04/15/2005
Judge Dismisses Declaratory Judgment Complaint Against CrossMedia
In an important decision in the developing law of online contracts, a U.S District Court Judge in Northern California enforced the forum selection clause in CrossMedia Services, Inc.’s online terms of use and dismissed Cairo, Inc.’s declaratory judgment complaint against CrossMedia. While the decision will not be officially published, it should provide website operators with some guidance on enforceable terms of use.
CrossMedia and Cairo both operate local shopping websites. CrossMedia has contracts with retailers to convert their local advertisements into a searchable online format. Cairo uses a software robot to copy those ads, extract location and pricing information and create links to the ads from its own website. When CrossMedia demanded that Cairo stop its copying, Cairo filed for declaratory relief that its repeated robotic access to CrossMedia’s websites violated no contract with CrossMedia and was otherwise not wrongful.
CrossMedia posts terms of use on its websites, which contain a forum selection clause giving state and federal courts in Chicago exclusive jurisdiction over legal disputes arising under the contract. CrossMedia therefore moved to enforce that clause and dismiss Cairo's complaint.
Cairo's lawyers argued vigorously that Cairo was not bound by CrossMedia's terms because it had never clicked on a button or otherwise affirmatively registered assent, in effect, arguing that a "browsewrap" contract was never enforceable. They also argued that they did not know of the terms, despite receiving a demand letter from CrossMedia pointing them out. Adopting CrossMedia’s position in whole, Judge James Ware soundly rejected Cairo's arguments. He applied the long-established law of unilateral contract and ruled that accepting an offered benefit—in this case, access to CrossMedia's website—with knowledge of the terms of the offer bound Cairo to the terms, whether it clicked on a button or not. He also rejected all of Cairo's attempts to back away from its admission that the demand letter gave Cairo the necessary knowledge.
Cooley Godward LLP represents CrossMedia Services, Inc. in this matter. The Cooley team includes partner Janet Cullum, senior counsel Mike Traynor and associates Eric Evans and Daniel Kaleba.