Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.In 2023, Lawrence seconded at Amazon Lab126, where he led the negotiation of high-profile licensing deals for a variety of Amazon device teams. The secondment was an immersive opportunity to gain additional insights and experience from the perspective of in-house counsel. Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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Socially Aware is devoted to the law and business of social media, proactively addressing emerging issues and keeping our clients informed of new developments. We cover fields such as artificial intelligence, privacy and data security, Section 230, intellectual property, and much more.

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Lawrence W. Gallick

SCOTUS Age-Gates the Internet: Free Speech Coalition v. Paxton and the Future of Adult Content Regulation

Social Links: Clickbait, Court Dates, and the Beige Apocalypse

The Bipartisan TAKE IT DOWN Act Is Now Federal Law

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Effective January 1, 2025, California’s Assembly Bill 2426 (<a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB2426" target="_blank">AB 2426</a>) mandates that companies clearly disclose when consumers are obtaining a revocable license to “digital goods” (broadly defined to include digital audiovisual works, audio works, books, code, applications, and games) rather than full ownership. This legislation, <a href="https://www.gov.ca.gov/2024/09/24/governor-newsom-signs-consumer-protection-bills-targeting-medical-debt-overdraft-fees-and-unfair-subscription-practices/" target="_blank">signed by Governor Newsom in September 2024</a>, aims to strengthen consumer protections and set new standards for transparency and accountability.Read the full <a href="https://www.mofo.com/resources/insights/250318-a-new-california-digital-content-law-establishes" target="_blank">client alert</a>.

Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.

Aaron Rubin

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Evan Minsberg counsels fintech companies, banks, ecommerce platforms, and others on product development, strategic partnerships, and regulatory compliance. 

Evan R. Minsberg

Evan Minsberg counsels fintech companies, banks, ecommerce platforms, and others on product development, strategic partnerships, and regulatory compliance.

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A New California Digital Content Law Establishes New Requirements for Advertisers and Vendors

