Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Partner

Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Lawrence Gallick

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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Socially Aware is devoted to the law and business of social media, proactively addressing emerging issues and keeping our clients informed of new developments. We cover fields such as artificial intelligence, privacy and data security, Section 230, intellectual property, and much more.

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Lawrence W. Gallick

2024 Recap: Ten Lords A-Leaping!

Social Links: If the Suit Fits

Social Links: Age Verification, X Appeal, and the Great White North

Social Links: Fake Reviews, Real Rulings, and an Epic Fail

Lawrence W. Gallick on Toth v. Everly Well, Inc.

IntroductionIn June of this year, we sent out an alert about the anticipated new UK copyright infringement exceptions. These exceptions were to be introduced based on the recommendations of the Hargreaves Review. Surprisingly, some of the exceptions had been dramatically pulled from the legislative slate at the last minute. However, the UK government has now upheld its subsequent promise to re-publish the statutory instruments for the infringement exceptions for (1) personal use, (2) parodies and (3) quotations, with new legislation on all three subjects that came into force on October 1, 2014.Almost in parallel, a European ruling and an Advocate General opinion have helped to prepare for the arrival of the two statutory instruments, with commentary on (i) the scope of parody and (ii) in relation to personal use, the impact of copyright levies.The New LegislationTwo new regulations have come into force, amending the Copyright, Designs and Patents Act 1988 (the “CDPA”) to include new exceptions for copyright infringement. The first – the <a href="http://www.legislation.gov.uk/uksi/2014/2356/contents/made" target="_blank" rel="noopener">Copyright and Rights in Performances (Quotation and Parody) Regulations 2014</a> (the “Quotation and Parody Regulations”) – extends the provisions for quotations of copyright-protected works (having previously only been available for criticism and review), and creates a new provision for parodies.  The second regulation – the <a href="http://www.legislation.gov.uk/uksi/2014/2361/contents/made" target="_blank" rel="noopener">Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014</a> (the “Personal Copies Regulations”) – concerns making copies of copyrighted works for personal use.QuotationFrom October 1, 2014, the free quotation of copyright protected works is no longer limited to reporting current events or to works of criticism or review. The Quotation and Parody Regulations, inserted into the CDPA as section 30(1ZA), now permit quotation for any purpose, provided that:<ul><li>the work quoted has been made publicly available;</li><li>the use of the quotations constitutes “fair dealing” with the work;</li><li>the extent of a quotation is no more than is necessary for the purpose; and</li><li>the quotation is accompanied by sufficient acknowledgment to the copyright owner (unless this is impossible).</li></ul>The UK Intellectual Property Office has stated that this amendment will help to save costs on copyright clearance, support free expression and align UK law with the rest of Europe. However, as anticipated in our previous alert, the Quotation and Parody Regulations do not provide a definition of “quotation”, or guidance as to how extensive a “quotation” is allowed to be. This may place undue pressure on the meaning of “fair dealing” as UK courts seek to define the scope of the exception.ParodyThe new exception for parodies allows fair dealing with a work for the purposes of caricature, parody or pastiche (section 30A of the CDPA) and provides that fair dealing with a recording or performance  (section 2A to Schedule 2 of the CDPA) for the purposes of parody does not infringe copyright conferred in the performance or recording. This change now means that the permission of the copyright holder will no longer have to be obtained, provided that the use of the original work is fair and proportionate.  This is good news for British comedians and artists, it would seem, unless, of course, it is their work that is being parodied.However, an EU court ruling on parodies in September 2014 has already placed some restrictions on the new legislation. In Deckmyn v Vandersteen C-201/13, the Court of Justice of the European Union (the “CJEU”) defined a parody as something that evokes an existing work while being noticeably different from it and constituting an expression of humour or mockery. The CJEU also stated that national courts must strike a balance between copyright owners’ interests and mimickers, and that copyright owners have a legitimate interest in disassociating their work from a parody, if the parody involves a discriminatory message.This creates a whole new checklist for UK courts to consider, alongside the usual fair dealing test. Judges will have to also hold a view on whether the parody (i) strikes a fair balance, (ii) differs noticeably from the original work, and (iii) is sufficiently humorous. In particular, the last of these requirements may worry budding parodists, who could end up having to justify their comedy in front of a very different audience than first intended.Personal CopiesThe Personal Copies Regulations, incorporated into the CDPA as section 28B, now allow consumers to make personal copies of content (other than computer programmes) they have bought, as long as (i) the copy is for their own private and non-commercial use, (ii) the copy is not an infringing copy, and (iii) the content has been lawfully acquired on a permanent basis.  The UK government’s hope is that this new exception will cause UK law to reflect common consumer practice more closely in this area.The personal use exception contains some interesting features:<ul><li>Temporary vs. permanent copies – Any copies of works that have been borrowed, rented, broadcast, streamed or obtained using any other technology, which allows for only temporary access to a copy are not “lawfully” acquired and would not benefit from the exception. For example, copying a show from a TV streaming service is not allowed.</li><li>Cloud services – Copies can be made for “back up” and “format-shifting”, provided that the copy is accessible only to the individual and the data storage provider. This feature has been included, perhaps in an effort to assuage rights holders’ concerns about P2P sites.</li><li>Technological protection measures – To ensure that copyright owners do not unduly prevent copying of content for personal use, there is a procedure to submit complaints to the Secretary of State, in the event that a technological measure prevents a copyrighted work from being copied for personal use (see section 296ZEA of the CDPA).</li></ul>It had been thought that there might be some concession made, such as copyright levies on storage media, to the “fair compensation” lobby that has complained that the personal use exception may cause financial detriment to rights holders.  However, the UK government has given no indication that any such compensation system is to be introduced.  It is worth noting that some EU countries already have such levies in place; however, the decision whether to introduce levies lies with each Member State.  This determination was re-affirmed in a recent Advocate General opinion in Copydan Båndkopi v Nokia C-463/12. A final decision in the case has not yet been issued and we will consider the implications of the CJEU judgment on the UK position, once a definitive ruling has been made.ConclusionThe personal use exception remains controversial and faces criticism from rights holders such as musicians, who could lose out on approximately £58 million in revenues a year, as a result. Further, the relationship between the personal use exception and temporary content apps such as Snapchat poses interesting questions, for users and companies alike.There are no guidelines as to what constitutes a “quotation” and although there are guidelines as to what constitutes “parody” the inherently subjective nature of aspects of those terms allows room for disagreement.The initial uncertainties about the limits of the two new exceptions may trouble rights holders, especially adding the concern that users will be emboldened to stretch boundaries. This is in turn seems likely to lead to judicial intervention.  So, whilst the new exceptions align the UK more closely with other parts of Europe, commercially these changes may result in some copyright owners being forced into selective, strategic litigation in an effort to protect their works.

