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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Facebook Messenger joins the elite “one billion monthly users” club just four years after its release as a standalone app.A Canadian judge ordered a couple convicted of child neglect to post to all their social media accounts his decision describing their crime.Leslie Jones of Ghostbusters highlights Twitter’s trolling problem. One tech columnist says the platform needs to rethink its application programming interface strategy to enable users and communities to insulate themselves from abuse.Don’t drive and Facebook Live.Google erased Dennis Cooper’s 14-year-old blog without warning or explanation. We recently examined the outcome of lawsuits challenging a platform’s right to remove user content (spoiler alert: the platforms usually win).Twitter now lets anyone apply to get verified.Researchers say there’s a correlation between an increase in the psychological stress that teens suffer and the amount of time they’re spending on social media.A Playboy model who “fat-shamed” a woman by photographing her and posting it to Snapchat risks prosecution.Forensic psychologists explain why people post evidence of their crimes to social media.We may soon have a federal law making revenge porn illegal. Our blog post from 2014 took a look at some of the legal issues raised by revenge porn.There’s now a dating app that sets people up on Pokémon Go dates. Want to know more about the most popular mobile game of all time? Read our Pokémon Go Business and Legal Primer.

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

Social Links: Twitter’s troll problem; Snapchat fat-shamer risks prosecution; a federal anti-revenge-porn law?

Facebook Messenger joins the elite “one billion monthly users” club just four years after its release as a standalone app. A Canadian judge ordered a couple con

Social Links: Twitter’s troll problem; Snapchat fat-shamer risks prosecution; a federal anti-revenge-porn law?

