i.LAN Systems, Inc. (“i.LAN”), helps companies monitor their computer networks. NetScout Service Level Corp., formerly known as NextPoint Networks, Inc. (“NextPoint”), sells sophisticated software that monitors networks. In 1998, i.LAN and NextPoint signed a detailed Value Added Reseller (“VAR”) agreement whereby i.LAN agreed to resell NextPoint’s software to customers. This dispute concerns a transaction that took place in 1999.

i.LAN claims that for $85,231.42 it purchased the unlimited right to use NextPoint’s software, replete with perpetual upgrades and support, whereby it effectively could rent, rather than sell, NextPoint’s software to customers. In support of its argument, i.LAN points to the purchase order associated with the transaction. NextPoint, in response, points to the 1998 VAR agreement and the clickwrap license agreement contained in the software itself to reach a different conclusion.

The parties continued their relationship for several months without confronting their conflicting interpretations of the 1999 purchase order, but eventually the disagreement erupted into litigation. i.LAN filed a complaint that allegesbreach of contract. Both parties moved for summary judgment, i.LAN arguing that it should be awarded specific performance—perpetual upgrades of NextPoint’s software and unlimited support—and NextPoint arguing that even if i.LAN’s allegations were true, the clickwrap license agreement limits NextPoint’s liability to the price paid for the software: $85,231.42.

Questions:

1. What law should the court apply to resolve this conflict over the terms of clickwrap license agreements for software?

2. What is the basis for i.LAN’s and NextPoint’s dispute?

3. What law governs the software licenses in question?

4. Then what law does the court use to resolve the dispute?

5. Why?

6. Do you mean the court ignores the common law—which arguably should apply in the absence of any software license-specific legislation to the contrary—and applies 7. Article 2 of the UCC, which the court acknowledges does not apply to software licenses?