purposes such as sending spam. The court granted an
injunction based on a browsewrap agreement that prohibited commercial use of any
information obtained from its site.

Pollstar v. Gigmania, Ltd.56: Pollstar alleged that Gigmania downloaded concert
information from pollstar.com and placed it on its competing website at
www.gigmania.com.57 The court held that the browsewrap agreement prohibiting
commercial use of information from Pollstar’s website was arguably valid and denied a
motion to dismiss the breach of contract claim.

Lipscher v. LRP Publications, Inc.58: This case involved a subscription agreement in a
database context. The database provider filed suit against a competitor who copied and
redistributed database information.59 This information was protected by an agreement
that restricted a subscriber from copying or remarketing the information.60 A jury
determined that the competitor had breached the subscription agreement, and the court
entered judgment on the breach of contract claim in favor of the database provider.61
In the following cases where database proprietors were unable to prevent the copying of
uncopyrightable facts, no contractual restriction was involved. First, in a recent case, the court in
Nautical Solutions Marketing, Inc. v. Boats.com62 held that there was no infringement of
copyright where a competitor used an internet “spider” to extract public domain data from yacht
listings. A previous breach of contract claim was dismissed because the contract at issue did not
restrict use, but rather said robots were welcome and invited to come back every 30 days.63 And
in American Massage Therapy Ass’n v. Maxwell Petersen Associates,64 where a competitor
53
Id. at 1142.
248 F. Supp. 2d at 1143, 1145.
55
126 F. Supp. 2d 238 (S.D.N.Y. 2000), aff’d, 356 F.3d 393 (2d Cir. 2004).
56
170 F. Supp. 2d 974 (E.D. Cal. 2000).
57
Id. at 976.
58
266 F.3d 1305 (11th Cir. 2001).
59
Id. at 1308.
60
Id. at 1309. Providing, in part, “We will not make any copies of any reports or disks for which this subscription is
for, recognizing that the Law Bulletin Publishing Company has a copyright interest in each. Under no circumstances
will we furnish any copies, or any of the information contained therein, in bulk form to any third-party, and we will
not computerize, record, reproduce or re-market any portion of the publication or the selected material which it
contains.”
61
Id.
62
2004 U.S. Dist. LEXIS 6304 (M.D. Fla. 2004).
63
Ina Steiner, Recent Ruling on Aggregators Could Impact eBay Copyright Issues, available at
http://www.auctionbytes.com/cab/abn/y04/m04/i16/s03 (April 16, 2004) (statement by NSM’s attorney).
64
209 F. Supp. 2d 941 (N.D. Ill. 2002).
54
7
copied the names from a database provider’s membership directory which contained a restriction
of use clause, there was no breach of contract claim, so the contract issue was never before the
court. In these cases, if a contractual restriction had been in play, the results may have been
different.
Finally, in another case where the user was not bound by contractual restrictions, the
court was willing to prevent competitive appropriation on another theory. In eBay Inc. v.
Bidder’s Edge, Inc.65 Bidder’s Edge had used “web crawlers” to search content within eBay’s
website, but had not consented to a user agreement prohibiting this activity.66 The court granted
an injunction against Bidder’s Edge under a trespass to chattels theory.
In sum, courts have routinely enforced agreements restricting competitive or commercial
uses of database content, even when this content is not subject to copyright protection. This
legal authority suggests that database proprietors can effectively use shrinkwrap, clickwrap, and
in some cases browsewrap agreements to effectively automate the formation of binding
contracts, in which they can dictate highly restrictive terms governing the use of information
extracted from their databases. For example, if eBay does not want users to compile and
commercially exploit the data found in its database, eBay can provide for this restriction on its
website. As long as it can be shown that a user was put on notice of the restriction and assented
to it through some affirmative conduct, the restriction is likely to be upheld. Therefore, contract
law can effectively protect the information in databases from commercial and competitive use.
B. Agreements Have Been Enforced Even When They Protect Uncopyrightable
Materials or Restrict “Fair Uses” of Information
Copyright law does not protect facts, ideas, and unoriginal materials. This is not just a
matter of chance or oversight: it is mandated by the U.S. Constitution67 and codified in the
Copyright Act,68 reflecting both the Framers’ judgment and a careful policy balance struck by
Congress. However, courts have enforced contractual agreements that restrict uses of
uncopyrightable information (as several of the cases above demonstrated), or prevent “fair uses”
that would allow access to unprotectable ideas within copyrighted works (discussed further
below). Challenges to the enforcement of such agreements based on the copyright preemption
doctrine, which says that state law—such as contract law—will be preempted when it creates
rights that are “equivalent” to the rights granted by copyright law,69 have been unsuccessful.70
This line of authority suggest that, by opening shrinkwrap or clicking on an “I agree” button,
database users may contract away important rights preserved under copyright law.
65
100 F. Supp. 2d 1058 (N.D. Cal 2000).
Contracts can protect data from web crawlers and other software robots by implementing “robot exclusion
headers.” See Jeffrey M. Rosenfeld, Spiders and Crawlers and Bots, Oh My: The Economic Efficiency and Public
Policy of Online Contracts that Restrict Data Collection, 2002 STAN. TECH. L. REV. 3, 21 (2002).
67
Feist Publications, Inc. v. Rural Telephone Services, Co., 499 U.S. 340, 351 (1991); U.S. CONST. Article I, § 8, cl.
8.
