May 02, 2013
Ticketmaster and Those Pesky Bots
April 24, 2013
Paperless Tickets and Licenses
The Sacramento Bee reports that a California legislative committee (if you really want to know, it’s called the Assembly Arts, Entertainment, Sports, Tourism and Internet Media committee) “gutted” a bill that would have illegalized “paperless” tickets. Paperless tickets are more (or is it less?) than what they sound like – they are a way for companies like Ticketmaster to sell seats without permitting purchasers to resell those seats. Purchasers must show their ID and a credit card to attend the show. The bill pitted two companies, Live Nation (owner of Ticketmaster) and StubHub, against each other.
This bill and the related issues should be of interest to contracts profs because it highlights the same license v. sale issues that have cropped up in other market sectors where digital technologies have transformed the business landscape. Like software vendors and book publishers, Ticketmaster is concerned about the effect of technology and the secondary marketplace on its business. Vendors, using automated software (“bots”), can quickly purchase large numbers of tickets and then turn around and sell these tickets in the secondary marketplace (i.e. at StubHub) at much higher prices. Both companies argue that the other is hurting consumers. Ticketmaster argues that scalpers hurt fans, who are unable to buy tickets at the original price and must buy them at inflated prices. Stub Hub, on the other hand, argues that paperless tickets hurt consumers because they are unable to resell or transfer their tickets.
The underlying question seems to be whether a ticket is a license to enter a venue or is it more akin to a property right that can be transferred. Or rather, should a ticket be permitted to be only a license or only a property right that can be transferred? The proposed pre-gutted legislation would have taken that decision out of the hands of the parties (the seller and the purchaser) and mandated that it be a property right that could be transferred. In other words, it would have made a ticket something that could not be a contract. Of course, given the adhesive nature of these types of sales, a ticket as contract would end up being like any other mass consumer contract – meaning the terms would be unilaterally imposed by the seller. In this case, that would mean the ticket would be a license and not a sale of a property right.
It’s not just the media giants who are feeling the disruptive effect of technology - we contracts profs feel it, too.
[NB: My original post confused StubHub with the vendors who use the site. StubHub is the secondary marketplace where tickets can be resold. Thanks to Eric Goldman for pointing that out].
April 22, 2013
Phone "Bill Cramming" and Consent
The FTC recently charged a company, Wise Media, with unfair and deceptive business practices. The FTC complaint alleges that Wise Media charged unwitting mobile phone users for “premium" text services, or junk text messages (horoscopes, love tips, other “useful” information…) that consumers never authorized. The practice is referred to as “bill cramming,” and consumers often failed to notice the indefinitely recurring charges of, in this case, $9.99/month. Even when they did and sent a text to “stop” the messages, the company often failed to comply with the request.
Consumers often miss these charges because they aren’t aware that their mobile phone bills contain charges by third parties and because the charges are not clearly indicated. The result? Wise Media has made millions of dollars by surreptitiously charging consumers.
What I find particularly interesting and troubling is the potential interaction of contract law in the area of electronic contracts and consumer protection. What distinguishes a deceptive business practice (although not necessarily an unfair one) from a “hard bargain” is consent. The FTC complaint, for example, was filed because the charges were “unauthorized” by consumers - they were signed up "seemingly at random" without consumer "knowledge or permission." The FTC has, in my view, done a pretty terrific job of protecting consumers given the lack of resources and the wide range of consumer-harming activities out there. Courts have not done so well. What happens where contractual “consent” (such as in the form of a clickwrap”) is obtained for an unfair practice, such as bill cramming? What if the consumer had clicked "I agree" on a clickwrap to the premium service? Would the contract law notion of “consent” mean that the consumer had authorized the “premium text” service, even when we all know that nobody reads clickwraps and browsewraps? Or would the commonsense version of consent championed by the FTC prevail?
I talk about this disjunction between, what I refer to as “wrap contract doctrine” (since, let's face it, the digital contract cases are not consistent with traditional contract doctrine despite what Easterbrook and others claim) and the FTC’s more commonsense approach to consumer perception and business practices in my forthcoming book on wrap contracts. (Did you know a plug was coming? I actually didn’t but there it is.) The conclusion I reached was that there appears to be a disconnect between contract law notions of “reasonable notice” and the FTC’s notion of “reasonable notice” (which I find more reasonable….) The takeaway for businesses – just because you obtain consent for a particular business practice via an online contract which may meet the surreal standards of contractual consent set forth by courts doesn’t mean that the practice in question won’t be viewed as an “unfair and deceptive” one by the FTC.
