Academic journal article Harvard Law Review

On Enforcing Viral Terms

Academic journal article Harvard Law Review

On Enforcing Viral Terms

Article excerpt


"Viral" terms in licenses and contracts purport to create rights and duties for parties other than the signatories. For instance, the General Public License (GPL) version 2, under which much free and open source software is distributed, purports to prevent downstream users of the licensed software from selling it, or any derivative works they create from it, for profit. (1) So for example, the developer of such software claims the right to directly sue any user who violates these terms, regardless of how she obtained the software (whether directly from the developer or from some third party). This Note discusses whether viral terms should be directly enforceable against downstream users, and if so, when.

Courts and commentators confronting this question have made a startling assumption. They have assumed that the enforceability of viral terms must turn on whether the terms are best classified as contractual provisions or as valid conditions on some underlying intellectual property (IP) right. If the terms are seen as contractual, they are considered unenforceable against downstream users absent privity of contract, but if they are seen as IP rights, they are considered enforceable. (2) This Note argues that this assumption and the classification-based rule for enforcing viral terms that it creates are unjustified.

Part II explains that enforceable viral terms are necessary to allow certain kinds of business models to flourish. Part III then argues that it is not appropriate to view viral terms through the lenses of "contract" and "property." Comparing the economic properties of viral terms against the economic purposes of these legal archetypes reveals a double mismatch. First, neither the contract nor the property paradigm (nor both together) can accomplish the primary purposes of viral terms. Business methods that rely on viral terms require that such terms be more widely enforceable than contract rights and more customizable than property rights. Second, the paradigms cannot tackle the primary potential dangers of viral terms. Widely enforceable and freely customizable terms can create [0]crippling information cost externalities, and neither paradigm is set up to deal with this problem.

Part IV argues that the classification-based enforcement rule, with its focus on the presence or absence of an underlying IP right, has perverse economic consequences when applied to viral terms. Economic analysis of the information cost danger reveals the classification-based rule to be both under- and overinclusive. The presence of an IP right is at best irrelevant to the economic costs and benefits of enforcement; at worst, it might actually cut against enforceability. Therefore, the enforcement of viral terms should not depend on whether they are treated as "property" or "contract," but should instead be governed by a distinct enforcement rule that directly addresses the potential information costs involved.

Parts V and VI discuss what that new rule should be. Part V considers two traditional mechanisms for addressing third-party information costs--registration and notice. It argues that, although they effectively reduce information cost externalities in other contexts, these mechanisms are impractical and ineffective where viral terms are concerned. Viral terms attach to constantly changing electronic products, which no registry can adequately index, and notices of viral terms attached to products can be stripped out by downstream intermediaries.

Part VI therefore proposes a novel rule for enforcing viral terms. In trademark dilution law, marks are eligible for protection only if their owners have succeeded in making them "famous" in the relevant marketplace. This Note proposes that the owners of viral terms should similarly earn the right to have their terms enforced. As with trademarks, viral terms would qualify for enforcement only upon proof that their existence and import were widely known to those likely to be bound by them. …

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