Drafting Website User Agreements by Eric Goldman

Drafting Website User Agreements
University of Dayton Advanced Computer and Cyberspace Law Program
June 7, 2002
Eric Goldman
Epinions / Marquette Univ. Law School

Contract Formation

  • Many websites want easy contract formation
  • But normal contract rules still apply (offer, acceptance, consideration)
  • Failed contract = marketing representation

What Works

  • Signed contracts
  • Mandatory non-leaky clickthrough agreements
    • Mandatory = every user must go through process
    • Non-leaky = no alternative “bypass”
    • Clickthrough = affirmative manifestation of assent
    • See Appendix A for representative cases
  • After-sale terms plus refund right (see Appendix B for representative cases)
  • Email acceptance of terms (maybe)

What Doesn’t Work

  • Non-mandatory/bypassable link to terms
    • Ticketmaster Corp. v. Tickets.com, 2000 WL 1887522 (C.D. Cal. 2000)
    • Specht v. Netscape Communications Corp., 150 F. Supp. 2d 585 (S.D.N.Y. 2001)
    • Williams v. America Online, 2001 WL 135825 (Mass. Super. 2001)
  • “Use of this website constitutes assent” (maybe)
  • “Disclaimers” (what are they?)
  • So how do you bind non-registering visitors?
    • Answer: Register.com v. Verio, or you don’t.  But why do you need to?

Other Limits on Formation

  • Illegal Purpose
  • Contrary to Public Policy (America Online, Inc. v. Superior Court (Mendoza), 90 Cal. App. 4th 1 (2001))
  • Statute of Frauds (but E-Sign/UETA)
  • Incapacities
    • Age
    • Mental incapacity
    • DUI
  • Unconscionable (Brower v. Gateway 2000, 676 N.Y.S.2d 569 (N.Y. App. Div. 1998))
  • UCC Sec. 2-207 (Klocek v. Gateway, 104 F. Supp. 3d 1332  (D. Kan. 2000))

Amendment Procedures

  • Notification mechanisms
    • Clickthrough
    • Email notification
    • Announcement on home page/in special area
    • “We can make arbitrary changes, so please check back frequently…”
  • What happens if someone doesn’t agree to the amendment?
  • Amending to change “X” to “not X”

Drafting Philosophies

  • Alternate philosophies
    • –   users can’t negotiate, so stick it to ’em
    • –   contracts are just marketing collateral
    • –   contracts come into play only in litigation, so primarily use the contract for risk management
  • Ask yourself—under what circumstances will you sue your users?

Who is Your Audience?

  • So who should you draft the contract for?
    • Users
    • Judges
    • Plaintiffs lawyers/government enforcement agencies
    • Press
    • Investors/financial analysts
    • Competitors
    • Employees

What You Must Have

  • Filtering Language (47 USC Sec. 230(d))
  • DMCA Requirements (17 USC Sec. 512(c))
    • Contact info for Agent of Service of Notice
    • Policy re termination of repeat infringers
  • E-Commerce Disclosures (CA Civil Code Sec. 1789)
  • Notice of Surreptitious Monitoring Devices (18 USC Sec. 1030(a)(2))
  • COPPA (15 USC Sec. 6501-6506), Graham-Leach-Bliley (15 USC Sec. 6801-6810), TRUSTe

What You Don’t Want

  • “We reserve the right to terminate accounts in our sole discretion”
    • See Fonovisa, Inc. v. Cherry Auction, 76 F.3d 259 (9th Cir. 1996) and A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001)
  • Ridiculously egregious clauses
    • Overbroad IP assignments/licenses (Ex. Geocities, iTool)
    • Noncompete clauses
    • Nondisparagement clauses (Ex. Microsoft FrontPage)
    • Indemnity from users?
  • Unintended privacy promises (FTCA and ECPA)
    • “private,” “confidential,” “anonymous,” “secure”

What You Might Want

  • Arbitration (see Appendix C)
  • Governing Law/Venue
  • Risk Management
    • Warranty Disclaimers
    • Consequential Damage Waivers
    • Dollar caps
  • Amendment Process
  • License Grants/Anti-Robot Language (see Appendix D)

Some Opinionated Suggestions

  • Avoid Formation Hubris
  • Adhere to the “Everyone Else is Doing It” Meme Advisedly
  • Avoid the Clone ‘n’ Revise Syndrome
  • Write in English
  • Keep it Fair
  • Keep it Short

