ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, July 10, 2017

Jeff Lipshaw on Robot Lawyers and Legal Education

Over at the hallowed mothership of the Law Professor Blogs Network, TaxProf Blog, Jeff Lipshaw (Suffolk) has written a thought-provoking post entitled "Robot Lawyers, 'Skills Training' and Legal Education." Here are two of the key closing paragraphs:

Jeff LipshawAs a long, long, long time practitioner and generalist, I continue to be amused (or something like that) by the buckets of legal education (the rooms of the Mystery House).  For example, it took returning to academia to find out that "commercial law" (i.e. the UCC) is a different area than "corporate law."  Within business law, there are corporate camps and "uncorporate" camps, with the latter seemingly most interested in demonstrating why the area in which they happen to write and teach is normatively superior to the other (my friend and co-author, the late Larry Ribstein, being a prime example of the latter).  

In the long, long term, I think the crunchable middle will be both doctrine, as traditionally taught, and what today pass for "skills."  Both, to a large extent, have the potential of being robotic.  The long game is in doing and teaching what robots really can't do, or in managing the robots.  I'll put aside both trial and appellate litigation and focus on everything else lawyers do. In the interim, I'd do away with a lot of classes that are merely more yammering away at segments of doctrine by way of litigated cases, reverse the classroom, and make classes ones in which you merely bring doctrine to the party along with all the other theories.  (In my own area, I'd do away with the traditional business law courses, and combine with the business school to teach "Law & Finance of Business Entities" with J.D. and M.B.A. students intermingled.)

The whole post is well worth a read and is available in its natural habitat here.

July 10, 2017 in Law Schools, Teaching, Web/Tech | Permalink

Monday, July 3, 2017

RoboLawyer Draws Nearer? Contract Analytics Software ContraxSuite Goes Open Source

What happens when contract and document legal analytic software goes open source? Is RoboLawyer on the horizon? Are unmet needs to legal transactional services about to be fulfilled?  Maybe some of both. LexPredict, a legal software company associated with Chicago-Kent law prof Daniel Katz, announced today that we are about to find out. The results should be of great interest to those of us who follow trends in legal tech. Below are some key paragraphs from the press release on the open-sourcing of ContraxSuite:  

ContraxSuiteOver the last decade, we’ve spent many thousands of effort-hours and hundreds of thousands of dollars developing the contract and document analytics tools that we use with clients. These tools, based on enterprise-quality open source frameworks for natural language processing, machine learning, and optical character recognition, have allowed us to quickly and easily attack many problems, from securities filings and court opinions to articles of incorporation and lease agreements.

Today, we are proud to announce that we plan to open source our core platform for document analytics as ContraxSuite. This code base will be hosted on Github under a permissive open-source licensing model that will allow most organizations to quickly and freely implement and customize their own contract and document analytics. Like Redhat does for Linux, we will provide support, customization, and data services to "cover the last mile" for those organizations who need support or assistance.

We believe that the future of law lies in its central role in facilitating and regulating the modern information economy. But unless we start treating law itself like the production of information, we’ll never get there. We hope our actions today will help lawyers and other LegalTech companies accelerate the pace of improvement through more open collaboration.

*     *     *

Robot-lawyer-at-deskThe real challenge in contract analytics is to develop the so-called "training data" - the set of documents and labels used to "teach" the machine what separates a lease agreement from a purchase/sale agreement from a retirement benefits plan. Herein lies the true value of the current software and service providers. But, paradoxically, almost all providers get their information from one of two sources - either public sources of agreements, like the SEC’s EDGAR database or evidence from public courts, or private sources of agreements - their clients. Many organizations have therefore paid for the privilege to give away their own information so that someone else can profit.

By open-sourcing ContraxSuite, we hope to change this dynamic. The analysis and standardization of contracts and corporate governance material is key to the transformation of our economy. But blockchain and Smart Contracts aside, there are significant improvements in risk management, compliance, and profitability that can be gained by treating contracts as valuable data. Until legal departments and law firms can be "sequentially motivated," to borrow Professor Agarwal’s language, we will not see this maturation of the industry.

In the near future, we’ll be revealing more details about this open source strategy - including partnerships, support and customization services, and open-source license model. In the meantime, we hope to get everyone thinking fundamentally about how we do business in legal tech. What does the client really want - software licenses, or a real solution?

The full text of the press release is available here.

July 3, 2017 in In the News, Web/Tech | Permalink

Sunday, July 2, 2017

The McMansion Hell Dispute Was Really About Contracts

Zillow's cease-and-desist letter to popular Tumblr blog McMansion Hell --and its subsequent backing down from its position after the blogger secured representation from the Electronic Frontier Foundation --has been well-documented, including by such outlets as BBC News. However, a lot of outlets reported it as being a copyright dispute. While there was definitely a copyright angle to the disagreement--Zillow even alleged as such in its letter--the issue was really one of contract. After all, as many commentators pointed out, Zillow didn't even own the copyright in any of the photos. The true dispute, as Zillow conceded and EFF explained in its letter response, was over Zillow's terms of use. 

