As we have noted many times in prior articles, courts often refuse to enforce “browsewrap” agreements where terms are presented to users merely by including a link on a page or screen without requiring affirmative acceptance. Courts typically look more favorably on “clickwrap” agreements where users agree to be bound by, for example, checking a box or clicking an “I accept” button.

The problem is that many implementations of online contracts do not fit neatly into one category or the other. The result is that courts, seemingly unable to resist the siren song of the “-wrap” terminology, find themselves struggling to shoehorn real-life cases into the binary clickwrap/browsewrap rubric, and often resort to inventing new terminology such as the dreaded “hybridwrap.”

HealthplanCRM, LLC v. Avmed, Inc., a case out of the Western District of Pennsylvania, illustrates this phenomenon. Plaintiff Cavulus licensed certain CRM software to defendant AvMed. AvMed decided to replace Cavulus software with a different CRM product and engaged defendant NTT to assist AvMed in transitioning its data to the successor product. Cavulus alleged, among other things, that NTT misappropriated its trade secrets in the course of doing this work. Cavulus sought to compel NTT to arbitrate these claims based on an arbitration clause contained in an “End-User Agreement” that was referenced in a link on the log-in page of the Cavulus software. Continue Reading Court Discovers Rare and Elusive “Enforceable Browsewrap”

Courts continue to grapple with the enforceability of online agreements. While courts generally enforce clickwrap agreements—online agreements where users affirmatively show their acceptance after being presented with the terms, usually by clicking “I agree”—browsewrap agreements have stood on shakier enforceability grounds. Browsewrap agreements are online terms that, unlike a clickwrap agreement, do not require any affirmative indication of consent. Indeed, users can often continue using a website without ever viewing the terms of a browsewrap agreement, or possibly even knowing they exist. As the Northern District of California’s decision in Alejandro Gutierrez v. FriendFinder Networks Inc. demonstrates, browsewrap agreements are not always unenforceable, but reaching such a determination can be a highly fact-specific inquiry requiring significant discovery—including discovery of offline activities, such as phonecalls between the user and the online service provider.

AdultFriendFinder.com (AFF) is an online dating website. The website is generally free, although users can pay for particular upgrades and services. Users must register to use the site, and AFF collects users’ personal information as part of the registration process. Use of AFF is governed by the site’s Terms of Use (the Terms). Users don’t have to explicitly agree to the Terms in order to register or use AFF, but the Terms are readily available on the site, and they state that continued use of AFF constitutes acceptance. The Terms also include an arbitration provision. Continue Reading Just Browsing: District Court Finds Browsewrap Agreement Enforceable

Contract

Courts have generally categorized online agreements into two types: “clickwrap” agreements and “browsewrap” agreements.

Clickwrap agreements—which require a user to check a box or click an icon to signify agreement with the terms—are usually enforceable under U.S. law, even where the terms appear in a separate hyperlinked webpage but where language accompanying the box or icon indicates that checking the box or clicking the icon indicates assent to such terms.

On the other hand, browsewrap agreements—where the terms are passively presented to users in a hyperlink somewhere on a webpage, often at the very bottom of the page in small font—are often unenforceable because it often cannot be proved the user knew the terms existed or even was aware of the hyperlink.

A New Jersey court recently faced a type of online agreement that did not fit nicely into either category. Where a contract, sent electronically but signed in hard copy, contains a hyperlink to a separate terms and conditions page, are those separate terms incorporated into the agreement? In Holdbrook Pediatric Dental, LLC, v. Pro Computer Service, LLC, the New Jersey court said no. A requirement to arbitrate disputes buried in the online terms and conditions page was not incorporated into a contract where the contract merely stated “Download Terms and Conditions” near the signature line.

Again, the signed contract did not itself contain an arbitration clause. Rather, on the last page of the contract, directly above the signature line, the following appeared in small text: “<a href=“http://www.helpmepcs.com/site_media/terms.conditions.pdf”>Download Terms and Conditions </a>”, which, if viewed in HTML, would instead appear as “Download Terms and Conditions”. The signed contract looked like this:

Holbrook

Holdbrook’s office manager, Nancy McStay, received the contract in electronic form where the hyperlink was clickable, but then printed and signed a hard copy. PCS argued that because McStay signed the contract, one could assume that she read and agreed to the entire agreement, including the hyperlinked terms and conditions. Holdbrook disagreed. They argued that the contract did not incorporate the terms and conditions for several reasons.

