Jumping Through EULA Hoops

“Unconscionable” is a legal term used to void contracts that are unfair to one party because of the other party’s superior bargaining power. By my reading, that makes end-user license agreements (EULAs) unenforceable.

Ten years ago, when I was working at a different technology magazine, I wrote a column about the growing power of end – user license agreements (EULAs)-aka “click-wrap contracts”-to curtail consumer rights. It was an informational column explaining that you really should read those contracts before you click “I agree.” Since then, vendors have acquired astounding powers when it comes to deciding exactly what you can and cannot do with their products. Personally, I think it is unconscionable. And the courts are starting to agree with me.

I don’t use the term unconscionable casually. I’m no lawyer (sorry, Mom), but I am in the minority opinion on the downright sneakiness of EULAs. Indeed, EULAs are the law of the land. You can’t sign up for a webmail account, download a new browser, or activate a cell phone without agreeing to a laundry list of legal gobbledygook. I have clicked through hundreds of EULAs. I haven’t read a single one. And neither have you.

Sometimes it really does pay to read EULAs. In 2005, a guy named Doug Heckman read the EULA for PC Pitstop. He found a line saying that if he e-mailed the company at a certain address, it would send him a check for $1,000. He did, and the company delivered. The Doug Heckmans of this world are rare, and the cash prizes hidden in EULAs are rarer still.

Luckily, another option is available. A cool (and free!) application called EULA Analyzer lets you drag and drop any EULA legalese into its Analyzer, which will scan the text for key phrases. “Without notice” is a big red flag here. For example, iTunes’ latest version says:

Apple and its licensors reserve the right to change, suspend, remove, or disable access to any Services at any time without notice. In no event will Apple be liable for the removal of or disabling of access to any such Services.

Good for Apple! But by my reading, Apple can do whatever it wants to that software, and I can’t do anything about it. You can bet this or a similar clause is in every piece of software you have installed on your home system.

Another, even more troubling issue of the click-wrap trap is legal venue. Yahoo! has many excellent services, but in the event you needed a lawyer’s help, the company’s terms of service demand that you agree to submit to the courts located within the county of Santa Clara, California. Better have those frequent-flier miles handy.

Agreeing to a EULA can also lock you out of the courts entirely. Blizzard Entertainment’s EULA gives the company rights to deny you access to the courts and to enforce binding arbitration if it so chooses. To be fair, the company does ALL CAP this warning in its EULA:


Part of the problem is that EULAs aren’t negotiated; they are simply agreed to. There is no discussion between the user and the vendor. You click “Yes” to use the software on the vendor’s terms or look elsewhere. I understand the interests of the company here, but it is hard to think of this kind of mass-market contracting as a bargaining process.

The tide may be turning. Earlier this year, a California appeals court struck down a mandatory arbitration clause in T-Mobile’s EULA. In that case, Gatton v. T-Mobile, the court decided that, because the agreement was written by a party with superior bargaining strength and the customer was given no ability to negotiate-just a simple yes/no choice-the contract was unconscionable. To which I say: Well, duh-what took so long?

Another decision that should be of particular concern to PC Magazine readers was handed down recently in New York State. Blue Coat Systems had decided it could contractually forbid customers from criticizing its products. It did so by inserting an “antibenchmarking” clause into its EULA. Seems it didn’t want any customers comparing its proxy servers with the competition’s. The state attorney general’s office filed suit, at which point Blue Coat quickly settled, paid a small fine, and removed the clause from its contracts. Amen.

I wonder what kind of EULAs we have violated by benchmarking products that come into PC Magazine Labs. Turns out we published a review of VMware Workstation without the company’s approval, as required in its EULA. Yeah, sorry about that, guys.

Common sense tells me that EULAs are pitiful excuses for fair contracts. It is time for consumers to have a choice that extends beyond “yes” or “no.” Note to lawyers: All EULAs are unconscionable.

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