68
17 U.S.C. §§ 101, 102 (2000).
69
17 U.S.C. § 301(a) (2000).
70
See Bowers v. Baystate Technologies, Inc., 320 F.3d 1317 (Fed. Cir. 2003); Wrench LLC v. Taco Bell Corp., 256
F.3d 446, 457 (6th Cir. 2001); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996); Nat'l Car Rental Sys., Inc.
v. Computer Assocs. Int'l, Inc., 991 F.2d 426, 433, (8th Cir. 1993); Taquino v. Teledyne Monarch Rubber, 893 F.2d
1488, 1501 (5th Cir. 1990); Acorn Structures v. Swantz, 846 F.2d 923, 926 (4th Cir. 1988).
66
8
For example, the court in ProCD v. Zeidenberg found that a shrinkwrap agreement
prohibiting the copying of information stored on a CD-ROM was enforceable as a matter of
contract law and not preempted by the Copyright Act, even though the data was not
copyrightable.71 Similarly, in Information Handling Services, Inc. v. LRP Publications, Inc. the
court held that a license prohibiting the copying of database contents was enforceable against a
competitor even though the database contained uncopyrightable elements.72 And in Matthew
Bender & Co. v. Jurisline.com LLC, the district court held that a shrinkwrap agreement
prohibiting copying of uncopyrightable legal publications was enforceable against a
competitor.73
More recently, in Bowers v. Baystate Technologies, Inc.,74 the Federal Circuit enforced a
shrinkwrap agreement that prohibited reverse engineering, a practice that courts have recognized
as a fair use under copyright law because it allows the public access to ideas contained in a
copyrightable work, and “a prohibition on all copying whatsoever would stifle the free flow of
ideas without serving any legitimate interest of the copyright holder.”75 In this case, Bowers
patented software that Baystate Technologies purchased and reverse engineered in order to
develop its own version of the product. The court held that, by reverse engineering the software,
Baystate breached the shrinkwrap license agreement governing Baystate's possession of the
software.76
Copyright law ensures that necessary raw materials for innovation, such as facts and
ideas, are freely available for the public to use and build upon. Allowing private parties to
override this safeguard through restrictions in shrinkwrap-type agreements, which bind users
without allowing them to negotiate these restrictions, has troubled many commentators.77
Nevertheless, whether this is good or bad policy, it appears that contract law enables database
owners to restrict uses of information even when this would contradict copyright law.
71
86 F.3d 1447, 1454-55 (7th Cir. 1996). The court reasoned that contract rights are not equivalent to those afforded
by copyright law because contract rights affect only the parties to the contract and “strangers may do as they
please,” whereas copyright law provides a “right against the world.” Accordingly, it concluded that “whether a
particular license is generous or restrictive, a simple two-party contract is not ‘equivalent to any of the exclusive
rights within the general scope of copyright’” and therefore may be enforced.
72
2000 U.S. Dist. LEXIS 14531, *4-*5 (E.D. Pa. 2000).
73
991 F. Supp. 2d 677, 678 (S.D.N.Y. 2000).
74
320 F.3d 1317, 1324 (Fed. Cir. 2003).
75
Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 843 (Fed. Cir. 1992). In Bowers, the Federal Circuit
stated: “this court has left untouched the conclusions reached in Atari Games v. Nintendo regarding reverse
engineering as a statutory fair use exception to copyright infringement.”
76
Bowers, 320 F.3d at 1324-25, 1339. The court reasoned that the breach of contract claim contained the same
“extra element” found in ProCD, namely mutual assent and consideration. In addition, the court espoused the
principle that people are free to enter into private contracts on whatever terms they deem necessary, and as a result
are free to contractually forego their ability to reverse engineer a software product.
77
See David Rice, Copyright and Contract: Preemption After Bowers v. Baystate, 9 ROGER WILLIAMS U. L. REV.
595 (2004); Mark A. Lemley, Intellectual Property and Shrinkwrap Licenses, 68 S. CAL L. REV. 1239, 1269-72
(1995).
9
III. WHEN COMBINED WITH TECHNICAL MEASURES, CONTRACTS CAN
PROVIDE EXTREMELY POWERFUL PROTECTION FOR DATABASES
Database proprietors currently use a host of self-help schemes to safeguard their
investments. These include shrinkwrap, clickwrap and browsewrap agreements that bind users to
contractual terms dictated by the database provider. They also include technical measures, such
as encryption and passwords, that control access to databases.78
Together, contracts and technical measures can ensure an extremely secure database.
Database providers can condition access to their databases on entering into an agreement that
restricts the use of information within the database. At the same time, they can use technical
measures to prevent any users who have not assented to that agreement from gaining access to
the database. With most databases, circumvention of these technical measures would be
prohibited by the anti-circumvention provisions of the Digital Millennium Copyright Act
(“DMCA”), which outlaw the circumvention of technical measures controlling access to
copyrighted works.79 As a result, if users gain access to a database without a contract, they could
be liable under the DMCA. And if they gain access with a contract, they must abide by the terms
therein. All users are either contractually bound or violating the DMCA.
Database proprietors worry that digital technologies render their databases particularly
vulnerable to misappropriation. However, these same digital technologies also offer extremely
powerful means of protection. Under current law, enforceable restrictions in shrinkwrap,
clickwrap and browsewrap agreements, especially when combined with technological access
controls, can effectively safeguard the information in databases from commercial and
competitive use.80
78
Other measures such as copy controls and watermarking can buttress controls on information use once in the
database.
79
The DMCA applies to databases containing any copyrightable element, such as original fields or indexes, or
copyrightable content within the database. As noted at the outset, this will encompass the vast majority of
databases.
80
See accompanying article by Jason Gelman, Legal Publishing and Database Protection, which explains how
Lexis and Westlaw have effectively protected their electronic databases from misappropriation though a
combination of legal and extra-legal tools.
10