First, the online terms and conditions contained a separate signature block, suggesting that it required additional acceptance, and Holdbrook never signed onto those terms.

Second, Holdbrook claimed that McStay had no idea that additional terms were being incorporated, given the garbled coding of the hyperlink in the printed copy and the fact that the contract contained no clause specifically pointing to the separate terms and conditions.

Applying New Jersey contract law, the court held that “a separate document may be incorporated through a hyperlink, but the traditional standard nonetheless applies: the party to be bound must have had reasonable notice of and manifested assent to the additional terms.”

After describing clickwrap and browsewrap agreements, the New Jersey court examined two key cases in this area, Fteja v. Facebook, Inc. (which we’ve discussed previously) and Swift v. Zynga Game Network, Inc. In Fteja, a New York court found that a user had sufficient notice of Facebook’s terms of service even though the terms were only visible to the user during sign-up via hyperlink (like a browsewrap). A notice above the “Sign Up” button stated that “By clicking Sign Up, you are indicating that you have read and agree to the Terms of Service” (like a clickwrap).

Similarly, in Swift, a California court found that a hyperlink to the terms of services that appeared right below an “Accept” button—along with a statement that clicking “Accept” meant the user accepted the terms—was sufficient to prove the user agreed to those terms.

The New Jersey court explained that the fact that this case involved “mixed media” did not matter. The contract was “much like the ‘clickwrap’ agreements in Fjeta [sic] and Swift, where the ‘Terms and Conditions’ were contained in a hyperlink immediately next to a mechanism for accepting the agreement. In place of an ‘I Accept’ icon to be clicked, a Holdbrook representative was required to sign the agreement on paper.”

However, the New Jersey court found one crucial component to be missing. In Fteja, Swift and other clickwrap cases, a statement draws “the user’s attention to the hyperlink” that is “sufficient to provide reasonable notice that assent to the contract included assent to the additional terms.” The New Jersey court noted that there was no such statement in this case, nor instructions to sign the contract only if Holdbrook also consented to the additional terms. The hyperlink, standing alone, was insufficient to show that Holdbrook had “reasonable knowledge” that the terms and conditions were part of the contract.

“Further complicating matters” was the fact that the contract was sent in electronic form but could not be accepted in electronic form. It had to be printed and signed. This made it even less clear that the hyperlink contained additional terms.

The New Jersey court noted that discovery might show that Holdbrook actually reviewed the contract electronically, noticed the hyperlink and agreed to its terms. In fact, after conducting some limited discovery, PCS has filed a new motion to compel arbitration, which, as of the date of this post, is currently pending before the court.

Like the courts in Fteja, Swift and other clickwrap cases, the New Jersey court took careful note of the language that surrounded the hyperlink to the terms and conditions to determine whether Holdbrook reasonably understood those additional terms were included in the contract. It seems that, for the court, PCS’s “Download Terms and Conditions” was just a little too similar to a “browsewrap” agreement to be found enforceable without further inquiry into whether Holdbrook in fact was aware of and agreed to the terms.

PCS could have likely avoided the issue entirely by simply including the following language in the signed agreement: “By signing the agreement, you also accept the Terms and Conditions on the PCS website.”

When it comes to clickwrap versus browsewrap agreements, a few words can go a long way.

0813_CCIMAGE_iStock_000036595676_LargeWebsites sometimes present their terms of use (“TOU”) to users merely by including a link to those TOU on the website without requiring users to affirmatively accept the terms by, for example, checking a box or clicking an “I accept” button. As we have written previously, Courts tend to look disfavorably on such website TOU presentations, which have become somewhat misleadingly known as “browsewrap agreements,” when determining whether a TOU constitutes an enforceable contract between the website operator and a user. According to a recent federal district court opinion, however, browsewrap TOU might be sufficient to help websites achieve another legal end: providing sufficient notice to defeat a false advertising claim based on an allegedly fraudulent omission.

