Mind The Wrapping: Ensuring The Validity Of Online Agreements

Whether your game is sold to consumers in a box, downloaded through an online storefront, or accessed via browser, the era of the paper or shrink-wrap licence is long over. Modern end-user licence agreements are almost always online contracts that rely on a user clicking an "accept" button ("clickwrap" agreements), or agreements that rely on the user's mere navigation on a website ("browsewrap" agreements).

A lot depends on the validity of these agreements, since they contain key risk management and intellectual property clauses. Yet court decisions in the United States and Canada have shown that if online agreements are not implemented correctly, they might be invalid or unenforceable. While both clickwrap and browsewrap agreements are normally enforceable,1 particularly in business to business contexts,2 enforceability is not guaranteed. This bulletin examines why courts choose not to enforce these agreements, and how software developers can avoid these pitfalls.

Online Agreements in the United States

The enforceability of online agreements in the gaming industry was recently considered in Wilson v. Huuuge, Inc., No. 18-36017 D.C. No. 3:18-cv-05276- RBL (Washington, 2019). Wherein, the United States Court of Appeals denied a bid from gambling game developer, Huuuge, Inc., to arbitrate a proposed class action lawsuit against it.3 Huuuge relied on the Terms of Use ("TOU") for its mobile app, which required all disputes to proceed by arbitration. At issue in this appeal was the validity of Huuuge's TOU.

Huuuge did not require users to acknowledge or agree to its TOU before downloading or using its application. Nor was the TOU prominently displayed. To find the TOU before downloading the app, users had to click on an ambiguously-labelled button and scroll through multiple screens to locate the relevant paragraph; the court described the TOU as being "...buried twenty thousand leagues under the sea". Similarly, the court described accessing the TOU during gameplay as a "hide the ball exercise", since the "Terms & Policy" tab was buried amongst more-noticeable tabs. Even once a user located the TOU, it was unclear that it bound them.

A contract forms when "mutual assent" exists, which generally consists of offer and matching acceptance. With online agreements, the existence of mutual assent turns on whether the user has reasonable notice of the terms and accepts them. In Wilson v. Huuuge Inc., the court found the TOU to be unenforceable because...