A California court recently dismissed on the pleadings a putative class action against Skype Inc. alleging that Skype unfairly advertises its monthly calling plans as “Unlimited” when there are limits on consumers’ use of the plans. The court’s ruling focused on Skype’s website disclosures and its “clickwrap” agreement with consumers. More specifically, plaintiff alleged claims under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, arguing that Skype unfairly advertises its monthly calling plans as “Unlimited” when Skype, through its Fair Usage Policy, restricts use of the plans to a maximum of 10,000 minutes a month, six hours per day and no more than 50 different numbers called in a day. In response, Skype argued that, in its website advertising, the word “Unlimited” is footnoted to Skype’s Fair Usage Policy, which discloses through a hyperlink the complained-of restrictions. In addition, prior to purchase, all Skype users are required to assent, clicking a box labeled “I agree,” to Skype’s Terms of Use — commonly referred to as a “clickwrap” agreement — which, again, incorporates Skype’s Fair Usage Policy. The Honorable Jane Johnson in the complex division of the Los Angeles Superior Court, dismissing all of plaintiff’s claims with prejudice, reasoned that the restrictions of the Fair Usage Policy were disclosed through the footnote and plaintiff is held to the terms of her “clickwrap” agreement with Skype. This ruling is particularly significant given that California has some of the toughest unfair competition, false advertising and consumer protection laws in the country. Bingham partner Warren Rissier represented Skype in this matter.
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Rissier-JThis article was originally published by Bingham McCutchen LLP.