Zillow alleged that its terms of use prevented "reproducing, modifying, distributing, or otherwise creating derivative works from any portion of the Zillow site." Zillow seemed to be alleging that the blogger's parodies and commentaries of the photos on the site--otherwise easily protected by copyright's fair use doctrine--were prohibited by the terms of use. EFF fought back on this, though. EFF claimed that the blogger had never effectively assented to be bound by the website's terms of use, and that even if she had, the agreement's clause permitting modification without notice rendered the terms of use illusory and unenforceable. EFF also noted that contract doctrines have in the past restricted terms that restrict speech, at least in part due to public policy concerns. Finally, EFF raised the recently enacted Consumer Review Fairness Act of 2016, which voids contract provisions that attempt to prevent people from posting reviews, performance assessments, or other analyses of goods and services. The blogger's parodies of the real estate photographs on Zillow, according to EFF, are analyses of Zillow's services, and therefore Zillow cannot restrict them through its terms of use. 

Zillow backed off pretty quickly, claiming that it never intended to cause McMansion Hell to shut down, and McMansion Hell is back up, without having deleted any of the demanded photos. It seems like a victory for McMansion Hell and, more importantly, for individual speech. All of us spend a lot of time on websites with terms of use that we never bother to read. The quick reaction of many in the legal community to help McMansion Hell fight back, and the subsequent news coverage it received, is a nice reminder that not all contracts are automatically binding, especially not when criticism is involved. Hopefully other less high-profile recipients of dubious cease-and-desist letters can take heart from this story. 

July 2, 2017 in Commentary, Current Affairs, In the News, True Contracts, Web/Tech, Weblogs | Permalink | Comments (0)

Friday, May 26, 2017

Ancestry.com Doesn't Want Your DNA Forever (At Least, Not Anymore)

Earlier this week, Stacey Lantagne wrote a post about Ancestry.com’s Terms and Conditions. Among other things, it gives Ancestry.com a perpetual license to use its customers' DNA for…well, pretty much anything.  Attorney Joel Winston wrote about the terms here and his post quickly went viral. The social media backlash was fast and furious – and Ancestry.com now claims that it didn’t really mean what it said in its terms. They also say that they will take out that provision (although as of this writing, it is still there). It seems that nobody reads wrap contracts – even the companies that draft them.

This is another example of how consumers often do care what’s in the TOS, even if they don’t read them. Not reading (and so not knowing what’s in the terms) is not the same as not caring that the terms apply. It’s also another encouraging example of a company responding to market demand for different contract terms. Shades of General Mills….

May 26, 2017 in Current Affairs, Miscellaneous, True Contracts, Web/Tech | Permalink | Comments (0)

Monday, May 22, 2017

Terms and Conditions on Your DNA: How Complicated Can It Get?

This is a long one, that I didn't expect to be long, but I decided the point is how long this is, and the questions it raises about all of those terms and conditions on websites. 

A friend of mine asked me recently about the terms and conditions of the Ancestry.com DNA service. The service, if you're not familiar with it, takes your DNA and breaks it down into ethnic backgrounds for you, based on analysis of genetic markers. Here's a video that talks about it some: 

So if you're using the DNA service, you're handing your DNA over to Ancestry.com, and maybe we should think: what does that mean? After all, who does our DNA belong to, and what can it be used to? The Supreme Court looked at this in the context of patents a few years ago, finding that DNA cannot be patented. So we know that no one can own a patent on your DNA. But that's not really what's at issue in the DNA service site. No one is trying to patent the DNA, but Ancestry.com is still using the DNA in certain ways.

Looking into the terms and conditions initially seemed to me like it would be straightforward. Several hours later...

I started with the actual terms and conditions (makes sense, right?). It has a license provision:  

"By submitting DNA to AncestryDNA, you grant AncestryDNA and the Ancestry Group Companies a perpetual, royalty-free, world-wide, transferable license to use your DNA, and any DNA you submit for any person from whom you obtained legal authorization as described in this Agreement, and to use, host, sublicense and distribute the resulting analysis to the extent and in the form or context we deem appropriate on or through any media or medium and with any technology or devices now known or hereafter developed or discovered."

That "we deem appropriate" language seems very broad to me. Appropriate for what? There isn't a lot of limitation there, and a lot of trust seems to be placed that your definition of "appropriate" will be the same as Ancestry's (and how likely is that, really?). I looked at some social media terms to compare (Facebook, TumblrTwitter), and none of their license grants had "we deem appropriate" language (and, in fact, Tumblr's license in particular was fairly narrow in its grant). Keep in mind, Ancestry has your DNA, not a random tweet about making a cup of tea in the morning. Also a point to think about: the social media is free, and I think we kind of expect that there's a trade-off for that. Ancestry costs money AND also takes a broad license grant in exchange. 

