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Monday, September 12, 2005

Plaintiffs Afflicted by Spyware Might Not Be Bound by Arbitration Clause in EULA

Most computer users have been afflicted by Spyware – that is, software that a computer user unwittingly downloads from the Internet which allows a company to track, profile and analyze a computer user’s behavior for the purposes of sending the computer user targeted advertising.

In Illinois, a group of computer users brought a class action lawsuit against, among others, a Spyware and advertising company that use the software.  The lead plaintiff alleged that, without his consent, the defendants caused Spyware to be downloaded onto his personal computer, and that the Spyware traced his Internet use, invaded his personal privacy and caused substantial damage to his computer.  He  claimed that defendants “secretly installed” Spyware onto his computer by bundling it with other software that is free on the Internet – e.g., when the computer user downloads and installs a game, she also simultaneously downloads Spyware.

The Defendants claimed that an End User License Agreement (“EULA”) informed plaintiffs that Spyware would be installed and used to monitor the computer user’s Internet usage.  The plaintiffs, however, claimed that the defendants installed the Spyware in at least three different ways that avoided showing the EULA to computer users.  In response, defendants asserted that the computer user is presented with an opportunity through a hyperlink to read the EULA before downloading any software.

On defendants’ motion to stay the litigation in favor of arbitration, one issue was whether plaintiffs were bound by the arbitration clause contained in the EULA.  The court held that the lead plaintiff raised a triable issue of whether he agreed to the EULA, or was even provided with notice of its existence.  The court distinguished ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996):

Here, by contrast, plaintiff claims that he was not given notice of the EULA’s existence prior to installation, Spyware begins consuming computer resources when it is installed, and uninstalling Spyware is [a] significantly more confusing and vexing process than returning a product.

Sotello v. DirectRevenue, LLC, 2005 U.S. Dist. LEXIS 18877 (N.D. Ill. Aug. 29, 2005).

[Meredith R. Miller]

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