Second Circuit Affirms Bar To Datamining Domain Name Registrar
 
July 6, 2004
 
Jocelyn Brittin- Northern Virginia

To the joy of countless consumers tired of spam, telemarketing and other unsolicited mass-marketing techniques, the Second Circuit Court of Appeals recently affirmed the decision enjoining the harvesting of domain name registrations from the public domain name databases of Register.com for marketing purposes. (Register.com v. Verio Inc., Docket No. 00-9596, 2nd Circuit, 2004) Register.com is a domain name registrar, appointed by the Internet Corporation for Assigned Names and Numbers. The injunction prevents Verio, Inc. from using its software “robot” to datamine Register.com’s WHOIS database to collect contact information relating to registrations of domain names which Verio then uses for marketing its Web development services. One aspect of the case particularly significant to Internet users and e-commerce businesses is the decision regarding when “term of use” of a Web site becomes contractually binding upon visitors to the site.

The decision in the Register.com case holds that Verio is bound by the “terms of use” restrictions provided with the data from the Register.com database even though Verio never gave any affirmative consent or approval to be bound to such terms, and interestingly, even though the terms come with the data requested, rather than appearing prior to the submission of a request. Verio queried the public WHOIS database daily, and Register’s WHOIS database replied to those queries with the information requested, and a legend which stated:

“By submitting a WHOIS query, you agree that you will use this data only for lawful purposes and that under no circumstances will you use this data to ... support the transmission of mass unsolicited commercial advertising or solicitation via email.”

The Court of Appeals found that the above legend, included in the replies to Verio’s automated requests for information, was sufficient to contractually bind Verio to the restrictions on use of the data. The Court relied on what it called “standard contract doctrine”– that when a benefit is offered subject to stated conditions, and the offeree makes a decision to take the benefit with knowledge of the terms of the offer, the taking constitutes an acceptance of the terms, which are then binding on the offeree. The Court found it persuasive that Verio knew of the terms of use restrictions, and that Verio received notice of the terms of use restrictions on numerous occasions, since it queried the Register.com database daily.

The ruling that an Internet user can be bound by the terms of use posted or otherwise provided by a Web site even absent an affirmative act of consent or approval by the user is significant, as many Web sites include terms of use that restrict what can be done with the data on the site. The ruling stands in contrast to other recent rulings, which seem to require affirmative agreement to be bound, before enforcing the terms of use. For example, in Ticketmaster Corp. v. Ticket.com, Inc, No. CV99-7654, 2000 WL 1887522 (C.D. Cal. Aug 10, 2000), the court found there was insufficient proof of an agreement to the terms of use on the Web site, because the user is not required to check an “I agree” box before proceeding to navigate the site. In Specht v. Netscape Communications Corp., 306 F. 3d. 17 (2nd Cir. 2002), the court refused to impose an arbitration clause, because the users would only access the site once, and had to scroll down the screen to see the terms of use, thus raising the possibility that the user never knew of the terms of use. The Second Circuit opinion in the Register.com states the court sees no reason for this conclusion under the facts presented in Ticketmaster. The Court distinguished the Register.com facts from those in Specht because Verio accessed the Register.com database numerous times, and admitted it knew of the terms of use imposed by Register.com.

The Court left for future rulings the question of when the affirmative act of a user is necessary to the formation of a contract based upon terms posted on a Web site, and in what circumstances it is not necessary. But because of the Register.com case, Internet users will have to be increasingly vigilant to the possibility that posted terms of use on Web sites are binding upon them. Web-based businesses may be able to enforce terms and conditions which can be shown to be know to visitors of the site, even if the visitors do not have to “click I agree” or otherwise affirmatively assent to the terms.

For more information, e-mail Jocelyn West Brittin at jocelyn.brittin@hklaw.com or call toll free, 1-888-688-8500.