Contracts

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In 2007, Ticketmaster brought a multi-count complaint against RMG Technologies, a software company that supplied ticket brokers with software that enabled them to automatically and rapidly access Ticketmaster’s Web site, to the detriment of ordinary users seeking tickets to popular events. The Ticketmaster v. RMG complaint was notable for stating a series of claims that leveraged the allegation that RMG’s access to the Web site for the purpose of creating its software, as well as the subsequent use of the software, violated the Ticketmaster Terms of Use and was thus unauthorized. Ticketmaster’s claims included breach of contract, copyright infringement, violation of the anticircumvention provisions of the Digital Millennium Copyright Act, and violation of the Computer Fraud and Abuse Act. Based on these claims, Ticketmaster succeeded in obtaining a preliminary injunction against the distribution of the software and a $18.2 million default judgment against RMG.

In December 2008, Facebook filed a similarly framed complaint against Power Ventures, the operator of Power.com, an online service that allows social networking users to access all of their accounts through one interface. In Facebook, Inc. v. Power Ventures, Inc. (N.D. Cal. May 11, 2009), Judge Jeremy Fogel denied Power Ventures’s motion to dismiss Facebook’s claims of copyright infringement, violation of the anticircumvention provisions of the DMCA, and violation of federal and state trademark infringement laws for failure to state a claim. Judge Fogel acknowledged the similarity of Facebook’s copyright claims against Power Ventures to the claims in Ticketmaster’s litigation against RMG. Slip op. at 5.

A primary purpose of a Web site’s "Terms of Use" ("ToU") is to reserve to Web site owners the ability to regulate undesirable conduct. But should that ability be extended to third parties? Can users of a site assert that they are third-party beneficiaries of that Web site’s ToU, and invoke the provisions of the ToU against another user of that site? In Jackson v. American Plaza Corp., 2009 U.S. Dist. LEXIS 35847 (S.D.N.Y. Apr. 28, 2009), the district court said that at least in the case of Craigslist, a user could not claim third-party beneficiary status under the Craigslist ToU.

In A.V. v. iParadigms, LLC, 2009 U.S. App. LEXIS 7892 (4th Cir. Apr. 16, 2009), the Fourth Circuit concluded that the archiving of high school student term papers by a plagiarism detection service is protected by the fair use doctrine. Having so ruled, the appeals court did not address the district court’s analysis of the enforceability of the clickwrap agreements executed by the minor students when they submitted their papers to the service.  The district court ruling on the issue of enforceability is, therefore, left intact.

The district court opinion offers some other general points of interest with respect to clickwrap agreements.

Case law has developed over the years with respect to enforceability of Web site terms and conditions, and the general parameters are now pretty well understood. Courts will, in general, enforce online terms and conditions against consumer users, provided they are given adequate notice and an opportunity for review.

There are numerous exceptions to the general rule, however. Courts often refuse to enforce specific terms in Web site terms and conditions against consumers, particularly where those terms involve class action waivers, arbitration requirements, inconvenient forum choices, and like provisions.

The case of Burcham v. Expedia, involving a pro se attorney’s challenge to the enforceability of the Expedia travel site terms and conditions, is not one of those exceptions.

In Doe v. SexSearch.com, Inc., the Sixth Circuit considered the appeal of a user of the SexSearch online dating service from dismissal of his breach of contract, fraud and other state law claims (based on Ohio law) against the service for its failure to screen out underage minors. Doe was arrested and charged with unlawful sexual conduct with a minor for his encounter with a fourteen year old who represented herself on the service as eighteen. As the opinion notes, the charges were later dismissed and the record sealed for reasons undisclosed, but Doe subsequently brought suit claiming that the service was at fault for his relationship with the minor and for the resulting harm caused by his arrest.

In a relatively brief opinion, the court upheld the district court’s dismissal of each of Doe’s 14 causes of action for failure to state a claim, based in large part upon the disclaimers contained in the Terms and Conditions in the contract.