In the case, Handy v. LogMeIn, Inc., the U.S. District Court for the Eastern District of California held that a software vendor’s online terms and conditions provided notice that the company might discontinue its app, and that such notice was sufficient to defeat a customer’s claims under California’s false advertising and unfair competition laws, regardless of whether the customer had affirmatively accepted the TOU.

The defendant, LogMeIn, Inc., sells software for accessing computer files remotely from separate computers or mobile devices. LogMeIn previously provided its software as two separate products: LogMeInFree, a free service that allowed users to log into remote computers from a desktop or laptop; and Ignition, a paid service that allowed users to log into computers using mobile devices. Before 2011, the plaintiff, Darren Handy, downloaded LogMeInFree and then paid for Ignition. In 2014, LogMeIn introduced a new paid product called “LogMeInPro,” which merged the features of LogMeInFree and Ignition. Eventually, LogMeIn posted a message on its website stating it would begin migrating users of LogMeInFree and Ignition to the new platform while ending support and maintenance on the older platforms. This required users of LogMeInFree and Ignition to pay for LogMeInPro in order to receive continued support and maintenance for Ignition and to continue to use the functionality previously provided for free as part of LogMeInFree.

In response, Mr. Handy brought a class action suit alleging he would never have purchased Ignition if he had known that the company would discontinue support for Ignition or require additional payment for continued access to the LogMeInFree functionality. His suit claimed that LogMeIn violated California Business and Professions Code §§ 17200 and 17500 by fraudulently failing to disclose that the company might discontinue support and change its pricing model for the software.  LogMeIn argued, among other things, that its online TOU reserved the right for LogMeIn “to modify or discontinue any Product for any reason or no reason.” But Handy argued that this statement was not binding on him because he never affirmatively accepted the TOU.

The court disagreed, however, holding that “whether the Terms and Conditions constituted an enforceable contract is irrelevant to whether the Terms and Conditions related to LogMeInFree provided notice to prospective purchasers of the Ignition app that LogMeInFree could be discontinued.” The court went on to note that, while LogMeIn’s TOU may not have been “forced on Plaintiff through a clickwrap,” the TOU nonetheless showed that LogMeIn had “publish[ed] the fact that it reserved the right to terminate the free app, LogMeInFree.” Therefore, the court held that there was “an insufficient showing that information related to the future termination of LogMeInFree constituted a material omission when selling the Ignition app.”

Clients often ask us whether a “browsewrap” TOU serves any purpose at all, in light of the fact that courts are often disinclined to construe such TOU presentations as creating an enforceable contract. Handy v. LogMeIn, Inc. shows that, in at least some circumstances, the answer is yes: even if a browsewrap does not constitute a contract, it may serve a useful purpose by providing legally significant notices to users.

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 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.

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

Online service providers typically seek to mitigate risk by including arbitration clauses in their user agreements. In order for such agreements to be effective, however, they must be implemented properly. Babcock vs. Neutron Holdings, Inc., a recent Southern District of Florida case involving a plaintiff who was injured while riding one of the defendant’s Lime e-scooters, illustrates that courts will closely scrutinize the details of how an online contract is presented to users to determine whether or not it is enforceable. Continue Reading Sweating the Details: Court Analyzes User Interface to Uphold Online Arbitration Clause

Here at Socially Aware we covered a wide range of issues in 2019. We reviewed an opinion reminding us that user-generated content posted on social media platforms is not necessarily freely available for use in other contexts, and a rare instance of a federal district court holding that a browsewrap agreement was enforceable.

We also examined some aspects of Internet law in Europe, including the legality of using “cookie walls” in the European Union, and the EU Copyright Directive’s impact on content-sharing service providers’ liability for copyright-infringing content.

And, as we’ve done in past years, we revisited the scope of the “safe harbor” that Section 230 of the Communications Decency Act provides again, again, and again.

