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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Social media is transforming the way companies interact with consumers. Learn how to make the most of these online opportunities while minimizing your company’s risk at Practicing Law Institute’s (PLI) 2015 Social Media conference, chaired by Socially Aware editor John Delaney.This year’s program features speakers from American Express, BuzzFeed, Dell, and Foursquare. There will also be a “Meet the Regulators” panel discussion featuring representatives from FINRA, the FTC, and the New York State Attorney General’s Office. And the conference will conclude with a networking reception.Join us for the conference in New York on February 25th. For more information or to register, please visit PLI’s website <a href="http://www.pli.edu/Content/Social_Media_2015_Addressing_Corporate_Risks/_/N-1z1297bZ4k?ID=225654" target="_blank" rel="noopener">here</a>.

Social Media 2015: Addressing Corporate Risks

Social media is transforming the way companies interact with consumers. Learn how to make the most of these online opportunities while minimizing your company’s

Social Media 2015: Addressing Corporate Risks

IBM has been receiving rave reviews in the media for simplifying its Cloud Services Agreement to a mere two pages in length. And yes, the Agreement also boasts healthy margins and a normal font. But does the Agreement’s reasonable length equate to reasonable terms?After all, from a customer’s perspective, shorter doesn’t necessarily mean better.Certainly IBM’s new Agreement was designed to reduce negotiation. According to the International Association for Contract & Commercial Management, which declared IBM a finalist for an <a href="https://www.iaccm.com/resources/?id=8288" target="_blank" rel="noopener">award</a> because of the Agreement’s simplified approach, IBM has competitively benchmarked the terms of the new Agreement and IBM apparently feels that the terms will meet the business requirements of most enterprise clients.Indeed, of the customers presented with IBM’s new Agreement, 80 percent have reportedly signed it without negotiation. The remaining 20 percent, however, still chose to treat the new Agreement – simplified or not – as merely IBM’s opening draft.Upon review of the new agreement, it becomes clear why these why these “20 percenters” chose to negotiate.For example, the first section of the Agreement is entitled Service Performance and Commitments, but the 208 words of the section contain little in the way of actual commitments; the Cloud Services are merely “designed” to be available 24/7, and while IBM agrees to provide notice of scheduled maintenance, there are no limits on the timing or duration of such maintenance.Customers must also review the Service Description — in a separate document — to determine what, if any, license rights, data security obligations, service levels and renewal options will apply to the Agreement.At times, the Agreement does provide terms that a customer will want to see — such as an indemnity against third-party patent and copyright claims — but the value of these terms is often limited. (Even in the shortest contract, the devil is still in the details.)Customers must also be careful not to skip over short statements with potentially broad implications. For example, while IBM does not ask the customer to expressly indemnify IBM, the Agreement does contain a very short — and very vague — statement making the customer “responsible for” any “violation of law or any third party rights caused by” by the customer’s content uploaded to the service or other use of the service. Could this statement require that a customer indemnify IBM for claims arising from any such violation? If so, the customer’s liability for such third-party claims could be unlimited, because the Agreement’s limitation-of-liability provision protects only IBM, not the customer.Service providers are often urged to keep an agreement as “short and simple” as possible, and this is unquestionably an important goal that will help to reduce costs for both parties. At the same time, anyone reviewing such an agreement should bear in mind that it may have been “shortened and simplified” by the omission of key legal protections.Ultimately, an informed customer wants an agreement that is short, simple and sweet.

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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Shorter and Simpler, Yes – But Is IBM’s New Cloud Services Agreement Any Sweeter?

Shorter and Simpler, Yes – But Is IBM’s New Cloud Services Agreement Any Sweeter?

IBM has been receiving rave reviews in the media for simplifying its Cloud Services Agreement to a mere two pages in length. And yes, the Agreement also boasts 

