Guest Post from Guy Rub on Federal Law and Browsewrap Agreements

Today, we welcome guest-blogger Guy Rub (right) to the blog.  Professor Guy A. Rub is the Joanne Wharton Murphy/Class of 1965 and 1973 Professorship in Law at The Ohio State University Moritz College of Law. He is an expert in the intersection between intellectual property law, contract law, and economic theory. His work explores how markets shape and are being shaped by intellectual property law. His publications have appeared in the Chicago Law Review, UCLA Law Review, Yale Law Journal Forum, and Virginia Law Review, among others.

Professor Rub has studied law on three continents. He holds an SJD degree and an LL.M. degree from the University of Michigan Law School; a master’s degree in Law & Economics from the University of Madrid; a European Master in Law and Economics from the Erasmus University in Rotterdam, Netherlands; and an LL.B. degree from Tel-Aviv University.

Professor Rub also holds a bachelor’s degree in computer science from Tel-Aviv University and worked as a software programmer and engineer prior to pursuing a career in law.

Browsewrap Agreements and Federal Law

Standard form agreements have been a topic of high interest and controversy for decades. Still, in the abstract, most would agree that while important differences exist between negotiated contracts and form agreements, most courts most of the time treat them quite similarly. A few doctrines, like unconscionability, operate differently when form agreements are concerned, but, for most courts, once Alice signs the dotted line, a bilateral contract is formed, whether she spends ten months negotiating the terms or ten seconds skipping them. And, as we know, signing is overrated too. If Alice can accept a contract by signing a form she didn’t read, she can also do it by tearing a wrap or clicking on “I accept.” 

But browsewrap agreements, contracts that are allegedly accepted by using a website, are trickier. To the degree that the offer and acceptance ceremony still matters (and it should, right?), most people probably perceive the act of signing a dotted line, clicking “I agree,” and browsing quite differently (although, for what it’s worth, over the last decade, more and more students are telling me that “everybody knows that by using a website you accept its terms.”). So are browsewrap forms binding? It depends a little on the jurisdiction and a lot on the website. Courts have developed tests that focus on what users actually knew and on how “conspicuous” the terms were. They explore the color of the link, where it was placed, how big the font was, and so on. Browsewrap agreements let judges play website designers.

While state law still struggles with browsewrap agreements, a new brief from the United States Solicitor General (left) suggests that federal law might have something to say about the issue. Genius.com is a popular website for music lyrics. Its browsewrap prohibits the copying and public display of those lyrics for commercial use. Google, however, allegedly did just that. If you google “the lyrics of little lies” (useful when teaching misrepresentation), you will get the results on Google itself, in what Google calls “an information box.” No need to spend time visiting Genius’s website for lyrics anymore. This can make the users happy and Google probably happier, but it is a disaster for Genius’s ad-centric business model. A breach of contract lawsuit followed.  

Contract law might give Google quite a few tools to fight this lawsuit, but it chose federal preemption as its first line of defense. Google argued that Genius’s claim is expressly preempted by copyright law. Section 301(a) of the federal Copyright Act preempted rights under state law that are “equivalent” to rights under copyright. Courts disagree on whether contracts are ever equivalent to copyright. A minority of courts hold that contracts that regulate what copyright regulates, mostly the reproduction and distribution of information goods, are preempted. The majority of courts, however, hold that a contract, as a bilateral agreement, cannot be equivalent to a property right like copyright. The most famous articulation of that majority approach came in an opinion we know for other reasons—ProCD v. Zeidenberg. In Genius v. Google, however, the Second Circuit adopted the minority approach and held Genius’s browsewrap agreement preempted as a contract that regulates copying. Genius’s cert petition to the Supreme Court followed, and the Court invited the Solicitor General to file a brief on this matter. 

In its brief, the Solicitor General acknowledges the circuit split and suggests that the Second Circuit approach is quite problematic (a view I share), but it nevertheless recommends denying the cert petition. At the heart of its brief, the Solicitor General argues that this case is not a good vehicle to address the copyright-contracts tension because browsewrap agreements are just different. 

The Solicitor General claims that it is not clear that this case would have come out differently in any other circuit. It, quite creatively, partly relies on a much-quoted (and often misunderstood) sentence from ProCD, where Judge Easterbrook (right) explains that not everything “with the label ‘contract’ is necessarily outside the preemption clause.” I always assumed that if the Seventh Circuit had any specific example in mind, it was probably implied-in-law contracts, which, we know, are not contracts at all. But can’t we apply the same approach to browsewrap agreements? After all, if the heart of the Seventh Circuit argument is that the act of acceptance categorically distinguishes contracts from copyright, then maybe it is less than obvious that browsewrap agreements should be treated similarly.

To be clear, in this case, courts addressed the federal preemption question first and never decided whether a contract was even formed under New York law. But the Solicitor General suggests that even if a contract was formed, for preemption purposes, that contract “is quite different from the paradigmatic bargained-for exchange.” 

Most of the implications of this brief and this case are beyond the scope of contract law, but contract professors will still find it interesting. Consider, for example, the following nuggets: First, while its argument is interesting, the Solicitor General’s brief completely ignores the fact that Genius repeatedly put Google on actual notice as to its terms and conditions, which is likely quite meaningful as a matter of state contract law. Shouldn’t it matter for federal law too? Second, contract professors might find it noteworthy that the Solicitor General distinguishes ProCD because there “the existence of a contract was apparent.” Third, the brief not only argues that browsewrap agreements are different, which they might be, but it implies that they are maybe less important, referring to them repeatedly as “atypical.” I’m not sure that claim is self-evident. 

In any event, are we going to soon have the Supreme Court weighing in and telling us whether browsewrap terms and conditions are contracts, at least from a federal preemption perspective? I know better than to bet on anything that the Supreme Court does, especially on cert petitions. However, it is probably more likely than not that the Court will deny the petition. But if it surprises us, maybe Justice Sotomayor will get a chance to revisit the topic 20-something years after Specht v. Netscape.