We have become inured to the sight of people staring at their phones rather than engaging with one another or enjoying their real-life surroundings. But, over the past two weeks, enslavement to mobile devices rose to new levels, with smartphones and tablets actually propelling users’ movements in the real world as opposed to merely distracting them from it.Unless you’ve been off the grid this month, you know that the force mobilizing these seemingly possessed pedestrians (and drivers!) has been Pokémon Go, an app that has been downloaded more than 15 million times. Pokémon Go is currently boasting more daily users than Twitter despite having been launched on July 6, 2016, making it the most popular mobile game of all time.Despite all this, if you happen to be, umm, over a certain age (i.e., you’re not a Millennial or younger), you may be a bit mystified as to what this Pokémon Go thing is all about. Accordingly, we put together this primer on Pokémon Go, including some observations regarding potential legal issues raised by the app.How the Game WorksPokémon Go is an augmented reality game that uses the device’s ability to track time and location and shows the user a map of his or her real-life surroundings. As the player moves around, the game superimposes animated Pokémon characters onto the screen over a view of the player’s real-life surroundings as seen through his or her mobile device’s camera. The more characters the player catches, the higher his or her ranking rises.The game is free to download from online app stores, but, as players progress, they need Pokémon coins to enable certain functions. While the game allows players to earn coins over time, the fastest way to acquire them is by purchasing them. Such in-app purchases are real money makers, expected to account for more than $50 billion in industry-wide revenue this year.Who’s Behind ItThe funds that players are plunking into Pokémon Go are likely to add up to real money for the companies behind the app, a <a href="http://www.marketwatch.com/story/pokemon-chasing-investors-send-nintendo-shares-soaring-2016-07-11-61034340" target="_blank" rel="noopener">joint project</a> of The Pokémon Company, which is 32%-owned by Nintendo, and Niantic Inc., a spinout from Alphabet Inc.Since the app’s recent release, shares in Nintendo—a company that has <a href="http://fraghero.com/nintendo-still-refusing-release-games-mobile-market/" target="_blank" rel="noopener">struggled in recent years as a result of its reluctance to embrace mobile games</a>—have <a href="http://news.sky.com/story/nintendo-shares-up-56-amid-pokemon-go-craze-10501554" target="_blank" rel="noopener">risen 56%</a>. The game has also significantly strengthened the financial position of Unity Technologies, the company that owns the game engine software that provides basic functionality for Pokémon Go (and for approximately 31% of the 1,000 top-grossing mobile games).Perks and Pitfalls (some, unfortunately, literal)Pokémon Go is being hailed as boon for small businesses; to drive foot traffic, merchants are paying the app a $10 daily fee for items called lures, which attract users. It’s also being lauded for incentivizing some players to exercise and for relieving users’ depression and social anxiety. Of course, the app is also creating problems and drawing its share of controversy.Safety concerns have arisen as players who won’t look away from their mobile devices have run-ins with their real-life physical surroundings, cutting and bruising themselves, getting into driving accidents, and even falling off cliffs. These incidents have prompted a police department in Texas to post to social media a list of safety reminders for Pokémon Go users.The list advises players to “tell people where you’re going if it is somewhere you’ve never been”—wise advice in light of police reports describing Missouri armed robbers’ use of the game’s geolocation feature “to anticipate the location and level of seclusion of unwitting victims.”And, while some columnists have deemed the game educational because many of its so-called PokéStops (places where players can get free in-game items) are famous landmarks and historical markers that allow “players to learn about their community and its history,” some of those PokéStops, such as the Holocaust Museum, have objected, maintaining that playing the game on their property is inappropriate. They are frustrated by the fact that they have no control over their PokéStop designation.Legal IssuesDespite the app being so new, it is already raising legal concerns. Some of the key concerns include the following:PrivacyThe Pokémon Go app has been dogged by privacy concerns. When it was first launched, the Pokémon Go app requested permission to access all of the data associated with the player’s Google accounts (including emails, calendar entries, photos and stored documents). The app’s first update, available since at least July 12, 2016, remedied that problem and now asks people downloading it for permission to access only their Google IDs and email addresses.The more limited-information-access permission terms—which downloaders of the original version of Pokémon Go can only adopt by downloading the update, signing out and signing back in—haven’t stopped U.S. Senator Al Franken from penning a letter to Niantic’s CEO John Hanke requesting Niantic to answer a series of questions to “ensure that Americans’—especially children’s—very sensitive information is protected.”Product LiabilityAnd what about the aforementioned injuries that people have sustained while playing Pokémon Go? Can Pokémon Go’s developers be held liable for such injuries? At least one car accident victim is suing another popular social media app, Snapchat, for the traumatic brain injuries he suffered when he was struck by a car driven by a Georgia woman allegedly trying to use the Snapchat speed filter—a feature that tracks how fast the app’s user is moving and rewards points to users who submit photos of their speed.TrespassThere’s also the question of property rights. In some cases, owners of the physical real estate sites that have been designated as PokéStops have complained about the traffic and other nuisances caused by the players. As a result, Niantic is accepting requests for removal of PokéStops from property owners, but removal isn’t guaranteed.Of course, app users who enter upon another’s land without permission may be subject to trespassing claims. But could the companies behind the game also be liable for trespass? As The Guardian points out, “A Pokéstop cannot be ‘on private property.’ A PokéStop does not exist: it is a latitude and longitude stored on Niantic’s servers, interpreted by the Pokémon Go client which then represents it as a circle hovering over a stylized Google Map of the area surrounding the player.”It is possible to recover in trespass for an intangible invasion of property, but whether a real estate owner’s exclusive rights to his or her property extends to cyberspace remains to be seen.Steps Taken to Mitigate Legal RisksPokémon Go’s owners have taken steps to limit their potential legal liability. For example, a warning screen on the app advises users to pay attention to their real-world surroundings. And Pokémon Go’s detailed, robust Terms of Service attempt to limit the potential liability of the companies behind the app. In addition to a $1,000 liability cap and a mandatory arbitration provision, the Terms of Service contain an entire “Safe Play” section, which states in part that, as a player, you “agree that your use of the App and play of the game is at your own risk, and it is your responsibility to maintain such health, liability, hazard, personal injury, medical, life, and other insurance policies as you deem reasonably necessary for any injuries that you may incur while using the Services. You also agree not to use the App to violate any applicable law, rule, or regulation (including but not limited to the laws of trespass).”Pokémon Go’s Terms of Service, however, don’t do anything to limit the liability of the game’s players. As noted above, users could be liable for trespass and for any harm that others suffer as a result of players’ use of the app (especially careless use, such as playing while behind the wheel of a car).The UpshotAny innovative technology that becomes a worldwide phenomenon overnight is bound to raise legal concerns. But, as we’ve noted here at Socially Aware, such concerns often turn out to be overblown. The real significance of Pokémon Go is ultimately a business, rather than a legal, story: thanks to the app, millions of consumers around the world have now embraced augmented reality technology. Lawsuits will inevitably follow in the wake of Pokémon Go’s success but, more importantly, so will millions of dollars of investment in new augmented reality applications. As a result, in what could be a very short amount of time, the integration of augmented reality into nearly every facet of our everyday life will become, well, a reality.[Authors’ Note: We would like to thank Luke D. (age 13), Ben R. (age 12), Alfredo M. (age 10) and Dylan J. (age 9) for the invaluable research that they contributed to this blog post.]*          *        *For more of the Socially Aware editors’ observations on tech innovations, please see the following: Will Ad Blockers Kill Online Publishing?; Building a Successful Social Media App: Four Lessons Learned From Snapchat; and Narrow Vision: Did Anti-Glass Hysteria Contribute to the Demise of Google Glass?