Are parents now liable for what their kids post to Facebook?  According to a recent decision in the Georgia Court of Appeals, they <a href="http://blogs.wsj.com/law/2014/10/15/parents-may-be-liable-for-what-their-kids-post-on-facebook-court-rules/" target="_blank" rel="noopener">are</a>.The Georgia Court of Appeals <a href="http://online.wsj.com/public/resources/documents/2014_1015_facebookgeorgia.pdf" target="_blank" rel="noopener">held</a> that the parents of a seventh-grade student could be found negligent for failing to ensure that their son deleted an offensive Facebook profile that defamed a fellow classmate.  The fake Facebook account depicted a fat-face caricature of the female student and featured sexual, profane and racist postings.  Facebook eventually took the page down at the urging of the bullied girl’s parents, more than 11 months after the school first disciplined the male student.  According to the court, the failure of the boy’s parents to take any action to get their son to delete the profile for nearly a year after the school alerted them about the Facebook page could constitute negligence.“Given that the false and offensive statements remained on display, and continued to reach readers, for an additional eleven months, we conclude that a jury could find that the [parents’] negligence proximately caused some part of the injury [the girl] sustained from [the boy’s] actions (and inactions),” the court stated.The appeals court found that because the boy’s parents made no attempt to view the Facebook page, learn what content their son had distributed or demand that their son delete the page, they could be held negligent for failing to police their son’s social media account.  For this reason, the appeals court reversed the trial court’s decision to grant summary judgment to the boy’s parents.  The court, though, agreed with the lower court’s dismissal with respect to holding the parents responsible for allowing the page to be posted in the first place.If upheld, this ruling by the Georgia Court of Appeals could usher in a new era of parental responsibility, imposing a significant duty upon parents to monitor their children’s online activity and remedy any problems once they are put on notice.But will parents be upset about this holding, or welcome it as they seek ways to justify their cyber-spying?  <a href="http://www.pewinternet.org/2013/03/13/teens-and-technology-2013/" target="_blank" rel="noopener">More than 37%</a> of teens own smartphones, and parents are increasingly looking for ways to keep tabs on their kids.  According to the <a href="http://www.craveonline.com/lifestyle/tech-and-gadgets-news/787407-78-parents-logged-childs-facebook-account-spy" target="_blank" rel="noopener">Family Online Safety Institute</a>, 78% of parents have logged into their child’s Facebook account to monitor their private messages.  In <a href="http://business.time.com/2012/09/14/should-you-use-your-smartphone-to-track-your-kids/" target="_blank" rel="noopener">2012</a>, 20 million people had already downloaded <a href="https://www.life360.com/" target="_blank" rel="noopener">Life360</a>, a location app that allows families to track each other’s movements with by-the-minute updates.  According to the co-founder of TeenSafe, an invisible tracking app that allows parents to monitor their kid’s location, social media activity and text messages, more than <a href="http://www.usatoday.com/story/tech/personal/2014/09/17/teens-parents-tracking-apps-security-mamabear-teensafe/15716335/" target="_blank" rel="noopener">500,000 users</a> have used the service to help identify online bullying and keep teens out of dangerous situations.So the next time a teenager yells at a parent for violating her civil liberties by tracking all of her online activities, the parent can simply point to the Georgia Court of Appeals decision and say they were forced to cyber-spy, for everyone’s protection.

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

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Forced to Cyber-Spy: Court Rules Parents Can Be Held Negligent for Child’s Facebook Activity

Forced to Cyber-Spy: Court Rules Parents Can Be Held Negligent for Child’s Facebook Activity

Are parents now liable for what their kids post to Facebook?  According to a recent decision in the Georgia Court of Appeals, they are. The Georgia Court of App

