Feldman v. Google, Inc.
513 F. Supp. 2d 229 (2007)
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Rule of Law:
An online 'clickwrap' agreement, including a forum selection clause contained within it, is an enforceable express contract when the user is provided reasonable notice of its terms and is required to manifest assent by taking an affirmative step, such as clicking a box indicating agreement.
Facts:
- In January 2003, Lawrence E. Feldman, a lawyer, began purchasing 'pay-per-click' advertising from Google, Inc.'s 'AdWords' program to attract clients for his law firm.
- To activate his AdWords account, Feldman was required to complete an online sign-up process.
- This process presented the AdWords contract in a scrollable window on a webpage, with a notice in bold print stating, 'Carefully read the following terms and conditions. If you agree with these terms, indicate your assent below.'
- The contract contained a forum selection clause requiring all disputes to be adjudicated in Santa Clara County, California.
- To proceed and activate the account, Feldman had to click a box next to the words, 'Yes, I agree to the above terms and conditions'; failure to do so would prevent activation.
- Feldman alleged that he was subsequently overcharged due to 'click fraud,' where competitors or other non-interested parties repeatedly clicked his ads to drive up his costs.
- Feldman claimed that 20-30% of the clicks for which Google charged him over $100,000 were fraudulent.
- He contended that Google had the capacity to prevent click fraud but failed to do so and did not adequately investigate his complaints.
Procedural Posture:
- Lawrence E. Feldman initiated the lawsuit in the Common Pleas Court of Philadelphia County, a state trial court.
- Google, Inc. removed the case to the U.S. District Court for the Eastern District of Pennsylvania, a federal trial court, based on diversity jurisdiction.
- Google filed a Motion to Dismiss Feldman's original complaint.
- Feldman then filed an Amended Complaint, changing his legal theory from express contract to implied contract and other claims.
- Google filed a Motion to Dismiss the Amended Complaint or, in the alternative, to transfer the case to the Northern District of California based on the agreement's forum selection clause.
- The court converted Google's motion to dismiss into a Motion for Summary Judgment.
- Feldman filed a Cross-Motion for Summary Judgment.
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Issue:
Is a forum selection clause contained within an online 'clickwrap' agreement enforceable when a user must affirmatively click 'I agree' to the terms and conditions before using the service?
Opinions:
Majority - Giles, District Judge
Yes. A forum selection clause in a clickwrap agreement is enforceable where there is reasonable notice of the terms and a clear manifestation of assent. The court applied traditional principles of contract law to determine the validity of Google's AdWords agreement. The court found that Google provided reasonable notice by displaying the agreement with a prominent admonition to read it carefully. Feldman manifested assent by taking the affirmative step of clicking the 'Yes, I agree' button, which was required to use the service. His failure to read the agreement, if that was the case, did not excuse him from its terms. The court distinguished this from the 'browsewrap' agreement in Specht v. Netscape, where terms were hidden behind hyperlinks and no affirmative assent was required. Furthermore, the court found the agreement was not unconscionable, as Feldman was a sophisticated party, was not subject to high-pressure tactics, had the option to reject the terms, and other advertising alternatives likely existed. The forum selection clause itself was deemed substantively reasonable because it served Google's legitimate interest in centralizing litigation in its home jurisdiction.
Analysis:
This case is a foundational decision in internet law that solidifies the enforceability of 'clickwrap' agreements by treating them as valid, binding contracts akin to traditional written ones. It establishes a clear standard for companies to follow when designing online terms of service, emphasizing the importance of providing reasonable notice and requiring an affirmative act of assent. The ruling distinguishes enforceable clickwrap designs from less reliable 'browsewrap' agreements, thereby providing a practical guide for online businesses seeking to enforce their user agreements. This precedent significantly strengthens the ability of internet companies to enforce forum selection clauses, which helps them manage litigation risk by consolidating lawsuits in a single, predictable venue.
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