In January 2003, California resident Cathy Baker walked into her local CompUSA store to return copies of Windows XP and Norton AntiVirus she'd purchased there. When trying to install the programs, she had of course been confronted by all the obnoxious terms in the Windows and NAV End User License Agreements. Instead of clicking OK, she took them back to the store for a refund, as the EULAs said she was supposed to do if she refused to accept the terms.

At CompUSA, however, Baker was told the store's policy was that it could not give refunds for software once the customer has opened the package. Even though Baker had no way of seeing the EULAs until after she purchased the products, took them home, opened the package and tried to install the software on her computer, she was now told she could not get her money back even when she rejected the terms. (In a somewhat bizarre twist, after she protested enough, one CompUSA employee told her that they had "secret instructions" from Symantec to provide refunds in such circumstances.) So, like many others before her, Baker was confronted with the classic shrinkwrap license conundrum: She could only see the terms by opening the box, and opening the box meant she was stuck with it. But Baker did something most others before her had not - she went and got a lawyer.

"When Miss Baker came to us, we felt it was an important case to bring for the benefit of the general public," says Baker's attorney, high tech litigation specialist Ira Rothken. "In our research, we found that it hadn't been discussed before - there was no guidance on it in the literature. Here you have a multibillion-dollar industry that is using improper business practices as a consistent policy, in violation of federal and California consumer warranty statutes. As a practical matter, the consumer couldn't review the terms and conditions prior to the sale and couldn't reject them with any certainty they could get all their money back."

After Rothken first filed the lawsuit in February of 2003, ensuing news coverage brought more consumers forward with similar stories of their own. An amended complaint to the case Rothken filed in May of that year added a second plaintiff along with Baker and also included Adobe, Staples and Best Buy as defendants with Microsoft, Symantec and CompUSA. Ultimately the parties entered a mediation process and in April they reached a settlement under which the six defendants had up to 120 days to make the agreed-upon changes to their procedures. The entire settlement along with the amended complaint and exhibits can be read in a PDF file on Rothken's website, but it reads in part:

"The Settlement Agreement provides to the General Public of California, amongst other things, the right of consumers to return applicable Symantec, Adobe and Microsoft software for full monetary refunds even if the shrink-wrap has been opened ... In addition, Symantec, Adobe, and Microsoft agreed to provide EULAs for the applicable software products on their web site and notices on their respective software packaging of the web addresses to such EULAs so consumers can review such EULAs prior to purchase of the software." CompUSA, Best Buy and Staples "agreed to provide such EULAS to consumers upon request prior to sale of the above software at their retail stores in California and to provide notices to consumers in such stores to effectuate the above."

There's a lot in this settlement, and I'm going to have more to say about why it's important in the near future. But there have already been changes because of it, and I think there are going to be more. When Baker walked into that CompUSA almost two years ago, there was basically no way for her to see the Windows XP or Norton AntiVirus EULA before she put her money down. Last week, as part of the General Public of California myself, I strolled into my local Staples to see if anything has changed now that these wayward defendants have had their 120 days to shape up. Sure enough, the new packages for Windows XP Home Edition and NAV 2005 direct you to Microsoft and Symantec web pages where those EULAs are posted. In fact, newer packages for Microsoft Office applications also have a URL for those EULAs, even though Office was not formally part of the settlement agreement.

And that's why I think we can expect more changes to come. This settlement isn't going to be just applied in California, it's not going to only be honored by these three software companies, and it's not only going to force brick-and-mortar software retailers to help their customers see terms before they buy. Think about it. If you were a legal advisor for Amazon, Autodesk, Borland, CDW, Circuit City, Intuit, Macromedia, McAfee, Sears, or any number of other companies involved in selling software to consumers, wouldn't you be suggesting they treat this settlement as if it were binding on them as well?

Of course, the right to return opened software and the right to see terms before you buy aren't going to rid us of all the nasty sneakwrap terms overnight. But the first step has been taken. Baker took it two years ago when she walked into a store to demand the rights that we all should have.

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