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Augmenting Reality: A Pokémon Go Business and Legal Primer

Augmenting Reality: A Pokémon Go Business and Legal Primer

We have become inured to the sight of people staring at their phones rather than engaging with one another or enjoying their real-life surroundings. But, over t

If your company is involved in selling products or services to consumers in New Jersey over the web or through mobile apps, you’ll want to read this blog post.In what amounts to a feeding frenzy, plaintiffs’ lawyers are working overtime bringing class action suits against e-commerce companies, alleging that their online terms and conditions violate New Jersey’s unusual <a href="http://www.gannlaw.com/OnlineApp/dtSearch-Data/TextFiles/Condominium/App-32.pdf" target="_blank" rel="noopener">Truth-in-Consumer Contract, Warranty and Notice Act</a> (“TCCWNA”). Some of the online retailers to have been sued include Victoria’s Secret, <a href="https://topclassactions.com/lawsuit-settlements/lawsuit-news/332489-toys-r-us-bed-bath-beyond-class-actions-filed-over-website-terms/" target="_blank" rel="noopener">Bed Bath & Beyond and TOYS ‘R’ US</a>, with more suits being filed every day.Unlike most consumer protection laws, the TCCWNA focuses specifically on the contractual terms governing certain transactions with consumers, imposing limitations on such terms even if such contractual terms are governed by the law of a state other than New Jersey—creating a potential gotcha for e-tailers who are based outside of New Jersey and who traditionally have their online terms and conditions reviewed only by lawyers admitted to practice in the state whose laws govern such terms and conditions.Although the TCCWNA was enacted in 1981, it has only recently achieved notoriety, as more and more plaintiffs’ lawyers have embraced the statute due to its broad scope and its statutory penalty of not less than $100 per violation without the need to prove actual harm.Overview of the TCCWNA New Jersey adopted the TCCWNA over 30 years ago not to create new rights for consumers, but rather <a href="http://law.justia.com/cases/federal/appellate-courts/ca3/13-1359/13-1359-2014-11-07.html" target="_blank" rel="noopener">to “bolster[] rights and responsibilities established by other laws</a>,” particularly those established by New Jersey’s Consumer Fraud Act (“CFA”). <a href="http://legalnewsline.com/stories/510704501-hertz-class-action-among-latest-in-rising-number-of-new-jersey-tccwna-cases" target="_blank" rel="noopener">Observers have noted</a> that the number of TCCWNA cases has been increasing in the last few years, particularly since 2013 when the Supreme Court of New Jersey in <a href="http://caselaw.findlaw.com/nj-supreme-court/1638020.html" target="_blank" rel="noopener">Shelton v. Restaurant.com, Inc.</a> found that online certificates or coupons were subject to TCCWNA rules and opened the door to TCCWNA class actions stemming from e-commerce.The TCCWNA applies where a company is a “seller, lessor, creditor, lender or bailee,” offering its services to a “consumer” or “prospective consumer” in New Jersey. A “consumer,” under the TCCWNA, is defined as “any individual who buys, leases, borrows, or bails any money, property or service which is primarily for personal, family or household purposes.” Indeed, <a href="http://caselaw.findlaw.com/nj-supreme-court/1638020.html" target="_blank" rel="noopener">courts</a> have emphasized that the TCCWNA is inapplicable unless the plaintiffs are consumers.The text of the TCCWNA prohibits three types of provisions in consumer contracts, warranties, notices and signs.First, it prohibits provisions violating “clearly established” legal rights of a consumer or responsibilities of a seller, lessor, creditor, lender or bailee. These rights and responsibilities may arise from federal or state law. For example, one court found that provisions restricting limitations periods for initiating lawsuits, asserting counterclaims or raising affirmative defenses violate consumers’ rights under federal and New Jersey procedural rules.Second, the TCCWNA prohibits provisions waiving a consumer’s rights under the TCCWNA. In <a href="http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/1:2012cv00079/268859/25/" target="_blank" rel="noopener">Johnson v. Wynn’s Extended Care, Inc.</a>, for example, the U.S Court of Appeals for the Third Circuit held that a provision in a service contract that prevented the recovery of attorneys’ fees and costs constituted a waiver of a consumer’s rights under the TCCWNA, and was therefore prohibited.Note, however, that at least two cases have found that a claim under the TCCWNA cannot be based merely upon an omission. As <a href="http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/2:2016cv01506/330981/11/" target="_blank" rel="noopener">one court</a> noted, the statute’s use of the term “includes” suggests that only a statement affirmatively “included” in the consumer contract, warranty, notice or sign should give rise to liability; in addition, the legislative history does not include any examples of an omission triggering liability.Third, the TCCWNA prohibits blanket “inapplicable in some jurisdictions” savings clauses (e.g., phrased “void where prohibited”)—though, notably, it does not prohibit such savings clauses in any warranty. In order for a savings clause to be acceptable under the TCCWNA, the statute requires the clause to specify which provisions, if any, are unenforceable in New Jersey.In one recent case, Martinez-Santiago v. Public Storage, the following language was found to be in violation of the TCCWNA’s