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REDDIT CO-FOUNDER MAKES PLAY FOR TIKTOKIf you want the perfect illustration of the high-stakes world of tech acquisition, look no further than the mad scramble for TikTok. Alexis Ohanian, Reddit’s wunderkind co-founder, has joined Frank McCourt’s <a href="https://www.reuters.com/technology/reddit-co-founder-alexis-ohanian-joins-frank-mccourts-bid-tiktok-2025-03-03/" target="_blank">Project Liberty bid</a> to snag ByteDance’s crown jewel. Ohanian <a href="https://x.com/alexisohanian/status/1896999129521512875" target="_blank">posted to X</a> expressing a desire to create “a TikTok for the people, by the people.” Meanwhile, tech entrepreneur Jesse Tinsley is marshaling his own <a href="https://www.ign.com/articles/mrbeast-and-the-ceo-of-roblox-are-trying-to-buy-tiktok-for-over-20-billion" target="_blank">retinue of heavy hitters</a> in a <a href="https://ktla.com/business/press-releases/ein-presswire/778386242/american-investor-consortium-led-by-employer-com-founder-jesse-tinsley-makes-all-cash-offer-for-tiktoks-us-operations/" target="_blank">separate bid</a> for the social media giant, including Jimmy “MrBeast” Donaldson, a YouTuber with <a href="https://www.youtube.com/channel/UCX6OQ3DkcsbYNE6H8uQQuVA" target="_blank">enough subscribers</a> to start a decent-sized republic.The impetus for all this frantic dealmaking comes courtesy of President Donald Trump, who set an April deadline for ByteDance to either sell the app or risk a U.S. ban. But as with most TikTok <a href="/topics/social-links-tiktok-wild-ride" target="_blank">developments</a>, the current deadline may itself <a href="https://www.forbes.com/sites/saradorn/2025/03/06/trump-says-hell-probably-extend-tiktoks-sale-deadline-halting-next-months-ban/" target="_blank">change</a>. The president has also <a href="https://www.usatoday.com/story/money/business/2025/03/10/tiktok-trump-administration-talking-to-buyers/82227545007/" target="_blank">indicated</a> that there are additional bids in the offing. “We’re dealing with four different groups. And a lot of people want it, and it’s up to me,” he stated.It’s a spectacle that’s hard to look away from. Though the players involved <a href="https://www.wired.com/story/frank-mccourt-tiktok-bid/" target="_blank">promise</a> (and may very well deliver) a transparent and egalitarian future for TikTok, the financial tug-of-war for control of this lucrative platform appears to be dominating the zeitgeist.U.S. SENATE REVISTS DIGITAL PROTECTION FOR TEENSA bipartisan group of U.S. senators just proposed sweeping amendments to the Children and Teens’ Online Privacy Protection Act (<a href="https://www.markey.senate.gov/imo/media/doc/coppa_20.pdf" target="_blank">COPPA 2.0</a>). If it passes, this would be the biggest update to online protections for minors since the <a href="https://www.congress.gov/bill/105th-congress/senate-bill/2326" target="_blank">original COPPA</a> law in 1998, which only covered kids under 13. The push for COPPA 2.0 is being led by Senators Ed Markey (D-Mass.)—who wrote the first COPPA—and Bill Cassidy (R-La.). The new version includes some <a href="https://www.mofo.com/resources/insights/240812-u-s-senate-approves-legislation-to-protect-youth-online" target="_blank">significant changes</a>, including:<ul><li>Blocking companies from collecting or using teens’ data without permission</li><li>Requiring an “eraser button” so kids can delete their personal info</li><li>Closing loopholes that let companies get around protections for underage users</li></ul>Senator Markey is really, really into this legislation. He first introduced it in 2011 and has brought it back in every Congress since. Last year, COPPA 2.0 was included in a <a href="https://www.congress.gov/bill/118th-congress/senate-bill/1409/text" target="_blank">broader children’s online safety bill</a> that passed the Senate with a 91–3 vote, but <a href="https://thehill.com/homenews/house/4826544-kids-online-safety-bill-kosa-house-roadblock/" target="_blank">stalled in the House</a> over censorship concerns and questions of enforcement (which would be overseen by the FTC). The revived bill has <a href="https://www.aasa.org/docs/default-source/advocacy/2024-04-15-fepc-coppa-2.0-support-letter.pdf?sfvrsn=3fed34df_3">strong backing</a> from children’s advocacy groups, teacher unions, privacy advocates, and medical associations, but not everyone is as excited. Influential trade association NetChoice has <a href="https://netchoice.org/house-committee-should-reject-bills-full-of-false-promises-to-american-families-online/" target="_blank">pushed back</a> vigorously, with Director of State & Federal Affairs Amy Bos stating, “COPPA 2.0 threaten[s] the safety and security of Americans by exposing them to massive cybersecurity vulnerabilities, increased censorship, and increased government power over families’ decision-making.”CALIFORNIA SOCIAL MEDIA LAW PARTIALLY ENJOINEDOn March 4, the U.S. District Court for the Eastern District of California finally <a href="https://storage.courtlistener.com/recap/gov.uscourts.caed.433978/gov.uscourts.caed.433978.59.0.pdf" target="_blank">wrapped up</a> X’s long-running lawsuit against <a href="https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB587" target="_blank">AB 587</a>, California’s “tell us every last detail of your content moderation policies” law. After a year of back-and-forth in court, a few parts of AB 587 got knocked out on First Amendment grounds.Here’s a quick look back at the journey:<ul><li>AB 587 became law in 2022, mandating that social media companies with more that $100 million in gross revenue file public reports explaining their content moderation practices in detail.</li><li>X <a href="https://digitalcommons.law.scu.edu/historical/2805/" target="_blank">filed suit</a> in September of 2023, arguing that the law infringed on the First Amendment, the <a href="https://constitution.congress.gov/browse/essay/artI-S8-C3-7-1/ALDE_00013307/" target="_blank">Dormant Commerce Clause</a>, and Section 230.</li><li>In early 2024, a federal court affirmed AB 587, rejecting X’s motion for a preliminary injunction.</li><li>By September 2024, the <a href="https://cdn.ca9.uscourts.gov/datastore/opinions/2024/09/04/24-271.pdf" target="_blank">Ninth Circuit took X’s side</a> on appeal, saying certain parts of the law likely trampled on the First Amendment.</li><li>In March 2025, the court permanently blocked the law’s most burdensome reporting requirements, saying they were unconstitutional.</li></ul>Applying strict scrutiny, the highest standard of review, the recent court order took issue with three parts of AB 587—specifically, subsections (a)(3), (a)(4)(A), and (a)(5) of <a href="https://casetext.com/statute/california-codes/california-business-and-professions-code/division-8-special-business-regulations/chapter-228-content-moderation-requirements-for-internet-terms-of-service/section-22677-service-report" target="_blank">California Business & Professions Code Section 22677</a>—because they were found to violate the First Amendment. At the same time, X’s other claims that AB 587 broke federal laws were dismissed for good.These now-blocked sections were a big part of AB 587’s reporting rules, which required social media companies to give detailed definitions of categories like “hate speech,” “extremism,” and “misinformation,” and to outline their policies for handling such content. Subsection (a)(5) also demanded a breakdown of how much content was flagged or acted upon, along with how and by whom each item was flagged.Even though those sections are no longer enforceable, AB 587 still stands. Most of its provisions remain, so social media companies still must file their <a href="https://oag.ca.gov/ab587" target="_blank">Terms of Service reports</a>—just with fewer details to painstakingly break down. They can breathe a small sigh of relief for now, but there are still plenty of regulatory hoops to jump through.FOURTH CIRCUIT SENDS PRIVACY SUIT TO ARBITRATIONA split Fourth Circuit panel <a href="https://law.justia.com/cases/federal/appellate-courts/ca4/24-1080/24-1080-2025-03-10.html" target="_blank">has ruled</a> that two subscribers to documentary streamer Curiosity Stream can’t sue the service for allegedly handing over their viewing history to third parties, because, as the court sees it, they technically agreed to arbitration when they clicked “Sign Up.” The decision overturned a <a href="https://casetext.com/case/dhruva-v-curiositystream-inc-1" target="_blank">lower court’s ruling</a>, with the 2–1 majority concluding that users had “reasonable notice” of the arbitration clause tucked inside Curiosity Stream’s terms of use.“Reasonable notice” has a specific legal meaning, but it also sounds like the kind of thing someone says when they “definitely told you about” the party. If a website vaguely suggests you’ve agreed to something, does that mean you actually have? <a href="https://www.fjc.gov/history/judges/heytens-toby-jay" target="_blank">Judge Toby Heytens</a>, writing for the majority, believes so. He argued that Curiosity Stream made its position clear: users were informed (via reference to accompanying hyperlinks) that subscribing meant they’d “read” the <a href="https://curiositystream.com/terms" target="_blank">terms of use</a>, which included a binding arbitration clause. He went on to posit that any user registering for a subscription knows they are entering into a contract, and if the user had “read” the terms of service as they attested, they would have read the language stating that creating an account binds the user to the terms of service. <a href="https://www.fjc.gov/history/judges/wilkinson-james-harvie-iii" target="_blank">Judge Harvie Wilkinson</a>, however, wasn’t convinced. In his dissent, he pointed out that Curiosity Stream never actually asked users to “accept” the terms, just to acknowledge they’d seen them. This, he argued, creates a legal framework where arbitration becomes less about consent and more about blind luck.We live in a world where clicking a button can have massive (and unpredictable) legal implications, even if done so unwittingly. We also live in a world where a streaming service designed to educate people is being sued for allegedly selling their users’ private data. That may prove to be the most educational aspect of the whole case.LEGALLY BINDING EMOJIS?Imagine you’re scrolling through your phone, completely engrossed in <a href="https://www.sociallyawareblog.com/" target="_blank">your favorite blog</a>, when a friend texts: “Sign the doc?” You reflexively send a thumbs-up emoji. You do this because it’s easy, because it’s non-committal, and because emojis are basically our new hieroglyphics, the social media and textspeak version of sign language. But here’s the thing: according to one <a href="https://www.canlii.org/en/sk/skca/doc/2024/2024skca115/2024skca115.html?resultId=0c4bb6b8bc764b1580b8469668d2f02d&searchId=2024-12-18T10:41:55:926/961a997674504a7eb4472b08757e8f05" target="_blank">Canadian appellate court</a>, that routine thumb gesture just might be the digital equivalent of an irrevocable commitment. Could a single emoji trigger a legally binding contract?<a href="https://leaderpost.com/news/local-news/emoji-case" target="_blank">That’s what happened</a> in a dispute between Achter Land & Cattle Ltd. (ALC) and South West Terminal Ltd. (SWT) heard by the Court of Appeal of Saskatchewan. This case has been in front of Saskatchewan judges for quite some time, <a href="/topics/be-careful-what-you-click-for-a-canadian-court-rules-that-a-thumbs-up-emoji-indicates-a-binding-contractual-agreement-" target="_self">as we covered back in 2023</a>, but it now appears to have reached final resolution.SWT sent a photo of a contract to ALC, asking for confirmation. ALC responded with a thumbs-up emoji. The court concluded that, under the <a href="https://www.canlii.org/en/sk/laws/stat/rss-1978-c-s-1/latest/rss-1978-c-s-1.html" target="_blank">Sale of Goods Act</a>, an emoji can serve as a valid signature if there’s enough contextual evidence to support it, such as phone metadata and prior communication patterns. It’s all about context (like how your friend’s casual “LOL” sometimes isn’t laughing at all, but shorthand for “Please stop texting me now”). According to the court, if there are enough digital breadcrumbs, an emoji response could constitute a valid, legally recognized signature.“So what?” you might say. “That’s Canada, home of hockey, <a href="https://www.youtube.com/watch?v=HaE9eiXV7O8" target="_blank">Rush</a>, and <a href="https://www.seasonsandsuppers.ca/authentic-canadian-poutine-recipe/" target="_blank">poutine</a>.” Not so fast, hoser. This unusual case may very well highlight a new reality. The <a href="https://www.nbcnews.com/business/business-news/ryan-cohen-bed-bath-beyond-investor-emoji-lawsuit-rcna97379" target="_blank">Bed Bath & Beyond situation</a> offers another example. Big time investor Ryan Cohen used the “smiley moon” emoji in social media posts that allegedly helped drive the company’s stock price up. He then sold his shares, leaving many investors with significant losses. <a href="https://tmsnrt.rs/3Oz9GB1" target="_blank">A lawsuit</a> claimed that his use of this emoji influenced market perception. Both cases show how easily a simple icon—once seen as harmless or playful—can carry serious legal or financial weight. As digital communication evolves, these small symbols may hold more power than ever before.