The terms and conditions also go on:

"You hereby release AncestryDNA from any and all claims, liens, demands, actions or suits in connection with the DNA sample, the test or results thereof, including, without limitation, errors, omissions, claims for defamation, invasion of privacy, right of publicity, emotional distress or economic loss. This license continues even if you stop using the Website or the Service."

So they can do whatever they deem appropriate, and you release them from any lawsuits in connection with it. 

Now, adding a complicating layer to all of this, though, is that the terms and conditions are supposed to be read in conjunction with the privacy statement, on a completely different webpage, that does appear to limit what they're doing with the DNA, I think, and also appears to give you the opportunity to cancel the service, although how that affects the license, which says that it survives termination of the service, is unclear to me. And in addition to that, there is another completely different webpage, called the Consent Agreement. I don't know when this comes up in the DNA process, because I didn't want to input my credit card, and before that point I only saw the terms and conditions and privacy statement referenced. But the Consent Agreement has to do with participation in scientific research, which seems cool, except that when you read further down into it, it says stuff like this: 

"If Data are obtained through these methods, it is possible that information about you or a genetic relative could be revealed, such as that you or a relative are carriers of a particular disease. That information could be used by insurers to deny you insurance coverage, by law enforcement agencies to identify you or your relatives, and in some places, the data could be used by employers to deny employment.

In the United States, a federal law called the Genetic Information Non-Discrimination Act (GINA) generally makes it illegal for health insurance companies, group health plans, and most employers to seek your genetic information without your consent, and to discriminate against you based on your genetic information. GINA does not protect you from discrimination with regard to life insurance, disability insurance, long-term care insurance, or military service. There may be state laws and laws outside the United States that prohibit discrimination against you based on genetic data."

Tl;dr: What I just want to say is that's the point. I spent all morning trying to piece together all the different clauses of all these different documents, and I'm still confused, and I'm an actual lawyer (theoretically). And then I wrote a blog entry about it that was also too long! How confused do you think consumers are? And how many of them do you think actually spent the amount of time I did to try to get through all of that? 

May 22, 2017 in Commentary, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, May 3, 2017

Forum non conveniens Doesn't Overcome Forum Selection Clauses

A recent case out of Delaware, SRL Mondani, LLC v. Modani Spa Resort, Ltd., C.A. No. N16C-04-010 EMD CCLD, deals with forum issues. In the case, the parties had entered into a number of contracts. The contracts at issue in the dispute between them both contained forum selection clauses that disputes should be brought in Delaware court. A third contract between the parties, not explicitly at issue in the dispute, had a forum selection clause that disputes should be brought in Israeli court. Modani argued that the Israeli forum selection clause should control, but SRL was seeking to enforce the Delaware agreements, not the Israeli one, and so the court found the Israeli forum selection clause didn't matter. 

In the alternative, Modani tried to argue that the action should be dismissed under forum non conveniens. Modani's argument was that the relevant documents were located in Israel. The court, however, noted that "modern methods of communication" meant it was relatively easy to get the documents over to Delaware. While Modani alleged that the relevant witnesses were located in Israel, it failed to explain exactly what testimony those witnesses might have and why they were relevant, so the court was not convinced. The court did acknowledge that Modani's principles were located in Israel and had no ties to Delaware but at all but the court also pointed out that the contracts at issue had resulted from negotiations between two sophisticated businesses with millions of dollars at stake, so it was unpersuaded by Modani's allegations of hardship. Because the dispute was about enforcement of contracts with clauses requiring the application of Delaware law, Delaware was the best forum. 

May 3, 2017 in Current Affairs, In the News, Recent Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0)

Tuesday, May 2, 2017

Some Fun with Offers!

Here's some fun with offers from Kirin Produce Co. v. Lun Fat Produce, Inc., Docket Number 1684 CV 03338-BLS2, a recent case out of Massachusetts. 

The dispute revolved around whether any of Kirin's actions constituted an offer that Lun Fat could accept form a binding contract. Over about a month's time, Kirin sent to Lun Fat a series of spreadsheets proposing terms under which it would be willing to buy Lun Fat's assets. However, each of these spreadsheets was labeled in several places that they were "subject . . . to change," including "Change by both Seller & Buyer." Under these circumstances, Kirin failed to manifest any present intention to be bound and so none of those spreadsheets constituted an offer. 

Lun Fat eventually responded to one of Kirin's spreadsheets with an email proposing a series of new terms, but the court found nothing in the email stated that this was a counteroffer and that Lun Fat was willing to sell if Kirin accepted those terms. At any rate, Kirin did not accept the terms but rather proposed new terms in response. The court construed that response as a rejection of any offer by Lun Fat and a counteroffer by Kirin. 

