The USÌýÌýinvolved a specific statutory requirement that to be binding against a party, a settlement agreement must be in "writing subscribed by him or his attorney". The decision focused on the statutory requirement within the ambit of the State's laws, and interpretations of what is required for a settlement agreement to be "subscribed". Counsel for the defendantÌýwas appealing enforcement of a settlement agreement made by email.ÌýThe finding hinged on the fact that counsel for the defendant hadÌýpurposelyÌýincluded a personal signature on theÌýsettlementÌýcorrespondence, and thus had fulfilled the requirement imparted by the statute for subscription. However, underlying the entire discussion was the overall question about theÌýequivalencyÌýof electronic documents to paper ones.

While avoiding academic discussions about the nature of interpersonal contracts, the heart of contract law acknowledges that an agreement between parties is independent of the physical (or non physical) documents between them. This supports the ability to have legally binding oral contracts, electronic contracts, and impliedÌýÌýwhen there is no paper document, and conversely sometimes a finding of no binding contract even when there is a paper record. There are a few areas of law that do require a written paper documentation of a contract, for example a will or sale of land, but these are the exceptions to the rule.

Canadian and International Law

In many Canadian jurisdictions, there are numerous statutory enactments supporting the legal force of electronic contracts. TheÌýÌýin British Columbia is one that states a document in electronic form satisfies a requirement that a contract be inÌýwitting. It also allows for electronic copies to count as originals, provided there is a reliable assurance to the integrity of the document. Similar statutes have been enacted in other provinces.

Internationally, there have also been United Nations conventions regarding the use of electronic documents in contract law, in particular theÌý.ÌýThe convention is similar to the Electronic Transactions Act in that it allows an electronic document to satisfy any requirement that a contract be inÌýwitting, unless otherwise expressly required to be in paper. Behind the Convention is the theory of non-discrimination based on the medium of a contract. This theory simply expands the notion that a contract is not a physical document, and legal rights can be established regardless of the form the contract takes.

The Benefits of E-Contracts

Many see the equivalency of electronic and paper documents in modern life as a foregone conclusion. With theÌýprevalenceÌýof electronics in both personal and business life, a strict requirement for paper records wouldÌýparalyzeÌýmodern commerce. Clearly, contracts have been, and continue to be, executed using electronic communications, and courts have been recognizing the reality of this fact.

The Concerns of E Contracts

However there are still some concerns from using electronic documents in place of paper ones. One issue is the ease with which a large volume of contacts can be entered into electronically. One study found that the simple act of actual reading every Privacy Policy that one consents to each year would take aÌý. When one includes all the other electronic contracts entered into, it is not difficult to imagine anÌýindividualÌýenteringÌýinto more contracts than they could conceivably read. This inability to read every contract also has implications for the legal requirement ofÌýÌýto the contract, which requires both parties to intend entering into the contract. When voluminous contracts are entered into by clicking to accept, there are valid concerns over actual understanding and intent of the party clicking.

What Was Really at Issue?

The real issue at the heart of the recent US decision was that the defendant had a motion for summary judgment granted after entering into the settlement agreement, and wanted to avoid being bound by it. There was no real concern over the validity of the electronic agreement, only remorse from the defendant after entering into it. As such, their counsel pursued all opportunities to secure the best outcome for their client, and in this case that involved pursuing avenues to avoid enforcement of the agreement. The only reason the defendant thought they had a potential case was due to specific statutory enactments, and ambiguity over what it meant to be subscribed. At the core, the defendant's case was not so much a concern over electronic documents than an attempt to argue the agreement had not been properly formed. Going forwardÌýit seems likely that parties will continue to challenge the validity of electronic documents where it is to their advantage, but rulings like this one will continue to reiterate their equivalency in law.

Alex Buonassisi is an IPilogue Editor and a JD Candidate at the University of British Columbia.

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At first glance, the century old seems simple enough. However, as with many other IP doctrines, the digital world has thrown a wrench in this otherwise well-understood principle (see on a similar topic). In the case of a Ninth Circuit District Court was confronted with the issue of whether first-sale applied upon the purchase of computer software that the seller termed to be subject to an end user licence agreement, and thus if Vernor had the right to re-sell the software.

The abbreviated facts are as follows. Autodesk is the undisputed copyright owner of the software and all printed materials contained in its "AutoCAD packages". These printed materials explicitly state that the software is subject to the AutoCAD Software Licence Agreement that is both contained in the box and also appears during the installation of the software. Some of these packages were sold to CTA, an architectural firm who in turn sold them to Mr. Vernor. Without using or installing the software, Mr. Vernor sold the packages on eBay. The dispute turns on whether ownership was acquired by CTA on the initial sale, thus invoking the first-sale doctrine. If ownership was not transferred, the AutoCAD licence provisions forbidding transfer to others would be binding.