Money may not be able to buy happiness, but it can buy phony Facebook “likes.” And those can go a long way toward making a small business owner’s dreams come true, right?Wrong, explains Facebook site integrity engineer Matt Jones in a recent <a href="https://www.facebook.com/business/news/authentic-activity-on-facebook" target="_blank" rel="noopener">post</a> on the company’s official blog.Businesses that purchase fake likes “won’t achieve results and could end up doing less business on Facebook if the people they’re connected to aren’t real,” Jones observes.Phony likes don’t help companies to reach their target audiences on Facebook because, for one thing, the creators of phony likes—which usually originate from fake Facebook accounts or real ones that have been hacked into—aren’t actual paying customers with whom the business would benefit from communicating, digital marketing gurus explain.Nor do phony likes represent people who are likely to be Facebook friends with consumers looking for peer recommendations.Further, fake likes won’t increase the likelihood that the business purchasing them will reach a relevant wider audience because, according to Jones, the Facebook algorithm that decides when and where to deliver a page’s legitimate ads and content takes page engagement rates into account, and “the people involved [in creating a fake like] are unlikely to engage with a page after liking it initially.”As one digital marketing blogger notes, “[Q]uantity [is] not the metric that [is] important with Facebook marketing; it’s all about the quality. Having 10,000 fans in India is great, but they’re not going to buy anything or visit you if you’re a furniture store in Sydney, Australia.”And so, for these reasons, and for the sake of maintaining its own advertising-dependent business model, Facebook is doing all it can to rid the social network of phony likes, <a href="https://www.facebook.com/business/news/authentic-activity-on-facebook" target="_blank" rel="noopener">reports</a> Jones. The company’s efforts to achieve this end include automated measures such as algorithms that block spam and help Facebook to identify fraudulent activity. The company also asks for verification from accounts with particularly high like activity.Indeed, Facebook’s recent <a href="https://www.sociallyawareblog.com/2014/11/17/r-i-p-the-facebook-like-gate/" target="_blank" rel="noopener">ban on the practice of “like” gating</a> appears to be part of this same initiative to ensure the legitimacy—and marketing value—of each individual like.There is one group of businesses for whom bogus likes make economic sense: Those that profit from selling such likes. Pssst—wanna buy a like? <a href="http://www.forbes.com/sites/larrymagid/2014/10/06/why-facebook-hates-and-fights-fake-likes/" target="_blank" rel="noopener">For $480, you can reportly purchase 10,000 likes, while $1,200 gets you 50,000 new likes</a>. It’s big business; a 2013 study <a href="http://nypost.com/2014/01/05/fake-facebook-twitter-and-youtube-clicks-are-big-business/" target="_blank" rel="noopener">estimated</a> that fake Facebook activities generate $200 million a year. But Facebook is fighting back.Jones’s Facebook blog post <a href="https://www.facebook.com/business/news/authentic-activity-on-facebook" target="_blank" rel="noopener">highlights</a> the nearly $2 billion in legal judgments that the social media platform obtained by filing lawsuits against spammers. The <a href="http://www.forbes.com/2009/10/30/spam-microsoft-phishing-technology-security-facebook.html" target="_blank" rel="noopener">most publicized</a> of those suits concern more traditional spamming—the gaining of <a href="https://cases.justia.com/federal/district-courts/california/candce/5:2009cv00798/211911/1/0.pdf?ts=1236349468" target="_blank" rel="noopener">unauthorized access to Facebook user accounts</a> for the purpose of sending unsolicited commercial electronic messages. But Facebook <a href="http://www.cbsnews.com/news/facebook-to-sue-mark-zuckerberg-it-gets-weirder/" target="_blank" rel="noopener">has filed at least one suit</a> against a seller of phony likes, and, based on Jones’s statements, one can expect Facebook to commence more such suits in the future.And while Facebook isn’t likely to see much money from these lawsuits—the defendants often file for bankruptcy or simply disappear—the resulting judgments are likely to deter parties from selling phony likes.As we’ve recently <a href="https://www.sociallyawareblog.com/2014/11/04/whats-in-a-like/" target="_blank" rel="noopener">discussed</a>, the Facebook like has now achieved legal status—as property, as protected speech under the First Amendment and as protected “concerted activity” under the National Labor Relations Act. So it’s not surprising that, with the growing business and legal importance of the like, we’re seeing a greater effort on Facebook’s part to ensure the integrity of the like.And, if it is to have integrity, a like needs to be earned, not bought.<div></div>

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Facebook Dislikes Fake Likes

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

Money may not be able to buy happiness, but it can buy phony Facebook “likes.” And those can go a long way toward making a small business owner’s dreams come tr

Facebook Dislikes Fake Likes

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

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Implementing and Enforcing Online Terms of Use

Implementing and Enforcing Online Terms of Use

Operators of social media platforms and other websites must manage a large number of risks arising from their interactions with users. In an effort to maintain 