Later, Lun Fat called Kirin on the phone and orally offered to sell Lun Fat's assets on the terms that had been in Lun Fat's e-mail. Even if Kirin had accepted that oral offer, though, it was ineffective because this was a deal for land and thus subject to the statute of frauds. 

Therefore, there was never any contract between the parties. 

May 2, 2017 in Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Thursday, April 6, 2017

Cyberattack liability

“Fees, fines or penalties” do not cover fraudulent charges incurred on commercial parties during a cyberattack. So ruled the Eight Circuit Court of Appeals in Schnuck Markets, Inc., v. First Data Merchant Serivces Corp., et al., (No. 15-3804, Jan. 13, 2017). 

Schnuck is a retail supermarket chain. First Data served as its credit card processor and Citicorp as its “acquiring bank.” Such a bank is one that pays the merchant and is reimbursed by the issuing bank. The acquiring bank sponsors the merchant into credit card association networks, in this case VISA and MasterCard. It also vouches for the merchant’s compliance with the associations’ rules. Unknown

Schnuck signed a contract with First Data and Citicorp for the credit card arrangement. Among other things, the agreement stated that liability under the relevant section of the contract “shall not apply to Schnucks’ liability for chargebacks, servicers’ fees, third party fees, and fees, fines or penalties … by the Association or any other card or debit card provide under this [agreement].”

In March 2013, a cyberattack against Schnucks compromised cardholder data. First Data and Citicorps subsequently withheld not only the fees and costs that MasterCard assessed against these corporations from payments to Schnucks, but also the fraudulent charges from the cyberattack itself. Schnuck filed suit, alleging breach of contract. At bottom, Schnucks agreed that it was liable for only actual fees and fines, but not the actual losses incurred by the issuing banks. Unknown-1

The court agreed. The payment of a “fee” is a payment for a service, not reimbursement for another party’s losses. Furthermore, since the contract does not mention anything about reimbursement for data compromise events, the banks were not in a legal position to get reimbursed for those. “Fines” and “punishment” describe, more narrowly, only sums imposed as a punishment and not data compromise losses.

Supermarket wins; banks lose. Good thing that the card holders were not involved here. The bigger loss is, of course, that shared by all of us; financiers, vendors, and card users when internet-based losses such as this happen. Another cost that undoubtedly will be built into the pricing scheme will result, but apparently, such is the nature of electronic transactions these days.

April 6, 2017 in Current Affairs, Web/Tech | Permalink | Comments (0)

Friday, March 31, 2017

Prison Telephone Service Provider Continues to Lose on Enforcing Arbitration Provision

I have already blogged about a related case out of the Western District of Arkansas, in which the court concluded that prison inmates did not consent to arbitrate when they funded their telephone accounts to enable them to make calls. This case out of the Third Circuit, James v. Global Tellink Corp., No. 16-1555, affirms a similar conclusion by the District of New Jersey. To refresh your memory, GTL provides telephone services to prison inmates. Inmates sign up for accounts and deposit funds into the account, either through GTL's website or through its automated telephone service. When interacting with GTL's automated telephone service, users are alerted that their transactions are governed by the terms of use found online but they are not required to indicate their assent to those terms. Inmates have brought a class action alleging that GTL's charges are unconscionable. GTL moved to compel arbitration based on its online terms of use, but the district court found that those who used GTL's automated telephone service never agreed to be bound by those terms of use. 

The Third Circuit agreed with the district court's conclusion. The subject of how to form a binding contract through interactive telephone services was a new and different one, as most of these cases involve websites these days. GTL argued that the inmates manifested the requisite assent by continuing to use the telephone services after being notified there were terms of use. But the inmates never had to perform any affirmative act to indicate their assent, and they were never told that their continued use alone would constitute such assent. None of the inmates in question who used the automated telephone services had ever taken the necessary extra step to access GTL's website to see the terms of use, so they were never presented with the terms of use or the arbitration provision in question. The inmates simply never received the terms, and were never told that use of the telephone system would bind them to the terms. 

March 31, 2017 in Current Affairs, Government Contracting, In the News, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, March 8, 2017

Company's Pledge to Donate to a Charity Did Not Create a Contract

A recent case out of the Second Circuit, McCabe v. ConAgra Foods, Inc., 16-3301-cv, adds to the jurisprudence on promotions and offers and unilateral contracts. 

ConAgra ran an annual promotion whereby it pledged to donate to a charity every time a certain code from its packaging was entered on its website, up to a certain maximum amount. McCabe alleged that this promotion created a contract and alleged that ConAgra breached the contract. A promotion is generally not considered an offer to enter into a contract unless it is clear, definite, and explicit, leaving nothing left to negotiate. ConAgra's promotion did not rise to that level, not least because the promotion was clearly limited to a certain maximum amount. For that reason, a person entering the code into ConAgra's website would never have any way of knowing if its code would trigger a donation on ConAgra's part, because the maximum donation amount might have already been achieved. ConAgra's promotion was not an offer, and McCabe could not accept it. 

