No Contract Formed by New Car Satellite Radio Trial Subscription Offer

This case is not a copyright case or even an intellectual property law case.  However, this case discusses contract formation issues that every intellectual property owner would benefit from knowing.  This case discusses contract formation for a digital service.  Since many business owners rely on licenses (a type of contract) to help protect their intellectual property rights, understanding when and how a contract is formed is essential.

Satellite radio service Sirius XM Radio Inc. broadcasts commercial-free radio channels to over 20 million subscribers.  A trial subscription of Sirius XM radio comes with many new vehicles. Erik Knutson activated the Sirius XM radio trial subscription that came with his new truck on November 7, 2011.  Knutson afterward received telemarketing calls on his cell phone from Sirius XM.  Knutson brought a class action lawsuit against Sirius XM, claiming federal Telephone Consumer Protection Act violations.  The district court ruled that Knutson was bound by the arbitration provision in the Sirius XM Customer Agreement and dismissed Knutson’s case.  The Ninth Circuit Court of Appeals reversed and remanded.

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