April 16, 2013
Dog Bites Man Story from the Nota Bene Blog
Under the headline "Contract Law Can Be Interesting!" Nota Bene, a blog by the librarians at the University of Houston O'Quinn Law Library, features a post praising some recent contracts law books. Other interesting posts on the Nota Bene blog include "Objects Fall to Earth," "Smoking May Be Harmful to Your Health," and "Cubs Unlikely to Win World Series this Year."
After proclaiming contracts to be right up there with civil procedure on the list of most boring law courses, he author \recommends two books that can make this daunting subject palatable: Contracts Stories, edited by Douglas Baird, and Larry Cunningham's Contracts in the Real World, about which we posted an online symposium a few months ago.
I also recommend these books, but I'm not sure the blog post's author's marketing strategy is going to work. He says, in effect, "I recommend to you these two books (only one of which I've read) about a subject that doesn't interest you. If you did not enjoy studying contracts, here are two books about contracts that will cause you to upgrade your attitutude towards the subject from 'feh' to 'meh.'"
Whatever. I always thought that the point of books like Contracts Stories is to enable students to learn more about the fascinating cases that they studied in their law courses. They also provide insights into litigation strategies, legal history, business strategies underlying contractual disputes, and lots of other useful supplements to the raw case law. Contracts in the Real World is an excellent representation of the sorts of issues that come up in the world of contracts law all the time. If there were some huge gap bewteen what Larry Cunningham talks about in his book and what we talk about in contracts courses, the book would not be as useful as it is.
Ultimately both books are born of a love of contracts law. And a book is a mirror. . . .
April 15, 2013
CBC Radio Interview with Margaret Radin
Next month, we will host an online symposium on Margaret Radin's recent book, Boilerplate.
For those who can't wait to get a sesne of the book, you can listen to a Canadian Broadcasting interview with Professor Radin here.
Irony of ironies: in order to listen to this, I had to download an upgrade of Adobe Flash Player, and of course that required my agreement to boilerplate terms and conditions.
There is no escape from boilerplate.
March 04, 2013
For Those Who Have 76 Days to Spare
( H/T to Ben Davis -and his student - for posting about the article to the Contracts Prof list serv).
This article indicates that the average Internet user would need 76 work days in order to read all the privacy policies that she encounters in a year. (Unfortunately, the link to the study conducted by the Carnegie Mellon researchers and cited in the article doesn’t seem to be working). But you don’t need a study to tell you that privacy policies are long-winded and hard to find. That’s one of the reasons you don’t read them. Another is that they can be updated, often without prior notice, so what’s the point in reading terms that are constantly changing? Finally, what can you do about it anyway? Don’t like your bank’s privacy policies – good luck finding another bank with a better one.
So, what’s the difference between a contract and a notice? The big difference is that the enforceability of a notice depends upon the notice giver’s existing entitlements, i.e. property or proprietorship rights whereas a contract requires consent.
If I put a sign on my yard that says, Keep off the grass, I can enforce that sign under property and tort law. As long as the sign has to do with something that is entirely within my property rights to unilaterally establish, it’s enforceable. If the sign said, however, ‘Keep off the grass or you have to pay me $50” – well that’s a different matter entirely. That would require a contract because now it involves your property rights.
Privacy policies are more like notices – and should be treated as such even if they are in the form of a contract (such as a little clickbox that accompanies a hyperlink that says TERMS). If a company wants to elevate a notice to a contract, it should require a lot more than that simple click. Because the fact is, contract law currently does require the user to do more than click – it requires the user to read pages and pages of terms spread across multiple pages – at a cost of 76 days a year. The standard form contract starts to look a lot less efficient when viewed from the user’s perspective.
January 24, 2013
When It Comes to The Hobbit, Wired.com Puts Us to Shame
Nancy Kim beat me to the punch by posting about the contract that Bilbo Baggins enters into with Thorin's crew in The Hobbit. I was so upset that she beat me to the punch on the subject matter that I docked her a month salary from her position as contributing editor on the blog.
