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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Contractual provisions giving a website operator the unilateral right to change its end user terms of service are ubiquitous and appear in the online terms of m

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Potential Limitations Placed on Unilateral Right to Modify Terms of Use

Potential Limitations Placed on Unilateral Right to Modify Terms of Use | Socially Aware

Jessica Kaufman

Contractual provisions giving a website operator the unilateral right to change its end user terms of service are ubiquitous and appear in the online terms of many major social media sites and other websites, including Facebook, Twitter, Instagram and Google. Although amendments to terms of service <a href="http://www.theverge.com/2013/10/17/4845828/digging-through-new-google-terms-of-service">quite often</a> <a href="http://consumerist.com/2009/02/15/facebooks-new-terms-of-service-we-can-do-anything-we-want-with-your-content-forever/">cause</a> <a href="http://readwrite.com/2011/03/03/how_recent_changes_to_twitters_terms_of_service_mi#awesm=~omVExYmQimbZMM">consumers</a> <a href="http://www.huffingtonpost.com/2012/12/20/instagram-terms-of-service-change_n_2333284.html">to complain</a>, litigation regarding such changes is relatively rare. A recent decision from the U.S. District Court in the Northern District of Ohio, however, challenges the enforceability of unilateral amendments to online terms of service in at least some circumstances.In Discount Drug Mart, Inc. v. Devos, Ltd. d/b/a Guaranteed Returns, Discount Drug Mart, a distributor of pharmaceuticals, sued Guaranteed Returns, a company that processes pharmaceutical product returns, for Guaranteed Returns’ failure to remit credits due under a written distribution agreement between the parties. Guaranteed Returns pointed to the forum selection clause on its website, which it argued required the parties to bring suit in either Nassau or Suffolk County in the State of New York. This provision appeared in Guaranteed Returns’ online “standard terms and conditions,” which Guaranteed Returns claimed were incorporated into the parties’ written distribution agreement.The court held otherwise, citing the Sixth Circuit case Int’l Ass’n of Machinists and Aerospace Workers v. ISP Chemicals, Inc. and stating that “[i]ncorporation by reference is proper where the underlying contract makes clear reference to a separate document, the identity of the separate document may be ascertained, and incorporation of the document will not result in surprise or hardship.” The court also pointed out that Guaranteed Returns’ purported right to change its standard terms and conditions unilaterally could result in Discount Drug Mart being subject to surprise or hardship. Further, the court noted that there was no evidence that the forum selection clause had been included in the standard terms and conditions at the time the distribution agreement was signed (and Guaranteed Returns did nothing to try to prove this fact). Thus, the court concluded that the standard terms and conditions were not properly incorporated into the distribution agreement (although the court ended up finding in favor of Guaranteed Returns on other grounds).It is difficult to say what, if any, precedential force Discount Drug Mart will have. Putting aside the facts that the case was brought in the Northern District of Ohio and was ultimately dismissed on grounds unrelated to this holding, the underlying background of the case was nuanced. First, although the court stated in dicta that “one party to a contract may not modify an agreement without the assent of the other party,” a statement that could be interpreted to mean that unilateral amendment of contracts is never permitted, the holding itself was limited to situations in which terms and conditions are incorporated by reference. That said, even this limited holding may be relevant to many website operators in the social media world, as the larger social media sites often use a network of contracts that reference each other (for example, Facebook’s “<a href="https://developers.facebook.com/policy/">Platform Policies</a>” requires developers to agree to the company’s “<a href="https://www.facebook.com/#!/legal/terms">Statement of Rights and Responsibilities</a>,” which are “requirements for anybody who uses Facebook” and which can be unilaterally modified by Facebook).Second, the Discount Drug Mart court did not elaborate on the “surprise or hardship” standard, so it is possible that unilateral changes to end user terms would be upheld if the website operator gave proper notice to its end users of such changes in order to avoid causing surprise or hardship. The leading social media platforms currently have different approaches to providing notice of changes to their online terms of use. For example, <a href="https://www.facebook.com/legal/terms">Facebook</a> provides seven days’ notice (although “notice” here includes posting on Facebook’s site governance page); <a href="https://twitter.com/tos">Twitter</a> will notify users of changes to its terms of service via an “@Twitter” update or through email (but only for changes that Twitter deems to be material in its sole discretion); and <a href="http://instagram.com/legal/terms/">Instagram</a> notifies users of its changes to its terms of use by posting them on Instagram. A court could find that notification of changes using one or more of these methods is sufficient to avoid subjecting an end user to surprise or hardship.Finally, the court seemed to give weight to the lack of any evidence that the forum selection clause was included in Guaranteed Returns’ standard terms and conditions at the time that the parties entered into the distribution agreement. Today, however, most Internet service providers include “last modified” dates in their terms of use. Recording version dates and keeping copies of older terms of use could help a website operator show that a particular provision existed in terms of use at the time that the parties entered into an agreement referencing such terms (although these practices could also provide evidence to the contrary).Discount Drug Mart is not the first decision to challenge a company’s right to unilaterally modify its online terms and conditions. In the 2007 case <a href="http://pub.bna.com/eclr/0675424_071807.pdf">Douglas v. Talk America, </a>the Ninth Circuit Court of Appeals held that Talk America could not enforce an arbitration clause against an individual who had initially accepted the applicable terms of service prior to Talk America’s unilateral addition of the arbitration clause. Although Talk America posted the amended terms online, the court noted that the individual’s assent to the new terms could only be inferred “after [the individual] received proper notice of the proposed changes.” Discount Drug Mart seems consistent with this decision to the extent that the case suggests that failure to provide adequate notice to end users of changes to online terms may invalidate such changes.A decision in the Northern District in the U.S. District Court of Texas in 2009, <a href="http://epic.org/amicus/blockbuster/Opinion_DC.pdf">Harris v. Blockbuster Inc., </a>went further than the Douglas court by holding an arbitration clause in Blockbuster’s online terms of use rendered the terms of use illusory and unenforceable. The court’s holding was based on the fact that Blockbuster could, in theory, unilaterally modify the arbitration provisions and apply those modified provisions to earlier disputes. Harris cited the Fifth Circuit case, <a href="https://law.justia.com/cases/federal/district-courts/FSupp2/49/529/2467514/">Morrison v. Amway Corp., </a>in which the court had held an arbitration clause in online terms of use to be illusory under Texas law when defendant Amway attempted to apply arbitration terms that been had modified after the plaintiff had agreed to Amway’s standard terms. Although limited to the Northern District of Texas (for now), the implications of Harris could be troubling to online service providers, as the case suggests that if a company includes language allowing it to make unilateral changes to its terms by simply posting the revised terms on its website, those terms could be deemed invalid. In fact, <a href="http://blog.ericgoldman.org/archives/2009/06/stop_saying_we_1.htm">at least one legal scholar</a> has suggested that companies should not include such language in their online terms.Discount Drug Mart does not necessarily provide any clear guidelines that online service providers must follow for their online terms to be valid and enforceable. Because the court based its holdings on specific factual circumstances and provided little insight into its reasoning, it is unclear at this point whether other courts will follow this opinion and impose limitations on companies’ rights to unilaterally change their online terms of service under different circumstances. However, given the legal precedent on the subject, it will likely behoove companies that incorporate their online terms into other documents to consider re-evaluating their amendment and notification practices to minimize any chance of subjecting end users to “surprise or hardship.”