prohibition against overly broad savings clauses: “If any provision of this [agreement] shall be invalid or prohibited under [the law of the state where the applicable premises are located], such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions.”Certain courts, however, have refused to find such a violation of the TCCWNA when the consumer contract, notice or sign is <a href="http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/1:2014cv06446/310478/24/" target="_blank" rel="noopener">only available within New Jersey</a>, or when the clause uses the alternative “to the extent permitted by law” phrasing, as discussed below.TCCWNA’s Potential Danger to Online CompaniesThe TCCWNA is potentially dangerous for companies operating online for at least three reasons.First, plaintiffs’ lawyers are pushing for an extremely broad application of the statute. They argue that the TCCWNA applies to almost every company providing consumer products online that are available to New Jersey residents, and to any “written consumer contract” and “written consumer warranty, notice or sign” made available to these residents—presumably encompassing nearly all material displayed or offered by a company online.Second, as noted above, the TCCWNA may expose companies located outside of New Jersey (but whose online websites can be accessed within the state) to claims stemming from any applicable “clearly established” federal or New Jersey state right or responsibility, effectively requiring companies based outside of New Jersey to develop expertise on all potentially applicable New Jersey laws (even if their website terms of use purport to be governed by another state’s laws and have been carefully drafted and reviewed by lawyers admitted to practice in such state).Think about it: If every state had a law similar to the TCCWNA, every e-tailer would need to have its online Terms of Use reviewed by as many as 50 different lawyers. The result would essentially be a full employment act for attorneys across the country.Third, the TCCWNA is potentially dangerous for companies because it provides an “aggrieved consumer” with the option to seek recovery of a civil penalty of not less than $100. This means the penalties in class actions—especially the penalties in class actions over online terms and conditions—could add up quickly. The text of the statute also allows for actual damages, reasonable attorneys’ fees and court costs in addition to the civil penalty, and further states that such remedies are cumulative and do not preclude recovery available under other laws.Some Guidance for Online Companies From Emerging TCCWNA Case LawBecause claims arguing that online terms and conditions violate the TCCWNA have been filed only recently, there is only sparse guidance from the courts on how online companies selling into New Jersey can protect against these lawsuits.Moreover, any such company, if it has not already done so, should promptly contact New Jersey counsel for advice on how to ensure its online terms and conditions are compliant with the TCCWNA.With those important caveats in mind, recent court decisions applying the TCCWNA do highlight some potential precautionary measures for website operators.For example, as a first line of defense, it may be prudent for companies to include, and seek to bolster the enforceability of, an arbitration provision and a related class action waiver clause in their online terms and conditions. As an example, <a href="http://caselaw.findlaw.com/nj-supreme-court/1678725.html" target="_blank" rel="noopener">in one TCCWNA case</a>, the Supreme Court of New Jersey indicated that an arbitration provision would have been enforceable if it had clearly and unambiguously notified the consumer that she was waiving her statutory right to seek relief in the court of law. While there is no prescribed wording for a valid arbitration provision, <a href="https://www.courtlistener.com/opinion/1545878/griffin-v-burlington-volkswagen/" target="_blank" rel="noopener">one New Jersey court</a> found the following arbitration notice to be acceptable:The parties to this agreement agree to arbitrate any claim, dispute, or controversy, including all statutory claims and any state or federal claims, that may arise out of or relating to the [subject matter of the agreement]. By agreeing to arbitration, the parties understand and agree that they are waiving their rights to maintain other available resolution processes, such as a court action or administrative proceeding, to settle their disputes.As a second line of defense, it may be prudent for companies, working with New Jersey counsel, to review and potentially revise their online contracts, warranties and notices in light of TCCWNA cases to date. One approach suggested by existing TCCWNA case law is that businesses can avoid violating the TCCWNA’s prohibition on blanket “inapplicable in some jurisdictions” savings clauses by using different language in their savings clauses to achieve the same result. As noted above, the text of the TCCWNA prohibits savings clauses that state that certain terms “may be void, unenforceable or inapplicable in some jurisdictions” if such clauses do not identify which terms are or are not void, unenforceable or inapplicable in New Jersey. In <a href="http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/3:2015cv06098/323286/28/" target="_blank" rel="noopener">Kendall v. CubeSmart L.P.