EULAs Inability to Stop Lineage II Lawsuit

A judge’s ruling earlier last month that Craig Smallwood’s lawsuit against Lineage II maker NCsoft could continue (a suit in which Smallwood claimed he was addicted to the game), could have an impact on End User Licensing Agreements (EULA).

A lawyer at Princeton’s Center for Information Technology Policy named Steven Roosa took to his blog (thanks Slashdot) to discuss the Smallwood case, using the headline “A Software License Agreement Takes it on the Chin.”

Roosa detailed NCsoft’s attempt to stop the lawsuit by using Section 12 of its User Agreement, which is entitled “Limitation of Liability.” The judge eventually only partially granted NCsoft’s motion to dismiss.

Roosa wrote:

The Court determined that the User Agreement contained a valid “choice of law” provision stating that Texas law would govern the interpretation of the contract. However, the Court then ruled that both Texas and Hawaii law did not permit people to waive in advance their ability to make gross negligence claims. The plaintiff’s remaining negligence claims survived as well.

The claims based on gross negligence remained viable for the full range of tort damages, including punitive damages, whereas the straight-up negligence-based claims would be subject to the contractually agreed on limitation on damages.

This is significant, according to Roosa, because the gross negligence claim survived, but also because “having the right to sue for “gross negligence” is the functional equivalent of having the right to sue for straight-up negligence as well—thus radically broadening the scope of claims that (according to the court) cannot be waived in a User Agreement.”

The unfolding events in the Smallwood case caused Roosa to proclaim:

The Smallwood decision, if it stands, may achieve some lasting significance in the software license wars.

A Wall Street Journal article on the subject answered Roosa’s above proclamation with the response, “Let’s hope not. Because a new opportunity for parasitic litigation isn’t exactly the way to boost technological progress.”

If Smallwood’s lawsuit was eventually tossed, the WSJ author wrote:

And a good thing that would be, because discovering some newly elastic definition of injury, combined with an expanded concept of "gross negligence" would be just the stuff to spur a new tortious gold rush. Do we want the tech biz focused on innovation or litigation?

The Journal writer also took an unnecessary potshot at gamers. Smallwood’s claims of being “unable to function independently” and suffering from "distress and depression” caused the author write:

Mr. Smallwood did not specify how this differs from the condition of the average video-game aficionado.

Jerk.

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