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«THE 12TH ANNUAL STANFORD ECOMMERCE BEST PRACTICES CONFERENCE STANFORD LAW SCHOOL JUNE 8, 2015 Ian C. Ballon Greenberg Traurig, LLP Silicon Valley: ...»

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THE ENFORCEABILITY OF UNILATERAL

INTERNET AND MOBILE CONTRACTS:

EXPRESS AND IMPLIED ASSENT

Excerpted from Chapter 21 (Obtaining Assent in Cyberspace) of

E-Commerce and Internet Law: A Legal Treatise With Forms, Second Edition,

a 4-volume legal treatise by Ian C. Ballon (Thomson/West Publishing 2015)

THE 12TH ANNUAL STANFORD ECOMMERCE

BEST PRACTICES CONFERENCE

STANFORD LAW SCHOOL

JUNE 8, 2015 Ian C. Ballon Greenberg Traurig, LLP

Silicon Valley: Los Angeles:

1900 University Avenue, 5th Fl. 1840 Century Park East East Palo Alto, CA 914303 Los Angeles, CA 90067 Direct Dial: (650) 289-7881 Direct Dial: (310) 586-6575 Direct Fax: (650) 462-7881 Direct Fax: (310) 586-0575 Ballon@gtlaw.com www.ianballon.net Facebook, Google+, LinkedIn, Twitter: IanBallon This paper has been excerpted from the 2015 update to E-Commerce and Internet Law: Treatise with Forms 2d Edition (Thomson West 2015 Annual Update), a 4-volume legal treatise by Ian C. Ballon, published by Thomson Reuters West Publishing, 395 Hudson Street, New York, NY 10014, (212) 337-8443, www.ianballon.net.

Ian C. Ballon Silicon Valley 1900 University Avenue Shareholder 5th Floor Internet, Intellectual Property & Technology Litigation East Palo Alto, CA 94303 T 650.289.7881 F 650.462.7881 Admitted: California, District of Columbia and Maryland JD, LLM, CIPP Los Angeles 1840 Century Park East Ballon@gtlaw.com Los Angeles, CA 90067 Google+, LinkedIn, Twitter, Facebook: Ian Ballon T 310.586.6575 F 310.586.0575 Ian Ballon represents Internet, technology, mobile, and entertainment companies in copyright, intellectual property and Internet litigation, including the defense of data privacy, behavioral advertising, security breach, and TCPA class action suits; secondary copyright, trademark and patent infringement suits; and cases raising the CDA, DMCA and other safe harbors and exemptions. He is also the

author of the leading treatise on Internet law, E-Commerce and Internet Law:

Treatise with Forms 2d edition, the 4-volume set published by West (www.IanBallon.net). In addition, he is the author of The Complete CAN-SPAM Act Handbook (West 2008) and The Complete State Security Breach Notification Compliance Handbook (West 2009) and serves as Executive Director of Stanford Law School’s Center for E-Commerce.

Mr. Ballon, who practices in both Silicon Valley and LA, has brought or defended novel suits involving computer software, user generated content, rights in the cloud and in social media, links, frames, sponsored links, privacy and security, database protection, screen scraping and content aggregation, digital music, the Digital Millennium Copyright Act, rights of privacy and publicity, the enforceability of Internet Terms of Use and Privacy Policies and preemption under the CDA. A list of recent cases may be found at www.GTLaw.com/People/IanCBallon.

Mr. Ballon was named the Lawyer of the Year for Information Technology Law in the 2013 edition of Best Lawyers in America. In addition, he was the 2010 recipient of the State Bar of California IP Section’s Vanguard Award and named new media lawyer of the year in 2012 by the Century City Bar Association. He is listed in Legal 500 U.S., The Best Lawyers in America (in the areas of information technology and intellectual property) and Chambers and Partners USA Guide in the areas of privacy and data security and information technology.

He also has been recognized by The Daily Journal as one of the Top 75 IP litigators (2007-2015, every year the list has been published), Top 25 IP Lawyers (2003, the one year this list was published), and Top 100 lawyers in California and is consistently listed as a top Northern California and Southern California litigator. Mr. Ballon also holds the CIPP certificate for the International Association of Privacy Professionals (IAPP) and is listed in Chambers USA and Chambers Global for Privacy and Data Security.

21.02[10] E-Commerce and Internet Law

21.03 Modern Law on the Enforceability of Unilateral Internet Contracts: Express and Implied Assent 21.03[1] Unilateral Contracts—In General Unilateral contracts where express assent is obtained— such as click-through, click-to-accept or clickwrap contracts— are generally held by most courts to form binding contracts, provided they are not unconscionable1 or otherwise unenforceable for reasons other than the absence of assent. By contrast, where express assent is not obtained, posted terms and conditions (sometimes called browsewrap or browserwrap licenses) are unlikely to be deemed binding by most courts except where assent may be inferred because the person against whom enforcement is sought had reasonable notice2 that use of a website or product was conditioned on terms and impliedly accepted those terms by conduct (such [Section 21.03[1]] See infra § 21.04.

