Some Thoughts on Web Agreements — Guest Blog by Neil Olson

Happy 2010.

This Post is by Neil Olson. Neil is Chief Legal Officer (that is a general counsel who does not wear a tie) at FNC, Inc. He points out that this post “is not really, really serious research, like the kind of legal research you can make some wretched, overpaid but terrified first year associate do. This is the kind of research that a below average general counsel of a technology firm is likely to be able to do with the limited amount of time that person can devote to any one issue. What that means is that we try to be quite practical about what we write and what we advise as the appropriate conduct for our one client.”

Here is his post:

 

 

Since we last talked most of those who were grossed out by our dissection of the Red-Eyed Tree Frog (Agalychnis callidryas) http://en.wikipedia.org/wiki/Red-eyed_Tree_Frog have since recovered (who knew that could be a “pre-existing condition”?), so we have been encouraged to embark on a more serious dissection exercise, the dissection of Web Agreements. Since this is a messy dissection, this may take several different sessions. Let’s slap on those non-latex gloves and dive in.

 

I picked Web Agreements (I’ll stop capitalizing this in a minute), as a great topic for lawyers because

 

• Almost everyone has web agreements (or have at least “agreed” to one), or will have one, or would like to have one

• They create issues about whether people have actually agreed to the agreement or not (and can they even be agreements).

• Since they are one-sided agreements they bring out our worst instincts when it comes to what should be included in an agreement

• And, we feel we should be able to change them whenever we want, just to make them even worse.

 

What is a web agreement anyway?

 

Spoiler alert: This is not an official legal definition.

 

I consider anything that is attached to a web site that is intended to govern or influence the relationship between you (the person with the website) and the person who uses your website to be a web agreement.

 

That means my definition covers not only “terms of use” “terms and conditions” “terms of service” and the like, but also “Privacy Policies”, “Disclaimers” and similar. Hey, we even have a link to trademarks we claim.

 

Why does all this matter? It means you need to think about each of these from the same point of view. Why is it here? What is it that I am “afraid of”, that is, what interests am I trying to protect? How serious are the issues at hand (we will get to that when we look at the difference between a “transaction” web license as opposed to a “just wander around and see what we have here” kind of web license)? Who do I think the people who come to my website are? Why are they here? Are they consumers or businesses? What can go wrong in the relationship?

 

Life’s Uncertain, Let’s Get the Answer First

 

Look, I can go into all of the details first about why we decided what we do with respect to getting how we handle web agreements, but why don’t I skip to the answer. Then, if you are interested you can read my fascinating description of what our generally flawed understanding of the law is that lead us to our conclusions.

 

Like many people we have two kinds of websites. We have the websites where you can wander around and see what we have to offer. You can read about our offerings and see how to get in touch with us.

 

We also have websites where you engage in transactions.

 

Here is what we do.

 

Informational website

 

We use a browse-wrap license agreement and stick the reference to it on the bottom of the home page in the footer (in other words, in scroll down city).

 

No way, you say. What happened to the clear and conspicuous disclosure part? What about Specht v. Netscape Communications 306 F3d 17 (2d Cir. 2002)

 

The sole reference to SmartDownload’s license terms on the “SmartDownload Communicator” webpage was located in text that would have become visible to plaintiffs only if they had scrolled down to the next screen.

 

Even for a user who, unlike plaintiffs, did happen to scroll down past the download button, SmartDownload’s license terms would not have been immediately displayed in the manner of Communicator’s clickwrapped terms. Instead, if such a user had seen the notice of SmartDownload’s terms and then clicked on the underlined invitation to review and agree to the terms, a hypertext link would have taken the user to a separate webpage entitled “License & Support Agreements.”

 

We conclude that in circumstances such as these, where consumers are urged to download free software at the immediate click of a button, a reference to the existence of license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.

 

or Ticketmaster v Tickets.com? 2003 U.S. Dist. LEXIS 6483 (C.D. Cal. March 6, 2003)

 

“Earlier in this case (and at the time of the motion for preliminary injunction) the notice was placed at the bottom of the home page of the TM web site, so that a user without an especially large screen would have to scroll down the page to read the conditions of use. Since then, TM has placed in a prominent place on the home page the warning that proceeding further binds the user to the conditions of use. As one TX executive put it, it could not be missed”.

 

 

or all of those other “browse-wrap” cases?

 

First, for us, the stakes with respect to our corporate sites are probably lower than for some. Although frankly, anyone today who allows a consumer to download software which does not itself have a nice license agreement embedded in it with a clear click through (“click-wrap”) license is asking for it. That was Netscape’s real problem. They were hoping to graft the license agreement from the website onto the “SmartDownload” program/plug in, which did not apparently have a license agreement. Moreover, they were trying to get the court to allow arbitration (which always raises the stakes in the court’s analysis).

 

Second, “real estate” on a corporate website is very valuable. You can only get so much space on the website if you are just the lawyers, so you have to pick your battles. (Besides, we have all had the challenge where we thought we had a “clear and conspicuous” location and then found ourselves in Lower East Brownfield when the website actually got launched.)

 

Third, sticking things in the footer passed the “at least 5 other big examples” test. Let’s start with the ironic example. Go to the Ticketmaster website right now and tell me where their “terms of use” is located. Pick any other well known organization’s website, one that you think should be quite smart about the intellectual property issues and other issues regarding their terms of use. I think you will find practically all of them are located behind a link that is located in the footer.

