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February 17, 2012

An Explanation of a Website’s Terms of Use

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Terms of Use serve both, as the agreement that defines the legal relationship between a website and its users and a non-legal marketing document that sets the tone of the ongoing relationship that the website seeks to establish with its users. Well prepared Terms of Use will achieve an effective balance between these often competing objectives. Terms of Use are in addition to the other most common document associated with websites, the Privacy Policy, the terms of which need to reflect issues that Internet attorneys often confront.

It is tempting for new websites to grab a Terms of Use document from a similar website and just modify it for their purposes. While this might seem economical in the short run, it may be short sighted given the often modest fees that are charged to have Terms of Use professionally prepared. Once Terms of Use are prepared and uploaded, modifying them to address issues that were initially either overlooked or misunderstood may not be a simple or inexpensive matter.

Just this past year, as reported on www.publicknowledge.org, Twitter faced a problem when a user who was being harassed by another user wanted Twitter to take action against the harassing user for violating Twitter’s terms of use. In that matter, a Twitter co-founder actually admitted that Twitter, as a young start up, just borrowed Flickr’s terms of use, without considering them carefully, and would now have to revisit them.

KEY PROVISIONS

Following are some of the main issues that need to be considered when preparing Terms of Use.

ESTABLISHING ENFORCEABILITY. It may seem obvious, but Terms of Use need to be enforceable against the users. Enforceability will often hinge on how users express their assent to the Terms of Use. On one end of the spectrum, Terms of Use can just be posted on a website without requiring users to take any action to accept them. This approach will be least enforceable. On the other end, a user could be compelled to view and affirmatively accept the Terms of Use before being allowed to access the website. There are also various options in between. Several factors need to be considered before selecting the right approach, including balancing liability risks with the impact on the user experience. It is important to note that the method by which users are notified of modifications to Terms of Use will also determine whether such modifications are binding upon the users.

RULES APPLICABLE TO USER CONDUCT. The Terms of Use need to define acceptable and unacceptable behavior. For instance, the Terms of Use should (i) define proper and acceptable interaction with other users, (ii) define the guidelines for content that users are permitted to upload, (iii) restrict users to personal use or also allow commercial use, (iv) prohibit data harvesting or data mining, (v) prohibit unsolicited emailing or marketing, (vi) prohibit unauthorized manipulation of the services, (vii) prohibit impersonation or fictitious profiles, etc.

RULES APPLICABLE TO USER-GENERATED CONTENT. When users can upload content to a website, the rights and ownership relating to such content must be defined. For instance, does the website have ownership or at least license rights to comments and discussions, images, videos? License rights must be carefully drafted, because rights not specifically granted will be deemed retained by the user. So if a website wants to be able allow video or other content to be posted on other related sites or otherwise transferred, the website will need these rights expressly granted by the users. Also, a website will want the right to remove for any or no reason any content that it deems inappropriate. Without this express right, a website could face liability from a user. If the website wants to expand its use rights after initial Terms of Use are uploaded, it may be difficult to have the expanded rights apply to user-generated content uploaded prior to the effective date of the version containing the expanded rights.

PRESERVE OWNERSHIP RIGHTS IN CONTENT. Content can come from two sources: (i) website originated content and (ii) user-generated content. The Terms of Use should establish the website ownership in content and limit how users are permitted to use that content.

PROVISIONS DESIGNED TO BENEFIT WEBSITE FROM STATUTORY IMMUNITIES AND ACHIEVE COMPLIANCE WITH LEGAL REQUIREMENTS. Certain provisions are required to be in a Terms of Use to receive immunity for copyright infringement under the Digital Millennium Copyright Act. Similarly, Terms of Use can include language providing that the users provide affirmative consent to receiving direct marketing materials from the website or third parties. This will serve to avoid the opt-out provisions of the CAN-SPAM Act. Additionally, the law requires specific procedures for collecting personal information from children under the age of 13 in accordance with the Children’s Online Privacy Protection Act (COPPA).

PROVISIONS DESIGNED TO POSITION WEBSITE TO INITIATE ENFORCEMENT ACTIONS. It is important that a website has broad discretion to terminate a user’s right to access the website when violating the Terms of Service or otherwise behaving in a manner that might harm the website or other users. There are also various laws that a website will be better positioned to take advantage of if certain provisions are contained in the Terms of Use. For instance, an express prohibition of sending unauthorized emails to other users will improve the ability of the website to take immediate legal action for common law trespass and a violation of the Computer Fraud and Abuse Act, and other laws that require a showing of unauthorized access. Additionally, establishing and limiting rights to use copyrighted content will undercut an infringer’s defense that there is an implied license for liberal use of the website content.

DISCLAIMER OF WARRANTIES. Users may come to rely on the performance or services offered by a website. It is therefore important that the Terms of Use clarify that the website makes no warranties as to performance, availability, quality, correction of errors or accuracy of information. Enforceability of such a provision may depend upon the jurisdiction.

LIMITATION OF LIABILITY. A failure in performance might result in users incurring some kind of a loss or damage. Therefore, it is critical that users agree that the website has only limited liability in terms of the types of damages and the total amount of damages incurred by a user. Enforceability of such a provision may depend upon the jurisdiction.

CHOICE OF LAW/VENUE. If there is a dispute between a user and a website, the website would want to be able to choose what laws apply and where any disputes will be conducted. Defending an action in a distant location could put a significant financial burden on a website.


William Galkin, Esq. is an Internet lawyer who has dedicated his legal practice to
representing Internet, website, e-commerce, computer technology and new media businesses in the U.S. and around the world. Go to http://www.galkinlaw.com/services to learn more about agreements needed by websites.

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