Publications & Articles

In the first installment, I covered how U.S. Copyright law provides protection for databases that have adequate selection and arrangement. This time, I’m going to cover how state contract law may provide some additional protection.

State contract law has always permitted the licensor to impose restrictions on the licensee. For example, in ProCD, Inc. v. Zeidenberg, ProCD, Inc. (“ProCD”) compiled and sold a CD-ROM containing a telephone directory.¹ Zeidenberg bought a copy of the consumer version of the CD-ROM and created a Web site where he sold access to those names and numbers to the public.² The consumer version of the CD-ROM contained a "shrink-wrap license”³ which allowed personal use, but prohibited commercial use, such as sale to the public, of the database. Instead of pursuing a copyright infringement claim, ProCD sued Zeidenberg on the grounds that Zeidenberg breached the terms of the license, which, as previously stated, prohibited any commercial use of the product.⁴

The U.S. Court of Appeals for the Seventh Circuit found for the ProCD, holding that shrink-wrap licenses are enforceable under Wisconsin state law.⁵ The court determined that the terms of the shrink-wrap license were not unconscionable and were enforceable because no contract was formed until the buyer "accepted" the terms of the license by agreeing to keep the software. Furthermore, the court found licenses under state contract law prohibiting commercial use are not preempted by the Copyright Act.⁶ During the trial, Zeidenberg had unsuccessfully argued that state contract law was providing copyright like protection, thus, preempting an exclusive power constitutionally granted to Congress.⁷

Database developers should be cautious. First, there may still be a question as to the enforceability of shrink-wrap licenses. Although many courts have found them enforceable, there are a few courts which have held them invalid.⁸

Second, there may still be a question as to if state contract law can give copyright like protection to non-copyrightable databases.⁹ The Seventh Circuit's decision in ProCD allows database developers to use licensing agreements regardless of the specific provisions and restrictions imposed by any particular license.¹⁰ As a result, the ProCD decision could alter the balance of the public policy interests of encouraging compilations for the good of public and not just the author.¹¹ Throughout the Copyright Act, Congress has carved out certain exceptions to protect or to allow unrestricted use of specific works of authorship.¹² The Seventh Circuit in ProCD stated "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."¹³ This may contradict the public policy balancing act of the Copyright Act and thus be preempted.

Last, there is a problem that once terms of the license have been breached and the database released to the public, the damage to the database owner may be irreparable. In some instances, taking legal action against all illicit users may not be an economically viable option for the database owner to pursue.

In part 3 of 3, I will be covering a few additional forms of protection available for database owners.


1 86 F.3d 1447, 1449 (7th Cir. 1996).
2 Id. at 1450.
3 a shrink-wrapped plastic covering containing a licensing agreement describing the terms of use
4 Id.
5 Id. at 1455.
6 Id. at 1455.
7 Id. at 1453.
8 Klocek v. Gateway, Inc., 104 F.supp.2d 1332 (D.Kan. 2000) (terms supplied with packaging of a computer do not create a binding contract with that consumer under the law of Missouri or Kansas).
9 Id.
10 Apik Minassian, The Death of Copyright: Enforceability of Shrinkwrap Licensing Agreements, 45 UCLA L. Rev. 569, 592 (December 1997).
11 Id.
12 Id.
13 Id. (quoting ProCD, Inc., 86 F.3d at 1455).

 

This article has been reprinted with permission from the January/February 2006 edition of Res Ipsa Loquitur, published by the Washtenaw County Bar Association.