McCabe then tried to characterize the promotion as an invitation for offers, with people "offering" when they input the code onto ConAgra's website, and ConAgra "accepting" when it acknowledged receipt of the code. However, the promotion was too indefinite to set any terms for the "offer," and the code entry itself did not clarify any of the terms further. 

At any rate, even if there had been a contract, the court found that there weren't sufficient allegations ConAgra had breached it. There was no allegation that ConAgra did not donate to the charity every time it received the code, up to the maximum amount. McCabe's disagreement was really with the charity's own methodology, which was not ConAgra's issue. 

You can listen to the oral argument in this case here

March 8, 2017 in E-commerce, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Saturday, March 4, 2017

Inmates Didn't Consent to Be Bound to a Contract Every Time They Used the Telephone

Myanna has already blogged about the problem of inmate telephone rates being set unreasonably high. Myanna's blog post was about a dispute in California but a recent decision out of the Western District of Arkansas, In re Global Tel*Link Corporation ICS Litigation, Case No. 5:14-CV-5275 (behind paywall), deals with the same issue. (There are several of these litigations, as well as other government debates about regulation of these rates.) In the Arkansas decision, the court refuses to compel arbitration. 

Global Tel*Link's allegation was that the inmates consented to the terms of use when they funded their accounts to enable them to make phone calls, and the terms of use contained an arbitration clause. Every time the inmates put money on their accounts with Global Tel*Link, they heard a message similar to the following: 

Please note that your account, and any transactions you complete with GTL or any of its affiliates, are governed by the terms of use and the privacy statement posted at www.connectnetwork.com . The terms of use and the privacy statement were most recently revised on March 30, 2015.

The court determined, however, that a reasonable person would not have understood this message as referring to a contract and as constituting consent to be bound by that contract, since it never used any contract buzzwords like "contract," "consent," "agree," "assent," "offer," "accept," etc. The court said that, as far as the inmate listening to the message was concerned, the terms of use and privacy statements could have been just generally applicable legal rights imposed by regulators. The court characterized Global Tel*Link's behavior as basically hiding the contract ball: Global Tel*Link could have straightforwardly said the inmates were entering into a contract but instead "invite[d] [them] to visit a website where [they] might accidentally stumble across this fact." (I went to connectnetwork.com. The terms of use are located at the bottom of the page and required me to scroll to find them, and I just blogged about a case where the persistent location of the terms of use hyperlink at the bottom of the page didn't constitute enough notice.)

Because the inmates never signed anything, never clicked or punched any button signifying acceptance of contract terms, never had an opportunity to review the terms of use prior to using Global Tel*Link's services, and would not reasonably have understood the message to be referring to contractual terms, the inmates did not assent to the contract and thus are not bound by the contract's arbitration provision. 

March 4, 2017 in Current Affairs, Government Contracting, In the News, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Sunday, February 26, 2017

Terms and Conditions Hyperlink at Bottom of Page Not Conspicuous Enough to Be Binding on Users

We have blogged about arbitration clauses in contracts lots of times before, including in the Internet context, and including in the diet pill context. Now a recent case out of Florida, Vitacost.com, Inc. v. McCants, No. 4D16-3384, adds to the pile, in the Internet diet pill context. In this case, McCants sued Vitacost, from which he purchased dietary supplements that he alleged seriously damaged his liver. In response, Vitacost sought to compel arbitration based on the arbitration clause in the terms and conditions on its website. In Florida, the enforceability of Vitacost's "browsewrap" terms and conditions was a matter of first impression. 

Vitacost claimed that the hyperlink to its terms and conditions was located at the bottom of every page of its website and that that was sufficient to put McCants on notice of them. However, the court noted that the constant positioning of the hyperlink at the bottom of the page required every user to have to scroll to the bottom of the page to notice the terms and conditions. Even upon buying something and "checking out," the hyperlink remained positioned toward the bottom of the page. McCants alleged that he had not seen the terms and conditions, and the court found that the hyperlink's location was not conspicuous enough to put McCants on notice. 

February 26, 2017 in E-commerce, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (2)

Saturday, February 25, 2017

This Is a Case About Trade Secrets But in Other News: Google Has a Project Called "Project Loon" Involving Balloons in Earth's Stratosphere

Balloon fully inflated.jpg
By CambridgeBayWeather - Own work, GFDL, Link

Here's a case that's out of this world, lolololol, I'm ashamed of myself. 

But a recent case out of the Northern District of California, Space Data Corp. v. X, Case No. 16-cv-03260-BLF, deals with weather balloons and a failed negotiation between Space Data and Google regarding becoming partners. Like many corporations who have valuable trade secrets that need to stay protected during negotiations but also need to be revealed so they can be evaluated and discussed, the parties entered into an NDA. This lawsuit resulted from Google's subsequent development of "Project Loon," which involves using high-altitude balloons to provide wireless services, and which Space Data alleges uses information Google gained from Space Data during the failed negotiations. 

