04_21_Apr_SociallyAware_v6_Page_01The latest issue of our Socially Aware newsletter is now available here.

In this issue of Socially Aware, our Burton Award winning guide to the law and business of social media. In this edition, we discuss what a company can do to help protect the likes, followers, views, tweets and shares that constitute its social media “currency”; we review a federal district court opinion refusing to enforce an arbitration clause included in online terms and conditions referenced in a “wet signature” contract; we highlight the potential legal risks associated with terminating an employee for complaining about her salary on social media; we explore the need for standardization and interoperability in the Internet of Things world; we examine the proposed EU-U.S. Privacy Shield’s attempt to satisfy consumers’ privacy concerns, the European Court of Justice’s legal requirements, and companies’ practical considerations; and we take a look at the European Commission’s efforts to harmonize the digital sale of goods and content throughout Europe.

All this—plus an infographic illustrating the growing popularity and implications of ad blocking software.

Read our newsletter.

Many of my clients ask how they can best ensure that their websites’ terms of use are enforceable. Is it really necessary to require the website’s users to check a box or click a button manifesting affirmative assent? In this portion of my video on website terms of use, I explain what the courts have had to say about that.

For more information on this subject, see my earlier video post on Website Terms of Use: Are They Really Necessary?

To stay abreast of social media-related legal developments, please subscribe to our free newsletter.

As a social media lawyer, I work closely with website operators and other clients to help reduce the risk of liability that can arise from doing business online. One of the key ways to minimize online legal risks is to use a carefully drafted online Terms of Use agreement. In my new video below, I discuss how website operators use terms of use to mitigate risk and liability, and explain the difference between “clickwrap” and “browsewrap” terms of use.

To stay abreast of social media-related legal developments, please subscribe to our free newsletter.

03_21_Signs_Today’s companies compete not only for dollars but also for likes, followers, views, tweets, comments and shares. “Social currency,” as some researchers call it, is becoming increasingly important and companies are investing heavily in building their social media fan bases. In some cases, this commitment of time, money and resources has resulted in staggering success. Coca-Cola, for example, has amassed over 96 million likes on its Facebook page and LEGO’s YouTube videos have been played over 2 billion times.

With such impressive statistics, there is no question that a company’s social media presence and the associated pages and profiles can be highly valuable business assets, providing an important means for disseminating content and connecting with customers. But how much control does a company really have over these social media assets? What recourse would be available if a social media platform decided to delete a company’s page or migrate its fans to another page?

The answer may be not very much. Over the past few years, courts have repeatedly found in favor of social media platforms in a number of cases challenging the platforms’ ability to delete or suspend accounts and to remove or relocate user content.

Legal Show-Downs on Social Media Take-Downs

In a recent California case, Lewis v. YouTube, LLC, the plaintiff Jan Lewis’s account was removed by YouTube due to allegations that she artificially inflated view counts in violation of YouTube’s Terms of Service. YouTube eventually restored Lewis’s account and videos but not the view counts or comments that her videos had generated prior to the account’s suspension.

Lewis sued YouTube for breach of contract, alleging that YouTube had deprived her of her reasonable expectations under the Terms of Service that her channel would be maintained and would continue to reflect the same number of views and comments. She sought damages as well as specific performance to compel YouTube to restore her account to its original condition.

The court first held that Lewis could not show damages due to the fact that the YouTube Terms of Service contained a limitation of liability provision that disclaimed liability for any omissions relating to content. The court also held that Lewis was not entitled to specific performance because there was nothing in the Terms of Service that required YouTube to maintain particular content or to display view counts or comments. Accordingly, the court affirmed dismissal of Lewis’s complaint.

In a similar case, Darnaa LLC v. Google, Inc., Darnaa, a singer, posted a music video on YouTube. Again, due to allegations of view count inflation, YouTube removed and relocated the video to a different URL, disclosing on the original page that the video had been removed for violating its Terms of Service. Darnaa sued for breach of the covenant of good faith and fair dealing, interference with prospective economic advantage and defamation. In an email submitted with the complaint, Darnaa’s agent explained that she had launched several large campaigns (each costing $250,000 to $300,000) to promote the video and that the original link was already embedded in thousands of websites and blogs. Darnaa sought damages as well as an injunction to prevent YouTube from removing the video or changing its URL.