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Mercedes Samavi is an associate based in the London office of Morrison & Foerster and a member of both the Technology Transactions Group and the Global Privacy Group.
Mercedes advises domestic and int

Mercedes Samavi

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Copyright: Europe Explores Its Boundaries – New UK Infringement Exceptions – The Ones That Came Back Again

Copyright: Europe Explores Its Boundaries – New UK Infringement Exceptions – The Ones That Came Back Again

Introduction In June of this year, we sent out an alert about the anticipated new UK copyright infringement exceptions. These exceptions were to be introduced b

In a little-noticed decision, Matter of Noel v. Maria, Support Magistrate Gregory L. Gliedman—a Staten Island, New York family court official—recently permitted a father seeking to modify his child support payments to serve process on the child’s mother by sending her a digital copy of the summons and petition through her Facebook account.Magistrate Gliedman’s decision struck us at Socially Aware—where we follow such developments closely—as a groundbreaking move. We are unaware of any published U.S. court opinion permitting a plaintiff to serve process on a domestic, U.S.-based defendant through a Facebook account.As we addressed in a 2012 Socially Aware blog post, in Fortunato v. Chase Bank a federal district court in Manhattan held that Chase Bank could not rely on Facebook to serve a third-party defendant.While the same federal district court subsequently allowed the FTC to serve defendants through Facebook in FTC v. PCCare247, the service at issue in that case concerned documents other than the summons and complaint, and the defendants were two India-based entities and three India-based individuals who had already appeared through counsel and shown themselves to be on notice of the lawsuit.Other cases authorizing service via social media have been similarly limited in scope. For example, in WhosHere v. Orun, the U.S. District Court for the Eastern District of Virginia allowed service via social media on a defendant who allegedly resided in Turkey. In Mpafe v. Mpafe, a Minnesota family court authorized the service of divorce proceedings on a defendant by “Facebook, Myspace or any other social networking site” where the defendant was believed to have left the country.Further, the court in FTC v. PCCare247 permitted Facebook service only as a backstop to service by regular email, and specified that Facebook service alone might not satisfy due process because—as the court understood it—“anyone can make a Facebook profile using real, fake, or incomplete information, and thus, there is no way for the Court to confirm whether the [party] the investigator found is in fact the third-party Defendant to be served.”Of course, Facebook has been well known for requiring use of one’s real name in opening a Facebook account. And although Facebook recently modified its real-name policy to accommodate stage names, Facebook remains strongly opposed to fake accounts. That being said, Facebook has acknowledged that many unauthorized accounts exist on its platform.Moreover, with over 1.5 billion users, it’s not uncommon for people sharing the same or similar names to be mistaken for one another on Facebook; if you can accidentally send a friend request to a stranger who happens to share a name with a childhood classmate, could you end up serving process on the wrong person via a Facebook message?And although a 2013 study revealed that smartphone users access their Facebook accounts an average of 14 times a day (!), might there be people out there who have a Facebook account but rarely if ever check it? Of course, this particular concern may be overcome by showing that a defendant is actively using his or her Facebook account; indeed, in Matter of Noel v. Maria, the father presented evidence that the mother had recently “liked” photos posted to another Facebook page, indicating that the mother was in fact an active Facebook user.In any event, Magistrate Gliedman’s decision represents a significant milestone, and deserves greater attention and discussion. As Facebook and other social media practices become ever more deeply integrated into our lives, expect to see other judges and magistrates exploring—and perhaps even expanding—the circumstances under which service of process via a social media channel is deemed appropriate.