</a>, however, the United States District Court for the District of New Jersey found that companies could use savings clauses that “attempt…to conform to New Jersey law.” Citing several cases, it held that the phrases “to the extent permitted by law,” “in the manner permitted by applicable law,” “allowed by applicable law” and “or as otherwise permitted by applicable law” were acceptable in savings clauses under the TCCWNA.Even if companies adjust their savings clauses as suggested by TCCWNA case law, it may still be prudent to pay particular attention to any language in their online contracts, warranties and notices that may violate “clearly established” legal rights, with particular attention to language that:<ul><li>Waives a consumer’s right to recover attorneys’ fees or requires litigation costs to be split. Current TCCWNA case law indicates that companies should be careful of clauses that explicitly waive a consumer’s right to recover his or her attorneys’ fees, or state that “<a href="http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/1:2012cv00079/268859/25/" target="_blank" rel="noopener">[e]ach party shall pay the fees of its own attorneys</a>.”</li><li>Limits liability of the company for personal injuries or property damage. The enforceability of such limitations will vary based on the situation, including variance from industry to industry. For example, on one hand, <a href="http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/1:2014cv06446/310478/24/" target="_blank" rel="noopener">a limitation of liability in a rental agreement for storage space</a>, which released the storage company from liability “for any personal injuries or property damage sustained by Customer and/or Customer’s guests while on” the company’s property, was found by a court to violate the TCCWNA because, under applicable New Jersey law, storage companies are under a duty to maintain their premises for consumers. On the other hand, a similar limitation of liability in a gym membership agreement was found by a court not to violate the TCCWNA because, the court reasoned, consumers are deemed to have assumed certain risks for personal injury on gym premises under New Jersey law.</li><li>Indemnifies the company against losses resulting from the company’s own negligence. <a href="http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/1:2014cv06446/310478/24/" target="_blank" rel="noopener">For example</a>, a rental agreement offered by a storage company that included consumer indemnification of the company for “any and all manner of claims for damages or lost property or personal injury” was found by a court to violate the TCCWNA.</li><li>Restricts claim limitation periods. <a href="http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/2:2013cv00929/285237/66/" target="_blank" rel="noopener">At least one court</a> has reasoned that the Federal Rules of Civil Procedure and New Jersey Court Rules dictate statutes of limitation on claims, from which companies cannot derogate, and therefore any attempt to shorten a consumer’s claim limitation period would violate the TCCWNA.</li><li>In addition to the above, current TCCWNA case law suggests that companies should present disclaimers and limitations of liability, in particular, conspicuously to consumers (e.g., use capital letters).</li></ul>The Spokeo, Inc. v. Robins Decision and Its Potential Impact on TCCWNA LitigationAlthough, as noted, the TCCWNA allows aggrieved consumers to elect a $100 civil remedy instead of their actual damages, the recent U.S. Supreme Court decision in <a href="https://supreme.justia.com/cases/federal/us/578/13-1339/" target="_blank" rel="noopener">Spokeo, Inc. v. Robins</a> may make it more difficult for plaintiffs to maintain TCCWNA class actions in federal court where concrete and particularized harm has not been established.The Spokeo case arose out of a claim by Robins that Spokeo, an operator of a “people search engine” that gathers and provides personal information about individuals to users, sold inaccurate information in violation of the Fair Credit Reporting Act. The U.S. Supreme Court held that standing to sue in federal court, even in the context of a statutory violation, requires proof of “concrete and particularized” harm inflicted on each individual plaintiff. It also held that “particularized” harm means “personal and individualized”—a relatively high threshold for class action plaintiffs claiming statutory violations. In fact, the First Circuit recently held in <a href="http://law.justia.com/cases/federal/appellate-courts/ca1/15-1446/15-1446-2016-05-23.html" target="_blank" rel="noopener">Hochendoner v. Genzyme Corp.</a> that plaintiffs did not satisfy the “particularized harm” requirement because the plaintiffs’ alleged injuries due to a shortage of a drug could not be linked to any specific plaintiff, and therefore the class actions were dismissed. At least one company has even submitted the Spokeo decision in support of its motion to dismiss in a case filed by a New Jersey consumer in federal court alleging that the company’s online terms and conditions were in violation of the TCCWNA.As it is too soon to definitively conclude how Spokeo will affect TCCWNA class actions, e-commerce companies will want to closely monitor TCCWNA developments, including any legislative initiatives that may result from recent <a href="http://legalnewsline.com/stories/510723798-new-jersey-civil-justice-institute-concerned-about-consumer-lawsuit-spike" target="_blank" rel="noopener">lobbying efforts</a>. In the meantime, companies would be well advised to review their online terms and conditions carefully with qualified counsel—indeed, the sharp increase in TCCWNA cases presents an opportunity for all website operators and mobile app developers to take a look at their terms and conditions and make sure that they are up to date.

