Legal and Business Implications of Shrink-Wrap Agreements: Look Before You Click

Yusuf Cassim, Vice President, Intellectual Property, Licensing and Contracts, The Charles Schwab Corporation, USA
Michael R. Overly, Partner,Foley & Lardner LLP, USA

Shrink-wrap and click-wrap agreements are the fine print you see, among other things, when you click through terms and conditions in accessing an online service (e.g., in connection with a cloud computing service) or as part of the installation of a piece of software. They may also be encountered as part of the documentation provided with new software or a hardware component. They may even be found, with some searching, in a file entitled “license.txt” or similar name on the installation CD on which a new piece of software is delivered. Businesses seldom read these terms in any detail, generally view them as non-negotiable, and accept them as a necessary evil. The fact is, these types of agreements can present significant legal and business issues. They can place a business’ sensitive data at risk, expose the business to liability, compromise the business’ ownership of its own intellectual property, and cause the business to pay additional, unforeseen fees. This article discusses some of the key risks inherent in these types of transactions.

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USA Contract IT August 2011 Vol. 4, No. 16, Summer 2011

Yusuf Cassim

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Yusuf Cassim was appointed Vice President, Intellectual Property, Licensing and Contracts in February 1998. His practice focuses on counseling clients regarding technology licensing, outsourcing, information security, electronic commerce and intellectual property. He is responsible for Schwab's patent program and developed Schwab's formal patent risk assessment program, including enhancing Schwab's proactive approach to monitoring potential areas of IP risk. Mr. Cassim writes and speaks frequently on legal issues of doing business on the Internet, technology in the workplace and Open Source.

Michael Overly

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The Charles Schwab Corporation

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The Charles Schwab Corporation (NYSE: SCHW) has been a leader in financial services for more than three decades. Through advocacy and innovation, the company has worked to make investing more affordable, more accessible and more understandable to all. Today, Schwab meets the needs of individual and institutional clients through two operating segments: Investor Services provides retail brokerage and banking operations to millions of individuals. Institutional Services meets "business-to-business" needs through Advisor Services, Retirement Plan Services, Corporate Brokerage Services and Retirement Business Services.