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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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

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.

Social Links: Going Back to Cali

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FAKE REVIEW RULES TAKE EFFECTThe Federal Trade Commission’s new rules banning phony online reviews are now in effect. These rules aim to curb false consumer testimonials, the buying of fake reviews from brokers, review suppression, falsifying social media influence, and misrepresentation of company ownership for review sites. As <a href="/topics/social-links-recent-developments-in-the-law-and-business-of-social-media" target="_self">we reported</a> last August, fake and bot-generated reviews have proliferated at an alarming rate, potentially leading to consumer cynicism, mistrust, and unfair competition. These <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/r311003consumerreviewstestimonialsfinalrulefrn.pdf" target="_blank">new FTC rules</a> have some teeth: non-compliance could result in a $51,744 fine for each violation. It remains to be seen how e-commerce behemoths that host tens of millions of online reviews will navigate compliance, but it’s probably a safe bet there will be some late nights for IT personnel in Seattle and Mountain View. <a href="https://www.ftc.gov/news-events/news/press-releases/2024/08/federal-trade-commission-announces-final-rule-banning-fake-reviews-testimonials" target="_blank">FTC chair Lina Khan said</a>, “Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors. [The rule will] protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.” It will be interesting to see what e-commerce and review sites look like in six months.MASS. SUPREME COURT RULES IN FAVOR OF MEDICAL DATA TRACKINGThe Supreme Judicial Court of Massachusetts <a href="https://www.reuters.com/legal/transactional/web-browsing-tracking-doesnt-violate-massachusetts-wiretap-law-court-rules-2024-10-24/" target="_blank">has ruled</a> that website tracking software does not run afoul of the <a href="https://bja.ojp.gov/program/it/privacy-civil-liberties/authorities/statutes/1284#:~:text=1968%2C%20(Pub.-,L.,wiretapping%20by%20government%20officials%2C%20and" target="_blank">1968 Wiretap Act</a>, and sites can continue tracking browser activity without the consent of the user. The <a href="https://fingfx.thomsonreuters.com/gfx/legaldocs/lbpgjobqqvq/10242024sjc_wiretap.pdf" target="_blank">5–1 ruling</a> maintains that two hospitals named in the action—Beth Israel Deaconess Medical Center and New England Baptist Hospital—were not breaking the law by collecting and sharing patient data with tracking sites. The plaintiff alleged that the collected data allowed tech companies to profit from private medical data without consent.Writing for the majority, Judge Scott Kafker noted that the 1968 Wiretap Act does not apply to website operators who track data from those who visit, and the law’s legislative history does not lead to the conclusion that it was meant to apply so broadly as to potentially criminalize the interception of web browsing. He added, “If the legislature intends for the wiretap act’s criminal and civil penalties to prohibit the tracking of a person’s browsing of, and interaction with, published information on websites, it must say so expressly.”In a strongly worded dissent, Judge Dalila Wendlandt argued that the Wiretap Act’s prohibition on electronic surveillance does apply to browser tracking because, despite the implied privacy of the hospitals’ online communications, third parties were allowed to track and record patients’ healthcare information. She wrote, “The court decides that the wiretap act provides no recourse despite its prohibition on surreptitious electronic surveillance by private parties. Lamentably, the court is right about one thing; the Legislature will need to correct today’s error.”With hundreds of <a href="https://www.reuters.com/legal/transactional/massachusetts-top-court-considers-allowing-website-tracking-class-actions-2024-04-03/" target="_blank">similar cases</a> filed across the country, this ruling is unlikely to be the final word.LAWSUIT AGAINST X THROWN OUT IN DRAMATIC FASHIONFormer Twitter (now X) executive Mark Schobinger’s attempt to gain class status in a suit over unpaid bonuses <a href="https://www.courthousenews.com/former-twitter-employees-denied-class-action-certification-in-bonuses-suit/" target="_blank">failed in spectacular fashion</a> in a San Francisco courtroom this month. In a <a href="https://www.courthousenews.com/wp-content/uploads/2024/10/schobinger-vs-twitter-order-denying-motion-class-certification.pdf" target="_blank">scathing order</a>, U.S. District Judge Vince Chhabria wrote that Schobinger “might fit nicely into this case as a defendant,” adding that the suit “reflects remarkable hubris.” The crux of Judge Chhabria’s order comes down to one simple thing—hypocrisy. It turns out that Schobinger himself was a leading advocate for not paying out the very bonuses he is now seeking when he was Twitter’s senior director of compensation. Discovery in the case revealed a litany of messages, emails, and alleged conversations in which Schobinger aggressively lobbied against the bonus payments. Schobinger’s attorney attempted a last-minute swap to bring in a new, untainted plaintiff, but Judge Chhabria stuck to the dance-with-who-brung-ya protocol, saying: “The fact that Schobinger’s lawyer thought it was a good idea to file a motion for class certification in the face of this evidence (as opposed to dropping the case or seeking to substitute another plaintiff immediately upon discovering it) shows that she is totally unqualified to serve as class counsel.” No word yet on whether any <a href="https://youtu.be/DGuOUJ132bU?si=jXRkCGU-0IYlsANt" target="_blank">gavels were broken</a>.ALEX JONES SET TO LOSE IP RIGHTS AND SOCIAL MEDIA ACCOUNTSConspiracy peddler Alex Jones’s social media accounts and IP rights are <a href="https://www.msn.com/en-in/entertainment/oscars/blow-for-alex-jones-as-judge-rules-on-how-he-ll-pay-sandy-hook-victims/ar-AA1rc6WL?apiversion=v2&noservercache=1&domshim=1&renderwebcomponents=1&wcseo=1&batchservertelemetry=1&noservertelemetry=1" target="_blank">likely to be sold</a> to the highest bidder in an effort to pay down the nearly $1.5 billion in defamation judgments levied against him for repeatedly calling the tragic 2012 Sandy Hook school shooting a hoax. Jones’s assets are currently controlled by a court-appointed trustee after he <a href="https://www.reuters.com/world/us/alex-jones-files-bankruptcy-following-sandy-hook-verdict-court-filing-2022-12-02/" target="_blank">filed for bankruptcy</a> shortly following the judgment. Many of his tangible assets (including his Infowars studio) are already slated to be auctioned off, but it’s possible the IP assets and social media accounts will prove more valuable at auction. Jones and his legal team maintain that his personal social media accounts are not subject to liquidation and cannot be disentangled from his name, likeness, or image. As one of the <a href="https://youtu.be/_V1vacCrFNs?si=vV9bVHQq9VF1PH1a">least sympathetic defendants</a> in recent memory, Jones faces serious headwinds in his attempt to retain assets.TIKTOK SUFFERS ANOTHER COURT LOSSSocial media juggernaut TikTok’s bid for an en banc panel rehearing has been shot down by the Third Circuit. The action stems from an <a href="https://www.sociallyawareblog.com/topics/social-links-tinder-tiktok-and-the-copacabana" target="_blank">August decision</a> in which the court ruled TikTok and its parent company, ByteDance, <a href="https://cases.justia.com/federal/appellate-courts/ca3/22-3061/22-3061-2024-08-27.pdf?ts=1724792413" target="_blank">were not protected</a> under <a href="https://www.law.cornell.edu/uscode/text/47/230" target="_blank">Section 230</a> of the Communications Decency Act in the tragic death of a 10-year-old child. TikTok argued that the panel’s August decision went against 30 years of precedent involving Section 230. The court disagreed, citing the U.S. Supreme Court’s <a href="https://www.supremecourt.gov/opinions/23pdf/22-277_d18f.pdf" target="_blank">Moody v. Netchoice LLC</a> decision in finding that the app’s algorithm qualifies as “expressive content.” The ruling revives a lawsuit by the deceased child’s mother against TikTok, which had been <a href="https://www2.ca3.uscourts.gov/opinarch/223061p.pdf" target="_blank">dismissed in January</a> by the U.S. District Court on Section 230 grounds. This ruling has wide implications for social media companies and is likely to be appealed to the U.S. Supreme Court. We’ll keep a close eye on this one.