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

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Controversial New Jersey Consumer Protection Law Creates a Potential “Gotcha” for E-Commerce Companies

Controversial New Jersey Consumer Protection Law Creates a Potential “Gotcha” for E-Commerce Companies

If your company is involved in selling products or services to consumers in New Jersey over the web or through mobile apps, you’ll want to read this blog post. 

The UK wants to use the blockchain to track the spending of welfare recipients.Some believe that a recent <a href="http://fortune.com/2016/07/10/sharing-netflix-password-crime/" target="_blank" rel="noopener">Ninth Circuit holding</a> could turn sharing passwords into a federal crime under the Computer Fraud and Abuse Act.And another Ninth Circuit <a href="http://fortune.com/2016/07/12/facebook-cfaa/" target="_blank" rel="noopener">opinion sided with Facebook</a> in a closely-watched case interpreting the same federal law, this time involving unauthorized access to Facebook’s website.The fashion world is embroiled in a <a href="http://www.thedailybeast.com/articles/2016/07/15/the-fashion-world-s-up-and-down-romance-with-social-media.html" target="_blank" rel="noopener">rocky romance with social media</a>.Snapchat filed a <a href="http://tech.co/snapchat-explores-image-recognition-tech-ads-2016-07" target="_blank" rel="noopener">patent application for image-recognition technology</a> that may help the platform’s ad sales.Scientists think they’ve found a way to <a href="http://www.popsci.com/scientists-think-theyve-found-way-to-eliminate-virtual-reality-sickness" target="_blank" rel="noopener">tackle virtual reality sickness</a>.What’s going on at Vine? First a bunch of <a href="http://digiday.com/platforms/swinging-vine-half-top-influencers-left-platform/" target="_blank" rel="noopener">influencers cut ties</a> with the platform. Now a group of its top executives have jumped ship.<a href="http://www.nytimes.com/2016/07/14/technology/live-streaming-breaks-through-and-cable-news-has-much-to-fear.html?smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=0" target="_blank" rel="noopener">Livestreaming services</a> are giving cable TV networks a run for their money.You didn’t think we’d ignore the Pokémon Go craze, did you? Here’s advice on how to <a href="http://www.nytimes.com/2016/07/14/technology/personaltech/how-to-protect-privacy-while-using-pokemon-go-and-other-apps.html" target="_blank" rel="noopener">protect your privacy</a> when you’re using the app. We’re also preparing an article describing the game and the business and legal issues that are arising from it. Stay tuned.

Social Links: Appeals court opinions show reach of anti-hacking law; a virtual reality sickness cure; intrigue at Vine

The UK wants to use the blockchain to track the spending of welfare recipients. Some believe that a recent Ninth Circuit holding could turn sharing passwords in

Social Links: Appeals court opinions show reach of anti-hacking law; a virtual reality sickness cure; intrigue at Vine

