Information Technology Reference
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At the trial, the defense argued that Zeidenberg could not be held to the terms of the
licensing agreement, since they were not printed on the outside of the box containing the
software. The US Court of Appeals for the Seventh Circuit ruled in favor of ProCD. Judge
Frank Easterbrook wrote, “Shrinkwrap licenses are enforceable unless their terms are
objectionable on grounds applicable to contracts in general (for example, if they violate
a rule of positive law, or if they are unconscionable)” [59].
MORTENSON v. TIMBERLINE SOFTWARE
M. A. Mortenson Company was a national construction contractor with a regional
office in Bellevue, Washington. Timberline Software Inc. produced software for the
construction industry. Mortenson had used software from Timberline for several years.
In July 1993, Mortenson purchased eight copies of a bidding package called Precision
Bid Analysis.
Timberline's licensing agreement included this paragraph:
LIMITATION OF REMEDIES AND LIABILITY.
NEITHER TIMBERLINE NOR ANYONE ELSE WHO HAS BEEN INVOLVED
IN THE CREATION, PRODUCTION OR DELIVERY OF THE PROGRAMS OR
USER MANUALS SHALL BE LIABLE TO YOU FOR ANY DAMAGES OF ANY
TYPE, INCLUDING BUT NOT LIMITED TO, ANY LOST PROFITS, LOST SAV-
INGS, LOSS OF ANTICIPATED BENEFITS, OR OTHER INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, ARISING OUT OF THE USE OR INABILITY TO
USE SUCH PROGRAMS, WHETHER ARISING OUT OF CONTRACT, NEGLI-
GENCE, STRICT TORT, OR UNDER ANY WARRANTY, OR OTHERWISE, EVEN
IF TIMBERLINE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAM-
AGES OR FOR ANY OTHER CLAIM BY ANY OTHER PARTY. TIMBERLINE'S
LIABILITY FOR DAMAGES IN NO EVENT SHALL EXCEED THE LICENSE FEE
PAID FOR THE RIGHT TO USE THE PROGRAMS.
In December 1993, Mortenson used Precision Bid Analysis to prepare a bid for the
Harborview Medical Center in Seattle. On the day the bid was due, the software mal-
functioned. It printed the message “Abort: Cannot find alternate” 19 times. Mortenson
continued to use the software and submitted the bid the software produced. After the
firm won the contract, Mortenson discovered that its bid was $1.95 million too low.
Mortenson sued Timberline for breach of express and implied warranties. It turns
out Timberline had been aware of the bug uncovered by Mortenson since May 1993.
Timberline had fixed the bug and already sent a newer version of the program to some
of its other customers who had encountered it. It had not sent the improved program to
Mortenson. Nevertheless, Timberline argued that the lawsuit be summarily dismissed
because the licensing agreement limited the consequential damages that Mortsenson
could recover from Timberline. The King County Superior Court ruled in favor of Tim-
berline. The ruling was upheld by the Washington Court of Appeals and the Supreme
Court of the State of Washington [60].
 
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