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New York Family Court Magistrate Allows Unprecedented Service of Process via Facebook; Will Others Follow?

New York Family Court Magistrate Allows Unprecedented Service of Process via Facebook; Will Others Follow?

In a little-noticed decision, Matter of Noel v. Maria, Support Magistrate Gregory L. Gliedman—a Staten Island, New York family court official—recently permitted

Congratulations to Socially Aware’s London-based correspondent Sue McLean for being shortlisted for the Women in the City Woman of Achievement Awards 2014. Established in 2007, these awards recognize senior level women who are actively promoting and encouraging the progress of women within their own organizations and beyond. Winners will be announced on October 23 at a celebration evening. In addition to her many contributions to Socially Aware, Sue is of counsel in Morrison & Foerster’s Technology Transactions Group, is the founder and chair of the firm’s MoFo Women affinity group, and manages and mentors a number of lawyers in the firm. She is also a passionate advocate  of gender diversity in tech. Just this week she hosted and chaired a “Women in Technology” roundtable with Harriet Minter of The Guardian newspaper. Senior women from leading companies such as VMware, Oracle, Intel, IBM, and Fujitsu, along with other representatives from across the sector, attended to discuss how we can improve gender diversity in tech. It was a great success and follow-up sessions are planned.

Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.

Aaron Rubin

Sue McLean Named Finalist for Woman of Achievement Award

Congratulations to Socially Aware’s London-based correspondent Sue McLean for being shortlisted for the Women in the City Woman of Achievement Awards 2014. Esta