Now we've both been shown up (and how!), by James Daily, identifed here by Wired.com as
a lawyer and co-author of The Law and Superheroes, [who] typically focuses his legal critiques on the superhero world at the Law and the Multiverse website he runs with fellow lawyer and co-author Ryan Davidson.
Apparently, Mr. Daily got his hands on a replica of the five-foot-long scroll that was used as the contracts prop in the film. He then goes through the contract provision by provision and reaches the following conclusion:
One the whole, the contract is pretty well written. There are some anachronisms, unnecessary clauses, typos, and a small number of clear drafting errors, but given the contract’s length and its role in the film (which is to say not a huge one, especially in the particulars) it’s an impressive piece of work. I congratulate prop-maker and artist Daniel Reeve on a strong piece of work.
He provides a link for those interested in purchasing their own version of the contract, for a mere $500. " If you’d like an even more accurate replica of the contract, Weta’s online store has a version with hand-made touches by Mr. Reeve."
We tip our hats to Mr. Daily.
But I have my own thoughts about the contract that Mr. Daily does not mention. First, the price term of the contract is ambiguous, since it promises Bilbo "only cash on delivery, up to and not exceeding one fourteenth of total profits (if any)," which on my reading does not really guarantee him anything. On the other hand, the dwarves do promise to pay for Bilbo's funeral expenses, if necessary, so I think under the contract terms, he's better off dead.
This ambiguity is only partially clarified with the later provision that "the company shall retain any and all Recovered Goods until such a time as a full and final reckoning can be made, from which the Total Profits can then be established. Then, and only then, will the Burglar’s fourteenth share be calculated and decided." While this provision would strengthen any potential argument Bilbo might make that he should get no less and no more than a fourteenth share, if the contract does not define "full and final reckoning," he might have to wait quite some time to get that share, perhaps beyond his own final reckoning, and then it's Frodo's problem.
In addition, to address a matter of genuine concern; i.e., one that actually plays a role in the book, the contract does not specify the manner of delivery of payment. As Bilbo points out in Chapter 18 (spoiler alert: the mission to recover Smaug's treasure was a success), "How on [Middle] earth should I have got all that treasure home without war and murder all along the way, I don't know." Mr. Daily offers a solution: since the contract does not actually entitle Bilbo to any protion of Smaug's treasure but only to the value of a 1/14 share, the Dwarves could have wired a check to Bilbo's bank in the Shire (or the Middle Earth equivalent to a wire transfer). But in the book, Bilbo waived his right to the spoils of war beyond "two small chests, one filled with silver, and the other with gold, such as one strong pony should carry."
The fact that he did so suggests that really no part of the contract mattered much in the end. And that is as it should be, since the bonds formed by those who joined Thorin's crew went well beyond those that can be reduced to any writing or even to any trilogy of films.
[JT, with hat tip to Mark Edwin Burge of the Texas Wesleyan School of Law for directing us to the Wired.com site]
When is a Contract Not a Contract?
I recently finished a book manuscript on the subject of “wrap contracts” – shrinkwraps, clickwraps, browsewraps, tapwraps, etc. These non-traditional contracts are interstitial, occupying space in and between contracts and internet law, but not neatly fitting into one alone. I'll be blogging a lot more about them in the future.
On the subject of wrap contracts, not long ago I bought a new laptop with Windows 8 pre-installed.
But that didn’t mean I didn’t have to agree to this:
What's interesting is that my old laptop, which I ordered online, came in a package like this:
Like the typical shrinkwrap, ripping the plastic bag (which was necessary to get to the laptop inside it) was deemed acceptance.
Both were examples of rolling contracts, but they came in different forms -- and neither gave me notice of any terms to come at the time of the transaction. Yet consider the hassle I would have to go through if I decided, after having received the goods and a "reasonable opportunity to read" the terms, that I didn't want to accept the terms. I would have to ship back the computer or take it back to the store, and try to explain that I was rejecting it because I disagreed with the contract terms.
Honestly, now - don't you think the retailer would just think I was nuts? Or that I had found a better deal elsewhere? (Or that I had done something sneaky, like somehow copied the software or infected the computer with a virus?) How many think I would actually get my money back if there was nothing (else) wrong with the laptop(s)?
January 16, 2013
Teaching Sales, Issue 2: When Is Software a Good and What of the Cloud?
