Megaupload takedown reminds us why website terms and conditions can be important

Kashmir Hill pointed out that at least one erstwhile file sharing service has changed its business model in response to the federal government’s action against Megaupload. She observes that:

FileSonic users can’t be too happy to have one of the main features of the site taken away. But the company must be less worried about its breach of contract with existing users than it is about the possibility of getting the Megaupload treatment, i.e., arrest, seizure of its property, and a criminal indictment.

This raises an important point. Any kind of online service that pushes the legal envelope may want to build in some mechanisms to pull back with impunity if it gets freaked out or loses its envelope-pushing courage. Said another way, that service should not make promises to its users that it cannot keep in the event the service wants to change what it is doing.

Some well known user generated content sites do this pretty well already in their terms of service. For example:

  • Dropbox: “We reserve the right to suspend or end the Services at any time, with or without cause, and with or without notice.”
  • YouTube reserves the right to discontinue any aspect of the Service at any time.”
  • Reddit: “We also reserve the right to discontinue the Program, or change the content or formatting of the Program, at any time without notice to you, and to require the immediate cessation of any specific use of the Program.”
  • Facebook (being kind of vague): “If you . . . create risk or possible legal exposure for us, we can stop providing all or part of Facebook to you.”

All good examples of foresight in drafting website terms and conditions that help innovative sites with damage control.

3 thoughts on “Megaupload takedown reminds us why website terms and conditions can be important

  1. FERGUS O'ROURKE

    Eh ?

    You think that it’s a good thing that contracts include terms to the effect of negating the principal point of the contract ?

    “We agree that our payment to you commits you to nothing”

    Obviously, users who have paid nothing have to accept that the “free lunch” may at one point cease to be available. Paying customers who enter into an agreement with a term such as Dropbox’s as quoted, and who do so “with their eyes open” presumably accepting that they have a good deal, likewise will have no legitimate basis for complaint.

    But for those who provide valuable consideration, but do not have the term brought to their attention, this is legal trickery. It should not IMHO be commended, or even countenanced, by lawyers, and this has already been recognised by some court decisions.

    1. Evan Brown

      Fergus – Definitely agree with you that legal trickery is to be avoided. I suppose the a critical part of the analysis on your point is of the manner and extent to which users may be made aware of the terms of service. The cases I know of where courts have held website terms and conditions unenforceable (e.g., Specht v. Netscape) have involved situations where the user was not presented with a meaningful opportunity to read and indicate assent to the terms. Are you proposing a heightened standard in certain circumstances, or to highlight certain provisions, such as termination like this? I’d be interested in hearing if there is anything unique to the approach in Ireland.

  2. Jay Parkhill

    Fergus – I agree with you that if a service pulls an important feature it is a bad sign for the business.

    That said, all the clients I work with take the view that their service is 100% likely to change over time. If they withdraw a feature that turns out to be important to a subset of users, the question is what remedy the users have. Typically we limit that to “if you don’t like it you can stop using the service”.

    In the vein of legal nitpicking: interesting that Dropbox, which charges users, says it can suspend “the Service”. Youtube and Reddit say they can discontinue features. I haven’t read the complete terms so maybe Dropbox allows itself to change features elsewhere in the document.

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