Sue McLean Named Finalist for Woman of Achievement Award

Not to be outdone by Florida, California has yet again amended its data security breach law and again in groundbreaking (yet confusing) fashion. On September 30, 2014, California Governor Brown signed into law a bill (<a href="http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB1710" target="_blank" rel="noopener">“AB 1710”</a>) that appears to impose the country’s first requirement to provide free identity theft protection services to consumers in connection with certain data security breaches. The law also amends the state’s personal information safeguards law and Social Security number (“SSN”) law. The amendments will become effective on January 1, 2015.Free Identity Theft Protection Services Required for Certain Breaches Most significantly, AB 1710 appears to amend the California breach law to require that a company offer a California resident “appropriate identity theft prevention and mitigation” services, at no cost, if a breach involves that individual’s name and SSN, driver’s license number or California identification card number. Specifically, AB 1710 provides, in pertinent part, that if a company providing notice of such a breach was “the source of the breach”:an offer to provide appropriate identity theft prevention and mitigation services, if any, shall be provided at no cost to the affected person for not less than 12 months, along with all information necessary to take advantage of the offer to any person whose information was or may have been breached.The drafting of this requirement is far from clear and open to multiple readings. In particular, the use of the phrase “if any” can be read in multiple ways. For example, the phrase “if any” can be read to modify the phrase “appropriate identity theft prevention and mitigation services.” Under this reading, the law would impose an obligation to provide free identity theft protection services if any such services are appropriate. The phrase “if any,” however, could be read to modify the “offer” itself. Under this alternate reading, the law would provide that if a company intends to offer identity theft protection services, those services must be at no cost to the consumer. It is difficult to know how the California Attorney General (“AG”) or California courts will interpret this ambiguity. One thing is clear: until the AG or courts opine, the standard will remain unclear.The drafting of the requirement also is not clear in other ways. For example, the statute does not specify what type of services would qualify as “appropriate identity theft prevention and mitigation services.” For example, would a credit monitoring product alone be sufficient to meet the requirement? Or would the law require something in addition to credit monitoring, such as an identity theft insurance element?Nonetheless, state AGs historically have encouraged companies to provide free credit monitoring to consumers following breaches. In addition, even though not legally required, free credit monitoring has become a common practice, particularly for breaches involving SSNs and also increasingly for high-profile breaches. Nonetheless, California appears to be the first state to legally require that companies offer some type of a free identity theft protection service for certain breaches.AB 1710 is particularly notable in its approach. First, the offer of free identity theft protection services will only be required for breaches involving SSNs, driver’s licenses or California identification card numbers. In this regard, an offer of free identity theft protection services will not be required for breaches involving other types of covered personal information, such as payment card information or usernames and passwords. This approach endorses a position that many companies have long held—that credit monitoring is appropriate only when the breach creates an actual risk of new account identity theft (as opposed to fraud on existing accounts). In addition, the offer of free identity theft protection services will only be required for a period of one year (as opposed to, for example, two years). The length of the offer of free credit monitoring has always been an issue of debate, and California has now endorsed a position that a one-year offer is sufficient.Service Providers Directly Subject to Safeguards Requirements AB 1710 also amends the California personal information safeguards law to impose the state’s safeguards obligations directly on entities who “maintain” information, even if they do not own that information. The state’s safeguards standard historically required companies that “own or license” covered personal information about California residents to “implement and maintain reasonable security procedures and practices appropriate to the nature of the information” in order to protect the personal information from unauthorized activity. The existing standard did not apply directly to third parties, such as service providers, that maintain information, but do not own it. Instead, the existing standard required that owners of personal information contractually require nonaffiliated third parties to whom they would disclose such information to take steps to protect the information.AB 1710, however, specifically amends the safeguards law to impose its reasonable security procedures and practices standard directly on entities that “maintain” covered personal information, even if they do not “own or license” the data. Moreover, AB 1710 eliminates the requirement to pass-through security obligations by contract to certain third parties. Specifically, AB 1710 provides that the third-party contract requirement does not apply to a company that provides covered personal information to a third party that will now be directly subject to the safeguards standard (i.e., a third party that “maintains” covered personal information). As a result, the third-party contract requirement would appear to apply only when a company discloses covered personal information to a nonaffiliated third party that will handle such data, but not “maintain” it.New Prohibition on Sale of SSNSFinally, AB 1710 amends the California SSN law to prohibit any person from selling, advertising for sale or offering to sell an individual’s SSN. Moreover, AB 1710 specifically provides that the “[r]elease of an individual’s [SSN] for marketing purposes is not permitted.” This new prohibition on the sale of SSNs, however, will not apply: (1) if the disclosure of the SSN is incidental to a larger transaction and is necessary to identify the individual in order to accomplish a legitimate business purpose; or (2) for a purpose specifically authorized or allowed by federal or state law. Although AB 1710’s limitation on the sale of SSNs is unique among the many state SSN laws, other state SSN laws do include similar prohibitions, such as the Alaska, Minnesota, North Carolina, South Carolina and Vermont laws.Practical Implications for Businesses The California requirement regarding free identity theft protection services for certain breaches adds yet another layer of complexity for a company that suffers a breach. Companies should be prepared to make difficult decisions regarding how to implement the new requirement. For example, companies should consider:<ul><li>Until further guidance is provided by the AG or courts, how will your company interpret the language of the requirement? For example, will your company take the position that AB 1710 does not actually impose a requirement to offer free identity theft protection services?</li><li>What type of “appropriate identity theft prevention and mitigation” services will your company offer when it believes such an offer is required?</li><li>In the event of a breach involving information regarding residents of multiple states, including California, will your company extend an offer of identity theft protection services to residents of states other than California?</li><li>Will your company offer identity theft protection services in connection with breaches involving personal information other than SSN, driver’s license number or California identification card number?</li><li>When your company offers free identity theft protection services, will it provide the offer only for one year? Are there circumstances in which your company will extend an offer for a longer period?</li></ul>As has been historically true, other states may follow California’s lead. As a result, it will be important to monitor state legislative developments, and if a state imposes a similar requirement, determine if it follows a risk-based approach similar to AB 1710.In addition, companies that provide services to others that involve maintaining personal information relating to California residents that is maintained but not owned should be aware that they will be directly subject to the requirements of the California safeguards law. Before AB 1710’s new requirements become effective, such companies should take a fresh look at their security procedures and practices and consider whether they are appropriate and would comply with the California safeguards requirement.