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.

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.











Anthony Ramirez

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

The Federal Trade Commission has finalized a <a href="https://www.ftc.gov/business-guidance/blog/2024/08/well-pay-you-give-our-new-rule-good-review">new rule</a> aimed at curtailing false, misleading, and otherwise fraudulent reviews on online retail sites. Fake reviews are a <a href="https://pushpullagency.com/blog/a-deep-dive-into-amazon-consumer-review-statistics/">significant problem</a> for the big e-commerce platforms, given that a robust customer review system is crucial to modern e-commerce business models. In fact, <a href="https://pushpullagency.com/blog/a-deep-dive-into-amazon-consumer-review-statistics/">studies</a> have shown that a one-star rating increase in a product review can result in as much as a 26% increase in sales. Unsurprisingly, this has caused a proliferation of fake reviews and “<a href="https://www.theguardian.com/money/2023/apr/22/it-can-be-incredibly-profitable-the-secret-world-of-fake-online-reviews">review brokers</a>.” The new FTC rule is pretty comprehensive and worth a <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/r311003consumerreviewstestimonialsfinalrulefrn.pdf">full read</a>.New York trademark attorney Jeremy Green Eche hit the jackpot—and may have run afoul of <a href="http://www.internetlibrary.com/publications/anticybsquattSamson9-05_art.cfm">federal anti-cybersquatting law</a>—when he recently sold the HarrisWalz.com domain for $15,000. Eche <a href="https://www.cbsnews.com/news/harris-walz-domain-name-sold-for-1500/">purchased the domain in 2020</a> for $8.50. Though cybersquatting law is focused predominantly on trademark protection, it includes a provision barring any registration that “consists of the name of another living person” without their consent and “with the specific intent to profit” from its sale. This isn’t the first time Eche got lucky purchasing domains. In 2016, he <a href="https://www.usatoday.com/story/news/politics/onpolitics/2016/10/03/clinton-kaine-trump-website/91462708/">sold ClintonKaine.com to the Trump campaign,</a> also for $15,000. Eche denied being profit-driven, noting the relatively low price he put on both the Harris and Clinton domains. That the “relatively low” price happens to be slightly less than the cost of pursuing a cybersquatting case against him is probably just a coincidence, right?The U.S. Court of Appeals for the Ninth Circuit has ruled that employers may be subject to lawsuits based on their employees’ off-work social media posts. In <a href="https://casetext.com/case/okownowsky-v-garland">Okonowsky v. Garland</a>, the court unanimously ruled that an employee of a federal prison was sexually harassed on Instagram by a coworker in violation of Title VII of the 1964 Civil Rights Act. Following the ruling, plaintiff’s attorney Drew Pletcher said, “It appears to be the first holding in the Ninth Circuit to find that social media posts on an Instagram page could be considered workplace harassment under Title VII.” In the wake of this ruling, companies will need to consider whether their employee <a href="https://www.expresspros.com/Newsroom/America-Employed/88-Percent-of-Hiring-Managers-Would-Consider-Firing-Workers-for-Content-in-Personal-Social-Media-Posts.aspx">social media policies</a> adequately address abusive or harassing behavior both inside and outside the workplace, including on personal social media.Ye, the artist formerly known as Kanye West, <a href="https://usaherald.com/kanye-west-faces-1-5m-copyright-suit-over-unauthorized-photo-use/">has been hit</a> with a $1.5 million copyright infringement lawsuit by celebrity photography sites <a href="https://usa.backgrid.com/">BackGrid USA</a> and <a href="https://uk.backgrid.com/">BackGrid UK</a>. The paparazzi companies allege Ye posted 10 BackGrid-owned photos to his Instagram account without permission or compensation. While it may seem counterintuitive that celebrities cannot post photos of themselves on their own social media, this is actually a fairly common fact pattern, and one that we <a href="https://www.sociallyawareblog.com/topics/by-winning-motion-to-dismiss-supermodel-loses-chance-to-clarify-whether-she-can-lawfully-post-photos-of-herself-to-social-media">have covered previously</a>. For Ye, in any event, this will not be the first time he has <a href="https://edition.cnn.com/2014/03/17/showbiz/kanye-west-plea-deal/">tangled with paparazzi</a>.Embattled Georgia attorney Lin Wood has been <a href="https://lawandcrime.com/high-profile/pro-trump-defamation-attorney-lin-wood-must-pay-former-law-partners-4-5-million-after-defaming-them-as-criminal-extortionists-on-social-media/">ordered to pay</a> his former law partners $4.5 million after an <a href="https://www.documentcloud.org/documents/25049449-lin-wood-defamation-damages">Atlanta jury found him liable</a> for defaming them on social media. The feud began, like so many do, as an argument over money. The federal court’s initial <a href="https://storage.courtlistener.com/recap/gov.uscourts.gand.301086/gov.uscourts.gand.301086.90.0.pdf">ruling</a> contained some not-so-subtle jabs at Wood. Judge Michael L. Brown wrote, “During a five-week period the following year, Defendant repeatedly accused Plaintiffs of criminal extortion in a series of messages he posted on a social media platform called Telegram. Hundreds of thousands of people viewed Defendant’s messages.” Brown continued, adding: “Tellingly, Defendant does not even try to show his accusations were true. Indeed, he admits Plaintiffs did not commit ‘the crime of extortion.’ But he insists his extortion accusations were still non-false because they contained ‘loose, figurative, or hyperbolic language’ that no reasonable person could construe as a genuine accusation of criminal conduct. The Court disagrees.” Lin Wood’s Telegram page can be viewed <a href="https://t.me/s/linwoodspeakstruth?before=50839">here</a>.A paywall for Reddit? CEO Steve Huffman <a href="https://www.pcmag.com/news/reddit-ceo-teases-paywalled-subreddits">hinted</a> at subscription-only features for the wildly popular news aggregation and social forum site during an <a href="https://s203.q4cdn.com/380862485/files/doc_financials/2024/q2/Reddit-Q2-24-Earnings-Call_Transcript.pdf">earnings call</a> with investors. Unsurprisingly, Redditors had a snarky, and often hilarious, <a href="https://www.reddit.com/r/technology/comments/1emac0p/some_subreddits_could_be_paywalled_hints_reddit/">meltdown</a> on the site. Despite its popularity, Reddit has struggled to become profitable. It’s a top site for AI web scrapers, which prompted the company to <a href="https://www.pcmag.com/news/microsofts-bing-search-engine-gets-ai-overviews-as-reddit-blocks-it">block Microsoft’s Bing</a> search engine and enter into an <a href="https://www.theverge.com/2024/2/22/24080165/google-reddit-ai-training-data">agreement with Google</a> for site access for AI training. Of the data sharing and web scraping situation, Huffman said, “[Our] preference is to have relationships with everybody, but we need to be very considered of where Reddit data goes and what it’s used for.”