This is the second in a series of posts on issues that arise in a Sales course.
As Holly K. Towle lays it out in, Enough Already: It Is Time to Acknowledge that UCC Article 2 Does not Apply to Software and Other Information, 52 S. Tex. L. Rev. 531 (2011), many courts simply apply Article 2 to software licenses without much consideration of the law of licenses Others apply the law of licenses, which she thinks is appropriate. Her approach makes sense when we're talking about mass-marketed software provided to consumers through licenses. In fact, courts ought to take notice of the fact that all U.S. jursdictions have now clarified the status of software as a "general intangible" and not a good through the revisions to UCC Article 9 adopted in all fifty states.
But what of custom-made software that may not be licensed but sold to the client who will be its exclusive user? My impression from the limited caselaw I have reviewed on the subject suggests that courts recognized early on that software consists of both tangible and intangible elements. They seem to have assumed that the intangible elements (the services provided in developing software, for example) could be easily separated from the tangible elements (the disks, drives or hardware associated with the delivery of the software). On this line of reasoning, only the latter are goods. That distinction strikes me as artificial. Unless the deal involves a lot of hardware, the cost of the "goods" is trivial compared to the costs of software development, and in fact, with digital downloads and cloud computing, there may not be a good at issue at all. That is, my office used to be cluttered with the boxes that held the disks on which my software came to me. I may have naively thought of software as a good then because those boxes made software look like a good. Now, my software either comes pre-loaded or I download it without the aid of a disk or external drive. Now it looks much less good-like, but of course, how it looks should not matter.
Towle draws on IP law to argue that software is really "information" and information ought to be treated differently from tangible goods. I'm not sure I understand why that distinction matters if we are dealing with a sale rather than a license. A lot of things that we consider goods are really just information, in the sense that Towle uses it. Books are just information, but a sale of books is a sale of goods (although she is correct that you cannot return a lousy novel based on a breach of the implied warranty of merchantability). There are lots of other items that we buy about which is could be said that the costs of development constitute a large part of the costs of the good, but the UCC does not ask about cost breakdowns; it just asks if the subject of the transaction is moveable at the time that it is identified to the contract. Electricity has been held to be a good because it moves. So does information. More particularly, custom-made software, White & Summers point out, does not really seem much different from any other specially-manufactured good, which the UCC treats as a good for the purposes of Article 2.
I recommend Towle's article. She has persuaded me that courts err in trying to apply Article 2 to software licensing transactions, but when it comes to custom-designed software that is actually sold, rather than licensed, to the end user, I think a strong case can be made for applying Article 2.
I do not know if the software design companies agree to flat out sell the software they develop. It might be safer for them to license it so that they can re-use the code for other businesses that might need similar software designed for their specific needs. If that's the way these deals are done, it follows from Towle's reasoning that licensing law, rather than Article 2 should apply to those transactions as well.
December 19, 2012
Thoughts on the Instagram Kerfuffle
Stop me if you've heard this one before - Facebook changes its Terms in a way that its users find offensive and invasive of their privacy. Uproar ensues and Facebook promises that the changes are harmless and everyone is just overreacting. Facebook backs off, a little, and then pushes the boundaries a little further next time, regaining even more ground against its users. Sound familiar?
I think the public backlash is a very good thing since it reminds companies that there are at least some people who are reading their online agreements. Unfortunately, they are usually only reading the terms of companies that already have a monopoly in the marketplace. It's not easy for unhappy Facebookers, Googlers or Instagramers to pick up their content and go elsewhere - where would they go?
What makes my skin crawl, however, is the misleading reassurances doled out by companies when they are called on their online agreements. Instagram, for example, states on its blog that users shouldn't fear, because it respects them, really it does:"Instagram users own their content and Instagram does not claim any ownership rights over your photos. Nothing about this has changed. We respect that there are creative artists and hobbyists alike that pour their heart into creating beautiful photos, and we respect that your photos are your photos. Period.
I always want you to feel comfortable sharing your photos on Instagram and we will always work hard to foster and respect our community and go out of our way to support its rights."
While it may be true that Instagram users own their content, Instagram does take a pretty broad license from its users:
As Instagram knows, it doesn't need to own your content in order to use it as if it owned it. All it needs is a broad license, like the one it has. Note that it has the right to "use" the content - and doesn't define what that means or restrict that use very much.