As discussed in section 21.03[2], notice may be express or, in limited circumstances, inferred. In practice, if not necessarily black letter law, a licensor may bolster its argument for implied assent based on notice if the proposed agreement may be characterized as an intellectual property license, rather than a mere contract, and access to the licensed intellectual property (such as content on a website) is conditioned on the license. See supra § 21.02[7].





An oeror, “as master of the oer, may invite acceptance by conduct, and may propose limitations on the kind of conduct that constitutes accepObtaining Assent in Cyberspace as accessing a site or service), purchasing a product or otherwise through performance.3 Lawyers whose clients are resistant to obtaining express assent for contracts formed over the Internet often point out that it is hornbook law that contracts may be formed either expressly or through implied assent. So long as there is an oer and acceptance (and consideration), which may be shown by posted terms accepted through conduct (such as accessing a site or service, where access may also form the basis for consideration) a binding agreement, in theory, will be formed.

In practice, however, when the enforceability of unilateral contracts is litigated, it is much easier and less expensive to enforce contracts where express assent has been obtained, and the outcome will be more certain, than when a site owner or service provider must prove implied assent. Although some users will truthfully acknowledge that they knew they were bound to contractual terms, many will not.

Indeed, some Internet users may well believe that unless they have clicked an “I accept” button or provided express assent through equivalent means they are not bound by any contractual restrictions. Whereas express assent may form the basis for obtaining summary judgment, disputes over implied assent may necessitate a trial, signiŽcantly increasing the cost of litigation and the risk of an adverse outcome.

Even judges, who presumably appreciate that contracts formed through implied assent are equally enforceable, are sometimes reluctant to Žnd that a binding contract has been formed absent express assent—especially in consumer cases where a company seeks to enforce an agreement against individual Internet users. Perhaps expressing a commonly held perception in some quarters, Ninth Circuit Chief Judge Alex Kozinski noted in dicta in a dierent context that “[o]ur tance.” ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1452 (7th Cir. 1996).

Thus, for example, in shrinkwrap licenses and certain other contracts where a user may not have the opportunity to review the agreement in advance, notice is provided that the transaction is subject to terms and that a user has the right to return the product and cancel the transaction within a deŽned period of time (such as 30 days) if the terms are unacceptable. See supra § 21.02.

As analyzed more extensively in section 21.03[2], it is almost always preferable in litigation to have obtained express assent, rather than have to litigate the issue of implied assent.

See infra § 21.03[2].

Pub. 1/2014 21-39 21.03[1] E-Commerce and Internet Law access to... remote computers is governed by a series of private agreements and policies that most people are only dimly aware of and virtually no one reads or understands.”4 The job of a lawyer drafting or revising unilateral Internet contracts is to act with knowledge of these perceptions and, where possible, force users to scroll through and express assent, such that it cannot be said that a user was unaware of the existence of an agreement (and any decision to avoid reading it is made at the user's own peril). Where a company relies on implied assent, rather than express assent, it must do so knowing that regardless of hornbook law the reality of consumer litigation is such that it will be more dicult to enforce the agreement than if express assent were obtained.

As discussed below in section 21.03[2], in almost every instance where a court has enforced a unilateral contract formed over the Internet based on implied rather than express assent, in either reported decisions or opinions otherwise accessible on Westlaw, there had been an acknowledgement by the party against whom enforcement was sought that he or she knew that the site or service had made available contractual terms that it contended governed a particular transaction. Where a party disputes that it knew about purported terms, and where it has even a plausible argument that it may not have noticed or been made aware of the terms, site owners or service providers have either failed to win enforcement of their unilateral contracts or have had to expend very substantial resources doing so.5 Where a contract is not formed, rights limited by license (such as restrictions on website access or use of software) will not be enforceable, arbitration clauses, venue selection and choice of law provisions will have no eect, and products sold subject to warranty disclaimers and damage limitations will be transferred without restriction. While some rights may be lost forever, where a unilateral agreement governs access or ongoing use, rather than a one-time transaction, a putative licensor may attempt to make the agreement binding prospectively (even though it may not govern prior transactions) by sending a letter or other communication that explicitly puts the putative license on notice that continued access or use will be governed by the terms of the purported agreement.

U.S. v. Nosal, 676 F.3d 854, 861 (9th Cir. 2012) (en banc) (dicta).

See infra § 21.03[2].

21-40 21.03[2] Obtaining Assent in Cyberspace Agency issues and questions surrounding which parties may be bound when a person clicks assent to a unilateral contract are separately considered in subsection 21.03[3].

The enforceability of website policies, including privacy policies, is analyzed in section 21.03[4].

21.03[2] Express and Implied Assent: Click-Through and Browsewrap Agreements Internet contracts, like those on terra Žrma, require oer and acceptance or mutual assent. Assent may be manifested explicitly (directly), such as by checking a box or clicking on a button, or impliedly (indirectly) through performance or other conduct. “To manifest tacit assent to a contract through conduct, one must ‘[intend] to engage in the conduct and know... or ha[ve] reason to know that the other party may infer from his conduct that he assents.”1 Although objectively easier to prove in litigation, express assent is not required.

An “unambiguous manifestation of assent to license terms” is unnecessary if there is “an immediately visible notice” of their existence,2 regardless of whether a user in fact reviews them.3 In evaluating implied assent, the central issue thus is notice, either actual or implied.



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