This issue has produced a long and contradictory line of case law. TheÌý Ninth Circuit alone contains contradictory precedent. In the court dealt with numerous transfer agreements. It was found that simply designating the agreement to be a "licence" is not determinative, nor are clauses in the agreement that reserve title to the copyright holder or that require the transferee to destroy transferred copies. There was only one common characteristic in all of the transfer agreements where ownership was deemed transferred; this was the right of the transferee toÌý indefinite possession. In the Vernor decision, Justice Jones explained this by stating that retaining title in a copy is meaningless without any means to regain possession of it.

Following Wise came three cases known as the MAI Trilogy. These cases hold that ownership is not transferred when there is a licence agreement that imposes significant redistribution restrictions on the transferee and also clearly stipulates that only a licence is granted to the copy of the software.

Jones J. found that both the Wise and MAI rulings applied in the context of Vernor. With respect to Wise, CTA has a right to retain possession. There is a clause in the agreement mandating that CTA destroy the original copy if it upgrades the software. However, it is not mandatory to upgrade the software in the first place and thus CTA has an ongoing right to possession of the original. Regarding the MAI rulings, the AutoCAD licence agreement forbids transfer without AutoCAD's permission. The agreement also stipulates that AutoCAD retains title to the software and accompanying materials.

In a rather unsatisfactory fashion, Jones J. reached the decision that the Wise precedent should be followed over the three more recent rulings because "the court must follow the oldest precedent among conflicting opinions". The policy considerations put forward by both parties were rejected, and, in what appears to be a plea to the legislature to clean up this muddied law, it was stated that Congress, not the courts, should deal with policy.

What will the impacts of this decision be? Reaction in the blogosphere is mixed. Most agree that it is too early to tell, as the ruling is and there are currently in the Ninth Circuit dealing with the same issue. Some as beneficial to consumers in the sense that it is a step towards software resales. However, it should be noted that this case does not mean that the consumer automatically gets ownership rights despite a licence agreement. Based on the reasons given by Justice Jones, a licensor simply needs to incorporate a clause denying perpetual possession to the licensee in order to avoid AutoCAD's fate.

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Professor Ginsburg has a new articleÌýforthcoming in WORKING WITHIN THE BOUNDARIES OF INTELLECTUAL PROPERTY, Rochelle Cooper Dreyfuss, Harry First, Diane Leenheer Zimmerman, eds., forthcoming, Oxford University Press (2009).

Ìý

This article addresses the extremes of private ordering, and the extent to which the principal multilateral copyright instruments, the Berne Convention and the TRIPs Accord, limit the range of State responses to the problems encountered at the far ends of the copyright-contract spectrum. At one end, we encounter private ordering at its most aggressive, in which private parties enter into agreements (or, more likely, the stronger party coerces the weaker parties, who may be mass market consumers) to protect subject matter or rights excluded from the ambit of copyright's exclusivity. At the other end, the difficulties arise not from overweening sellers forcing their way with timid buyers, but from failure to find the seller at all. The buyers, would-be copyright exploiters, are unable to locate the right holders from whom to negotiate a license to use their works. In this case, no contract can be concluded, unless the State steps in for the absent right holder. In the first case, a contract has been concluded, but at a cost that the State could not exact were it to seek the same result through public ordering.

The analysis of Part I proceeds in three steps. First, a review of the relevant Berne-TRIPs provisions will identify and assess the "maxima." Second, consideration will be given to whether the prescriptive force of the maxima extends to extra-copyright means of achieving copyright-prohibited objectives. Finally, an inquiry will be made into whether the mandatory exclusions and restrictions apply only to foreign Berne Union works or whether the treaties can also be read to compel their domestic application. Part II shifts from private ordering to State-imposed licenses and other interventions that limit the exercise of exclusive rights. Where Part I inquires whether current multilateral instruments limit private parties' freedom effectively to expand the scope of copyright subject matter or rights, Part II examines whether those same instruments constrain State responses to systemic failures of private ordering by limiting the remedies available against the unauthorized exercise of otherwise exclusive rights. The example of failed private ordering that will be considered concerns the problem of "orphan works," where the inability to find right holders means that would-be exploiters cannot enter into private agreements with them.

This exploration of the extremes of the copyright-contract spectrum finds little prescriptive force in the Berne-TRIPs "maxima" with respect to private agreements to protect subject matter the treaties exclude from copyright's ambit. By contrast, Berne-TRIPs "minima" can meaningfully constrain a State's prerogative to impose compulsory licenses or limit remedies when private agreements cannot be concluded, for example because a willing buyer cannot find the seller (willing or otherwise). The minima should not, however, be regarded as an impediment to resolving the "orphan works" problem. Rather, attention to the minima should enable States to shape an orphan works regime which both permits the exploitation of unlocatable right holders' works, and fairly compensates those right holders who, notwithstanding a rigorously diligent but unsuccessful search, subsequently turn up and object to the uses made of their works.

Professor Jane Ginsburg's article "Contracts, Orphan Works, and Copyright Norms: What Role for Berne and TRIPs?" (Columbia Public Law Research Paper No. 09-200)Ìýis available for download on SSRN .Ìý

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