- "provide personalized content and information to you and others, which could include online ads or other forms of marketing
- provide, improve, test, and monitor the effectiveness of our Service
- develop and test new products and features
- monitor metrics such as total number of visitors, traffic, and demographic patterns"
I found this sentence particularly sneaky:
"We will not rent or sell your information to third parties outside Instagram (or the group of companies of which Instagram is a part) without your consent, except as noted in this Policy"
Did you like the "except as noted in this Policy" ? And, as Contracts profs know, "consent" means something other than what a layperson might think - it can mean just using a website in many cases. There is similar broad language here:
"We may also share certain information such as cookie data with third-party advertising partners. This information would allow third-party ad networks to, among other things, deliver targeted advertisements that they believe will be of most interest to you."
I'm not as concerned about the targeted advertisements (which doesn't mean I'm not concerned at all) as I am about the "such as" and "among other things."
And remember, the Terms do expressly state:
"Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you."
The company reassures its users, on its blog that it is not their "intention" to "sell" user photos. The company says it is working on language to make that clear. Let's hope so, but my guess is that they are probably going to use more mealy language like "at the moment" or "sell as a good defined under the UCC," or something that leaves wide open the possibility that it can make money off user photos by selling them to third party advertisers.
I'd suggest you save Granny some embarrassment and delete that photo now.
November 19, 2012
London Court Finds Breach of K in Terminating Man for Facebook Post Opposing Gay Marriage in Church
The Independent reports here that Adrian Smith, who was stripped of his managerial post with the Trafford Housing Trust (the Trust), won his breach of contract claim against his employer. London's High Court found that Mr. Smith had not engaged in "gross miconduct" by posting on this Facebook page his view that gay marriages in the church were "an equality too far." However, the High Court awarded Mr. Smith less than £100 on his breach of contract claim, despite the fact that his slaray had been reduced as a result of his demotion from more than £35,000 to £21,000.
The limited damages may have been the only remedy available to Mr. Smith in a court. He could have taken his case to an Employment Tribunal and gotten more substantial damages, but Mr. Smith claims that he did not bring the case for money. He did it for the principle involved. The Trust has apologized to Mr. Smith and claims that it attempted to settle with Mr. Smith for a much higher amount, but Mr. Smith rejected the offer and chose to proceed with his litigation.
The Trust's action against Mr. Smith is somewhat surprising, given that Mr. Smith does not oppose civil marriage for gay partners. He only spoke out against church marriages for gay couples The Independent even quotes a "gay rights campaigner Peter Tatchell" as supporting Mr. Smith:
This is not a particularly homophobic viewpoint, In a democratic society, Adrian has a right to express his point of view, even if it is misguided and wrong.
A spokesperson from Stonewall, an LGB rights charity described the Trust's treatment of Mr. Smith as "a little heavy-handed given that he had temperately expressed his point of view, however disagreeable that point of view might be to many.”
October 29, 2012
Profile Tech Falls Out with Facebook and Sues for Breach
Chris Claydon, the Managing Director of a New Zealand based company, Profile Technology, Ltd. (Profile Tech.), has brought suit against the social networking giant, Facebook, alleging breach of contract, interference with business relationships, defamation, and unlawful, unfair and fraudulent business practices. Claydon’s Complaint alleges that Profile Tech. and Facebook entered into an agreement in 2008 allowing Profile Tech. to acquire Facebook data by automated “crawling,” for the purpose of creating a service called Profile Engine. Profile Engine became the world’s first search engine dedicated to Facebook. However, according to the Complaint, without notice, Facebook cut off the access Profile Tech. needed to continue its venture shorty after October 13, and began a “malicious” defamation campaign, thereby damaging Profile Tech.’s business and reputation.
Claydon further alleges that Facebook interfered with access to its other applications, independent of Profile Engine (IQ Test, Survey, Polling, etc…) Facebook’s actions were allegedly purposeful and malicious and as such, require punitive damages in addition to compensation for lost profits and defamation. In addition, Claydon requested an injunction to prevent Facebook from any further defamation it is allegedly employing against Profile Tech.