 Social Links: Recent Developments in the Law and Business of Social Media

Social Links: Recent Developments in the Law and Business of Social Media

The Federal Trade Commission has finalized a new rule aimed at curtailing false, misleading, and otherwise fraudulent reviews on online retail sites.

Social Links: Recent Developments in the Law and Business of Social Media

On February 12, 2024, in <a href="https://caselaw.findlaw.com/court/us-9th-circuit/115812465.html" target="_blank">Patrick v. Running Warehouse LLC</a>, the Ninth Circuit held that a defendant’s arbitration agreement contained in a website terms of use was enforceable, using the test the court articulated in 2022 in <a href="https://casetext.com/case/berman-v-freedom-fin-network-6" target="_blank">Daniel Berman v. Freedom Financial Network</a>. The court’s analysis is straightforward and the result is about what one would expect given the facts, but the opinion goes slightly off the rails in describing the terms of use at issue as a “browsewrap” agreement. We <a href="/topics/terms-of-use" target="_self">have been critical</a> of the generally confusing and unhelpful (but ubiquitous) “-wrap” terminology for many years, and this opinion is a good illustration of how that terminology tends to create more problems than it solves.  In Berman, the Ninth Circuit examined a website interface that displayed the text “I understand and agree to the Terms & Conditions which includes mandatory arbitration and Privacy Policy” in a tiny gray font (with “Terms & Conditions” and “Privacy Policy” functioning as hyperlinks to the applicable terms), above a large green “Continue” button. Users were required to click the “Continue” button to proceed to the next screen of the website. The defendants argued that, by clicking the “Continue” button, the plaintiffs (who had submitted their information to the websites at issue and then received unwanted telemarketing calls and text messages) had agreed to be bound by the arbitration provision in the terms of use.The Berman court determined that, unless a website operator can show that the user had actual knowledge of the underlying arbitration agreement, the user can only be held to the arbitration terms if: (1) the website provided reasonably conspicuous notice of the terms; and (2) the user took some action, such as clicking a button or checking a box, that unambiguously manifests assent to those terms. In Berman, the court decided that the defendants’ web pages did not provide reasonably conspicuous notice because of the small font size and format and because the hyperlink to the terms was not readily apparent.In Patrick, the court came to the opposite conclusion on different facts. Here, the “call to action” was much more explicit: “On each website, the following statement appears immediately adjacent to the account creation checkbox: ‘[b]y creating an account, you agree to our privacy policy and terms of use.’” In addition, users were required to confirm their orders by clicking a final button to “Place Order” or “Submit Order,” and immediately adjacent to this final button was the following statement: “By submitting your order you agree to our privacy policy and terms of use.” As in Berman, the “terms of use” text functioned as a hyperlink to the actual terms of use.Applying the Berman test to these facts, the court determined that the language about agreeing to the website’s terms was reasonably conspicuous, and the hyperlinks to the terms themselves were readily apparent, so the plaintiffs, each of whom had purchased goods on the websites and clicked the relevant buttons, were in fact bound by the arbitration provision in the terms of use.This seems straightforward enough, but for some reason the Patrick court refers to the defendants’ terms of use implementation as a “browsewrap,” which it clearly is not.  The phrase “browsewrap” typically refers to an implementation where terms are presented to users merely by including a link on a page or screen without requiring affirmative acceptance (see some of our prior coverage on <a href="https://www.sociallyawareblog.com/search?q=browsewrap" target="_self">browsewraps</a>). Courts often refuse to enforce browsewraps, but typically look more favorably on “clickwrap” agreements where users agree to be bound by, for example, checking a box or clicking an “I accept” button.In the Byzantine world of “-wrap” terminology, the implementation at issue in Patrick would likely be categorized as a “sign-in wrap” or “hybridwrap” (ugh), and would be seen as falling somewhere between a pure browsewrap and a classic clickwrap in terms of enforceability. By incorrectly referring to this implementation as a browsewrap but then holding that it is enforceable, the Patrick court creates potential confusion by suggesting that, hey, maybe browsewraps are enforceable after all!A better approach would have been simply to apply the Berman test to the facts to determine that: (1) the terms were presented clearly and conspicuously, (2) the plaintiffs took action to unambiguously manifest their assent to the terms, so (3) the terms are enforceable. It is entirely possible to apply that analysis without ever addressing what category of “-wrap” the terms fall into. And that about wraps up this installment of online contracting gripes!

