Terms of Service; Unenforceable? News Update – Nov 21, 2014

November 21, 2014

Terms of service (“TOS”) are an important component of any website – they protect the administrator and content-creators from all sorts of legal liabilities, including those caused by third-party conduct (racism/hate-speech on message boards), intellectual property violations (infringing on someone else’s trademark/copyright), dilution of intellectual property (other people using your marks/copyrights), third-party content liability (obscene content linked on your page from third party advertisers), among many others.

As points out, companies will spend thousands of dollars in legal fees for their attorneys to draft a superbly-crafted TOS, stipulating damage limitations, privacy policy, indemnifications, jury waivers, IP clauses, arbitration preferences, choices of law/forum, etc. As the technological legal landscape is always evolving, it turns out that many of those hours (and dollars) may be for naught. As many companies have learned the hard way when trying to enforce their expertly-written terms of service, believing that they have a legally binding contract with their users, they’re dumbstruck at judges who refuse to enforce the “agreements.”

So, what’s the problem? Even though many TOS sections are prominently displayed on the bottom banner of each page (right above “contact info” and right below “job opportunities”), many judges refuse to enforce the terms of service simply because the website lacks an “affirmative mechanism” for users to acknowledge and accept them.

What’s an affirmative mechanism, you ask?

Well, most websites have a link to access their terms of service on a different subpage, and typically, a user must scroll through a few pages or do a little bit of digging to access TOS. The other parts of the webpage are specifically designed to engage the user with content and media, and basically to be far more interesting than the hyperlinks leading to policies written in legalese. In effect, unless a user is really trying to access the terms, they’ll probably go unseen entirely.

Website licenses primarily come in two different forms; 1) browser licenses, and 2) website licenses. Browser licenses don’t require any affirmative conduct by the user, and try to bind their users to their terms with phrases like “[b]y using this website, you are bound by these terms.” “Cllick licenses,” on the other hand, specifically require users to affirmatively (key word, kids) agree to the terms of service before entering a site or finishing a transaction. This will typically take the form of an easily-noticable hyperlink next to the TOS, with an “I Agree” button that forces users to click to move on. Courts typically enforce these licenses because of the affirmative mechanism (yay!). In a Ninth Circuit (US Court of Appeals) case, Nguyen v. Barnes & Noble Inc., the court held that prominent notices of Terms of Service simply aren’t enough – the user must actually click the “I Accept” button, or must somehow otherwise have knowledge of the TOS in order for the terms to be binding and enforceable. The Second Circuit has held similarly in other cases as well.

At the end of the day, courts lay out the main takeaway: if you want to leave zero doubt about the ability to enforce your terms of service, make sure your user …  affirmatively… agrees to them.

If you’d like to discuss how we can help to build your website so as to enforce TOS and limit your company’s legal liabilities, please reach out to us. We have many TOS templates to choose from, and depending on your business’ legal needs, we can refer you to an experienced business attorney so you can rest easy at night. Someone from our team of experts will be in touch with you, and we’ll work with you to identify and implement the best solutions for your business’ specific needs.



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A seasoned Internet Media professional with more than 10 years of experience in varied domains such as website design & development, digital imaging, social media marketing, and search engine optimization. We are intrinsically technology geeks with an insatiable appetite for new developments in the digital landscape.