Space Data's challenge, of course, is that it knows very little about Google's Project Loon, and so all of its allegations regarding trade secret misappropriation and breach of the NDA are vague and conclusory. Space Data was unable to point to any confidential information Google used that violated the NDA, and therefore those counts were dismissed. Space Data tried to argue that it didn't know yet what information Google was using but that it had provided enough information for the court to infer that Google must be using some misappropriated confidential information. The court, however, found there was not enough in the complaint for these causes to survive into discovery. 

A guiding tale for anyone writing up a trade secret complaint right now. 

Space Data's patent infringement claims against Google still exist. The complaint is available here

February 25, 2017 in Commentary, Recent Cases, Web/Tech | Permalink | Comments (0)

Friday, February 24, 2017

Contracts IN THE FUTURE

So far in the future, they're on Mars. 

I've been doing a ton of traveling over the past few weeks, which is why my blogging has been so sporadic. One of the things I've been doing, therefore, is listening to lots of podcasts. So many podcasts that I've run out of many of my more news- or education-oriented ones, and so I started delving into a podcast called "Penumbra," which a friend recommended. Specifically the Juno Steel series of stories. "It's about an emotionally complex, sardonic character," she said, "that sounds like your thing." Such is my reputation. 

But yeah, totally my thing. Juno Steel is a private investigator on Mars many centuries from now. The podcast plays around with the film noir genre, complete with hard-boiled narration. But the reason why I'm rambling about it on this blog is because the first episode, Juno Steel and the Case of the Murderous Mask, happens, delightfully, to revolve around contracts. The most powerful family in Hyperion City on Mars requires everyone who is allowed in their house to sign an intensely detailed contract. One of the characters remarks that they've seen novels shorter than the contract and would need a month to read the whole thing. They end up signing the contract without reading it, mostly because they'd already had to agree to a shortened version of it before receiving the long version. And the contract, of course, required them to reveal nothing about the family in question. So apparently, in the future, the powerful will still be surrounding themselves with NDAs! (Interestingly, the "liquidated damages," should you breach the contract, appeared to be that the wealthy family would broadcast all of your secrets. Mutually assured privacy destruction, I suppose!)

Part of the plot also involves an oral agreement that isn't properly captured by the subsequent written agreement, as well as forged signatures. I don't want to spoil it, but if you're looking for something somewhat more fun than the latest cases (although what is more fun than the latest cases???), you can give it a listen and still feel like you're Thinking About the Law. 

February 24, 2017 in Commentary, Web/Tech | Permalink | Comments (0)

Monday, February 6, 2017

Federal Law Bans Gag Clauses

We’ve written about non-disparagement or “gag” clauses in wrap contracts on this blog in the past.  These clauses prohibit consumers from writing negative reviews about a company and typically impose a penalty or fee if the consumer does so.  California already has a law which prohibits them and now there’s a federal law.  The Consumer Review Fairness Act (CRFA) prohibits gag clauses and intellectual property transfer clauses in consumer form contracts.  (The prohibition on IP transfers is intended to prevent companies from using the DMCA takedown provisions to get posted content removed).  “Form contract” is defined as a contract with standardized terms “imposed on an individual without a meaningful opportunity for such individual to negotiate the standardized terms.”  Form contract does not include an employment or independent contractor contract.  The CRFA permits state attorney generals to bring a civil action on behalf of state residents.  The Federal Trade Commission may also institute action or intervene in a pending action.    

The law goes into effect for on March 14, 2017.

February 6, 2017 in Current Affairs, Legislation, Web/Tech | Permalink | Comments (0)

Sunday, February 5, 2017

A Holiday Decoration Lawsuit!

The holiday season feels like it happened so long ago, but, if you make yourself think way back to that distant era of our history, you may recall that suddenly spotlights that broadcast dancing snowflakes or other festive decorations onto houses were everywhere. 

Now they're in court, too. A case recently removed to the District of New Jersey, Closeout Surplus & Salvage CSS, Inc. v. Sears Outlet, LLC, Docket No. 2:17-cv-00104-KSH-CLW (behind paywall), involves the "Glow Bright" version of these lights. Here's a video of Glow Bright laser light show, to refresh your recollection and also maybe revive a little holiday spirit. 

The plaintiff, Closeout, alleged that it had an exclusive right to sell the Glow Bright with tripod and remote and began selling and advertising the product online. The plaintiff alleges that Sears, the defendant, appropriated the plaintiff's advertising and began advertising that it, too, was selling the Glow Bright with tripod and remote. However, the plaintiff alleges that only it had the right, via contract, to sell the Glow Bright with tripod and remote. It appears from the allegations that Sears was only selling the Glow Bright alone but, in appropriating plaintiff's advertisements, it looked to consumers like Sears was selling the Glow Bright with the tripod and remote.  

