Step-Saver Data Systems, Inc. v. Wyse Technology
Step-Saver Data Systems, Inc. v. Wyse Technology | |
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by designation ) | |
Case opinions | |
A written license and warranty disclaimer on the box-top of a software package did not become part of a binding contract when the software was purchased. Judgment of U.S. District Court for the Eastern District of Pennsylvania affirmed in part, reversed in part, and remanded. |
Step-Saver Data Systems, Inc. v. Wyse Technology was a case in the
Facts
During the relevant period, Step-Saver Data Systems, Inc. was a
In an effort to expand their market opportunities, Step-Saver sought to move to
As a result, 12 of Step-Saver's customers filed lawsuits against them. As producers of key components of Step-Saver's overall product, Step-Saver contended that TSL and Wyse were liable in these suits, arguing that the same implied warranties Step-Saver made to its consumers were also made to Step-Saver by TSL and Wyse.[1] However, TSL argued that the box-top license on the software delivered to Step-Saver was the only valid agreement made between the two companies. Step-Saver challenged this argument, indicating that the box-top license should be non-binding since Step-Saver never explicitly agreed to its terms.
Court opinions
Step-Saver initiated this case in an effort to hold Wyse and TSL liable in their customer lawsuits. Step-Saver argued, that any liability that it had to its customers should be shared by both Wyse and TSL since they were the original providers of the allegedly defective software and hardware. Step-Saver also argued that an implied contract existed between Step-Saver and these merchants at the time of purchase. They claimed that such an implied contract required the merchants to become co-defendants in the customer lawsuits.
TSL subsequently argued that the implied contract was not enforceable, but rather, that the
District case: Motion for Declaratory Judgment (1989)
The plaintiff, Step-Saver, sought contribution and compensation from the defendants, seeking declaratory judgment. In turn, the defendants, Wyse and TSL, moved for summary judgment.[2]
The defendants' motion for summary judgment was subsequently granted, and Step-Saver's motion for a declaratory judgment was denied on the grounds of misuse of the Declaratory Judgment Act. Specifically it failed because of U.S.C. 2201, and a lack of evidence demonstrating that the defendant was liable. The court held that Step-Saver's motion for a declaratory judgment was 'unripe', on the grounds that cases involving customer suits had not yet been decided. The errors in the Step-Saver system that initiated the suits had not been identified and thus could not be designated to be the fault of the hardware or software, in which case TSL and Wyse could be liable.[2]
First appeal to Third Circuit (1990)
Step-Saver called for a review of the district case, specifically a review of the court's decision to dismiss Step-Saver's complaint for a declaratory judgment. In order to reestablish that Step-Saver's motion could not be affirmed, the court cited Aetna Life Co. v. Haworth,[3] which supported the dismissal of motions for declaratory judgment if the motioning party provided insufficient concrete evidence. In addition, the court indicated that "making a law without finding the necessary facts constitutes advisory opinion writing, and that is constitutionally forbidden" [4]
In this appeal, the court also considered a direct damages claim brought forth by Step-Saver. The claim was defined as independent of declaratory judgment and it was found that the consequential damages could be recovered U.C.C. 2-714(2).[4]
The court affirmed in part and reversed in part. The declaratory judgment motion made by Step-Saver was still considered to be unripe. However, the portion of the claim associated with direct damages was reversed, now in favor of Step-saver. The case was then remanded for further proceedings.[4]
District case: Motion for Retrial (1990)
Dissatisfied with the verdict of previous proceedings, the plaintiff motioned for a
The court found that Step-Saver's allegations of error were unfounded and denied the motion for a new trial.[5]
District case: dismissal of vendor suit (1990)
Wyse technology and TSL sought to dismiss plaintiff's initial suit seeking compensation or
The court granted this motion on the basis that the first district case associated with Step Saver v. Wyse, was no longer relevant in light of Step-Saver's motion for a second appeal to the 3rd Circuit.[5]
Second appeal to Third Circuit (1991)
The court reversed holdings of the district court on the grounds that the box-top license is a non-enforceable contract, since Step-Saver did not explicitly agree to its terms.[5] In addition the box-top license itself violated the original contract terms between Step and TSL which had given Step-Saver the right to freely distribute copies of TSL Multi-Link Advanced. The court remanded for further consideration of the Step-Saver initial contract consisting of implied warranty. The court affirmed in all other respects.[5]
Importance of verdict
The enforceability of shrink wrap contracts has been an issue of controversy as demonstrated in a few notable cases,
The questions raised about constitutional and statutory preemptions from this case however has been re-argued in other cases such as
See also
- Vernor v. Autodesk
- ProCD, Inc. v. Zeidenberg
- Softman v. Adobe
- Shrink-wrap license
- Limited Use License Agreement
References
- ^ a b c Step-Saver v. Wyse, 752 F. Supp. 181 (United States District Court for the Eastern District of Pennsylvania 1990).
- ^ a b Step-Saver Data Systems, Inc. v. Wyse Technology, 1989 U.S. Dist. LEXIS 11320.
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(help)CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link) - ^ Aetna Life Co.v Haworth, 300 57 (S. Ct. 1939).
- ^ a b c Step-Saver Data Systems, Inc. v. Wyse Technology, 912 F.2d 643 (3rd Cir. 1990).
- ^ a b c d e Step-Saver Data Systems, Inc. v. Wyse Technology, 939 F.2d 91 (3rd Cir. 1991).