On February 12, 2024, in Patrick v. Running Warehouse LLC, the Ninth Circuit held that a defendant’s arbitration agreement contained in a website terms of use was enforceable, using the test the court articulated in 2022 in Daniel Berman v. Freedom Financial Network. 

An Enforceable Browsewrap . . . or Not?

Lawmakers on Capitol Hill continue to take aim at social media platforms that collect and use personal information that build algorithms to target individuals across a variety of dimensions when users engage with those platforms, most prominently in the form of advertising and other promotional campaigns from the political, entertainment, and commercial realms.The Banning Surveillance Advertising Act, introduced in January by <a href="https://eshoo.house.gov/media/press-releases/eshoo-schakowsky-booker-introduce-bill-ban-surveillance-advertising" target="_blank">Democratic Representatives Anna Eshoo (California) and Jan Schakowsky (Illinois), and Democratic Senator Cory Booker (New Jersey)</a>, seeks to rein in advertisers, ad networks, and other entities from using personal information received from third parties to target advertisements. As <a href="https://www.mediapost.com/publications/article/370406/new-bill-would-outlaw-most-forms-of-behavioral-tar.html" target="_blank">Media Post</a> reports, “The bill says personal information includes data that is ‘reasonably linkable’ to an individual or device—including inferred data, browsing activity and unique identifiers.”What makes this bill different from previous privacy bills is its departure from requiring a user’s consent or allowing a user to opt out of behavioral targeting. The bill would still permit contextual advertising, which generally refers to advertisements based on the information that a particular screen is displaying or for which the individual searched. But it would prohibit using information collected for contextual advertising purposes for further targeting in other forums or contexts. The bill also would not restrict certain types of location-based targeted advertising. In addition, the bill would ban targeting on either actual or perceived information about a user’s race, national origin, religion, sex, disability, or other protected statuses.The technology and advertising sectors have been swift with their commentary on the bill. Read more from the following:<ul><li><a href="https://www.emarketer.com/content/why-marketers-should-take-banning-surveillance-advertising-act-seriously" target="_blank">eMarketer</a></li><li><a href="https://techcrunch.com/2022/01/18/banning-surveillance-advertising-act/" target="_blank">Tech Crunch</a></li><li><a href="https://www.adexchanger.com/privacy/even-if-targeted-online-advertising-isnt-banned-take-note-of-which-way-the-wind-is-blowing/" target="_blank">Ad Exchanger</a></li></ul><h3>Like COVID variants, misinformation in social media surges</h3>Recent studies have shown a steep rise in misinformation being spread by online gangs and other groups responsible for coordinated inauthentic behavior (CIB). These movements continue to spread conspiracy theories and anti-vaccination rhetoric, and often use bullying tactics to harass and intimidate influencers, health officials, and journalists who oppose their alt-views. Many believe that these actors are causing more harm than government-backed groups, given their ability to infiltrate social media platforms, and the difficulty in regulating their informal tactics.Meta, Facebook’s parent company, <a href="https://about.fb.com/news/2021/12/metas-adversarial-threat-report/" target="_blank">recently banned adversarial pages</a> that were associated with a European anti-vaccination movement called “Viral Vendetta,” or “V_V,” as <a href="https://public-assets.graphika.com/reports/graphika_report_viral_vendetta.pdf" target="_blank">this Graphika report</a> explains.As <a href="https://www.axios.com/newsletters/axios-login-0bb473c3-938b-4771-bd0b-bbac04a795a4.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axioslogin&stream=top" target="_blank">Axios recently reported</a>, “Loosely organized activist movements can be more dangerous than bot-driven campaigns that are often backed by state or government actors, because they link real-world people who can encourage each other to take more drastic actions, according to Bryce Webster-Jacobsen, director of intelligence operations at GroupSense, a threat intelligence firm.”According to Meta, the company now has taken swift action against two tactics that these alt-actors employ:<ul><li>Brigading: We will remove any adversarial networks we find where people work together to mass comment, mass post or engage in other types of repetitive mass behaviors to harass others or silence them.</li><li>Mass Reporting: We will remove any adversarial networks we find where people work together to mass-report an account or content to get it incorrectly taken down from our platform.</li></ul><h3>Increasing number of U.S. adults favor regulation of social media</h3>A <a href="https://assets.morningconsult.com/wp-uploads/2021/10/18135638/2110047_crosstabs_MC_TECH_FACEBOOK_Adults_v1_CC.pdf?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axioslogin&stream=top" target="_blank">recent study from Morning Consult</a> reported that 56% of U.S. adults are in favor of governmental regulation of social media companies. That study also cited that approximately three in five U.S. adults don’t believe that social media platforms go far enough to keep their users safe.The year 2021 witnessed a sharp increase in governmental and general societal scrutiny of social media platforms and the roles they play—or don’t play—in a variety of societal, governmental, and political arenas.But how to fix the myriad of issues that policymakers and the public raise about social media remains elusive, given the massive role that it plays in society.As Ashley Johnson, a senior policy analyst at the Information Technology and Innovation Foundation noted in a report that accompanied the Morning Consult survey, “I think if there is legislation, it's going to be very broad, in order to try to compromise and break this really large gap between the two parties.”