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions.











Anthony Ramirez

Social Links: TikTok Tussles, Teen Privacy Push, and the Thumbs-Up That Sealed the Deal

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COPPA

Data Security

First Amendment

Social Media Policy

In <a href="https://storage.courtlistener.com/recap/gov.uscourts.cand.431021/gov.uscourts.cand.431021.41.0.pdf" target="_blank">Ryan v. X Corp.</a>, a Northern District of California court held that <a href="https://www.law.cornell.edu/uscode/text/47/230" target="_blank">Section 230 of the Communications Decency Act</a> immunized X (formerly Twitter) against claims arising from suspension of a user’s account, notwithstanding that X allegedly used an AI system to select the account for suspension. The case also illustrates the unsettled state of the law (at least in the Ninth Circuit) regarding whether contract-based claims based on a platform’s alleged failure to comply with its own terms of service regarding content moderation are excluded from the Section 230 safe harbor.Plaintiff Jeremy Ryan, a “successful NFT artist” who used X to “further develop his cryptocurrency and NFT community,” sued X for suspending his accounts without explanation. Ryan alleged that X used an AI system to select his account for suspension. Ryan’s claims included breach of contract, promissory estoppel, unjust enrichment, intentional interference with contractual relationships with third parties, interference with prospective economic advantage, promissory fraud, conversion, and unfair business practices.The opinion in this case came in two parts. The court first <a href="https://storage.courtlistener.com/recap/gov.uscourts.cand.431021/gov.uscourts.cand.431021.29.0.pdf" target="_blank">dismissed several of Ryan’s claims</a> in September 2024, holding that the breach of contract, intentional interference, conversion, and unfair business practices claims were barred by Section 230. The court then dismissed the remaining claims in a subsequent opinion in December 2024 as barred by X’s terms of service.In its September opinion, the court applied the three factors from <a href="https://law.justia.com/cases/federal/appellate-courts/ca9/05-36189/05-36189-2011-02-25.html" target="_blank">Barnes v. Yahoo!</a> to determine whether the statute immunized X from liability: (1) whether X is a provider or user of an “interactive computer service,” (2) whether Ryan’s claim seeks to treat the defendant as a “publisher or speaker,” and (3) whether the content at issue was provided by “another information content provider.” The court quickly determined that the first and third factors were satisfied: X is an interactive computer service, and Ryan provided the content at issue. The key question was whether X’s suspension of Ryan’s accounts constituted a “publishing decision.”The court ruled that X’s account suspension decisions were indeed “traditional publishing functions” protected under Section 230. Relying on Ninth Circuit precedent, the court held that “any activity that can be boiled down to deciding whether to exclude material that third parties seek to post online is perforce immune under section 230.” The fact that X may have used AI to assist in its moderation decisions did not change this outcome.Other than the AI angle, this would appear to be a fairly standard application of Section 230, but the court also had to address Ryan’s breach of contract claim based on X’s alleged failure to comply with its own terms of service and other statements made on X’s website. The court’s job was made more difficult by recent Ninth Circuit cases <a href="https://cdn.ca9.uscourts.gov/datastore/opinions/2024/06/04/22-15910.pdf" target="_blank">Calise v. Meta Platforms, Inc.</a> and <a href="https://cdn.ca9.uscourts.gov/datastore/opinions/2024/08/22/23-55134.pdf" target="_blank">Estate of Carson Bride v. YOLO Technologies, Inc.</a>, both of which found exceptions to Section 230 based on the defendant platforms’ alleged failure to comply with their own content moderation policies.Commentators have criticized <a href="https://blog.ericgoldman.org/archives/2024/06/ninth-circuit-does-more-damage-to-section-230-calise-v-meta.htm" target="_blank">Calise</a> and <a href="https://blog.ericgoldman.org/archives/2024/08/when-it-comes-to-section-230-the-ninth-circuit-is-a-chaos-agent-estate-of-bride-v-yolo.htm" target="_blank">YOLO</a> for significantly expanding the limited Section 230 exception for promissory estoppel claims in <a href="https://law.justia.com/cases/federal/appellate-courts/ca9/05-36189/05-36189-2011-02-25.html">Barnes v. Yahoo!</a> in a manner that is inconsistent with dozens of prior cases and with the words of the statute itself. Barnes created a limited exception to Section 230 for contract-based claims where the defendant platform operator made a specific promise to the plaintiff to remove content and then failed to do so. Calise and YOLO expanded the exception to include “promises” contained in generally applicable platform terms and policies.The Ryan court held that these cases did not preclude application of Section 230 and reached back to Barnes to support its conclusion that Ryan’s contract claim was barred, holding that “despite Ryan’s protestations to the contrary, his suspension was undertaken by X in its capacity as a publisher of information, it meets the other Barnes criteria, and is protected.” In discussing Calise, the court noted that Ryan was trying to “impose liability upon X arising from its actions as a publisher, not its failure to fulfill some promise separate from that role,” and that the argument that his contract claim arose from a separate promise that X made to users on its website “comes up short because . . . statements made in a social media site’s terms and community standards do not amount to a legally enforceable promise.” We leave it to the reader to decide whether Ryan actually distinguishes Calise or simply refuses to apply it.The court went on to dispose of Ryan’s claims for intentional interference with plaintiff’s contractual relationships, conversion, and unfair business practices, also on Section 230 grounds. In each instance, Ryan’s claim arose from X’s decision to suspend Ryan’s accounts, which the court held was a publishing decision and therefore immunized under Section 230. In discussing Ryan’s conversion claim, which was based on the allegation that an “automated bot” made certain misrepresentations to Ryan regarding restoration of his account, the court noted that suspending an account is a publishing decision, regardless of whether AI is used.Ryan did not fare any better in the December opinion, where the court dismissed his remaining claims as barred by X’s terms of service. X’s terms of service stated that X may stop providing services to users, limit use of services, remove user content, and suspend or terminate users without liability. Ryan argued that California courts do not enforce limitation of liability provisions under <a href="https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=1668.&lawCode=CIV#:~:text=All%20contracts%20which%20have%20for,(Enacted%201872.)" target="_blank">California Civil Code Section 1668</a> if they protect against fraud or gross negligence. Only Ryan’s claim for promissory fraud alleged fraud or gross negligence, however, and that claim requires a promise. Because X did not make any promise not to suspend Ryan’s accounts even if he complied with the terms of service, California Civil Code Section 1668 did not prohibit enforcement of the limitation of liability in X’s terms of service. Accordingly, the court dismissed Ryan’s claims for promissory fraud, promissory estoppel, unjust enrichment, and unfair business practices claim.The court also noted that, even if not barred by X’s terms of service, Ryan’s unjust enrichment claim would be barred under Section 230. Ryan argued that X was not entitled to Section 230 immunity because the decision to suspend his account was made by X’s AI system, and that this somehow made X an information content provider rather than merely an interactive computer service provider. Ryan also argued that X’s AI system (as distinct from X) was not entitled to Section 230 immunity. Ryan’s arguments are difficult to understand based on the opinion, and it appears that the court struggled with them as well. In any event, the court was not convinced, stating “no authority suggests that X’s use of a generative AI model to do content regulation deprives it of Section 230 immunity” and “[n]othing in the plain language of the statute suggests that X would be denied section 230 protection because it uses an AI system for content moderation.”