The court dismissed all of Darnaa’s claims because YouTube’s Terms of Service require lawsuits to be filed within one year and Darnaa had filed her case too late. In its discussion, however, the court made several interesting points. In considering whether YouTube’s Terms of Service were unconscionable, the court held that, although the terms are by nature a “contract of adhesion,” the level of procedural unconscionability was slight, since the plaintiff could have publicized her videos on a different website. Further, in ruling that the terms were not substantively unconscionable, the court pointed out that “[b]ecause YouTube offers its hosting services free of charge, it is reasonable for YouTube to retain broad discretion over [its] services.”

Although the court ultimately dismissed Darnaa’s claims based on the failure to timely file the suit, the decision was not a complete victory for YouTube. The court granted leave to amend to give Darnaa the opportunity to plead facts showing that she was entitled to equitable tolling of the contractual limitations period. Therefore, the court went on to consider whether Darnaa’s allegations were sufficient to state a claim. Among other things, the court held that YouTube’s Terms of Service were ambiguous regarding the platform’s rights to remove and relocate user videos in its sole discretion. Thus, the court further held that if Darnaa were able to amend the complaint to avoid the consequences of the failure to timely file, then the complaint would be sufficient to state a claim for breach of the contractual covenant of good faith and fair dealing.

Continue Reading How to Protect Your Company’s Social Media Currency

03_01_Mar_SociallyAware_COVER1aThe latest issue of our Socially Aware newsletter is now available here.

In this issue of Socially Aware, our Burton Award-winning guide to the law and business of social media. In this edition, we offer tips for a successful—and legal—advertising campaign; we examine a New York State Appellate Division opinion significantly limiting a personal-injury-case defendant’s access to the plaintiff’s social media posts; we review a court decision highlighting potential risks for companies seeking to exploit works licensed under the Creative Commons regime for commercial use; we take a look at an FTC report intended to help companies minimize the legal and ethical risks associated with their use of big data; we consider the complications that a federal district court opinion may create for companies hosting user-generated content; we explore the FTC’s guidance for businesses that publish advertising that could be confused with editorial content; we discuss seven key things to consider when drafting the terms and conditions for a mobile app in Europe; and we describe the key provisions of the European Commission’s proposed directives concerning a business’s online sale of goods or digital content to consumers.

All this—plus an infographic illustrating the state of the U.S. online music industry.

Read our newsletter.

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.

The latest issue of our Socially Aware newsletter is now available here.

01_08__Jan_SociallyAware_COVER_v6In this issue of Socially Aware, our Burton Award-winning guide to the law and business of social media, we offer practical tips to help ensure the enforceability of website terms of use; we discuss the FTC’s ongoing efforts to enforce disclosure obligations in social media advertising; we examine efforts by top social media platforms to control cyber-harassment and explicit material; we take a look at four recently passed laws protecting Californians’ privacy rights; and we explore legal issues that UK brands need to consider when engaging in vlogger endorsements and social media marketing.

All this—plus an infographic listing 2015’s most popular social media trends.

Read our newsletter.

[Editor’s Note: In response to the success of our earlier post on terms and conditions for mobile apps, two of our London-based colleagues have prepared a “remixed” version, which looks at the subject of mobile app terms and conditions from a European perspective. Enjoy!]

The mobile app has become the new face of business. It’s no longer sufficient to have a company website. More and more companies want a mobile app that users can download to their smartphones and easily access. It’s not 75601199_illustration-[Converted]difficult to see why. People are voting with their thumbs.