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Clients seek out Julie because of her practical advice on cutting-edge issues at the intersection of privacy and consumer protection laws. She provides clients with practical solutions to compliance c

Julie O'Neill

Clients seek out Julie because of her practical advice on cutting-edge issues at the intersection of privacy and consumer protection laws. She provides clients with practical solutions to compliance challenges around a wide variety of both online and offline privacy issues, including tracking, interest-based advertising, geo-targeting and other mobile tracking, personalization, and cross-device tracking. Recognized in The Legal 500 US 2014, 2016, 2019, and 2020 and Chambers USA 2021 for her exceptional legal work, her clients praise her saying, “She is really good at giving practical, targeted advice and taking stock of what the risk profile of the client is, so that the advice is holistic.” (Chambers USA 2021).

Social Links: Behavioral targeting under scrutiny from lawmakers

Lawmakers on Capitol Hill continue to take aim at social media platforms that collect and use personal information that build algorithms to target individuals a

Social Links: Behavioral targeting under scrutiny from lawmakers

In late October, Facebook announced that it would <a rel="noopener" target="_blank" href="https://about.fb.com/news/2021/10/facebook-company-is-now-meta/">change its name to Meta</a>, signaling a shift of the social media giant’s focus toward the <a rel="noopener" target="_blank" href="https://www.investopedia.com/metaverse-definition-5206578">metaverse</a>, a virtual space where social media, gaming, augmented reality, virtual reality, and cryptocurrencies converge and allow people to interact virtually with one another. It’s a relatively new concept in technology with <a rel="noopener" target="_blank" href="https://www.forbes.com/sites/cathyhackl/2021/05/02/defining-the-metaverse-today/?sh=883764764485">many different definitions and interpretations</a>. Facebook CEO Mark Zuckerberg <a href="https://about.facebook.com/meta">made the announcement at the company’s annual Connect conference</a> that brings together virtual and augmented reality developers, content creators, marketers, and other technologists to explore the industry’s growth and expansion.In addition to the name change, <a rel="noopener" target="_blank" href="https://about.fb.com/news/2021/11/update-on-use-of-face-recognition/">Facebook also announced</a> in early November that it would be shutting down its face recognition system that close to a third of all Facebook users use. This change in technology policy represents a seismic shift for the company and for the larger social media landscape, reflecting ongoing conversations in the industry about data privacy and access to personal information.Just in time for the holiday shopping season: Pinterest launches its own shopping networkIn late October, image sharing social media giant <a href="https://newsroom.pinterest.com/en/post/introducing-pinterest-tv">Pinterest announced</a> the launch of Pinterest TV, a digital destination where users and subscribers can interact with Pinterest creators selling their goods and creations. The channel features original episodes from “Pinners” in livestream sessions that are recorded and can be accessed after broadcast in an on-demand archive.COVID-19 fueled a meteoric increase in both online and live streaming shopping activities delivered from traditional television channels such as QVC and Home Shopping Network as well as internet companies such as YouTube, TikTok, Snapchat, and Amazon. <a rel="noopener" target="_blank" href="https://www.axios.com/live-video-shopping-format-fire-fd6b2b15-0e0e-46ea-9dce-64a167a277e8.html">Axios reported in September</a> that the live video shopping format is poised for exponential growth, while Coresight Research, a retail and tech analysis firm, predicted that livestream e-commerce could see growth to $25 billion in sales within the next two years.Social media companies prevail in Communications Decency Act’s intellectual property exception; Third Circuit cites internet publisher immunityKaren Hepp, a well-known Philadelphia television journalist, was photographed in 2017 by a New York City convenience store camera without her knowledge or consent. That photograph later found its way in a variety of online advertisements ranging from dating services to erectile dysfunction products.Hepp sued Facebook, Reddit, and Imgur in the United States District Court for the Eastern District of Pennsylvania. She claimed that each platform violated Pennsylvania’s statutory and common law right of publicity laws. <a rel="noopener" target="_blank" href="https://today.westlaw.com/Document/Iaf5326271d1d11ecbea4f0dc9fb69570/View/FullText.html?contextData=(sc.Default)&transitionType=Default&firstPage=true">The Third Circuit of the United States Court of Appeals recently dismissed the case</a>, citing that each of these companies were protected and had immunity under Section 230 of the Communications Decency Act 0f 1996 (CDA). Read the full opinion of <a rel="noopener" target="_blank" href="https://law.justia.com/cases/federal/appellate-courts/ca3/20-2725/20-2725-2021-09-23.html">Hepp v. Facebook, No. 20-2725 (3d Cir. 2021).</a>Algorithms under fire: proposed bill could alter Section 230 of the Communications Decency ActHouse Energy and Commerce Committee Chairman Frank Pallone, Democratic Representative from New Jersey, is sponsoring the Justice Against Malicious Algorithms Act (JAMA), a bill that would modify Section 230 of the Communications Decency Act of 1996 (CDA), which protects websites from liability over content posted by their users. The bill seeks to amend and strip away immunity from online platforms if they “knowingly or recklessly uses a personalized algorithm to recommend content that materially contributes to physical or severe emotional injury” <a rel="noopener" target="_blank" href="https://www.axios.com/newsletters/axios-login-55b536ad-4a7b-4557-a4d7-d3d1dde8be18.html">according to Axios</a>. The bill does not apply to platforms with fewer than five million unique monthly visitors or users.Some <a rel="noopener" target="_blank" href="https://www.engadget.com/house-bill-justice-against-malicious-algorithms-act-162915185.html">analysts don’t think the bill will get past the House of Representatives</a>, but even with its introduction, it sends a strong message for social media platforms to introduce more stringent policies away from self-regulation of content.LinkedIn’s presence in China to change under censorship concernsLinkedIn, the professional networking giant, recently announced that it will <a rel="noopener" target="_blank" href="https://blog.linkedin.com/2021/october/14/china-sunset-of-localized-version-of-linkedin-and-launch-of-new-injobs-app">retire its Chinese version and replace it with a new job board called “InJobs”</a> to connect China-based professionals with employers. LinkedIn acknowledges that operating in China presents challenges in compliance with the country’s requirements.LinkedIn recently came under fire for recently <a rel="noopener" target="_blank" href="https://www.axios.com/linkedin-blocks-us-journalists-profiles-in-china-22fcefd4-5bc1-490b-a448-b4f9b05e9566.html">blocking U.S. journalists’ profiles in China</a>. One such journalist, Bethany Allen-Ebrahimian, <a rel="noopener" target="_blank" href="https://www.axios.com/linkedin-unanswered-questions-china-censorship-56b75495-230c-4dc2-9a29-6a35e2f8cec0.html">pressed the platform about its censorship activities in China.</a>This unfolding story raises ongoing questions about Western technology companies and the roles they play in China, especially in their interplay with the Chinese government and its strict censorship laws and regulations.