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Associate

Lindsay is an associate in the Technology Transactions Group of Morrison Foerster.

Lindsay B. Harris

Lindsay Harris

Northern District Applies Section 230 to AI-Assisted Content Moderation

Artificial Intelligence

Contracts

Section 230 Safe Harbor

User-Generated Content

As the world’s premier blog and go-to source for insightful, pithy commentary on the law and business of social media (EDITOR’S NOTE: this claim has not been verified), the team at Socially Aware feels socially responsible to recap the top ten posts of 2024. We’re doing this in reverse-order “countdown mode” because we like to pretend we’re astronauts.It’s certainly been an interesting year in social media. Clickwrap agreements received a lot of attention from courts, the FTC cracked down on fake reviews, data scrapers spent nearly as much time in court as they did scraping data, age-verification laws for social media became a thing, and Section 230 was stress-tested from all angles. In an age where tech moves approximately one billion times faster than legislation, staying on top of these developments can be daunting, but it’s crucial for serving our clients.Here are the ten most popular Socially Aware posts of the year:10) <a href="/topics/lawrence-w-gallick-on-toth-v-everly-well-inc-" target="_self">Lawrence W. Gallick on Toth v. Everly Well, Inc.</a>In this post from October, Lawrence chatted with Socially Aware about Toth v. Everly Well and how the First Circuit’s ruling in a clickwrap/arbitration case may be at odds with the Fourth Circuit’s ruling in Lovinfosse v. Lowe’s Home Centers, LLP. Lawrence explores the nuances of the ruling and shares some deep insight.9) <a href="/topics/social-links-age-verification-x-appeal-and-the-great-white-north" target="_self">Age Verification, X Appeal, and the Great White North</a>This Social Links post from November covered Texas’s sweeping age verification law, the FTC’s fake reviews rules, a Saudi blogger’s lawsuit against X, Canada ordering TikTok to shutter offices, and ChatGPT’s approach to election integrity. Good times!8) <a href="/topics/california-federal-court-holds-x-s-claims-against-scraper-preempted-by-federal-law" target="_self">California Federal Court Holds X’s Claims Against Scraper Preempted by Federal Law</a>Socially Aware’s in-house gurus Aaron Rubin and Lawrence W. Gallick took an in-depth look at the X Corp. v. Bright Data Ltd. case last June, dissecting the intricacies and ramifications of this ongoing legal battle. Though X’s claims were initially dismissed by the U.S. District Court for the Northern District of California, they lived to fight another day when the court agreed to accept their amended complaint in late November. This one is a great read.7) <a href="/topics/social-links-deepfakes-ai-and-the-continuing-saga-of-reddit" target="_self">Deepfakes, AI, and the Continuing Saga of Reddit</a>In August, we posted this Social Links collection that looked at a couple of AI cases, including the $1 million judgement against Georgia-based VoIP service operator Lingo Telecom for using AI deepfake technology to mimic President Joe Biden’s voice in a series of robocalls. Other topics include Reddit’s post-IPO advertising approach and the copyright battle between major record labels and Cox Communications.6) <a href="/topics/owned-second-circuit-holds-that-traditional-principles-of-property-law-apply-to-social-media-accounts" target="_self">Owned: Second Circuit Holds That Traditional Principles of Property Law Apply to Social Media Accounts</a>Way back in February, Aaron Rubin and Lawrence W. Gallick addressed the always-contentious issue of social media account ownership by looking at JLM Couture, Inc. v. Hayley Paige Gutman. This piece draws some interesting conclusions that have aged well in subsequent months. The very <a href="https://storage.courtlistener.com/recap/gov.uscourts.txsb.459750/gov.uscourts.txsb.459750.937.0.pdf?ref=404media.co">recent filing</a> by X claiming ownership of Alex Jones’s account in Jones’s bankruptcy proceeding underlines Aaron and Lawrence’s freaky prescience.5) <a href="/topics/supreme-court-clarifies-the-boundaries-of-public-official-liability-on-social-media" target="_self">Supreme Court Clarifies the Boundaries of Public Official Liability on Social Media</a>On March 20, guest authors J. Alexander Lawrence and Justin Kareem Rezkalla contributed a great piece of analysis in the wake of the Lindke v. Freed Supreme Court opinion on when public officials may be held liable for violating the First Amendment for silencing critics on social media. The unanimous(!) opinion recognized that the mere fact that a social media page belongs to a public official is not by itself sufficient to impose liability.4) <a href="/topics/social-links-going-back-to-cali" target="_self">Social Links: Going Back to Cali</a>We named this early October piece “<a href="https://www.youtube.com/watch?v=FdizL4on-Rc" target="_blank">Going Back to Cali</a>” because each snippet of news just happened to be California-centric. Go figure. AI guidelines, social media addiction legislation, deepfake laws, privacy rights . . . it’s all about the Golden State.3) <a href="/topics/central-district-of-california-upholds-grindr-s-immunity-under-section-230-amidst-growing-concerns-over-social-media-safety-for-children" target="_self">Central District of California Upholds Grindr’s Immunity Under Section 230 Amidst Growing Concerns over Social Media Safety for Children</a>In addition to claiming the #3 spot on our countdown, this piece from February wins the “longest title of the year” award! In it, Aaron Rubin and Lindsay Harris dissect the John Doe v. Grindr case and how Section 230 was applied to the popular LGBTQ+ dating app. This example of Socially Aware’s substantive yet readable content is well worth revisiting.2) <a href="/topics/socially-aware-fake-reviews-real-rulings-and-an-epic-fail" target="_self">Social Links: Fake Reviews, Real Rulings, and an Epic Fail</a>We posted this extra-spooky Social Links piece on the eve of Halloween, and it clawed its way to the #2 spot. Fake reviews, medical data tracking, a very dramatic court ruling . . . this one was all treats, no tricks.1) <a href="/topics/an-enforceable-browsewrap-or-not" target="_self">An Enforceable Browsewrap . . . or Not?</a>The #1 most popular Socially Aware post of 2024 was authored by the dynamic duo of Aaron Rubin and Lawrence W. Gallick. The piece looks at Patrick v. Running Warehouse LLC, which addressed whether an arbitration agreement contained in a website’s terms of use was enforceable. Spoiler alert: it was.On behalf of Aaron Rubin, Lawrence W. Gallick, Anthony M. Ramirez, and the entire Socially Aware team, we’d like to wish everyone a happy and healthy holiday season. 2025 will no doubt be an interesting year in the world of social media and IP law—and we’ll be covering all of it, so you don’t have to.