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Recognized as an authority on financial privacy issues, Nathan helps financial institutions and other companies develop practical solutions for complying with privacy and data security laws. In partic

Nathan D. Taylor

Nathan Taylor

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Breaking Old Ground: California Again Amends Data Security Breach Law

New California Privacy Law Revisions Will Impact Website and Mobile App Operators With Users Under Age 18

Not to be outdone by Florida, California has yet again amended its data security breach law and again in groundbreaking (yet confusing) fashion. On September 30

Breaking Old Ground:  California Again Amends Data Security Breach Law

Operators of social media platforms and other websites must manage a large number of risks arising from their interactions with users. In an effort to maintain a degree of predictability and mitigate some of those risks, website operators routinely present users with terms of use or terms of service (“Website Terms”) that purport to govern access to and use of the relevant website and include provisions designed to protect the website operators, such as disclaimers, limitations of liability and favorable dispute resolution provisions. But are such Website Terms enforceable against users and do they actually provide the protection that website operators seek? The answer may well depend on how the Website Terms are implemented.Clickwrap vs. BrowsewrapWebsite Terms typically come in two flavors: “clickwrap” terms, where users are required to accept by taking some affirmative action such as checking a box or clicking an “I accept” button before using the website, and “browsewrap” terms that are provided to users through a link (often, but not always, at the bottom of the page) and purport to bind users even without any affirmative manifestation of acceptance. In determining whether Website Terms are enforceable against users, courts focus on whether users had notice of the terms and actually agreed to be bound by them. Not surprisingly, therefore, courts tend to look more favorably on clickwrap implementations as compared to browsewrap terms.For example, in Fteja v. Facebook, Inc. (S.D.N.Y. 2012), the plaintiff claimed that Facebook disabled his Facebook account without justification and for discriminatory reasons, causing emotional distress and harming his reputation. Facebook moved to transfer the case to federal court in Northern California based on the forum selection clause in the Facebook terms of use, but the plaintiff claimed that he had never agreed to the terms of use. The court concluded that the plaintiff was bound by the Facebook terms, however, because he had checked a box indicating his acceptance when he registered for Facebook.In contrast, Barnes & Noble had less luck enforcing its terms of use in Nguyen v. Barnes & Noble, Inc. (9th Cir. August 18, 2014). In Nguyen, the plaintiff ordered a tablet from Barnes & Noble at a discounted price but Barnes & Noble canceled his order. The plaintiff sued and Barnes & Noble moved to compel arbitration based on an arbitration clause included in its website’s browsewrap terms of use. The court held that Barnes & Noble’s terms could not bind the plaintiff, despite being presented through a “conspicuous” link during the checkout process, because Barnes & Noble did not prompt users to affirmatively assent to the terms.Evidentiary IssuesIn general, then, clickwrap Website Terms are more likely to be enforceable than are browsewrap implementations. But even if a website operator implements its Website Terms through a clickwrap, how can the operator prove that an individual user actually accepted the terms in a particular case? That issue arose in Moretti v. Hertz Corporation (N.D. Cal. Apr. 11, 2014). In Moretti, the plaintiff had booked a car rental on the Hotwire website and alleged that he was overcharged. The defendants invoked a forum selection clause, which was included in the terms of use connected to Hotwire’s ordering page via a hyperlink, to move litigation to Delaware. The plaintiff denied that he had ever agreed to the forum selection clause. Fortunately for the defendants, they were able to produce two declarations from employees at Hotwire affirmatively stating that the forum selection clause existed in the terms of use at the time the plaintiff booked his rental car and that the plaintiff could not have booked the rental without checking an “acceptance box” indicating his assent to the hyperlinked terms of use. Therefore, the court concluded, the plaintiff had notice of and consented to the terms of use containing the forum selection clause.Modifications One of the most difficult issues relating to Website Terms involves modifications and updates. Website Terms typically include a provision granting the website owner the right to modify the terms unilaterally. This makes sense in practical terms; a website owner cannot be expected to continue to operate under the same terms indefinitely and it would not be feasible to negotiate every update with individual users. At the same time, however, Website Terms are contracts and, under black letter contract law, contract modifications require acceptance by both parties. A website operator ideally should require users to affirmatively accept each updated version of Website Terms, for