Tag: internet law

Browsewrap License Cases: Fteja v. Facebook 2012 WL 183896 (SDNY 2012)

In Fteja v. Facebook  2012 WL 183896 (SDNY 2012), the Southern District of New York held that the forum selection clause in Facebook’s terms of service was enforceable against a site user.  The user sued Facebook in New York for terminating his account. He essentially claimed he was emotionally distraught over being kicked off of the site.  Facebook made a motion to remove the case to California pursuant to the forum selection clause in its Terms of Service.

Court found the Terms of Service was a hybrid clickwrap/browsewrap stating that it was “somewhat like a browsewrap agreement in that the terms are only visible via a hyperlink, but also somewhat like a clickwrap agreement in that the user must do something else — click ‘Sign Up’ — to assent to the hyperlinked terms. Yet, unlike some clickwrap agreements, the user can click to assent whether or not the user has been presented with the terms.” Id. at 838.

I think it was a clickwrap agreement, and this is an example of a court treating a clickwrap agreement as a browsewrap agreement, a trend which has leaked into other cases.  As browsewrap agreements require a little bit more as far as assent from the user this trend is important to note.

The Terms of Service required that to create an account each user had to click on a “Sign Up” button and agree to the following “By clicking Sign Up, you are indicating that you have read and agree to the Terms of Service” where the words Terms of Service were a hyperlink to another page which contained the Terms of Service (which you did not have to view to sign up).

The Court held that the forum selection clause was enforceable against the user, and that failure of a user to read the terms does not let them avoid the agreement (user was savy enough to know how hyperlinks work). Court analogized to the cruise ship cases (below) where ticket holders were deemed to have had actual or constructive knowledge of the terms on the back of the ticket regarding forum selection.

See Effron v. Sun Line Cruises, 67 F.3d 7 (2d Cir. N.Y. 1995) (upheld forum selection clause requiring all suits be brought in Greece, where NY resident bought ticket in FL, and was injured in cruise off of Brazil).

See Also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (held that United States federal courts will enforce forum selection clauses so long as the clause is not unreasonably burdensome to the party seeking to escape it.  There, the contract was printed on the back of the ticket.  The customer bought the ticket in WA, the ticket’s forum selection said claims would be heard exclusively in FL.  The customer boarded in CA, and was injured off Mexico.  The court held the clause enforceable.).

A similar decision on Facebook’s terms of use was rendered in E.K.D. v. Facebook, Inc., 885 F. Supp. 2d 894 (S.D. Ill. 2012).

Other NY courts have followed the precedent in Fjeta.  See 5381 Partners LLC v. Shareasale.com, Inc., 2013 U.S. Dist. LEXIS 136003, 24-25 (E.D.N.Y. Sept. 23, 2013) (“The instant case presents circumstances that are quite analogous to those in Fteja, and the Court agrees with the Fteja court’s analysis. Unlike the license terms at issue in Specht, defendant’s reference to its Merchant Agreement appears on the same screen as the button a prospective merchant must click in order to activate its account. (See Littleton Decl. Ex. B.) Plaintiff did not need to scroll or change screens in order to be advised of the Merchant Agreement; the existence of, and need to accept and consent to, the Merchant Agreement was readily visible. Moreover, whereas Facebook’s Terms of Use were referenced below the button a prospective user had to click in order to assent, defendant’s reference to its Merchant Agreement appears adjacent to the activation button (id.), thereby making it even more clear [*25] that prospective merchants of ShareASale are aware that by clicking the button to activate their account, they manifest their assent to the Merchant Agreement.”).

Clickwrap License Cases: Patterson v. Compuserve @ Paper This Deal

Compuserve v. Patterson, 89 F.3d 1257 (6th Cir. 1996).

Patterson, a resident of Texas (a lawyer and software programmer), sold his own software to third parties over Compuserve’s system, pursuant to the terms of a clickwrap agreement (where he had to type “I Agree” into various sections of the agreement).

Compuserve began to sell its own software that was similar to Patterson’s and Patterson demanded Compuserve pay him $100,000 as a settlement.  Compuserve then filed a declaratory judgment action in Federal court in Ohio.

Patterson moved to dismiss the action due to alleged lack of personal jurisdiction, claiming he never visited, did business in, or consented to suit in Ohio.

The Sixth Circuit found that making Patterson subject to suit in Ohio due to his acceptance of the clickwrap agreement, a Shareware Registration Agreement, did not violate the due process clause of the United States Constitution.

The Court reasoned that Patterson personally availed himself to do business with Compuserve, and made money doing so, and could therefore have reasonably expected he’d have to defend himself in Ohio due to the terms of the agreement.

The “Godfather” of the Shrinkwrap Cases: ProCD v. Zeidenburg @ Paper this Deal

This is the seminal case in the shrinkwrap realm, which paved the way for the rise of the browsewrap and shrinkwrap cases.  Upholding the software license as normally provided to purchasers, to get around the First Sale Doctrine under U.S. Copyright Law.   Cite, facts and holding are below. 

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Best Practices for Drafting Browsewrap and Clickwrap Agreements @ Paper this Deal

There’s still some hostility from the court system, and the public at times, on the enforceability of browsewrap and clickwrap agreements. Having an enforceable license for your website, software or mobile application is of the utmost importance.

The ABA Committee on Cyberspace Law provided general rules to ensure your online agreement is enforceable:

  1. The user must have adequate notice that the proposed terms exist;
  2. The user must have a meaningful opportunity to review the terms;
  3. The user must have adequate notice that taking a specified, optional action manifests assent to the terms; and
  4. The user must, in fact, take that action.

I fully agree with the above.  Notice, notice, notice is so important. But not just any notice.  You need to ensure that the notice is reasonable, that is that a reasonable person using your software/website/application would understand that by taking a certain action (clicking or continuing use of the site) it renders the agreement binding on them. My reading of the case law on shrinkwrap, browsewrap and clickwrap agreements made me come up with my own list in addition to the ABA Committee’s pointers:

  1. Create an easy to read, reasonable license that follows industry norms;
  2. Give the user reasonable notice that the license exists;
    • Make sure the notice is CLEAR AND CONSPICUOUS
    • Colors, size, font, placement, timing, etc. all relevant. Don’t “bury” it.  Get it in front of the user’s faces.
  3. Let the user read the full license if he or she so chooses (scrollable pop-up being preferred), prior to acceptance (click or use);
  4. Opt for clickwrap over browsewrap if possible.

 

 

Clickwrap and Browsewrap Agreements Kickoff @ Paper this Deal

I’ve been involved in drafting numerous versions of online agreements, including privacy policies, service agreements, pricing policies, various other policies and last but not least both browsewrap and clickwrap agreements.  I’ve done a quick post on case law with respect to browsewrap and clickwrap agreements in the past, and was recently asked to speak for a webinar entitled Drafting Clickwrap and Browsewrap Agreements: Advanced Strategies for Enforceable Online Contracts held by Strafford.  If you’d like to listen to the webinar email me or contact them.

I feel that more and more contracting is going to be done over the Internet in the future and I am going to start a series of blog posts on drafting these types of browsewrap and clickwrap agreements as well as case law in the area, which serves to let corporate lawyers know how they have to draft the agreement, and have the users accept it.

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Enforcing Online Terms of Use: Clickwrap vs. Browsewrap Agreements @ Paper this Deal

I’ve discussed why every website owner needs to have an effective Terms of Use and/or Service Agreement (also called an End User License Agreement, but you can call it what you want).  Now I want to briefly hit on how the provisions of the Terms of Use can be enforced under New York Law.

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