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Specht v. Netscape Communications Corp.

United States Court of Appeals, Second Circuit
306 F.3d 17 (2002)


Facts

Netscape Communications Corp. (Netscape) provides two separate software programs known as “Communicator” and “SmartDownload.” When internet users download these programs, the programs track the users’ internet usage and display advertisements relevant to such usage. Before downloading Communicator, all users are required to view and accept a license spelling out these terms of use. The license automatically displays on the computer screens of everyone who attempts to download Communicator. However, a similar license does not appear on the screens of those who attempt to download SmartDownload. Rather, users just see a button which says “download” and invites them to click to download the program. A link to the license agreement for SmartDownload can be viewed by users who scrolled down their screens below the “download” button. However, this link is not automatically visible to users who do not scroll down. Both license agreements for Communicator and SmartDownload contain arbitration clauses. Specht (plaintiff) and five other plaintiffs all downloaded both Communicator and SmartDownload. They agreed to the license agreement for Communicator but were unaware of and thus did not agree to the license agreement for SmartDownload. If they had clicked on the license link for SmartDownload, Specht and the other plaintiffs would have been presented with a screen telling them that by downloading the product, they were agreeing to be bound by the terms of the license agreement. Specht and the other plaintiffs brought suit against Netscape in federal district court on the ground that the Communicator and SmartDownload software is a violation of privacy and electronic “eavesdropping” statutes. Netscape sought to enforce the terms of its license agreements for both Communicator and SmartDownload with all plaintiffs. Specht argued that they should not be bound by the arbitration clause for the SmartDownload contract because the license for that product is not visible to a reasonable internet user. The district court agreed and held all plaintiffs were not bound by the license agreements for either Communicator or SmartDownload. Netscape appealed.

Rule of Law

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Issue

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Holding and Reasoning (Sotomayor, C.J.)

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  • A "yes" or "no" answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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