john step-hen hirsch

Step-Saver Data Systems, Inc. v. Wyse Technology

Step-Saver Data Systems, Inc. v. Wyse Technology

United States Court of Appeals for the Third Circuit
Argued April 8, 1991
Decided July 29, 1991
Full case name: ''Step-Saver Data Systems, Inc. v. Wyse Technology and The Software Link, Inc.
Citations: 939 F.2d 91; 1991 U.S. App. LEXIS 16526; 15 U.C.C. Rep. Serv. 2d (Callaghan) 1
Prior history: 1989 U.S. Dist. LEXIS 11320 (E.D. Pa. Sept. 25, 1989); affirmed in part, reversed in part, 912 F.2d 643 (3rd Cir. 1990); plaintiff's motion for a new trial denied, 752 F. Supp. 181 (E.D. Pa. 1990); dismissed, 1990 U.S. Dist. LEXIS 17381 (E.D. Pa. Dec. 21, 1990)
Subsequent history: None
A written license and warranty disclaimer on the box-top of a software package did not become part of a binding contract when the software was purchased. Judgment of U.S. District Court for the Eastern District of Pennsylvania affirmed in part, reversed in part, and remanded.
Circuit Court panel
Chief Judge Dolores K. Sloviter
Circuit Judges Robert E. Cowen, John M. Wisdom (U.S. Court of Appeals for the Fifth Circuit, sitting by designation)
Case opinions
Decision by: Wisdom
Joined by: Sloviter, Cowen
Laws applied
U.C.C. § 2-207
Step-Saver Data Systems, Inc. v. Wyse Technology, 939 F.2d 91 (3rd Cir. 1991) was case in which the legality and history of computer EULAs was explored. The court noted, "When these form licenses were first developed for software, it was, in large part, to avoid the federal copyright law first sale doctrine" thus the intent of EULAs after 1990 were to preempt federal statutes using contract law and that they serve no purpose besides attempts to preempt consumer rights in other statutes.

In this case, the U.S. Court of Appeals for the Third Circuit held that a EULA disclaimer waiving all express and implied warranties, printed on the outside of the box, was not binding. Step-Saver repeatedly bought Multilink Advanced, an allegedly MS-DOS compatible operating system, from The Software Link (TSL). On each box was a shrink wrap license disclaimer; "software sold AS IS, without warranty; TSL disclaims all express and implied warranties; if you don’t agree to this disclaimer return the product, unopened, to TSL for a refund.". Step-Saver sued TSL, claiming that Multilink Advanced was not MS-DOS compatible. The court ruled that the EULA was not enforceable and that the sole reason of the EULA after 1990 was to preempt federal statutory and constitutional laws. This matter, however, involved a negotiated transaction between two businesses, and the licenses varied terms between the shrink wrap license and the sale terms which were already negotiated, over the telephone.

The questions raised about constitutional and statutory preemptions from this case however has been re-argued in other cases such as Softman v. Adobe and Novell, Inc. v. CPU Distrib., Inc. in which the preempted federal statutes have been enforced over the EULA terms, thus invalidating that part of the EULA.

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