Claydon states that Facebook breached the implied duties found in every contract: to deal fairly and in good faith, and refrain from doing anything that would have an ill effect on, or injure the rights of the other party’s receiving the fruits of the contract.
[Christina Phillips & JT]
October 22, 2012
Miriam Cherry on Cunningham, Post II: Modern Technology: A Disruptive Influence on Contract Doctrine?
In my view, modern technology has exacerbated the doctrinal tensions within contract law. Currently, clickwraps and browsewraps stretch the notion of mutual assent to its extreme, perhaps warping it in the process.
The recent literature on form contracting online has been substantial. While some of this literature sees online contracting as a natural inheritance to traditional contract law doctrine, other commentators have argued that contracting online has distorted the doctrine.
In Contracts in the Real World, Prof. Cunningham attempts to reconcile two recent cases, Specht v. Netscapeand Pro-CD v. Zeidenberg, as part of his treatment of the theme of contract formation and mutual assent. As much as he tries, to me the cases still seem to be in conflict.
And if that weren’t enough, two well-known additional cases that dealt with late-arriving terms inside a computer box, Hill v. Gateway and Klocek v. Gateway, blatantly contradict each other, with contrary holdings on virtually identical facts.
In my mind, these contradictions reveal a mismatch in the doctrine and the reality on the ground. If there is no way for consumers to read or understand, or perhaps even see these clickwrap agreements, it hardly seems fair to bind consumers to them. As seen above, however, this leads to contradictory rulings.
Inconsistent holdings create the appearance of an arbitrary justice system, and these disputes, which are governed by the Uniform Commercial Code, should turn out in a uniform manner. When they do not, it only intensifies the debate about how to deal with online contracting and adhesion contracts online.
As we all continue to click our way through countless EULAs and are told that we are subject to “terms and conditions” that no reasonable consumer has had the time to read, I do not believe that it is enough to hope that antiquated laws will handle new situations.
Instead, I would suggest that we need to continue to build on the wisdom of contract law. While there is much to celebrate in the received wisdom of ancient doctrines, we must also recognize that it is the common law’s dynamism and adaptability that have led to its genius.
[Post by JT]
September 05, 2012
Money Well Spent on “America’s Favorite Pastime”
As reported here by mlb.com, ESPN and Major League Baseball (MLB) have entered into an eight-year, $5.6 billion agreement, which includes TV and radio rights to MLB programming both in the U.S. and internationally, keeps baseball on the network through 2021 and includes a record-setting increase in annual rights fees (doubled to $700 million from $360 million annually).
And there was much rejoicing.
ESPN's president said, “Baseball remains the national pastime," but the truth is, baseball has long been eclipsed by other sports and then by video games based on other sports and then by video games about killing people, and then by video games about killing zombies. Meanwhile, there was recently talk of MLB becoming a wholly-owned subsidiary of Justin Bieber, Inc. Commissioner Bud Selig commented that "today is a very historic day for baseball." Taken in the context of a sport that is so hung up on statistics that every day is considered "historic" (Wow, Lou, that's the first time that a rookie switch-hitter has struck out looking from both sides of the plate in the same inning -- what a historic day!), Selig's comments seems to be downplaying the deal.
According to the New York Times, ESPN's rival networks, Fox, TBS, NBC and CBS, are still contenders in the baseball airing arena, as ESPN did not manage to grab the division series or league championship series games. There's still some history out there to be made.
[JT and Christina Phillips]
August 22, 2012
Cigarette Packaging and - Contracts?
Last week, the Australian High Court upheld a ban on company logos on cigarette packages. The law that was upheld also requires that the front of cigarette packages show images of the harmful effects of smoking (e.g. mouth ulcers, tumors, etc).
Okay, you might be wondering what this has to do with contracts. One of my current research interests (obsessions) is the idea of notice substituting for actual assent, especially with online contracts. A dinky hyperlink nestled at the bottom of a page can serve as "notice," at least in the eyes of some courts although most people don't actually notice them. The fuss over the cigarette packaging (and Big Tobacco really fought hard over this one) underscores something that is often lost on courts evaluating notice in contract cases -- the quality of the notice matters. A warning label in a small text box gets ignored; graphic visual depictions of injured human organs do not. Snazzy corporate labels make smoking seem cool; plain labels don't have that same cachet. Websites, too, could draw more attention to their contracts, but they don't. They certainly know how to grab our attention when they want it, with images and sounds. So why make legal terms so unobtrusive? Could it be that they don't really want us to read them?
