Seidle v. National Ass'n of Securities Dealers, Inc.
248 F. Supp. 2d 1140, 2002 WL 32058309 (2003)
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Rule of Law:
A 'clickwrap' agreement, which requires a user to consent to terms and conditions before using a service or accessing content, is an enforceable contract. Such agreements are interpreted according to standard principles of contract law, including the directive to interpret the contract as a whole and give effect to all of its terms.
Facts:
- The National Association of Securities Dealers, Inc. (NASD) maintained a website with a Public Disclosure Program (PDP) containing data from the Central Registration Depository (CRD).
- To access the PDP data, users had to assent to a 'click agreement' that placed restrictions on the use of the information.
- The first click agreement stated that the information shall be used ONLY for assisting in business decisions with NASD members, in legal proceedings, or for 'other non-commercial purposes consistent with the promotion of just and equitable principles of trade.'
- In December 2001, Edward A. Siedle hired a computer programmer to create a program to download the entire content of the PDP website.
- In February 2002, the programmer copied the content, which Siedle and his company then reproduced in a directory and sold in hard copy for approximately $850 per copy.
- On March 12, 2002, NASD revised its click agreement, which also contained restrictions on commercial use.
Procedural Posture:
- Edward A. Siedle and The Siedle Directory of Securities Dealers, Inc. sued the National Association of Securities Dealers, Inc. (NASD) in the U.S. District Court for the Middle District of Florida.
- Plaintiffs sought a declaratory judgment that they were entitled to copy and sell the data, as well as temporary and permanent injunctions against NASD.
- NASD filed a Motion to Dismiss the Amended Complaint for failure to state a claim upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6).
- Plaintiffs filed an Opposition to the Motion to Dismiss.
- Plaintiffs also filed a Motion for Leave to Amend the Amended Complaint.
- The district court held oral arguments on the motions.
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Issue:
Does a website's 'clickwrap' agreement, which permits use of its data for specified purposes or for 'other non-commercial purposes,' prohibit a user from copying the entire database and selling it commercially?
Opinions:
Majority - Bucklew, District Judge.
Yes, the clickwrap agreement prohibits the user from selling the data commercially. Clickwrap agreements are generally valid and enforceable contracts. Interpreting the contract's plain language, the term 'other non-commercial purposes' in the third permissible use clause modifies the preceding clauses, meaning all permissible uses must be non-commercial. To read it otherwise would render the word 'other' superfluous, which violates the principle of contract construction that all terms should be given effect. The plaintiffs' public policy argument fails because the federal mandate for public disclosure does not require that the information be made available for commercial exploitation, and prohibiting such use is not inconsistent with the goal of protecting investors.
Analysis:
This case is a significant early affirmation of the enforceability of 'clickwrap' agreements, treating them as standard contracts subject to traditional interpretive rules. The court's decision reinforces the principle that online terms of service can create binding legal obligations on users. By applying the canon of construction against surplusage to an online agreement, the court demonstrated that established legal doctrines are readily adaptable to new technological contexts. This precedent strengthens the position of website operators seeking to control the use of their data and confirms that users cannot circumvent explicit terms of use, even if the data itself is publicly mandated.
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