example, by presenting the updated terms and requiring a click acceptance when the user first logs in after the change. But where obtaining such affirmative acceptance is not feasible, a website operator may nonetheless be able to enforce changed terms against users if it gives users sufficient notice of the change and informs them that continued use of the website constitutes acceptance.For example, the plaintiff in Rodriguez v. Instagram (San Francisco Sup. Ct. Feb. 28, 2014), objected to certain changes in Instagram’s terms of use. Instagram had unilaterally modified its terms in December 2012 and announced the changes to its users a month in advance of their implementation. The new terms stated that continued use of the website amounted to consent to the modifications and that users who did not accept the modifications must stop using Instagram. The court found that, by continuing to use Instagram, Rodriguez agreed to the new terms, and that she could simply have stopped using Instagram if she did not want to be subject to them. The court pointed out that Rodriguez could not possibly have had a reasonable expectation of perpetual use of Instagram’s service under the original terms, which included an express modification right for Instagram.It should be noted, though, that courts in some cases have looked less favorably on website operators’ attempts to modify Website Terms unilaterally, particularly where users are not given adequate notice or the changes are applied retroactively. For example, the Ninth Circuit held in Douglas v. Talk America (9th Cir. 2007), that an individual’s assent to changed Website Terms could not be inferred where the individual had not actually received notice of the changes. In Douglas, the defendant Talk America provided long distance services to the plaintiff Douglas. When a dispute arose, Talk America attempted to enforce an arbitration provision contained in updated terms that it had posted to its website. But Talk America had never given Douglas notice of the updated terms and Douglas was not required to visit the Talk America website in order to continue using the Talk America services. The court noted, “[p]arties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side.”Even more problematic for website operators, the court in Harris v. Blockbuster, Inc. (N.D. Tex. 2009), held that an arbitration clause in Blockbuster’s online terms was illusory and unenforceable because Blockbuster reserved the right to unilaterally modify the terms and apply the modified terms to earlier disputes. Interestingly, Blockbuster had not actually modified its terms of use and attempted to apply the modified terms retroactively; rather, the court held that the mere reservation of the right to unilaterally amend the terms rendered the contract illusory. The court in In re Zappos.com, Inc. (D. Nev. 2012), came to a similar conclusion regarding the unilateral modification provision in Zappos’ online terms of use (the Zappos court also did not look favorably upon Zappos’ browsewrap implementation of its terms).TakeawaysIn light of the issues noted above, the following are some steps that website operators may take to increase the likelihood that Website Terms will be enforceable against site users:<ul><li>When possible, Website Terms should be implemented using clickwraps that give clear notice and require affirmative assent, rather than through browsewraps. If a browsewrap is used because a clickwrap is not feasible – e.g., where a website does not require users to register and does not otherwise include functionality to interact with users – website operators should present the terms as conspicuously as possible (and should recognize that their Website Terms may prove more difficult to enforce).</li><li>If a clickwrap is used, website operators should be prepared to produce evidence that users must actually accept the Website Terms to access the website or make a purchase on the website, and be able to show the specific version of the Website Terms that were in place at the time that any given user indicated acceptance.</li><li>A prominent notice should be included on the website regarding the Website Terms and the terms should be easily accessible to users (including for download and printing). Website Terms should be easy for users to understand and particularly important terms – such as disclaimers, limitations of liability and dispute resolution provisions – should be conspicuous. Also consider adding a prominent “last updated” notice to Website Terms.</li><li>When modifying Website Terms, consider obtaining users’ express acceptance of the updated terms, if possible. If obtaining such express acceptance is not feasible, the users ideally should be provided with clear advance notice of any changes and a statement that continued use of the website following implementation of the updated terms constitutes acceptance of those terms.</li><li>Regardless of how terms are updated, website operators should not assume that they will be able to enforce updated terms retroactively. Indeed, website operators should consider making clear in their Website Terms that newly added provisions will not apply to disputes arising prior to the adoption of the new provisions.</li></ul>

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Implementing and Enforcing Online Terms of Use

Implementing and Enforcing Online Terms of Use