August 20, 2012
An article posted on TechCrunch, available here, discussed a new site which reviews terms of service (TOS) of various websites. The site provides a "grade" for website policies and can be accessed here (btw, it is looking for people to get involved).
August 16, 2012
An Early Win for Hewlett-Packard in Its Battle with Oracle
For three decades Oracle and Hewlett-Packard (“HP”) worked together, with HP selling its hardware and Oracle selling its software, to their shared customers and the two corporations cooperating to make certain that Oracle's software was compatible with HP's servers which run on a system called "Itanium." Tensions arose when Oracle acquired Sun Microsystems (“Sun”), a direct HP competitor, in 2010. And things did not get better when Oracle hired HP's former CEO, Marc Hurd, and HP sued to enjoin Hurd from sharing trade secrets with his new employers. Meanwhile, HP sought assurances from Oracle that it would continue to offer its software on HP’s platforms. Along with assurances from Oracle’s most senior software execs that it was committed to business as usual, the parties signed a “reaffirmation agreement” (the Agreement), which stated in Paragraph 1:
Oracle and HP reaffirm their commitment to their longstanding relationship and their mutual desire to continue to support their mutual customers. Oracle will continue to offer its product suite on HP platforms, and HP will continue to support Oracle products…on its hardware in a manner consistent with that partnership as it existed prior to Oracle’s hiring of Hurd.
The parties continued business as usual until Oracle abandoned this “work together” approach. In a press release issued in March, 2011, it announced, without notice to HP, that new versions of Oracle’s software would no longer be compatible with HP’s server platform. HP then filed suit, soon followed by Oracle’s very colorful cross-complaint.
After a 12-day trial, on August 1st, the Santa Clara Couty Superior Court bestowed this win on HP, fiinding in HP's favor on its claims for both breach of contract and promissory estoppel. The court found that the parties are bound by the Agreement, and that Oracle has a continuing obligtation to offer its product suite on HP's Itanium-based server platforms until HP discontinues the sale of its Itanium-based servers.
The Superior Court began its inquiry by breaking down the plain language of Paragraph 1 and determined that (1) the first sentence was fully consistent with a continued obligation to make certain that Oracle software is compatible with HP servers, and (2) the second sentence used the language “Oracle will continue…” which can “only be reasonably interpreted as requiring Oracle to continue offering its product on HP’s Itanium platforms.”
The court rejected Oracle's argument that the Agreement “merely a ‘public hug’ that imposed no obligations on either party,” and that Oracle “retained absolute discretion with regard to” making its software compatible with HP's systems. In rejecting the "public hug" theory, the court noted that throughout the parties’ history, 99% of their dealings were accomplished without contracts. Therefore, based on the parties’ prior course of dealing and the plain language of Paragraph 1, because HP was simply asking Oracle to maintain the business relationship as it had been prior to Oracle’s hiring of Hurd, it was fair and reasonable to require Oracle to continue its obligation to make its software compatible with HP systems. Since the court interpreted the Agreement as a promise by Oracle to continue to work with HP, it found that Oracle's unilateral announcement that it would no longer make its software compatiable with HP systems constituted a breach of contract.
The court also ruled for HP on its promissory estoppel claim, based upon unambiguous promises made by two Oracle executives. In reliance upon these assurances, HP provided Oracle with nearly $5 million of Itanium servers for porting and continued to invest in research and development in order to optimizing compatibility with Oracle’s software. Further, HP also entered into the Itanium Collaboration Agreement (“ICA”) with Intel, a $264 million investment. As the parties’ had been long-time business partners, it was foreseeable that HP would have no reason to doubt Oracle’s word and would make investments based on its support. HP relied upon the parties’ long-term, upstanding business relationship to its detriment. As a result, the court found that all elements of a promissory estoppel claim were satisfied.
In sum, the plain language of the agreement, Oracle’s continued assurances of commitment, both to HP and to the public, and the parties’ long history of informal dealing sans contracts led the court to find for HP on both the breach of contract and promissory estoppel claims. The court ordered Oracle to continue its porting obligations without charge “until such time as HP discontinues the sale of its Itanium-based servers.”