Snapchat has <a href="http://www.wsj.com/articles/snapchats-teen-fans-grumble-as-app-catches-on-with-their-folks-1467661872">caught on with “oldies”</a> (that’s people 35 and older, FYI).Facebook Messenger is testing “Secret” mode, a feature that allows some messages to be read only by the recipient.A <a href="http://www.nytimes.com/2016/07/06/technology/snapchat-snow-korea.html?_r=0" target="_blank" rel="noopener">South Korean copy of Snapchat</a> has taken off in Asia.Using social media to help promote your brand? Here’s a list of top <a href="http://www.huffingtonpost.com/richard-lorenzen/top-6-facebook-marketers-_b_10661018.html" target="_blank" rel="noopener">Facebook marketers</a> and some advice on how to get your customers to <a href="http://www.adweek.com/socialtimes/getting-customers-to-buy-using-social/641809" target="_blank" rel="noopener">make social platforms their point of purchase</a>.<a href="http://www.wsj.com/articles/meet-mikmak-the-mobile-shopping-network-that-sells-via-video-1467832496" target="_blank" rel="noopener">Meet MikMak</a>, the mobile shopping network that sells via video.A 14-year-old <a href="http://nypost.com/2016/07/08/snapchat-let-my-14-year-old-read-sex-stories-suit/" target="_blank" rel="noopener">and</a> his mother are <a href="http://nypost.com/2016/07/08/snapchat-let-my-14-year-old-read-sex-stories-suit/" target="_blank" rel="noopener">suing Snapchat</a>, claiming the app regularly exposes him to sexually explicit content.Dieters are <a href="http://www.nytimes.com/2016/07/08/health/instagram-diets.html?smprod=nytcore-iphone&smid=nytcore-iphone-share" target="_blank" rel="noopener">flocking to Instagram</a>.Twitter is looking to ink more NFL-style streaming deals.Young performers are trying to achieve stardom by <a href="http://www.nytimes.com/2016/07/05/business/media/young-performers-look-to-apps-for-stardom.html?&moduleDetail=section-news-0&action=click&contentCollection=Technology&region=Footer&module=MoreInSection&version=WhatsNext&contentID=WhatsNext&pgtype=article" target="_blank" rel="noopener">broadcasting on apps</a>, such as YouNow. Perhaps they should go old school, and follow this advice on building the perfect YouTube channel.The Wall Street Journal <a href="http://www.wsj.com/articles/instagrams-kevin-systrom-unfiltered-1467392074" target="_blank" rel="noopener">profiles Instagram’s founder</a>, Kevin Systrom.China is reportedly <a href="http://in.reuters.com/article/china-internet-idINKCN0ZK07V" target="_blank" rel="noopener">launching a crackdown</a> on “fake news” spread on social media sites.<a href="https://www.washingtonpost.com/news/the-switch/wp/2016/07/06/snapchat-memories-is-a-huge-change-for-users/" target="_blank" rel="noopener">Snapchat’s new feature, “Memories,”</a> will allow users to retain some content.

Social Links: Kids roll eyes as parents embrace Snapchat; teen sues Snapchat over sexual content; Snapchat to become less ephemeral with new “Memories” feature (plus some other news not involving Snapchat)

Snapchat has caught on with “oldies” (that’s people 35 and older, FYI). Facebook Messenger is testing “Secret” mode, a feature that allows some messages to be r

Social Links:  Kids roll eyes as parents embrace Snapchat; teen sues Snapchat over sexual content; Snapchat to become less ephemeral with new “Memories” feature (plus some other news not involving Snapchat)