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Facebook rebrands as “Meta;” disables facial recognition capabilities

Facebook rebrands as “Meta;” disables facial recognition capabilities

sociallyaware-ecommerce

In late October, Facebook announced that it would change its name to Meta, signaling a shift of the social media giant’s focus toward the metaverse, a virtual s

A new report from the U.S. Copyright Office suggests that Congress should fine-tune the Digital Millennium Copyright Act (DMCA) to, among other things, alter the takedown system that platforms must adhere to in order to be eligible for the safe harbor the DMCA affords to online platforms when third parties post infringing content. <a href="https://gizmodo.com/u-s-copyright-office-says-its-time-to-update-the-dmca-1843608938" target="_blank" rel="noopener noreferrer">Read about the Copyright Office’s issues</a> with the current takedown system.Malwarebytes, an online filtering company, has <a href="https://www.mediapost.com/publications/article/351493/anti-malware-company-wants-supreme-court-to-interv.html">asked the U.S. Supreme Court to grant certiorari</a> in a case brought by one of Malwarebytes’ competitors, Enigma Software, alleging that—when Malwarebytes flagged one of Enigma’s most popular offerings as a potential threat—Malwarebytes, among other things, committed a deceptive business practice. The Ninth Circuit <a href="https://www.sociallyawareblog.com/2020/04/07/computer-service-providers-face-implied-limits-on-cda-immunity/#more-9504">refused to dismiss the case</a>, holding that Section 230(c)(2) of the Communications Decency Act did not insulate Malwarebytes from liability.A <a href="https://www.cnn.com/2020/05/13/tech/french-hate-speech-social-media-law/index.html" target="_blank" rel="noopener noreferrer">new law in France</a> would impose fines of up to $1.36 million on technology platforms that fail to take down terrorist and child pornography content within one hour of that content being flagged, or fail to remove hateful comments that concern topics including gender or disability within 24 hours of being flagged.Members of the Florida Bar who <a href="https://www.law.com/dailybusinessreview/2020/05/12/the-florida-bar-is-taking-a-hard-look-at-lawyers-social-media-content/" target="_blank" rel="noopener noreferrer">deliver targeted ads through social media</a> must comply with that state bar’s more restrictive direct solicitation rules rather than its general advertising rules.A law firm fired one of its Dallas-based employees after learning <a href="https://www.courthousenews.com/law-firm-worker-fired-after-posting-threat-against-face-mask-requirements/" target="_blank" rel="noopener noreferrer">he had posted to his personal social media account</a> a rant about businesses requesting him to wear a mask to thwart the possibility of spreading or catching the COVID-19 virus. The rant included a threat to “show [his] Glock 21” handgun shooting range results to “the lame security guard outside of a ghetto store.”The New Jersey Supreme Court’s Disciplinary Review Board (DRB) decided that John Robertelli, a Rivkin Radler lawyer, violated the state’s Rules of Professional Conduct when—in order to gather evidence while acting as counsel for defendants in a personal injury case—Robertelli surreptitiously accessed the private Facebook account of the plaintiff, whom Robertelli knew was represented by opposing counsel. The DRB also recommended that the New Jersey Supreme Court adopt a policy on using social media for discovery purposes. <a href="https://www.law.com/njlawjournal/2020/05/13/lawyer-faces-admonition-over-facebook-friending-to-gather-information-on-litigant/" target="_blank" rel="noopener noreferrer">Read the guidelines the DRB suggested</a>.Big changes are afoot at Facebook, which has recently introduced <a href="https://techcrunch.com/2020/05/19/facebook-shops/" target="_blank" rel="noopener noreferrer">Shops</a>, allowing users to purchase products directly from businesses’ Facebook pages, and announced the addition of new features to Workplace, the company’s “<a href="https://techcrunch.com/2020/05/21/facebooks-workplace-now-with-5m-paying-users-adds-drop-in-video-rooms-and-more/" target="_blank" rel="noopener noreferrer">enterprise-focused chat and video platform</a>.”