In 2015, overall mobile app usage grew by 58%, with lifestyle and shopping apps growing 81%, following previous 174% growth in 2014, according to FlurryMobile. Indeed, FlurryMobile figures show that mobile commerce now accounts for 40% of online commerce worldwide. Accordingly, the advantages of an app to business, from a customer marketing, engagement, service and awareness perspective, are clear.

Even traditionally conservative sectors such as financial services are being revolutionised by the mobile app. In 2015, the British Bankers Association identified that banking by smartphone and tablet has become the main way for UK customers to manage their finances, with mobile banking overtaking branches and the internet as the most popular way to bank.

If your company will be among the many businesses that launch a mobile app in Europe in 2016, one of the key legal protections your company will need in connection with such launch is an end user licence agreement (EULA). So, where do you start? Here at MoFo, we regularly review mobile app EULAs and we’ve noticed a number of issues that app developers don’t always get right. Here is our list of the key issues you will need to consider.

  1. One size does not fit all

Your EULA will be an important part of your strategy to help mitigate risks and protect your intellectual property in connection with your app. It’s unlikely that you would release desktop software without an EULA, and mobile apps (which are, after all, software products) warrant the same protection. While a number of mobile app providers such as Google provide a “default” EULA to govern mobile apps downloaded from their respective app stores, they also permit developers to adopt their own customized EULAs instead—subject to a few caveats, as mentioned below. Because the default EULAs can be quite limited and can’t possibly address all of the issues that your particular app is likely to raise, it’s generally best to adopt your own EULA in order to protect your interests.

Continue Reading Launching a Mobile App in Europe? Seven Things to Consider When Drafting the Terms & Conditions

iStock_000048822690_smThe European Commission has announced new draft laws that would give consumers new remedies where digital content supplied online is defective or not as described by the seller.

On Dec. 9, 2015, the European Commission proposed two new directives on the supply of digital content and the online sale of goods. In doing so, the Commission is making progress towards one of the main goals in the Digital Single Market Strategy (the “DSM Strategy”) announced in May 2015: to strengthen the European digital economy and increase consumer confidence in trading across EU Member States.

This is not the first time that the Commission has tried to align consumer laws across the EU; its last attempt at a Common European Sales Law faltered earlier this year. But the Commission has now proposed two new directives, dealing both with contracts for the supply of digital content and other online sales (the “Proposed Directives”).

National parliaments can raise objections to the Proposed Directives within eight weeks, on the grounds of non-compliance with the subsidiarity principle—that is, by arguing that that regulation of digital content and online sales is more effectively dealt with at a national level.

Objectives

Part of the issue with previous EU legislative initiatives in this area is that “harmonized” has really meant “the same as long as a country doesn’t want to do anything different.” This time, the Proposed Directives have been drafted as so-called “maximum harmonization measures,” which would preclude Member States from providing any greater or lesser protection on the matters falling within their scope. The Commission hopes that this consistent approach across Member States will encourage consumers to enter into transactions across EU borders, while also allowing traders to simplify their legal documentation by using a single set of terms and conditions for all customers within the EU.

An outline of the scope and key provisions of each of the Proposed Directives, as well as the effect on English law, are summarized after the jump.

Continue Reading Harmonizing B2C Online Sales of Goods and Digital Content in Europe

10-14-2015 3-48-13 PMThe latest issue of our Socially Aware newsletter is now available here.

In this issue of Socially Aware, our Burton Award-winning guide to the law and business of social media, we highlight five key social media law issues to address with your corporate clients; we discuss when social media posts are discoverable in litigation; we identify six important considerations in drafting legal terms for mobile apps; we take a look at the clash between bankruptcy law and privacy law in RadioShack’s Chapter 11 proceedings; we examine a recent federal district court decision finding “browsewrap” terms of use to be of benefit to a website operator even if not a binding contract; we outline best practices for employers’ use of social media to screen and interact with employees and conduct workplace investigations; we explore a Washington state court’s refusal to unmask an anonymous online reviewer; and we discuss Facebook’s recent update of its “Notes” feature.

All this—plus an infographic illustrating the growing popularity of video on social media.

Read our newsletter.