2024 Recap: Ten Lords A-Leaping!

Copyright

Defamation

Fraud

Online Reviews

Trademark

CHARACTER.AI SUED IN TWO STATESCharacter Technologies has been hit with two lawsuits, including a wrongful death suit (among other claims), in less than two months over its popular Character.ai chatbot. The first was filed in the U.S. District Court for the Middle District of Florida (<a href="https://d34mgxl0pedajf.cloudfront.net/wp-content/uploads/2024/10/FILED-COMPLAINT_Garcia-v-Character-Technologies-Inc-1.pdf" target="_blank">Garcia v. Character Technologies Inc.</a>) by the mother of a Florida teenager who <a href="https://www.fastcompany.com/91215310/character-ai-app-lawsuit-legal-complaint-teen-suicide-chatbot-google" target="_blank">tragically committed suicide</a> after the chatbot allegedly encouraged the child to do so. The Plaintiff claims her son became instantly addicted to Character.ai and “fell in love” with the bot, leading to drastic behavioral changes such as sleep deprivation, school-related issues, and low self-esteem, which culminated in the child’s death. Just a few weeks later, two plaintiffs in Texas <a href="https://www.documentcloud.org/documents/25450619-filed-complaint/" target="_blank">filed suit</a> alleging that Character.ai <a href="https://www.npr.org/2024/12/10/nx-s1-5222574/kids-character-ai-lawsuit" target="_blank">abused the plaintiffs’ children</a> by exposing them to hypersexualized content, encouraging self-harm, and suggesting they should kill their parents. Both suits allege that the Character.ai chatbot is intentionally designed in a way that exploits minors by simulating human interaction, creating emotional dependence, and failing to implement safeguards against misuse. Given that these are the first major cases to seek damages related to anthropomorphized AI tech, it will be interesting to see whether juries find Character.ai liable, as this could spawn waves of similar lawsuits.MAJOR RECORD LABELS PETITION SUPREME COURT OVER VERDICT REVERSALThree of the world’s largest entertainment companies—Sony Music, Warner Music, and Universal Music—have <a href="https://tmsnrt.rs/3SX6Do2" target="_blank">petitioned the U.S. Supreme Court</a> to reconsider an appellate ruling that wiped out a $1 billion jury verdict in their suit against internet service provider Cox Communications. In 2019, a <a href="https://www.reuters.com/article/lifestyle/cox-to-pay-1-billion-to-music-labels-publishers-over-piracy-infringement-idUSKBN1YO0DE/" target="_blank">Virginia jury</a> found Cox liable for rampant music piracy by the company’s customers and failure to act despite receiving thousands of infringement notices. The verdict was <a href="https://business.cch.com/ipld/SonyMusicEntmtCoxComms4C20240220.pdf" target="_blank">overturned</a> earlier this year by the U.S. Court of Appeals for the 4th Circuit, which confirmed the jury’s finding of willful contributory infringement, but called for a new trial on damages because Cox did not directly profit from the piracy. Unsurprisingly, the plaintiffs appealed, and it appears the Supreme Court is poised to take the case. In a <a href="https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/24-181.html" target="_blank">one-sentence order</a>, the High Court has invited the solicitor general to file a brief expressing the views of the United States. This is a strong indication that the Court is interested in hearing the case. With a new administration set to take the reins in Washington next month, it seems likely that appellate attorney <a href="https://www.scotusblog.com/2024/11/trump-taps-lawyer-who-argued-his-immunity-case-for-solicitor-general/" target="_blank">D. John Sauer</a> will be solicitor general. Sauer’s disposition toward IP cases is tough to predict, as his work has largely focused on hot-button social issues. A brief in the case may give insight into Sauer’s positions on copyright law and corporate liability.X CLAIMS OWNERSHIP OF ALEX JONES ACCOUNTThe asset liquidation of Alex Jones’s <a href="https://storage.courtlistener.com/recap/gov.uscourts.txsb.459750/gov.uscourts.txsb.459750.882.0_1.pdf" target="_blank">intellectual</a> and tangible property in the bankruptcy proceeding following the $1.5 billion <a href="https://www.statesman.com/story/news/politics/state/2024/06/06/timeline-lawsuits-alex-jones-sandy-hook-shooting-infowars-false-claims/73985486007/" target="_blank">defamation judgment</a> against him has hit an unusual speedbump. At issue is Jones’s X account. With its 3.4 million followers, the account is among the highest-profile IP assets on the auction block. But here’s the thing: X has <a href="https://storage.courtlistener.com/recap/gov.uscourts.txsb.459750/gov.uscourts.txsb.459750.937.0.pdf?ref=404media.co" target="_blank">filed an objection</a> claiming that the account belongs to it, not Jones, and is therefore exempt from an asset sale. This raises several interesting questions and a judgment either way could have wide-ranging implications for all social media platforms. Though X’s <a href="https://x.com/en/tos" target="_blank">Terms of Service</a> state that users maintain ownership of “any Content you submit, post or display on or through the Services,” the terms do not explicitly define who actually owns the account. An ownership argument in this context is unusual. We’ve been <a href="/topics/owned-second-circuit-holds-that-traditional-principles-of-property-law-apply-to-social-media-accounts" target="_blank">covering</a> social media account ownership issues <a href="/topics/social-links-social-media-account-ownership-once-again-in-the-spotlight" target="_self">for years</a> and in the majority of cases the conflict is between employee/employer or company/consultant. X may very well prevail in this action. Users own their content, but the account itself will likely be seen as an extension of a user’s license to access and use the platform’s services. We’ll be following this one very closely.X LAWSUIT AGAINST ISRAELI DATA SCRAPING FIRM REVIVEDIt appears that Israeli firm Bright Data will be back in court facing an amended version of a complaint from X that was <a href="https://casetext.com/case/x-corp-v-bright-data-ltd-1" target="_blank">dismissed last May</a>. As we <a href="/topics/california-federal-court-holds-x-s-claims-against-scraper-preempted-by-federal-law" target="_self">reported in June</a>, X alleged that Bright Data’s scraping and selling of data from X violated the social media giant’s Terms of Service and the U.S. District Court for the Northern District of California held that X’s claims were preempted by federal copyright law. Though the court declined to allow amendments related specifically to Bright Data’s scraping operations, it granted X’s motion for leave to amend the company’s trespass to chattels claims and fraudulent business acts allegations. Judge William H. Alsup ruled that X’s updated complaint sufficiently alleges that Bright Data improperly accessed X’s servers, writing: “X Corp. newly alleges that scrapers traverse the X service in patterns markedly different from humans or authorized machines, that scrapers thus use underlying server capacity in abnormal proportions, and that this results in intermittent, isolated server failures and a ‘glitchy, lagged user experience’ for X’s human users.” Judge Alsup added that X also properly alleged that if it hadn’t purchased “millions of dollars of server capacity,” the alleged scraping would have resulted in “catastrophic system failures,” concluding that, with these revised allegations, “X Corp.’s proposed complaint now sufficiently alleges server impairment from scrapers accessing its service. . . Bright Data does not contest that if X Corp. states trespass to chattels as to data scrapers, it plausibly does so as to Bright Data, too. This order will assume as much.” You can read Judge Alsup’s thorough, and surprisingly entertaining, <a href="https://www.courtlistener.com/docket/67637345/156/x-corp-v-bright-data-ltd/" target="_blank">ruling</a>. Now that this case is set to move forward, we’ll see if it will have wider implications on the legalities of data scraping and platform protection.META PREVAILS IN IMMUNITY SUITUniversity of Massachusetts Amherst professor <a href="https://en.wikipedia.org/wiki/Ethan_Zuckerman" target="_blank">Ethan Zuckerman</a> has lost his bid for immunity from potential lawsuits alleging breach of contract and violation of federal criminal computer fraud laws related to his “Unfollow Everything 2.0” browser extension. The extension is designed to allow users to turn off the newsfeeds assembled for them by Facebook’s algorithms with one click, blocking unwanted content and advertisements. Unfollowing functionality is already in place on Facebook but requires unfollowing groups and pages individually. In the <a href="https://casetext.com/case/zuckerman-v-meta-platforms-inc" target="_blank">November 22 ruling</a>, Judge Jacqueline Scott Corley of the U.S. District Court for the Northern District of California wrote that Zuckerman’s “alleged injury is too contingent upon uncertain events to satisfy the constitutional ripeness requirement” and that the request for relief is too speculative because Zuckerman has not actually released the browser extension. Last May, Zuckerman filed a <a href="https://knightcolumbia.org/documents/gu63ujqj8o" target="_blank">preemptive suit</a> against Meta requesting immunity under Section 230, asking the court to declare that his extension would not violate Facebook’s <a href="https://www.facebook.com/legal/terms?_rdr" target="_blank">Terms of Service</a> or federal computer fraud laws, but this action was also rejected. The current case was dismissed without prejudice, so Zuckerman could refile it if he ever releases the Unfollow Everything 2.0 extension, but after two court losses, he faces significant headwinds.UBER’S ARBITRATION CLAUSE UPHELD BY APPEALS COURTIn a <a href="https://aboutblaw.com/bgm7" target="_blank">5–2 decision</a>, the New York Court of Appeals has ruled that a plaintiff’s legal claims against Uber must go through arbitration—even though her action was currently pending before a court. The ruling stems from a November 2020 lawsuit brought by plaintiff Emily Wu, who originally agreed to a prior version of Uber’s Terms of Service without mandatory arbitration. Uber amended its <a href="https://www.uber.com/legal/en/document/?name=general-terms-of-use&country=united-states&lang=en" target="_blank">Terms of Service</a> in January 2021, updating its mandatory arbitration clause, which Wu agreed to.At the heart of the case is the plaintiff’s argument that the arbitration clause should not apply to claims pending in court, even though the amended Terms of Service purported to apply to “any claims” without limitation. Among other things, Wu claimed that Uber’s notice to Wu violated <a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_4_2_communication_with_person_represented_by_counsel/" target="_blank">Rule 4.2 of the Rules of Professional Conduct</a> for attorneys, which bars the other party in a pending lawsuit from directly contacting a party they know is represented by counsel. The Court of Appeals <a href="https://www.reuters.com/legal/government/column-uber-clickwrap-contract-gets-blessing-nys-top-court-theres-twist-2024-11-26/" target="_blank">disagreed with Wu</a>, maintaining that (a) a mass email notification sent by Uber clearly explained there would be changes to the arbitration agreement and that Wu entered into a contract when she agreed to the revised terms; (b) Uber did not know that Wu was represented by counsel when it sent the mass notice; and (c) even if the claim had merit, Wu’s requested remedies were too extreme and she did not even ask for the more targeted and sensible remedy of simply voiding the arbitration agreement and allowing the dispute to move forward in court.In his majority opinion, Judge Anthony Cannataro wrote, “For essentially as long as there have been written contracts, parties have entered them without first carefully reviewing their terms. That failure can have legal consequences, whether the party is a sophisticated entity or an ordinary consumer, and whether the contract is presented on paper or through an electronic pop-up window.”