The plaintiff has therefore sued Sears for tortious interference with contractual relationship and/or prospective economic benefits and unfair trade practices and unfair competition. The suit was just removed to federal court at the beginning of January and Sears has not yet answered the complaint, but I'll keep an eye on it to give you the latest updates in holiday decoration law. 

February 5, 2017 in Film Clips, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Friday, February 3, 2017

Consent to Face Scanning

In a recent case, the video game publisher 2K recently won the right to collect and store gamers biometric data (in this case, face scans) indefinitely.  The face scanning technology is used in at least two of its NBA series games to allow gamers to create "personalized virtual basketball players". 

Plaintiffs agreed to allow them to do so when they agreed to the company’s terms and conditions.  The plaintiffs didn’t dispute that they had agreed to the terms or that they had consented to having their faces scanned; their objection was that they did not know that the scans would be stored “indefinitely” and that 2K could share the biometric data.  The court ruled that there was no harm under the Illinois Biometric Information Privacy Act.  The focus was not on contractual assent to the terms and conditions.  But this made me wonder, given how unobtrusive most terms and conditions are, and how easy it is to "manifest assent," shouldn't there be more stringent assent requirements when it comes to consent with respect to certain terms (such as the permanent storage and sharing of biometric data)?  Isn't it time we moved past the notion of blanket assent?

As more companies move toward biometric data for a wide range of reasons, we’re likely to see more problems with too-easy consent and wrap contracts.

February 3, 2017 in Commentary, Current Affairs, Miscellaneous, Web/Tech | Permalink | Comments (0)

Friday, January 27, 2017

This Is a Case About Copyright, Forum Selection Clauses, and Porn

Here's a case about porn. 

I thought all of us could use a brief break from the news, and porn always raises such interesting legal issues. This recent case out of the District of Arizona, AMA Multimedia LLC v. Sagan Limited, No. CV-16-01269-PHX-DGC, deals with the application of a forum selection clause to a copyright infringement case. You can read the complaint from the case here, and a couple of earlier orders from the case here and here. (Thanks to Eric Goldman for passing along the order link!)

The plaintiff, AMA, is a producer of pornographic material who entered into a contract with Porn.com, owned and operated by defendants (nice straightforward--and I would imagine valuable--URL there). Under the contract, AMA granted a license for the use of certain content. AMA became aware that Porn.com was displaying many copyrighted works which AMA had not granted a license to and sued for copyright infringement. The defendants responded that this lawsuit is governed by the contract between them, which has a forum selection clause requiring legal actions "arising out of or relating to" the contract to take place in Barbados. 

AMA's main argument was that the forum selection clause didn't apply because this is a case about copyright infringement, not about any issues arising from the contract. However, the court pointed out that the contract was entirely about the proper use of copyrighted works. AMA's copyright infringement case was really a case about the defendants using works in a way that violated the contract between them. The court would necessarily have to interpret the contract to decide if the defendants' behavior was in fact infringing. Therefore, the forum selection clause applied.

AMA next tried to argue that the forum selection clause should be found unenforceable because it would force AMA to litigate in a jurisdiction where discovery would be difficult and costly, and was therefore designed to discourage AMA from bringing suit at all. However, the court found that AMA provided no evidence for its assertions regarding litigation in Barbados being difficult and expensive, and that the mere inconvenience of the jurisdiction was not enough to negate the forum selection clause. 

January 27, 2017 in Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, December 7, 2016

Prince's Complicated Legal Legacy Continues

When the legendary musician Prince died suddenly, he left behind an enormous volume of music and no will. The courts have already been dealing with how to distribute Prince's assets to a complicated and squabbling cadre of potential heirs. The rights to all of his music have raised their own complicated issues that have most recently manifested themselves in a lawsuit in the District of Minnesota, NPG Records, Inc. v. Roc Nation LLC, Case No. 16-cv-03909

The case revolves around Roc Nation's streaming of Prince's music on its streaming service Tidal, and whether or not it had the contractual rights to do so. Roc Nation alleges yes, based on what it terms both written and oral agreements that it struck with Prince before his death. Commentators have tried to draw conclusions about these agreements based on Prince's statements and other behavior before his death. NPG, meanwhile, claims that there was a single contract between Prince and Roc Nation and that it only allowed Roc Nation to stream a very limited number of songs, which Roc Nation has now violated in streaming a much wider variety of Prince's song catalog. The case has been reported on in multiple places, including here and here and here and here.

If this case progresses, it seems like it's going to require an untangling of written contracts between the parties, whatever oral statements Prince will allege to have been made, and the interaction between the two. It adds an interesting layer to consider that Prince was notorious for fighting for artists' rights to their music and had a fraught relationship with online streaming of music. He does seem to have favored Tidal above the other Internet services. In any case, although NPG claims that there was never any such license and Tidal has been infringing the songs' copyright since it began streaming them, NPG has already proactively sought to cancel any license that Prince may have granted to Roc Nation to stream the music in question. 

