Intellectual Property and Shrinkwrap Licenses

Abstract

Intellectual property -- right, wrong, or indifferent -- is well on its way to becoming irrelevant in the computer world. The reason is that the debate over the appropriate scope of intellectual property protection for computer software largely ignores the role of contract law in setting rights. Software vendors are attempting en masse to “opt out” of intellectual property law by drafting license provisions that compel their customers to adhere to more restrictive provisions than copyright (and even patent) law would require. These software license agreements are of two types: bargained agreements for custom software, and unbargained “shrinkwrap licenses” imposed on mass-market purchasers. As software has become a mass-market commodity, the shrinkwrap license has tended to predominate.

Can software vendors really avoid the rules of intellectual property law entirely? Can they “pick and choose” among the rights and responsibilities of copyright law, adopting copyright when it suits their purposes and discarding it otherwise? By and large, the answer to these questions has depended on whether and under what conditions shrinkwrap licenses are enforceable. This article discusses the theoretical arguments in favor of and against enforcing such shrinkwrap license terms. After weighing these arguments, I conclude that shrinkwrap licenses should not be effective to alter the balance of rights created under federal law.