If you make available a service through a free app, and you subsequently decide to migrate users of that app to a paid subscription model, that shouldn’t create any problems, right?Well, app developer LogMeIn did just that, and became the target of a class action lawsuit filed in the Eastern District of California. Although the claims against LogMeIn were recently <a href="http://www.leagle.com/decision/In%20FDCO%2020160128B48/Handy%20v.%20LogMeIn,%20Inc." target="_blank" rel="noopener">dismissed</a>, the case, Handy v. LogMeIn, Inc., highlights the potential legal risks in seeking to transition app customers from a “no charge” (or a “one-time only charge”) business model to another business model, especially where the new business model will require those customers to pay ongoing subscriptions fees.LogMeIn’s Products LogMeIn made available a free app, LogMeIn Free, which allowed users to use a laptop or desktop computer to access remotely a separate desktop computer. The company also offered, for $29.99, a second app, Ignition, which provided the same remote access but from a tablet or smartphone.In 2014, LogMeIn notified its customers that it would no longer offer LogMeIn Free, and that it was planning to migrate all users of that app and the Ignition app to a paid subscription service, which offered a few extra features. The plaintiff—a user of LogMeIn Free and a purchaser of Ignition—brought suit under California’s <a href="http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC&sectionNum=17500." target="_blank" rel="noopener">False Advertising Law</a> (FAL) and <a href="https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?division=7.&chapter=5.&part=2.&lawCode=BPC" target="_blank" rel="noopener">Unfair Competition Law</a> (UCL), alleging that the company had failed to properly notify users that it would discontinue these products and that, had he known LogMeIn would do so, he would not have purchased Ignition.LogMeIn filed a motion to dismiss the plaintiff’s claims and a motion for summary judgment. Because the court considered evidence outside the pleadings, it applied summary judgment standards and ruled in favor of LogMeIn.Failure to Identify Any Affirmative Misrepresentation  The plaintiff claimed the following: (1) LogMeIn had misled consumers to believe that LogMeIn Free and Ignition apps were both being discontinued and that, in order to continue to receive the services provided through these apps, users had to pay for an annual subscription; and (2) LogMeIn had led users to believe that the free app and the paid subscription were “companion services” and, as such, had failed to inform users that the discontinuation of the free app would make the subscription app less valuable. The court rejected both theories.First, the court held that LogMeIn had not misrepresented its intention to discontinue its free app and the Ignition product. LogMeIn explained its migration plan and offered consumers a six-month free subscription to the new subscription-based service. It further explained that, regardless of whether users accepted the complementary subscription, they could continue to use Ignition until it was discontinued. This is exactly what the plaintiff did: he continued to use the Ignition product throughout 2014 and 2015. Because the plaintiff was not “tricked” by LogMeIn’s statement and did not buy the new subscription-based product because of any alleged misrepresentation, he could not base a claim on LogMeIn’s statement of its migration plan. The court noted:While [the plaintiff] may be outraged by what he feels occurred to others, the Court is not clear why he believed that this outrage makes him aggrieved such that he can vindicate this grievance in this litigation.Second, the court held that the plaintiff failed to show that the free app and Ignition were “companion services” such that Ignition was less valuable without the free app. It noted that the plaintiff used the free app for more than a year before buying Ignition and then used Ignition for more than a year after the free app had been discontinued. The products, therefore, were not dependent on one another.Further, the court noted that, prior to receiving access to the LogMeIn Free app, the plaintiff and other customers had been required to “click accept” the terms and conditions governing use of that app and the Ignition app, and, in such terms and conditions, LogMeIn had made clear that it reserved “the right to modify or discontinue” either LogMeIn Free or Ignition “for any reason or no reason,” thereby undercutting the plaintiff’s position that use of one was dependent on the other.ObservationsApp developers (and other companies, for that matter) should take note that, even though LogMeIn ultimately prevailed, migrating users off of a free app or a “one-time only charge” app to a paid subscription model can spark unwanted and costly litigation, no matter how baseless that litigation might be; accordingly, app developer will want to proceed with caution and ideally consult experienced counsel before undertaking such an initiative.That being said, the Handy decision highlights some of the challenges that a plaintiff will have in pursuing any such litigation. As the Handy plaintiff learned, fraud-based claims under the FAL and UCL are subject to heightened pleading requirements. Moreover, plaintiffs must allege reliance on specific statements and injury in fact as a result. Further, courts are increasingly dismissing claims that fail to allege such individualized reliance and injury.Finally, Handy shows how a carefully drafted set of terms and conditions governing app usage can help to bolster an app developer’s defenses to FAL, UCL and other claims arising out of a shift to a new business model. Such terms and conditions of use ideally should provide notice to users that the app (including any associated services) may be modified or discontinued, and that the app developer reserves the right to charge fees or to increase fees in connection with the app. Moreover, as in Handy, app developers can further strengthen the impact in litigation of an app’s terms and conditions of use by requiring customers to affirmative consent to such terms and conditions. *          *        *For other Socially Aware blog posts on legal issues relating to mobile apps, please see the following:<a href="https://www.sociallyawareblog.com/2015/07/20/mobile-app-legal-terms-conditions-six-key-considerations/" target="_blank" rel="noopener">Mobile App Legal Terms & Conditions: Six Key Considerations</a> <a href="https://www.sociallyawareblog.com/2014/11/05/dnew-california-privacy-law-revisions-will-impact-website-and-mobile-app-operators-with-users-under-age-18/" target="_blank" rel="noopener">New California Privacy Law Revisions Will Impact Website and Mobile App Operators With Users Under Age 18</a><a href="https://www.sociallyawareblog.com/2016/06/16/california-court-of-appeal-rules-that-state-attorney-generals-privacy-suit-over-fly-delta-mobile-app-is-preempted/" target="_blank" rel="noopener">California Court of Appeal Rules That State Attorney General’s Privacy Suit Over Fly Delta Mobile App Is Preempted</a>For in-depth coverage of class action law developments, please check out our sister blog, <a href="http://classdismissed.mofo.com/" target="_blank" rel="noopener">Class Dismissed</a>.

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

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Claudia M. Vetesi

App Developer Prevails in Class Action Lawsuit Challenging Shift to New Business Model