## Facts

- Illinois users filed a putative class action against RealNetworks, Inc., alleging that RealPlayer/RealJukebox software secretly accessed or intercepted users’ electronic communications and stored information, asserting privacy and trespass-type claims.
- RealNetworks distributed free “basic” software online and required users, before installation, to accept an on-screen End User License Agreement (EULA) displayed in a pop-up window.
- Users could not proceed with installation without clicking to accept the EULA; the arbitration clause appeared in the same font and size as other terms and was the last clause in the window.
- The EULA provided for Washington law, consent to jurisdiction in Washington state and federal courts, and arbitration in Washington for unresolved disputes under the license.
- In related actions, the court had already stayed the case and compelled arbitration under the Federal Arbitration Act (FAA).
- The court permitted an intervenor to present additional arguments opposing arbitration that had not been addressed when arbitration was first compelled.

## Issues

1. Whether the on-screen clickwrap EULA constituted an “agreement in writing” sufficient to satisfy the FAA.
2. Whether the EULA’s Washington jurisdiction language required application of Ninth Circuit law or otherwise displaced controlling Seventh Circuit precedent.
3. Whether the arbitration clause was unenforceable due to procedural or substantive unconscionability, including alleged concealment, a distant arbitral forum, lack of class procedures, or cost burdens.

## Decision

- The court rejected the intervenor’s new objections and left in place its prior order staying litigation and compelling arbitration.
- The court held that the electronic clickwrap EULA satisfied the FAA’s “agreement in writing” requirement.
- The court held that the Washington jurisdiction language functioned as a forum-selection/consent-to-jurisdiction term and did not change which federal circuit’s law governed enforceability in the pending case.
- The court held the arbitration clause was not procedurally unconscionable because it was presented in a readable format, not hidden, and acceptance required an affirmative click.
- The court held the arbitration clause was not substantively unconscionable based on the Washington arbitration location, the absence of class arbitration, or the EULA’s cost allocation.

## Legal Principles

- An electronic clickwrap contract can constitute a “written” arbitration agreement under the FAA when the terms are presented in a form that records and communicates the agreement and are capable of being preserved (including being printable or storable).
- A contractual clause consenting to jurisdiction in a particular forum is not, without more, a choice-of-law provision that imports another circuit’s decisional law for a case pending elsewhere.
- Procedural unconscionability focuses on whether terms were meaningfully disclosed and whether assent was obtained through a process providing a fair opportunity to review; uniform font/placement and an affirmative click-to-accept weigh against a finding that an arbitration term was hidden.
- Substantive unconscionability requires a showing of terms so one-sided as to be intolerable; a distant arbitral forum, the absence of class procedures, and consumer cost obligations are not necessarily sufficient, standing alone, to invalidate an arbitration clause.

## Conclusion

The court enforced the clickwrap arbitration clause and refused to revisit its earlier order compelling arbitration, concluding that the on-screen EULA met the FAA’s writing requirement, the Washington jurisdiction language did not alter controlling precedent, and the clause was not unconscionable.


In re RealNetworks, Inc. Privacy Litig., 2000 WL 631341 (N.D. Ill. May 8, 2000)