In Specht v. Netscape Communications Corp., 306 F.3d 17 (2nd Cir. 2002), Users who downloaded certain software programs provided by Netscape filed a class action in federal court.  Netscape then moved for arbitration which was required as per the download terms. There were, however, multiple ways to download the Netscape programs, some of which required an affirmative assent and some of which did not require any assent to the terms of the license (case is about the latter).

The 2nd Circuit found that users could download and use the software without having to view the full terms of the contractual arrangement including the arbitration clause. The Court stated that a reasonably prudent consumer would not assent to contractual terms that were so inconspicuous that they could use the product while totally overlooking them. You had to scroll down and click on the terms to see them.

The Court said what is needed is “clarity and conspicuousness” to ensure the user is cognizant of the terms of the license (emphasis mine).  This is the phrase to keep in mind when clients are creating browsewrap and clickwrap agreements to bind users online.

Aside: Court seemed concerned that the Internet gives companies too many opportunities to exploit unsuspecting users. Simple rule is that if the user is not reasonably alerted to the contractual terms, she cannot assent to them.