As reported here by allthingsd.com, Oracle released the following statement:
“Last March, Oracle made an engineering decision to stop future software development on the Itanium chip. We made the decision as we became convinced that Itanium was approaching its end of life and we explained our rationale to customers here. Nothing in the Court’s preliminary opinion changes that fact. We know that Oracle did not give up its fundamental right to make platform engineering decisions in the 27-words HP cites from the settlement of an unrelated employment agreement. HP’s argument turns the concept of Silicon Valley ‘partnerships’ upside down. We plan to appeal the Court’s ruling while fully litigating our cross claims that HP misled both its partners and customers.”
So, the battle has been lost but the war continues.
[Chrstina Phillips and JT]
August 14, 2012
Don't Get Screwed Over
Docracy is an open source legal document site. The site has launched a video campaign called "Don't Get Screwed Over" - it very effectively conveys the importance of freelancers having written contracts:
A free open source contract site is a great idea. I am not convinced, however, that it obviates the need for an attorney. That said, it is true that, regardless of whether an attorney is involved, freelancers should always get their deals in writing and carefully express expecations and payment schedule. The site's founder Matt Hall appears to share in my sentiment and believes that his site is a starting point for freelancers to figure out what they need and to find an attorney. Hall told .net magazine:
[T]he video was designed to "make sure freelancers are aware how important it is to have a contract for work they do, and that there are resources like Docracy that can take the fear and mystery out of the process". He said it's increasingly common that freelancers don't get paid for work they've done, starkly highlighted by projects like the World's Longest Invoice.
Hall recommended "upfront and clear communication with your client about what's expected, when it's expected and when you'll be paid", and then getting this all down in writing and signed. "Clear communication can go a long way to avoiding problems in the future," he added. And while Docracy can be a starting point, Hall said such sites are not a replacement for proper legal advice: "A good lawyer who understands your business will save you money over the long term, so get educated and then find a good lawyer you like working with. We have a bunch of great, tech-savvy lawyers on the site who have already shown their willingness to help freelancers, so they might be a good start."
[Meredith R. Miller]
August 03, 2012
ABA Program on 'Wrap Contracts
For those of you attending the ABA conference in Chicago this week, there is a CLE program on Clickwraps, Browsewraps and Why ESIGN Deserves a Bum Rap. The speakers are Mark J. Furletti of Ballard Spahr, Christine Poulon of PayPal and yours truly. The panel is from (the unspeakable hour of) 8:00am-10:00am. If any of you early risers are at the meeting in Chicago, stop by for an earful about the state of electronic contracts.
Statute of Frauds? There's an app for that!
HelloFax, the company that lets you send and receive digital faxes, has spun off its digital signature service into a new stand-alone product: HelloSign.
“Everyone has to sign documents, and it’s done in a really poor way right now, which is what we’re trying to fix,” Joseph Walla, CEO of HelloSign (and HelloFax) told Mashable.
Documents can be signed and securely returned to their sender from both the web and the company’s new iPhone application. Unlike some similar services and apps that are already out there, digital signatures using the service are free and unlimited so you can send and receive just a few documents — or all the contracts for your business — with the service at no cost.
On the iPhone application, you sign a document with your finger on the screen. Once you’re done signing, the signature is brought back into your document, then you can place it where you want it to go. The same experience can be done on your home computer using a mouse.
When you send documents to be signed with HelloSign you can also track those documents with read receipts and audit trails, so you know exactly what’s going on with the document every step of the way.
Walla says that, while digital signatures have been legal in the U.S. for any document that can be signed with a pen for the past 12 years, many companies are still using pen and paper to get the job done. He sees the service as being invaluable to companies and businesses that are faced with delays waiting on paperwork to be signed.
“What we found out is that the only reason people fax things is that the vast majority of these documents are being signed,” Walla said when we spoke to him about HelloFax earlier this year. “What we’ve found is a lot of people joined us for faxing, and now they’ve converted to electronic signatures. We have a lot users who were fax users and now they don’t fax at all.”
With HelloSign, contracts and the like can be handled almost instantly, saving everyone involved in the process valuable time. The only type of document the service can’t handle is one that requires a notary.
HelloSign and its iPhone app are available now. For a limited time, those who sign up for HelloSign will also receive 25GB of free storage from Box.
[Meredith R. Miller]