Clickwrap held enforceable.
Appistry, Inc. v. Amazon.com, Inc. (2015)
The Amazon Web Services platform offers cloud computing services for businesses. Appistry registered to use Amazon Web Services. An Appistry employee created an AWS account and during the sign-up process clicked through the AWS Customer Agreement. Later Appistry claimed that Amazon infringed on Appistry’s patents and filed a lawsuit in Missouri.
Amazon argued improper venue based on the forum selection clause, which requires any dispute to be tried in a federal or state court in its home town. Appistry claimed that given the ‘take it or leave it’ nature of the agreement, the company was forced into the contract without ability to negotiate the terms. The court turned down this argument and noted that the Plaintiff continued to use the services provided after being made aware of the clause that it tried to invalidate.
Appistry further claimed that the employee who clicked through the terms, was unauthorised to enter into the contract on behalf of the company. The court found this argument unconvincing, stating that the employee affirmatively represented, that he possessed the authority to bind the company, when signing up for the cloud service. Amazon also said that Appistry continued to pay and use AWS months after it was ‘reminded that the Customer Agreement governs its use’ and this way expressed its acceptance of the terms.
As a result, the court held that the Agreement was enforceable and agreed to transfer the case from the federal court in Missouri to the Internet retailer’s home state of Washington.
To defend itself Amazon also referred to another interesting clause of the Customer Agreement – a non-assert provision. The clause is still included in the agreement and states that the customer waives the right to assert patent infringement claims against Amazon during and after the Term. This means that even if the claim of infringement was valid, by accepting the terms Appistry prevented itself from pursuing any patent claims over AWS forever.
The court dismissed the patent suit against Amazon, ruling that the asserted patents covered abstract ideas and thus were invalid. As to the non-assert provision of the Agreement, it remains unclear whether this clause would have held up as a defence against a claim of infringement of valid patents.
For more cases check Are clickwrap agreements held enforceable by American courts?