Social Links: A report suggesting DMCA changes; a new social-media-use regulation for Fla. Bar members; big changes at Facebook

A new report from the U.S. Copyright Office suggests that Congress should fine-tune the Digital Millennium Copyright Act (DMCA) to, among other things, alter th

Social Links: A report suggesting DMCA changes; a new social-media-use regulation for Fla. Bar members; big changes at Facebook

<div class="container-fluid main"><div class="row body"><div class="body-container "><div class="col-md-8 col-md-push-2 col-sm-12 col-xs-12"><div>The European Union (EU) has made reform of the e-commerce rules in Europe one of its main priorities for 2018.The European Commission has already published two proposed Directives relating to cross-border e-commerce but legislative progress has been slow—a situation that the Commission plans to correct in 2018.The Commission’s stated aim is to establish a more harmonised set of rules for the supply of digital content and sale of online goods across the EU, and to make it easier and less costly for businesses to engage in cross-border commerce. But what most e-commerce providers will focus on is the increased rights for EU consumers, particularly in the context of defects. The new rules will apply to online e-commerce providers, whether EU-based or not.These changes are part of a wider programme of reform affecting all businesses operating in the Technology, Media and Telecoms (TMT) sectors in Europe.BackgroundThe European Union’s 2018 Work Programme sets out a challenging agenda of legislative and regulatory change for the TMT sectors, to be delivered in conjunction with the EU’s Digital Single Market (DSM) strategy. The Work Programme includes a list of the pending legislation that the Commission wants to have delivered most swiftly to European citizens as part of the DSM strategy. Any business with digital or technology operations in the EU will need to monitor and react to the EU’s planned changes.The Commission launched its DSM strategy in May 2015. We have written a number of articles following the DSM’s progress: at its <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blta8a9799d75acde0d/627317c60cffdf1eb1369e0d/150514eudigitalsinglemarket.pdf" target="_blank" rel="noopener">inception</a>, <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt7ca6fae4bd1791f3/6273195723c6cf2a1c3af651/160808digitalsinglemarketstrategy.pdf" target="_blank" rel="noopener">one year in</a> and in 2017 following a mid-term review. With the Commission still waiting for a number of its proposals to be delivered, 2018 is a key year in the life of the DSM.The DSM strategy is broken down into three “pillars” and 16 Key Actions. The first “Key Action” is to develop rules to make cross-border e-commerce easier, including harmonised rules on contracts with consumers and other consumer protection when buying online. Two proposed Directives relating to cross-border e-commerce were issued relatively quickly – firstly, a proposed Directive on the supply of digital content (Digital Content Directive) and, secondly, a proposed Directive on online and other distance sales of goods (Online Goods Directive) (together, the “Proposed Directives”).In a 2016 blog post we explored the scope, content and likely impact of the Proposed Directives across the EU generally (and in the UK and Germany specifically). In this alert, we review the progress that has been made so far and look ahead at the likely impact of these Directives in 2018.The Digital Content DirectiveAt present, some EU Member States (such as the UK, the Netherlands and Ireland) have introduced legislation to govern the sale of digital content to consumers; other member states apply existing rules on the sale of goods or services that were not intended for digital content. That makes it very hard to apply EU-wide principles on the sale of digital content. Depending on the member state, the sales contract could be considered as a sales contract, as a services contract or as a rental contract. And then there’s the question of whether consumer sales law is applicable to digital content: in Germany and in Italy, a consumer is protected under consumer sales law when it comes to digital content, and the courts qualify intangible goods as a moveable object; whereas in Norway, the online supply of digital content is considered a service contract, and consumer sales law is not applicable.The draft Digital Content Directive will harmonise the rules that apply to the provision of digital content to EU consumers, including rules on the remedies to which consumers are entitled for allegedly defective content. If any digital content is defective, firstly the EU consumer will be able to request that the defect be fixed – with no time limit on the ability to make that request—and, secondly, the burden of proof is reversed so that it will be the supplier’s responsibility to prove that the defect did not exist at the time of supply. See a more detailed summary <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltfc17d63fe11f5c09/6273195fa1a1dd2aa9f6cb04/160323digitalsinglemarketstrategy.pdf" target="_blank" rel="noopener">here</a>.The rules would apply: (i) regardless of the method of sale, and (ii) to both digital content sold to the consumer (i.e., licensed on a perpetual basis) and digital content supplied under a temporary licence on a subscription basis. Currently, most EU Member States do not have national consumer protection legislation specifically concerning sales or subscription of digital content to consumers (the issue tends to be covered by sales of goods or services rules).European Council: General ApproachAfter the Commission issued the draft Digital Content Directive in December 2015, there was steady progress through 2016 and various committees debated or “took stock” of the proposal.In March 2017, the European Data Protection Supervisor raised concerns with the proposal – namely that the provision of data as “counter-performance” was problematic (as discussed further below) and that there was a potential overlap in scope with the incoming General Data Protection Regulation.However, the first major development on the Digital Content Directive took place in June 2017, when the European Council clarified the EU’s position on the proposal as follows:<ul><li>Scope. The scope of the Digital Content Directive includes so-called “over-the-top” interpersonal communication services (such as voice and video calling, text messaging, email and social networking), bundle contracts and the processing of personal data. However, the Council recommended that embedded digital content (meaning, digital content or services that are pre-installed in goods such as smart fridges) should be excluded, leaving these issues to be governed by the rules on the sale of goods. Additionally, the Council explicitly stated that the proposal would not affect existing national and EU laws on copyright and related rights. </li><li>Non-conformity. The Digital Content Directive, as initially drafted, allowed subjective conformity criteria (i.e., criteria that are agreed in an individual contract) to prevail over objective conformity criteria (i.e., criteria that are stipulated by law). The Council rejected the idea that subjective conformity takes priority, requiring compliance with both subjective and objective criteria for conformity, unless the latter is expressly waived in advance by the consumer. </li><li>Remedies. The Council suggests that suppliers should have a second chance to supply the digital content or service in certain situations and proposes eliminating the strict hierarchy of remedies for lack of conformity that were initially proposed by the Commission.