(I'd post something Prince-related from YouTube, but Prince didn't like his music to be on YouTube. And, in fact, Lenz v. Universal Music Corp., the recent case that wended its way through the Ninth Circuit and is currently on petition to the Supreme Court, involves a Prince song in a YouTube video.)

December 7, 2016 in Celebrity Contracts, Commentary, Current Affairs, In the News, Music, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Monday, November 21, 2016

Top Gear, Grand Tour, Non-Competes--What Could Possibly Go Wrong?

My love for the British car show "Top Gear" over the past few years was deep and abiding, despite the fact that I am not interested in cars at all. Like most of the people I know, I watched Top Gear for the hosts, Jeremy Clarkson, Richard Hammond, and James May--a trio of men whose friendly and hilarious chemistry was, I thought, a little like capturing lightning in a bottle; it comes around so infrequently that it's striking when it does. 

For a taste of what this version of Top Gear was like, please enjoy my personal favorite, one of the caravan episodes: 

 

Or maybe you would prefer one of the boat-car episodes: 

 

The Top Gear Wikipedia entry details that the show's popularity resulted in consistently high ratings, a waiting list for tickets to the stage-filmed portion of the show that numbered in the hundreds of thousands, and a Guinness World Record for the world's most widely watched factual television show

There have been a number of high-profile Top Gear events over the years that I could document here, from Richard Hammond's terrifying crash while filming the show to the fascinating contractual dispute over the Stig, the show's famously anonymous racing driver, revealing his true identity

But what I'm really focusing on in this entry is the fact that the Top Gear hosts have a new show, "The Grand Tour," that looks a whole lot like their old show, and it made me wonder what their contracts looked like. 

The hosts left Top Gear over controversially. The BBC declined to renew Jeremy Clarkson's contract in March 2015, following an attack by Clarkson on one of the producers on the show (later the subject of a lawsuit that Clarkson settled for a hundred thousand pounds and a formal apology). The other two presenters, Hammond and May, also had contracts up for renewal and chose not to re-sign with the BBC, instead following Clarkson to Amazon, where the trio have launched a show called The Grand Tour

I didn't know what to expect from The Grand Tour but it turns out to be Top Gear by a different name. Where Top Gear had a Stig, The Grand Tour has "the American" -- and they tell us who he is right off the bat, rather than get embroiled in that kind of controversy again. Top Gear had a segment called, simply, "The News"; The Grand Tour launched a similar segment called "Conversation Street." Top Gear had a segment called "Star in a Reasonably Priced Car"; The Grand Tour...well, you should watch the show for its take on that segment. This review does a nice job running down all the similarities between the old show and the new. 

This all fascinated me from a contract perspective. I knew that Clarkson had previously co-owned the commercial rights to Top Gear. He sold them to the BBC in 2012 for fourteen million pounds. So, having given up those rights and left the BBC, Clarkson clearly couldn't keep making "Top Gear." But he is making a motoring show that is almost identical in every cheeky winking respect to the one he left behind (right down to a simple title highlighting a prominent "T" and "G"). 

I do think, from an IP point of view, the new show seems safe: they've been careful to avoid any trademarks and only seem to resemble Top Gear in the uncopyrightable idea level, i.e., being a playful show about cars. But I assumed that Clarkson, Hammond, and May had to have had a non-compete with the BBC, so I went looking for it, and I did find evidence that there was one. It apparently prohibited the three from presenting a competing car program for a period of two years. The two years aren't up yet, leaving lawyers to speculate that a conclusion was drawn that the non-compete only applied to terrestrial broadcast stations and not to Amazon's streaming Internet television. The entertainment industry is changing so quickly, it doesn't surprise me that the contracts are having trouble keeping up. 

Surely the BBC would have preferred to keep Clarkson, Hammond, and May from kicking a rival car show into production so quickly, especially while the BBC's relaunched Top Gear has reportedly struggled. But apparently their contracts failed to give them sufficient protection to save them from the result. 

I will leave for another day the issues of contracts made during the filming of Top Gear itself; like, for instance, the time Clarkson offered to save Hammond from a sinking boat in exchange for a bucket...that turned out to have holes. 

And instead I will leave this entry with an acknowledgment that Jeremy Clarkson is a problematic and controversial figure who is not a stranger to making offensive statement. That's beyond the scope of this article about the BBC's contracts, but this review, I think, does a decent job of capturing the internal tension of a former Top Gear fan contemplating the new Grand Tour.  

November 21, 2016 in Celebrity Contracts, Commentary, Current Affairs, Film Clips, In the News, Television, True Contracts, Web/Tech | Permalink | Comments (0)