Character Technologies has been hit with two lawsuits, including a wrongful death suit (among other claims), in less than two months over its popular Character.ai chatbot. The first was filed in the U.S. District Court for the Middle District of Florida (Garcia v. Character Technologies Inc.) by the mother of a Florida teenager who tragically committed suicide after the chatbot allegedly encouraged the child to do so. 

Social Links: If the Suit Fits

Bankruptcy

Supreme Court

On September 25, 2024, the U.S. Court of Appeals for the First Circuit issued its decision in <a href="https://law.justia.com/cases/federal/appellate-courts/ca1/23-1727/23-1727-2024-09-25.html" target="_blank">Toth v. Everly Well, Inc.</a> Socially Aware spoke to Lawrence Gallick (of counsel in Morrison Foerster’s Austin office) about the case for a deeper dive into this interesting ruling.SA: Can you give us a brief overview of the case details and why it caught your interest?LWG: Sure. On the surface, it’s just another run-of-the-mill clickwrap/arbitration case, but one with some interesting nuances.The defendant, Everly Well, Inc. (“Everlywell”), sells food sensitivity test kits. Joyce Toth purchased an at-home lab test on a third party retailer’s website for $119.99. Following the instructions on the box, which stated that an online account with Everlywell was required to send in her sample for testing, she created an account. During this process, she clicked a mandatory checkbox indicating that she “read and accept[ed]” Everlywell’s terms of service (she could not submit the form without checking it). When she received her food sensitivity test results back, they made no sense to her since they indicated she was sensitive to eggs, whereas she regularly and recently had eaten eggs with no trouble. Turns out that (allegedly) the test actually measured foods that had been recently eaten, instead of (as advertised) sensitivities to foods. Toth was displeased and filed a class action claim against Everlywell for deceptive marketing practices.SA: That seems pretty straightforward. Did the court address the underlying deceptive marketing claim, or was it limited to arbitration enforceability?LWG: The case is about the enforceability of the arbitration clause, not the merits of the underlying deceptive marketing claim, which are not addressed (since arbitrability is a threshold question). Following the typical fact pattern for these cases, Everlywell moved to compel arbitration pursuant to its terms of service. Toth argued that the arbitration provisions in the Everlywell terms of service were not binding on her for several reasons, including (among other challenges) lack of consideration, lack of notice and assent, and that the contract was illusory due to its unilateral modification clause. The district court didn’t find these arguments compelling and rejected her arguments, so Toth appealed.SA: Which brings us to today. What was the basis of First Circuit’s ruling?LWG: The court found that Toth had both been given reasonable notice of the terms and reasonably manifested assent to those terms. On Everlywell’s account creation page, Toth had to enter some basic information (name, email, and password), below which was a checkbox with text next to it reading “I have read and accept the Terms and Conditions,” where “Terms and Conditions” was a hyperlink displayed in green, setting it off from the rest of the black text. Underneath this verbiage was a green button with the text “Create My Account.” Relying on Massachusetts precedent, the court reasoned that, while Toth was not required to read the terms to proceed (and in fact, she attested that she did not read the terms), the requirement to click a checkbox put Toth on notice that she was entering into a contract and also was a required affirmative action, satisfying the assent requirement under Massachusetts law.SA: Sounds like they drew a sharp line between clickwrap and browsewrap terms in their discussion of Massachusetts precedent.LWG: They did. Toth’s claims that the higher standard under Massachusetts law for binding a user to arbitration applied here were rejected by the court, which noted that, among other things, the precedents cited by Toth dealt with “browsewrap” agreements, which did not require the affirmative acts I mentioned earlier.The court also rejected Toth’s claim that she did not “meaningfully” assent to the terms because she had no ability to get the benefit of the test she had already purchased without completing the registration process. As noted by the court, Toth purchased the test kit from a third-party retailer, not Everlywell, and the box clearly stated that registration and acceptance of Everlywell’s terms are required to obtain test results.SA: Did unilateral modification clauses enter into this somewhere? They seem to be a factor in many of these cases.LWG: Yes. The court rejected Toth’s claim that Everlywell’s right to unilaterally modify its terms of service made those terms an illusory contract, an interesting issue in light of <a href="https://www.sociallyawareblog.com/topics/240920-district-court-unilateral-modification-clause" target="_blank">our recent coverage of the Lovinfosse case</a> in the U.S. District Court for the Eastern District of Virginia (which is part of the Fourth Circuit, not the First Circuit as in Toth). Citing First Circuit precedent, the court in Toth noted that since the unilateral modification power was not used by Everlywell to modify the arbitration clause, the unilateral modification clause had no impact on whether arbitration was required – in fact, the court noted that this “is a subject for an arbitrator and not a court.” It is unclear whether Everlywell has since changed its unilateral modification clause (the current version, which was modified in March 2024, appears in <a href="https://www.everlywell.com/terms-of-use/" target="_blank">Section 8</a>, but it would be interesting to know if and how the court’s reasoning in Toth squares with Lovinfosse.SA: So the First Circuit and the Fourth Circuit may be at odds?LWG: It remains to be seen. Although the current Everlywell terms contain an obligation for Everlywell to “endeavor” to notify the user of “material changes” (as opposed to the clause in Lovinfosse, which didn’t require legal notice at all), the terms still purport that the changes are effective regardless of notice (as in Lovinfosse). Would the Lovinfosse court enforce the Everlywell terms? Will we ever know?SA: One last question. Which is the better album – Double Nickels on the Dime by The Minutemen, or Zen Arcade by Hüsker Dü?LWG: Please don’t ask me idiotic questions like this. It’s self-evident that they’re each watershed releases by legendary groups at the height of their power. Owning both in multiple formats is the only correct choice. Also, it’s just “Minutemen,” not “The Minutemen.” Are we done here?

