Procd, Inc. v. Zeidenberg

86 F.3d 1447 (7th Cir. 1996)


ProCD (P) compiled information from more than 3,000 telephone directories into a computer database. We may assume that the database cannot be copyrighted, but it is more complex and contains more information and is organized differently. P sells this database under the name SelectPhone. It is sold with a shrinkwrap license that becomes effective as soon as the customer tears the wrapping from the package. P’s program is compressed and encrypted, and the operating program actually uncompressed the files to allow their use by the end user. This copyrighted operating system allows the user to query the database and the eventual lists created from queries can be used in other software programs. The database cost 10 million dollars to compile and is expensive to keep current. P decided to sell its database to the general public for one price of $150 and to trade buyers for a higher price. The database is also available on AOL for $3 per hour. To implement its price plan, P limited the abilities of the consumer product and informed the consumer by its software license in the box. Every box containing its consumer product declares that the software comes with restrictions. This license is encoded on the disks as well as printed in the manual and appears on the user screen every time the product runs. The license limits consumers to non-commercial uses. Zeidenberg (D) bought a consumer package and ignored the license and decided to resell the information on a Web page. P filed an injunction against D. The district court held that the license was ineffective because it was not on the outside of the package. The court also added that the second and third licenses stand no different from the first even though they are identical because they might have been different and a purchaser does not agree to and cannot be bound by terms that were secret at the time of purchase. P appealed.