Netscape Communications, now a unit of AOL, was sued by customers alleging that the SmartDownload software was privacy-intrusive and violated electronic surveillance laws by monitoring internet users’ moves.
AOL abandoned the tracking feature of SmartDownload after being sued. However, it also claimed that its customers could not bring court proceedings because they had accepted an arbitration-only clause in the end-user licence agreement.
According to CNet, the court rejected AOL’s argument, reasoning that the terms of the agreement were presented on the web page below the download button. Therefore users who obtained SmartDownload had not received “reasonable notice” of the terms of the agreement.
The court also confirmed an earlier decision, ruling that the agreement in dispute did not cover SmartDownload anyway, because it was designed for Communicator.
Last month, another US court ruled that a PayPal clickwrap clause requiring users to go through arbitration proceedings in the event of a dispute was invalid.