Lawrence W. Gallick on Toth v. Everly Well, Inc.

Lawrence W. Gallick on Toth v. Everly Well, Inc.

On September 25, 2024, the U.S. Court of Appeals for the First Circuit issued its decision in Toth v. Everly Well, Inc. Socially Aware spoke to Lawrence Gallick (of counsel in Morrison Foerster’s Austin office) about the case for a deeper dive into this interesting ruling.

On August 8, 2024, the U.S. District Court for the Eastern District of Virginia in <a href="https://scholar.google.com/scholar_case?case=17363838191298839802&q=Lovinfosse+v.+Lowe%27s+Home+Centers,+LLP&hl=en&as_sdt=20006&as_vis=1" target="_blank">Lovinfosse v. Lowe’s Home Centers, LLP</a> addressed the enforceability of an arbitration clause in Lowe’s terms of service, serving as a reminder of the problems that may arise from terms of service (TOS) language allowing unilateral modifications. The plaintiff, Eleanor Lovinfosse, alleged that the retailer’s use of <a href="https://www.gov.uk/government/publications/online-choice-architecture-how-digital-design-can-harm-competition-and-consumers" target="_blank">Online Choice Architecture (OCA)</a> led her to purchase a water hose labeled as “Required for Use” while buying a washing machine online. Lovinfosse later discovered the washing machine came with all necessary parts, rendering the additional purchase unnecessary. She subsequently filed a class action lawsuit against the retailer, alleging deceptive practices.Lowe’s maintained the dispute is subject to the arbitration requirement in its TOS; arguing that Lovinfosse agreed to the terms by clicking the “Place Order” button during checkout.Directly below the “Place Order” button, hyperlinked text states: “By placing an order, I agree to Lowe’s Terms and Privacy Statement.” This allows users to reference the <a href="https://www.lowes.com/l/about/terms-and-conditions-of-use" target="_blank">full text of the terms</a> if they click the link. Lovinfosse did not click on the hyperlinked terms and asserted that she was not aware of their contents, including the arbitration clause.The court agreed with the defendant on this point, reasoning that based on the layout and language of the website, Lovinfosse had constructive notice of the terms and had manifested assent by moving forward with the order.The court then turned its analysis to the unilateral modification clause within the TOS, which stated:“You agree that Lowe’s may change, terminate, modify, add, end or delete any of these terms and conditions (including, without limitation, the Terms) under which the Site is offered at any time and without notice to you. Lowe’s, in its sole and absolute discretion, reserves the right to update, change, terminate, suspend, modify, add, end or delete any of these Terms . . . , in whole or in part, at any time with or without notice.”Although the arbitration clause existed as part of the TOS at the time Lovinfosse agreed to them, the unilateral modification clause purported to allow the retailer to change its terms at any time and without notice. The court concluded that, while Lovinfosse may have agreed to the TOS, the unrestricted ability to modify the terms without notice made the arbitration clause illusory and unenforceable.The court further reasoned that a customer who makes a single transaction would have no way of knowing if the terms had changed unless they constantly checked the website, highlighting that the lack of required notice distinguished this case from others where unilateral modification clauses were upheld.The court’s reasoning in Lovinfosse is reminiscent of the conclusions drawn in <a href="https://casetext.com/case/harris-v-blockbuster-inc" target="_blank">Harris v. Blockbuster Inc.</a>, a Northern District of Texas decision from 2009. In that case, the court similarly held that the unilateral modification clause in Blockbuster’s online terms of use rendered the arbitration clause illusory and unenforceable. The court reasoned that Blockbuster could, in theory, unilaterally modify the arbitration provisions and apply those modified provisions to earlier disputes.The case law regarding unilateral modification in online terms has shifted over the years. After Harris, unilateral modification requirements appeared to loosen, as evidenced by the 2014 San Francisco Supreme Court decision in <a href="https://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1656&context=historical" target="_blank">Rodriguez v. Instagram</a>. In Rodriguez, Instagram’s terms stated that users would be notified of material changes to the terms, and the meaning of “material change” would be determined at Instagram’s sole discretion.Though Instagram had sole discretion to determine when to give notice of a change in its terms, the court upheld the unilateral modification of its terms of use – noting that Instagram had in fact provided reasonable advance notice via email and that continued use of the service constituted Rodriguez’s acceptance of the new terms.More recently, decisions like <a href="https://casetext.com/case/sifuentes-v-dropbox-inc-1" target="_blank">Sifuentes v. Dropbox</a> have permitted unilateral modification but made it much harder to meet the requirement for giving notice. In Sifuentes, the United States District Court for the Northern District of California reviewed Dropbox’s ability to enforce amendments to its terms, which contained a notice provision that was similar to Instagram’s. The court held that Dropbox could not enforce its amended TOS because it failed to show that the plaintiff’s continued use of the service was conditioned on agreement to the amendments.The court found that the plaintiff also didn’t have actual notice of the modified terms because Dropbox did not show that the plaintiff had read the email notifications of the amendments. The Sifuentes court further characterized the provision as “essentially disavow[ing] any obligation to alert [users] to changes.” This decision underscored practical challenges of meeting the necessary notice standard, but these cases did not focus on or require the Harris standard of only enforcing unilateral amendment provisions where the terms themselves required the provider to give notice (presumably in addition to such notice being given where applicable to the case’s facts).Lovinfosse appears to mark a return to the stricter stance seen in Harris, serving as a reminder of the limitations and potential pitfalls of unilateral modification clauses in TOS. While the court acknowledged that the plaintiff had agreed to the terms, the ability to change those terms without notice made the arbitration clause illusory and unenforceable.In many ways, this is a frustrating standard for companies that have followed best practices when implementing enforceable terms, only to face the risk that agreed upon contractual terms which have not changed might be declared unenforceable simply because they could change. As companies navigate the complexities of digital contracts, Lovinfosse underscores the necessity of transparency in consumer agreements.

