Website Terms Of Use

Website Terms Of Use in the United States

Website operators can reduce risk by carefully implementing terms of service.

Terms and Conditions

By Aaron Rubin. He is a Morrison & Foerster partner, based in San Francisco. He co-edits the firm’s Socially Aware blog and newsletter, to which San Diego-based associate Anelia Delcheva contributes.

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, operators routinely present users with terms of use or terms of service (“website terms”) that govern access to and use of the website. They also include provisions designed to protect the website operators, such as disclaimers, limitations of liability and favorable provisions for dispute resolution. But are such terms enforceable against users, and do they actually provide the protection website operators seek? The answers may well depend on how the terms are implemented.

Clickwrap v. Browsewrap

Website terms typically come in two flavors: “Clickwrap” terms require users to indicate acceptance by taking some affirmative action such as checking a box or clicking an “I accept” button before using the website. “Browsewrap” terms are provided to users through a link (often at the bottom of the Web page), and they purport to bind users even with no affirmative indication of acceptance. In determining whether website terms are enforceable, courts focus on whether the users had notice of the terms and actually agreed to be bound by them. Not surprisingly, courts tend to look more favorably on clickwrap implementations than on browsewrap terms.

For example, in Fteja v. Facebook, Inc. (841 F. Supp. 2d 829 (S.D.N.Y. 2012)) the plaintiff claimed that Facebook disabled his 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, however, concluded that the plaintiff was bound by the Facebook terms because he checked a box indicating his acceptance when he registered for his account.

Barnes & Noble had less luck enforcing its terms of use in Nguyen v. Barnes & Noble, Inc. (2014 WL 4056549 (9th Cir.)). In that case, the plaintiff ordered a tablet from Barnes & Noble at a discounted price but the online retailer canceled his order. After the plaintiff sued, the defense moved to compel arbitration based on a clause included in its website’s browsewrap terms of use. But the court held that Barnes & Noble’s terms could not bind the plaintiff – even though they were presented through a “conspicuous” link during the checkout process – because users were not prompted to affirmatively assent to the terms.

Evidentiary Issues

In general, then, clickwrap website terms are more likely to be enforceable than browsewrap terms. But even with a clickwrap implementation, 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 (2014 WL 1410432 (N.D. Cal.)) after the plaintiff booked a car rental through the third-party Hotwire website and then alleged that he was overcharged. The defendant rental company invoked a forum selection clause, 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 Hotwire employees affirming 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 reserved the rental without checking an “acceptance box” indicating his assent. 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, website terms are contracts and, under black letter contract law, contract modifications require acceptance by both parties. Ideally a website operator should require users to affirmatively accept each updated version of website terms by, for example, presenting the updated terms and requiring a click acceptance when the user first logs in after the change. But when obtaining such affirmative acceptance is not feasible, a website operator may be able to enforce changed terms against users if it gives sufficient notice of the change and informs them that continued use of the site constitutes acceptance.

For example, the plaintiff in one San Francisco case objected to certain changes in Instagram’s terms of use. The company had unilaterally modified its terms in December 2012, announcing the changes to its users a month before 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, the plaintiff agreed to the new terms. The court pointed out that the user 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. (Rodriguez v. Instagram, No. CGC-13-532875 (San Francisco Super. Ct. filed Feb. 28, 2014).)

In some cases courts have looked less favorably on website operators’ attempts to modify website terms unilaterally, particularly when users are not given adequate notice or the changes are applied retroactively. For example, the Ninth Circuit held in Douglas v. Talk America (495 F.3d 1062 (9th Cir. 2007)) that an individual’s assent to changed website terms could not be inferred when the individual had not actually received notice of the changes. When a dispute arose between Talk America and the plaintiff, the long distance telephone service provider attempted to enforce an arbitration provision contained in updated terms it had posted to its website. But Talk America had never given notice of the updated terms to the plaintiff, who was not required to visit the Talk America website to continue using its services. “Parties 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,” the court noted. (Douglas, 495 F.3d at 1066.)

Even more problematic for website operators, a federal court in Texas 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. (Harris v. Blockbuster, Inc., 622 F. Supp. 2d 396 (N.D. Tex. 2009).) 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 entire contract illusory. A Nevada court came to a similar conclusion in In re Zappos.com, Inc. (893 F. Supp. 2d 1058 (D. Nev. 2012)), which also involved the unilateral modification provision in online terms of use that were implemented via browsewrap.

In light of the case law noted above, website operators may increase the likelihood that website terms will be enforceable against users by: using clickwrap rather than browsewrap implementations; being prepared to produce evidence that users have accepted the website terms; providing clear notice to users regarding the website terms and making terms easily accessible to users; and obtaining users’ express acceptance when updating website terms. If these steps are followed, chances are better that a website operator involved in a dispute will see a positive outcome.


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