But none of those topics—except the CDA’s Section 230—are on our list of the top-ten most read articles of 2019. Here are the pieces that made the cut:

  1. The Company Who Cried “General Audience”: Google and YouTube to Pay $170 Million for Alleged COPPA Violations
  2. How to Comply with the Revised Ephemeral-Messaging Provision in the DOJ’s Corporate Enforcement Policy
  3. By Winning Motion to Dismiss, Supermodel Loses Chance to Clarify Whether She Can Lawfully Post Photos of Herself to Social Media
  4. Will the Music Industry Continue To Win Its Copyright Battle Against ISPs?
  5. Time to Hit Pause: Copyright Infringement on User-Generated Platforms – When Is the Platform Provider Liable for Damages?
  6. The Meme Generation: Social Media Platforms Address Content Curation
  7. Court Holds That Arbitration Clause in “Hybridwrap” Terms Is Unenforceable
  8. Insta-Mural Infringement: Public Art in Instagram Ad Leads to Copyright Claim
  9. California Court Finds Section 230 Protects Decision to Suspend and Ban Twitter Account
  10. Ninth Circuit’s LinkedIn Decision Does Not Greenlight the Unauthorized Web Scraping of Public Websites

A federal district court in Illinois recently held in Anand v. Heath that a digital marketing company could not force a user to arbitrate because a “Continue” button on its website did not provide clear notice that clicking the button constituted assent to the hyperlinked terms and conditions that contained the arbitration provision.

As we have noted previously, website operators who wish to enforce their online terms against users will have a higher likelihood of success if they do two things. First, the website should display the terms to users in a conspicuous fashion. Second, and applicable here, the website should affirmatively and unambiguously require users to assent to the terms. Anand demonstrates that online agreements risk unenforceability when the terms are presented in a manner that does not make clear to users that they are agreeing to be bound.

The website www.retailproductzone.com offers users free gift cards in exchange for their responses to surveys and for their consent to be contacted for marketing purposes. Reward Zone USA LLC, a subsidiary of Fluent Inc., maintains the website. In June 2017, plaintiff Narantuya Anand registered on www.retailproductzone.com and completed a survey to receive a free gift card. According to Anand, she then received several unwanted telemarketing voicemails and text messages.  Continue Reading Court Holds that Arbitration Clause in “Hybridwrap” Terms Is Unenforceable

On July 19, 2018, in May, et al. v. Expedia Inc., U.S. Magistrate Judge Mark Lane issued a Report and Recommendation recommending that U.S. District Judge Robert Pitman for the Western District of Texas grant a motion to compel arbitration and dismiss a putative class action on the grounds that the plaintiff agreed to the defendants’ website’s Terms and Conditions, which contained a mandatory arbitration clause.

HomeAway User Files Putative Class Action 

HomeAway is an online marketplace for vacation rental properties where property owners can list their properties for rent and travelers can book rental properties. HomeAway’s original business model was to charge owners a fee to list their properties (either on a one-year subscription or pay-per-booking basis) and to allow travelers to search and book rentals for free. HomeAway was acquired by Expedia in 2015 and changed its business model to charge travelers a fee to book rentals in mid-2016. Plaintiff James May had been a property owner who used HomeAway since 2013. Continue Reading Sneaky Website User Bound by Online Terms of Use’s Arbitration Provision Despite Renewing Subscription in Spouse’s Name

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Last year we explained how companies could protect their social media currency and heed the FTC’s warning on native advertising. We examined court opinions establishing the criteria for enforceable website terms of use and defining the scope of protection afforded to website owners under Section 230 of the Communications Decency Act. We discussed courts’ struggles to interpret emoji and to determine whether “friending” a litigation adversary violates attorney ethics rules. We also explored questions such as whether ad blockers will kill online publishing and whether trolls are killing social media marketing.

We did our best to cover it all. But—of course—some articles resonated with our readers more than others. These were the most popular posts that appeared on Socially Aware in 2016:

  1. New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content
  2. Social Media Safety Guide for Companies
  3. The Internet of Things: Interoperability, Industry Standards & Related IP Licensing Approaches
  4. Don’t Worry, Be (Un)Happy: Does U.S. Labor Law Protect a Worker’s Right to a Bad Attitude?
  5. Augmenting Reality: A Pokémon Go Business and Legal Primer
  6. Controversial New Jersey Consumer Protection Law Creates a Potential “Gotcha” for E-Commerce Companies
  7. The Internet of Things: Interoperability, Industry Standards & Related IP Licensing Approaches (Part 2)
  8. #Trademarks?: Hashtags as Trademarks Revisited
  9. Mixed Messages: Courts Grapple With Emoticons and Emoji
  10. Clickwrap, Browsewrap and Mixed Media Contracts: A Few Words Can Go a Long Way