In <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/18/12-56628.pdf" target="_blank" rel="noopener">Kevin Khoa Nguyen v. Barnes & Noble Inc.</a>, 2014 U.S. App. LEXIS 15868 (9th Cir. 2014), decided on August 18, 2014, the Ninth Circuit rejected an attempt to bind a consumer to an arbitration clause found in an online terms of use agreement not affirmatively “click accepted” by the consumer but readily accessible through a hyperlink at the bottom left of each page on the subject website.The case arose from a “fire sale” by defendant Barnes & Noble of certain discontinued Hewlett Packard TouchPads. Plaintiff Nguyen had ordered two of the TouchPads, but received a notice from Barnes & Noble the following day that his order had been cancelled due to unexpectedly high demand. Nguyen sued Barnes & Noble in California Superior Court on behalf of himself and a putative class, arguing that he was forced to buy a more expensive tablet instead.Barnes & Noble, after removing the suit to federal court, moved to compel arbitration under the Federal Arbitration Act, arguing that, by using the Barnes & Noble website, Nguyen had agreed to an arbitration clause contained in Barnes & Noble’s Terms of Use. Nguyen responded that he could not be bound to the arbitration clause because he had no notice of and did not consent to the Terms of Use. Barnes & Noble countered that the placement of the Terms of Use hyperlink on its website had given Nguyen constructive notice of the arbitration clause.The district court agreed with Nguyen, Barnes & Noble appealed, and the Ninth Circuit affirmed.We have previously surveyed the law in this area <a href="http://www.sociallyawareblog.com/2012/11/01/thats-a-wrap-nguyen-v-barnes-noble/" target="_blank" rel="noopener">here</a> (regarding the Nguyen district court decision) and <a href="http://www.sociallyawareblog.com/2012/02/21/click-accept-arbitration-enforcing-arbitration-provisions-in-online-terms-of-service/" target="_blank" rel="noopener">here</a> (regarding other decisions involving online arbitration clauses). The Ninth Circuit’s opinion in Nguyen is generally consistent with the existing caselaw, which suggests that, absent evidence of affirmative consent, courts are reluctant to find that parties—especially consumers—are bound by arbitration clauses contained in online terms of use agreements.In Nguyen, it was established that Barnes & Noble made available a hyperlink to its Terms of Use at the bottom left corner of each page on its website. Further, on each page of the website’s online checkout process, Barnes & Noble presented, underlined and in green type, a hyperlink to its Terms of Use. However, it was apparently undisputed that Nguyen had neither clicked on the Terms of Use hyperlink nor actually read the Terms of Use.To determine whether a valid arbitration clause exists, <a href="https://supreme.justia.com/cases/federal/us/514/938/case.html" target="_blank" rel="noopener">courts apply ordinary state law principles of contract formation</a>. Interestingly, in Nguyen, the Ninth Circuit applied New York law as provided in the Barnes & Noble Terms of Use even though the question was whether such Terms of Use were a valid agreement in the first instance. The Ninth Circuit noted, however, that its analysis would be the same under California law as under New York law.Applying New York law, the Ninth Circuit examined the law of “clickwrap” and “browsewrap” agreements and commented that “[t]he defining feature of browsewrap agreements is that the user can continue to use the website or other services without visiting the page hosting the browsewrap agreement or even knowing that such a web page exists.” Thus, the Ninth Circuit observed, the determination of the validity of the browsewrap contract depends on whether the user has actual or constructive knowledge of the website’s terms and conditions.The Ninth Circuit noted that courts have consistently enforced browsewrap agreements where the user had actual notice of the agreement but pointed out that courts are more willing to enforce browsewrap agreements where the browsewrap agreement resembles a clickwrap agreement, i.e., where the user is required to affirmatively acknowledge the agreement in some way.The Ninth Circuit further stated that where, as in the case of Nguyen, no evidence exists that the user had any knowledge of a browsewrap agreement, the validity of such agreement turns on whether the disclosure of the agreement on the website is sufficient to put a reasonably prudent user on notice of the terms and conditions of such agreement. This inquiry turns on the design and content of the website. Where the link to the terms of use is hidden at the bottom of the page or tucked away in obscure corners of the website, notice is not sufficient.The Ninth Circuit’s analysis in Nguyen relies heavily on the Second Circuit’s decision in <a href="http://cyber.law.harvard.edu/stjohns/Specht_v_Netscape.pdf" target="_blank" rel="noopener">Specht v. Netscape Communications Corp.</a>, 306 F.3d 17 (2d Cir. 2002), in which the Second Circuit had rejected an arbitration clause in a terms of use agreement for inadequate notice. The Ninth Circuit acknowledged that Barnes & Noble’s placement of the link to its Terms of Use at the bottom left of every page and also close to the buttons a user must click to complete a transaction distinguished the case from Specht, in which the link at issue was on a submerged screen that could not be seen unless the user scrolled past the button that initiated the relevant transaction. However, the Ninth Circuit held that the proximity or conspicuousness of the hyperlink alone was not enough to give rise to constructive notice. Rather, the Ninth Circuit said, the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers.What then must a website owner do to provide the requisite notice? A clear manifestation of consent is the safest way to ensure enforceability—for example, by requiring the user to check an unchecked box before allowing the user to complete a transaction.The Ninth Circuit also suggests in Nguyen that a clear textual notice on the website that continued use will act as a manifestation of the user’s intent to be bound by the terms of use may also result in an effective agreement.It also noted in a footnote that the standard may be higher where agreements are being enforced against consumers than against business entities.In any event, Nguyen is a wake-up call for website operators for whom it is critical that an arbitration clause embedded in their website terms of use is enforceable; serious consideration needs to be given to how best to strengthen the enforceability of such clause in the wake of the Ninth Circuit’s decision.More generally, Nguyen is a reminder for all website operators that those ubiquitous browsewrap terms of use—found on nearly every website big and small across the entire span of the Internet—have serious limitations as a tool for legally binding site visitors and mitigating risks.