</li><li>Time limits. The Council proposes both that there should be a one-year time limit in relation to the reversed burden of proof on suppliers and also that any warranty or limitation period relating to the liability of the supplier must be at least two years under applicable domestic law. It stopped short of suggesting that warranty periods should be mandatorily harmonised across the EU.</li></ul>European Parliament: Joint ReportThe next key development took place in November 2017 when the two committees within the European Parliament that are responsible for progressing the proposed Digital Content Directive (being the Internal Market and Consumer Protection Committee (IMCO) and Legal Affairs (JURI)) adopted a <a href="http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fNONSGML%2bREPORT%2bA8-2017-0375%2b0%2bDOC%2bPDF%2bV0%2f%2fEN" target="_blank" rel="noopener">joint report</a> on the proposal. A number of compromise amendments to the draft Digital Content Directive were prepared on the basis of the report, of which the main ones were:<ul><li>Emphasis on data protection. The provisions on data protection in the draft Digital Content Directive should be prioritised over the contract law provisions.</li><li>Provision of data as counter-performance. The Digital Content Directive was drafted to cover digital content that is provided for non-monetary consideration, such as when a consumer provides his/her data to a supplier in exchange for access to content. The compromise amendment suggested in the report is to limit the provision of data as counter-performance to only personal data.</li><li>Latent defects. The draft provisions on a supplier’s liability for latent defects were removed, allowing Member States to retain or introduce domestic laws on liability for such defects.</li><li>Non-conformity. Consistent with the Council’s approach, the report suggests that all subjective and objective criteria for conformity must be met, unless the consumer expressly consents to waive compliance with such objective criteria in advance.</li><li>Time limits. Also in keeping with the Council’s approach, a time limit was introduced in connection with the proposed reversal of the burden of proof. However, the report suggests a time limit of two years (rather than the Council’s proposal of one year) and introduces an additional time limit relating to trader liability for defects of one or two years.</li><li>Embedded digital content. The scope of the draft Digital Content Directive was expanded to cover digital content embedded in tangible goods, in contrast to the amendment proposed by the Council.</li></ul>Next StepsThe report was referred to the European Parliament, Council and Commission to commence informal trialogue talks, which are now expected to take place in the first part of 2018.The Online Goods DirectiveThe draft Online Goods Directive will apply new rules to goods sold online or otherwise at a distance to EU consumers. Face-to-face sales are not covered, nor are contracts for the supply of services.The key provisions of the Draft Online Goods Directive include a reversal of the burden of proof (i.e., the onus will be on the seller to prove that any defect didn’t exist at the time of sale) for two years; consumers won’t lose their rights if they don’t inform the seller of a defect within a certain period of time (as is currently the case in some Member States); if the seller is unable or fails to repair or replace a defective product, consumers will have the right to terminate the contract and be reimbursed also in cases of minor defects. See a more detailed summary <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltfc17d63fe11f5c09/6273195fa1a1dd2aa9f6cb04/160323digitalsinglemarketstrategy.pdf" target="_blank" rel="noopener">here</a>.The draft Directive replaced the Commission’s previous attempt at harmonisation, which took the form of a proposed Regulation on a Common European Sales Law. The EU Parliament’s IMCO published its draft report on the Directive in November 2016, supporting the full harmonisation measures envisaged, but suggesting an expansion of the scope of the Directive to cover offline sales. This was driven by the desire for consistency – the idea that a common set of rules across Member States would be valuable for online, distance and face-to-face sales alike, rather than having a fragmented legislative framework that would vary depending on the method of sale.After publishing its draft report, IMCO tabled over 200 amendments to the draft Online Goods Directive during a committee meeting in January 2017, and more in July 2017 (mostly relating to the expansion of the scope of the draft Directive to offline sales).The Commission subsequently released an amended proposal on 31 October 2017. Although the main elements of the Online Goods Directive were unaltered, the amended proposal did provide for the following noteworthy changes:<ul><li>Offline sales. In alignment with the suggestions in the draft report, the scope of the proposed Directive was expanded to cover offline sales. As a result, Directive 1999/44/EC on consumer sales and guarantees would be fully repealed (whereas before, it would have been only partially amended).</li><li>Second-hand goods. Member States will have the option of narrowing the scope of the Online Goods Directive to exclude contracts for the sale of second-hand goods sold at public auction.</li></ul>Next StepsThe amended proposal has been resubmitted to the European Parliament and Council. We await a decision from the European Economic and Social Committee, after which the European Parliament will need to vote on the proposal at first reading.What Should We Expect in 2018?We will be keeping tabs on the Proposed Directives as they progress under the ordinary legislative procedure, although, because there is no time limit on the first reading stage, it is difficult to predict exactly when we will see movement.It is also difficult to predict the impact of the Proposed Directives on the UK. The UK is, of course, due to leave the EU in March 2019, which is likely to be before the Proposed Directives are implemented. It will therefore be for the UK to decide the extent to which it wishes to reflect the provisions of the final Proposed Directives in national law, if at all. The commercial benefits of harmonisation with EU Member States will need to be weighed carefully against the drawbacks of overhauling consumer laws so soon after the changes introduced by the UK Consumer Rights Act 2015.</div></div></div></div></div>

Proceed To Check Out? The Impact Of 2018 European E-Commerce Reforms