Appendix A: Cases Upholding Clickthrough User Agreements

  • America Online v. Booker, 781 So. 2d 423 (Fla. App. 2001)
  • Caspi v. Microsoft Network, 732 A.2d 528 (N.J. Super. Ct. 1999)
  • Celmins v. America Online, 738 So. 2d 1041 (Fla. Dist. Ct. App. 1999)
  • Decker v. Circus Circus Hotel, 49 F. Supp. 2d 743 (D. N.J. 1999)
  • DiLorenzo v. America Online (N.Y. Sup. Ct. January 22, 1999)
  • Groff v. America Online, 1998 R.I. Super. LEXIS 46 (Super. Ct. R.I. 1998)
  • Hotmail Corporation v. Van$ Money Pie, 1998 WL 388389 (N.D. Cal. 1998)
  • Jessup-Morgan v. America Online, 20 F. Supp. 2d 1105 (E.D. Mich. 1998)
  • Liekschke v. RealNetworks, 2000 U.S. Dist. LEXIS 1683 (N.D. Ill. 2000)
  • Ploharski v. eBay (N.D. Ga. August 1, 2000)
  • In re. RealNetworks Privacy Litigation, 2000 U.S. Dist. LEXIS 6584 (N.D. Ill. 2000)
  •  Register.com v. Verio, 126 F. Supp. 2d 238 (S.D.N.Y. 2000)
  •  Spera v. America Online (N.Y. Sup. Ct. January 27, 1998)

Appendix B: Cases Upholding Post-Sale Terms + Refund

  • Brower v. Gateway 2000, 676 N.Y.S.2d 569 (N.Y. App. Div. 1998)
  • Hill v. Gateway 2000, 105 F.3d 1147 (7th Cir. 1997)
  • Levy v. Gateway 2000, 1997 WL 823611 (N.Y. Sup. Ct. 1997)
  • M.A. Mortensen Co. v. Timberline Software Corp., 970 P.2d 803 (Wash. Ct. App. 1999)
  • ProCD v. Zeidenberg, 89 F.3d 1257 (7th Cir. 1996)
  • Rinaldi v. Iomega, 1999 WL 1442014 (Del. Sup. Ct. 1999)
  • Westendorf v. Gateway 2000, 2000 WL 307369 (Del. Ch. Ct. 2000)
  • But see Klocek v. Gateway, 104 F. Supp. 3d 1332  (D. Kan. 2000)

Appendix C: Arbitration Language Examples

  • eBay: “Any legal controversy or legal claim arising out of or relating to this Agreement or our services, excluding legal action taken by eBay to collect our fees and/or recover damages for, or obtain an injunction relating to, the eBay site operations, intellectual property, and our services, shall be settled by binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association. Any such controversy or claim shall be arbitrated on an individual basis, and shall not be consolidated in any arbitration with any claim or controversy of any other party. The arbitration shall be conducted in San Jose, California, and judgment on the arbitration award may be entered into any court having jurisdiction thereof. Either you or eBay may seek any interim or preliminary relief from a court of competent jurisdiction in San Jose, California necessary to protect the rights or property of you or eBay pending the completion of arbitration. Should either party file an action contrary to this provision, the other party may recover attorney’s fees and costs up to $1000.00.”
  • Gateway (in the Brower case): “Any dispute or controversy arising out of or relating to this Agreement or its interpretation shall be settled exclusively and finally by arbitration. The arbitration shall be conducted in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce. The arbitration shall be conducted in Chicago, Illinois, U.S.A. before a sole arbitrator. Any award rendered in any such arbitration proceeding shall be final and binding on each of the parties, and judgment may be entered thereon in a court of competent jurisdiction.”  [THIS LANGUAGE FAILED IN THE COURTS]
  • RealNetworks (in the privacy litigation): “This License Agreement shall be governed by the laws of the State of Washington, without regard to conflicts of law provisions, and you hereby consent to the exclusive jurisdiction of the state and federal courts  sitting in the State of Washington. Any and all unresolved disputes arising under this License Agreement shall be submitted to arbitration in the State of Washington.”  [THIS IS CONFUSING LANGUAGE BUT WAS UPHELD]

Appendix D: Anti-Robot Language Examples

  • eBay: “Our web site contains robot exclusion headers and you agree that you will not use any robot, spider, other automatic device, or manual process to monitor or copy our web pages or the content contained herein without our prior expressed written permission. You agree that you will not use any device, software or routine to bypass our robot exclusion headers, or to interfere or attempt to interfere with the proper working of the eBay site or any activities conducted on our site. You agree that you will not take any action that imposes an unreasonable or disproportionately large load on our infrastructure.
  • Epinions: “You may not use any automated means (such as scripts) to access Epinions.com or collect information from it.”
  • ICANN: “Registrar shall permit use of data it provides in response to queries for any lawful purposes except to . . . enable high volume, automated, electronic processes that apply to Registrar (or its systems).” [THIS LANGUAGE FAILED IN THE REGISTER.COM V. VERIO CASE]