In re RealNetworks, Inc. – Case Brief
In re RealNetworks, Inc., 2000 WL 631341 (N.D. Ill. 2000).
Facts: Plaintiffs initiated a class action suit against RealNetWorks (D), claiming that D’s software known as RealPlayer and RealJukebox permitted D to access and intercept users’ electronic communications and stored information without their knowledge or consent.
D’s software is available from its website. Users must accept the terms of the end user agreement which appears on the screen before using the products. The agreement included the requirement that disputes be submitted to arbitration in the State of Washington. D contended this created a binding agreement to settle disputes through arbitration. P contended that the writing did not constitute a writing as required by the Federal Arbitration Act (FAA) and the corresponding state act. P contended that electronic agreements are not written agreements because they cannot be printed or saved.
Issues: 1) Is an agreement that is stored digitally, and that cannot be printed or saved in any readily discernible manner, a “written agreement” under the FAA? 2) Is an arbitration clause unconscionable merely because the agreement does not draw attention to it? 3) Does the mere fact that an arbitration forum selection clause specifies a forum that is geographically distant from another party render that clause substantively unconscionable?
Holding and Rule: 1) Yes. An agreement that is stored digitally, and that cannot be printed or saved in any readily discernible manner, is a “written agreement” under the FAA. 2) No. An arbitration clause is not unconscionable merely because the agreement does not draw attention to it. 3) No. The mere fact that an arbitration forum selection clause specifies a forum that is geographically distant from another party does not render that clause substantively unconscionable.
The plain meaning of the word “written” did not exclude all electronic communications. The court held that it was easily printable and storable and as such was sufficient to render it written. The Intervenor contended that the agreement was not written because D did not provide a conspicuous print or save button on the pop-up license. The parties could easily copy and save the materials to their word processors on their hard drives and easily print it from there via a basic computer function.
The court held that the arbitration clause was valid. The arbitration clause was set out in the same size font as the rest of the agreement. It was the attention getting final provision of the agreement. D did not bury the clause nor did it call attention to the clause.
D contended that the license was substantively unconscionable because it chooses a forum geographically distant. The court rejected that argument. Designation of any state as a forum in a nationwide or internet distribution scheme would always place some locations geographically distant. As for the contention that D was using the arbitration clause to prevent a class action suit, the Seventh Circuit has upheld such arbitration agreements. Nor do potential costs of arbitration render the arbitration agreement unconscionable.
Disposition: for D.