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Sunday, November 06, 2005

EULA (#2)

In a previous post, I discussed some of the elements in the Sony End User License Agreement (EULA) that comes with its music CDs. Note the following in the EULA:
Before you can play the audio files on YOUR COMPUTER or create and/or transfer the DIGITAL CONTENT to YOUR COMPUTER, you will need to review and agree to be bound by an end user license agreement or “EULA”, the terms and conditions of which are set forth below. Once you have read these terms and conditions, you will be asked whether or not you agree to be bound by them. Click “AGREE” if you agree to be bound. Click “DISAGREE” if you do not agree to be bound. Please keep in mind, however, that if you do not agree to be bound by these terms and conditions, you will not be able to utilize the audio files or the DIGITAL CONTENT on YOUR COMPUTER.

As soon as you have agreed to be bound by the terms and conditions of the EULA, this CD will automatically install a small proprietary software program (the “SOFTWARE”) onto YOUR COMPUTER.
So, what happens if you “DISAGREE”? Well, I went on a couple of web sites to look at return policies for music CDs. Amazon's refund policy provides that:
Items that do not meet our returns guidelines will receive only partial refunds:
* Any CD, DVD, VHS tape, software, video game, cassette tape, or vinyl record that has been opened (taken out of its plastic wrap): 50% of item's price.
Best Buy is worse. Its refund policy is:
Nonreturnable Items
These items include labor and/or installation services; consumable items such as phone cards, gift cards, food and drink; or items that are damaged or abused. Opened computer software, movies, music and video games can be exchanged for the identical item but cannot be returned for a refund.
So, if you buy a CD at Amazon and promtly find that it contains the DRM rootkit software, you can get half your money back. But regardless of how fast you discover it if you bought the CD at Best Buy (online or in a store), you are SOL.

But you are not out of options. You can sue Sony. Remember, the EULA was declined, so Sony is stuck with the normal warranties of fitness, merchantability, etc., which the CD arguably breaches.

More interestingly though, given that these major CD retail vendors return half (Amazon) or none (Best Buy) of your money if you decline, that lost money had to have bought something. In the case of Best Buy, a good argument can be made that you purchased the contents of the CD with it. Then what about the EULA? Two things. First, if all the money went to buying the contents of the CD, then you aren't receiving any consideration for your agreeing to the EULA. A contract not supported by consideration is void. Secondly, it is what is called an "after acquired terms" under the Uniform Commercial Code (UCC) II (Sales). This is the "Battle of the Forms" that merchants engage in. But they are not applicable to retail customers. Again, then, the EULA is arguably invalid. Alternatively, you could argue that the contract is one of adhesion, since getting half or none of your money back is not a realistic alternative.

Unfortunately, these same arguments have been made for awhile with software shrinkwrap agreements, and recently, they have been losing. Nevertheless, looking at the totality of the transactions (that you don't get your money back if you decline the EULA), a court is going to have to close its eyes to reality in order to enforce the EULA.

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