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Tricia Matibag is an associate in the Boston office of Morrison Foerster and a member of the firm’s Technology Transactions Group.

Tricia Matibag

Lose Your Illusion: District Court Holds that Unilateral Modification Clause Makes ToS Unenforceable

Class Actions

Double-check before swiping right. Ubiquitous dating app Tinder scored a court victory when the U.S. District Court in New Jersey ruled in <a href="https://law.justia.com/cases/federal/district-courts/new-jersey/njdce/2:2023cv23115/537965/12/" target="_blank">Ciapinska v. Tinder</a> that the arbitration clause in the app’s terms of use (TOU) is binding. At the center of the suit is Tinder’s <a href="https://www.help.tinder.com/hc/en-us/articles/360034941812-Photo-Verification" target="_blank">photo verification</a> process. The plaintiff <a href="https://bronx.news12.com/elmwood-park-nj-woman-suing-tinder-claims-photos-being-used-fake-accounts" target="_blank">brought the action in late 2023</a> when she discovered that a number of fake accounts, which had passed Tinder’s verification protocol, were using her photos – even though she left the platform in 2019. In the ruling, Judge Jamal K. Semper wrote, “[Plaintiff] created numerous accounts and even purchased a subscription indicating sufficient opportunity to consult and assent to the TOU before continuing to use the platform.” Tinder maintains that its verification tool is not a guarantee.TikTok finds itself facing a federal lawsuit over the <a href="https://www.independent.co.uk/news/world/americas/crime/tiktok-blackout-challenge-nyla-anderson-b1980820.html" target="_blank">tragic death</a> of a ten-year-old girl who passed away while attempting the viral “blackout challenge.” The challenge dares users to choke themselves to unconsciousness and stream the act on TikTok. The deaths of <a href="https://www.bloomberg.com/news/features/2022-11-30/is-tiktok-responsible-if-kids-die-doing-dangerous-viral-challenges" target="_blank">more than a dozen children</a> have been linked to the viral trend. TikTok parent company ByteDance maintained that Section 230 immunized it from liability, but <a href="https://fingfx.thomsonreuters.com/gfx/legaldocs/mopaqabzypa/08272024tiktok.pdf" target="_blank">three federal judges disagreed</a>. U.S. Circuit Judge Patty Shwartz wrote that Section 230 only immunizes information provided by third parties, not recommendations that TikTok itself made via an algorithm underlying its platform, adding: “TikTok makes choices about the content recommended and promoted to specific users, and by doing so, is engaged in its own first-party speech.” This begs a question: Does any effort to curate the presentation of third-party content automatically make it first-party content and therefore not protected under Section 230?Dupe.com, a startup search tool that scrapes the web for knockoff versions of name-brand products at steep discounts, is <a href="https://www.bloomberglaw.com/public/desktop/document/WilliamsSonomaIncvCarrotCartIncdbaDupecomDocketNo124cv06597SDNYAu?doc_id=X1965IOOO1191OA3O1STJOT2OF2" target="_blank">being sued</a> by home retail colossus Williams-Sonoma. The complaint, which was filed in the U.S. Court for the Southern District of New York, maintains that <a href="https://dupe.com/" target="_blank">Dupe.com</a> illegally used furniture images made by the Williams-Sonoma creative team to promote its online search tool and craft social media ads disparaging the William-Sonoma family of brands. The lawsuit asserts claims for copyright infringement, false advertising, unfair competition, and deceptive trade practices. With the <a href="https://businessofhome.com/articles/furniture-dupes-kim-kardashian-donald-judd-knockoffs#:~:text=Dupe.com%20can%20absolutely%20be,nothing%20clandestine%20about%20that%20functionality." target="_blank">proliferation of dubious online retailers</a> offering counterfeit versions of premier products, we’ll be watching this litigation closely.A <a href="https://www.dailycal.org/news/state/sb-976-approved-aims-to-protect-kids-from-social-media-addiction/article_59dd5e9c-6a6d-11ef-b6f1-87863c2fb22d.html" target="_blank">California bill</a> designed to stop social media companies from using algorithms to target minors has passed the state legislature and is headed to Governor Gavin Newsom’s desk. The legislation is similar to laws <a href="https://www.democratandchronicle.com/story/news/2024/06/10/ny-passes-ban-on-addictive-social-media-for-children-how-it-works/74043024007/" target="_blank">recently passed in New York</a> and could mark the beginning of a significant shift in social media policy across the United States. If the Governor signs <a href="https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB976" target="_blank">the bill</a>, social media companies would be prohibited from providing an algorithm-driven social media feed to anyone younger than eighteen in the state of California. It would also ban social media notifications during school hours and at night without prior parental consent. Proponents of the bill feel legislation is necessary to protect children, while critics maintain the law will be difficult to enforce and could be susceptible to misuse.Everyone’s mom’s favorite soft rock icon, Barry Manilow, <a href="https://variety.com/2024/music/news/barry-manilow-sues-hipgnosis-unpaid-funds-1236129154/" target="_blank">has sued</a> Hipgnosis Songs Fund, a music IP investment and song management company that acquired the Manilow catalog in 2020. The suit alleges that Hipgnosis has not paid more than $1 million in contractually obligated bonus payments. Manilow sold the song catalog to Hipgnosis based on promises that the company would exploit social media and spark a <a href="https://www.tiktok.com/@dinandtonics/video/7375244202457845038" target="_blank">“Copacabana” dance trend</a> on TikTok. To the surprise of no one (except perhaps Mr. Manilow), this did not happen. Instead, Hipgnosis hemorrhaged cash after a number of <a href="https://www.forbes.com/sites/marisadellatto/2023/01/24/justin-bieber-sells-music-rights-for-over-200-million-to-hipgnosis-songs-capital/" target="_blank">high-profile catalog acquisitions</a> and was sold to Blackstone in July 2024. Social media and music streaming have confounded the old guard of the music industry as they’re eclipsed by younger, more tech-savvy artists who have a deeper understanding of the contemporary music business landscape. Despite the nearly identical names, Hipgnosis Songs Fund is not related to the art collective Hipgnosis that designed all your <a href="https://wimwords.com/the-hipgnosis-album-cover-gallery/" target="_blank">favorite 1970s album covers</a>.

Social Links: Tinder, TikTok, and the Copacabana

Social Links: Tinder, TikTok, and the Copacabana