 

Is everyone crazy? Not really. The point is that everyone is using a multi layered protection system. First, we are now almost 10 years later than the events in the Ticketmaster and the Netscape cases. Most users are pretty much used to the idea that there will be terms of use and they are probably in the footer (assuming that they think about the issue at all). Hey, the only way I can find the Google terms of use is to “google” them (sorry about the trademark faux-paux).

 

If there is something that is really dear, then everyone protects it separately. They make sure there is a license agreement inside anything they want to protect. Finally, people more or less try not to put really egregious terms in their terms of use (well, not really. People really do put egregious terms in their terms of use. We’ll talk about that later.)

 

 

Transactional Websites

 

If it is a transactional website, we do make it harder. Here are the rules we use, which we think are fairly good.

 

If you are going to be able to buy something, or any time where money is involved (in our case, use one of our products or services where money and liability is involved) then you have to sign up for an account and receive a user name and password. In the process of signing up for the account, you are asked to click through the license agreement.

 

There are lots of ways to click through a license agreement, but our rules say that

 

• You cannot get past the license agreement until you really do agree.

• When you are presented with the license agreement you must take some action, such as checking a box (“By checking the box to the left, you agree to the user agreement”). Until you check that box, you are not allowed to get past that point and you do not get your username and password.

• Do we make you read the agreement? Or scroll through it? We don’t. I know I cannot make you read the agreement. Besides, these agreements are all “you can read it but you cannot change it” agreements. I know I can make you scroll through it to get to the check boxes. Does it matter in the end?

• “I Agree” can never be the “default”. Look, we all click reflexively. We get in a hurry and just keep clicking. Our children click when we are not looking. My cat walks on my keyboard. You need to make it so that clicking is not “I agree” unless you do something else first. If you have an “I agree” or “I decline”, make the “I decline” the default so that people really have to agree. If they have a “check the box” then don’t help. Make the user check the box.

• Allow your consumer to have a copy of the user agreement. Allow them to get a copy at any time, not just when they sign up. How hard is that? (Okay, it is hard sometimes to get the web programmers to put a print button in a pop up. You have to check and make sure that they did that.)

 

These are the kind of rules that will save you from a result like the very recent result in the Hines v. Overstock.com case (Hines v. Overstock.com ED NY [LEXIS 81204 Sept 8, 2009]). I have not used the Overstock website so I do not know exactly how it works, but if what Overstock was relying on was agreement by browse wrap for a transaction site, they were asking for trouble.

 

And, by the way, if you really care about whether the person’s email address is authentic or not (something that matters in many circumstances), it is a fairly simple to make the authentication of the email part of the sign up process.

 

Since we make e-mail the primary means of communication for many of our “retail” products, we provide that users have to have an active, valid e-mail address on file with us (“[OUR REALLY COOL PRODUCT]’s primary means of communication with its USERS is through the Electronic Delivery Methods set forth in Section 5. As a result, USER is obligated to maintain an active, valid e-mail address on file”)

 

What about “sign-ins” and “unauthorized users”?

 

This will be our last topic for today.

 

What about “sign ins” and “unauthorized users”? First, ask yourself, do you care whether the person has to sign in or not? Do you care whether someone is an “unauthorized user” or not? Sometimes, you just get the information for marketing purposes and close is close enough.

 

But, you may. It may be that you charge for your services based on each unique person who uses it. The way you identify that is through each unique username and password combination. Where someone either shares their username and password, or where someone guesses or intercepts the username and password, you want some way to tie those unauthorized users into the terms and conditions of your web agreement.

 

Here’s a nice trick. It shows up in CoStar Realty Information v. Mark Field dba Alliance Valuation (SD Md March 31, 2009). http://docs.justia.com/cases/federal/district-courts/maryland/mddce/8:2008cv00663/157082/51/

 

The method to become an authorized user of the website and a warning against unauthorized use appears each time a user accesses the database (Id. at ¶19). Specifically, the “Subscriber Login Area” states that by logging in to the database, the user agrees to CoStar’s Terms of Use. A link to the Terms of Use is provided and states that access is restricted to unauthorized users and sharing of passwords is prohibited.

 

It sounds more elegant in the decision than it appears on the screen. Still it is effective. Give it a look http://www.costar.com/ (warning: you have to use Internet Explorer. If you use Firefox the username and password block does not show up. No comment.).

 

This trick will also help you with the Michael Motise v. America Online, Inc. problem (Michael Motise v America Online, Inc, 04 Civ. 2121 (SCR) (SD NY Nov. 30, 2004). As best I can gather Mr. Motise was the step-son of the actual AOL accountholder. Since he used his step-father’s account, he never went through any ritual regarding agreement to the terms of use. That said, the court found that Mr. Motise did not have any greater or different rights as the original account holder so he was going to be subject to the same terms of use.

 

 

Enough for now. Next, we will talk about Web Agreement Issues, like in, are they really agreements and can you enforce them? In the final episode, we will talk about “my website agreement is more one-sided than yours”, and what that leads to.

 

So, farewell for now. Your homework assignment is to look up the Green Iguana (Iguana iguana—no jokes now) http://en.wikipedia.org/wiki/Green_Iguana and be prepared to locate and discuss the parietal eye.