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To Click or Not to Click? Ninth Circuit Rejects Browsewrap Arbitration Clause

To Click or Not to Click? Ninth Circuit Rejects Browsewrap Arbitration Clause

In Kevin Khoa Nguyen v. Barnes & Noble Inc., 2014 U.S. App. LEXIS 15868 (9th Cir. 2014), decided on August 18, 2014, the Ninth Circuit rejected an attempt to bi

In November 2013, the Berlin District Court ruled that all of the 25 provisions in Google’s online terms of use and privacy policy that had been challenged by the German Federation of Consumer Associations (VZBV) are unenforceable.  In reaching its decision, the court found that German law applies to terms of use and privacy policies to the extent they are directed to German consumers.Under German unfair contract terms legislation, clauses that contradict main elements of German law and unfairly disadvantage consumers are invalid.  In this respect, the court found that the German Federal Data Protection Act and the Telemedia Act constituted key elements of law to be considered in relation to standard terms, and hence considered these statutes irrespective of the fact that these statutes only apply to organizations established in Germany or using equipment in Germany.  Google has announced that it will appeal the decision, but, if the judgment is upheld, any online terms of use or privacy policy applicable to German consumers could be challenged under German law and in a German forum.In the case, Google claimed that the unfair contract terms legislation was not applicable because its terms of use and privacy policy do not constitute contracts and the related Google services had been provided free of charge.  The court disagreed, observing that users were required to consent to these terms upon registration or use, and the services were not for “free” because of the commercial value of the personal data collected by Google and subsequently used for marketing purposes.Among other clauses, the court found the following provisions in the terms of use to be invalid, many of which are relatively standard provisions in U.S. terms of use:<ul><li>Google’s right to unilaterally terminate its services in the case of any breach of its terms of use or policies without prior notice that would allow users to remedy the breach;</li><li>Google’s right to monitor content for compliance with its policies;</li><li>Google’s right to alter its services at its discretion;</li><li>Google’s right to amend its terms of use without further notice or consent; and</li><li>The (mutual) liability limitation for bodily harm and life, or statutory product liabilities.</li></ul>The court also found that Google had not obtained valid consent for the collection, use and sharing of personal data via its consent box (“I agree to the use terms and I have read the privacy policy.”).  German law requires that users be informed as to the specific data to be collected and how such data will be used and shared.  Google’s privacy policy, however, provided insufficient detail and relied on blanket statements to describe its rights, for example:<ul><li>Google’s right to collect information (including device-type information) and location data “relating to the services”;</li><li>Google’s right to share data with organizations that “Google reasonably believes to have a need to know”;</li><li>Google’s right to share data in the context of a merger;</li><li>Google’s right to record phone calls without any specific notice;</li><li>Google’s right to merge data from different platforms without further notice or consent;</li><li>Google’s limitations on users’ rights to access data provided to Google; and</li><li>Google’s right to share data with law enforcement agencies without further notice or consent.</li></ul>The court also objected to the privacy policy’s broad cookie language, including Google’s statement that only “cookies and other anonymous data” are collected by Google.  Cookie IDs and other tracking information were considered by the court to be personal data in this context.

German Court Finds 25 Provisions in Google’s Online Terms of Use and Privacy Policy to Be Unenforceable

In November 2013, the Berlin District Court ruled that all of the 25 provisions in Google’s online terms of use and privacy policy that had been challenged by t

German Court Finds 25 Provisions in Google’s Online Terms of Use and Privacy Policy to Be Unenforceable