The New Price to Play: Are Passive Online Media Users Bound by Terms of Use

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The New Price to Play: Are Passive Online Media Users Bound by The New Price to Play: Are Passive Online Media Users Bound by

Terms of Use Terms of Use

Woodrow Hartzog

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15

COMM.

L.

&

PoL'Y

405-433

(2010)

Routledge

Copyright

@ Taylor

&

Francis

Group,

LLC

Taylor&Franis

Group

ISSN:

1081-1680

print

/

1532-6926

online

DOI:

10.1080/10811680.2010.512514

THE

NEW

PRICE

TO

PLAY:

ARE

PASSIVE

ONLINE

MEDIA

USERS

BOUND

BY

TERMS

OF

USE?

WOODROW

HARTZOG*

When

individuals

turn

on

the

television,

listen

to

the

radio,

or

pur-

chase

newspapers,

they

are

not

forming

contractual relationships.

Yet,

almost

without

exception,

online

readers,

viewers

and

listeners

are

required

to

enter into

"terms

of

use"

contracts.

These

ubiquitous

agree-

ments

are

generally

unfavorable

for

the

user

in

areas

of

intellectual

property

rights

and

privacy.

In

addition,

the

terms

often

restrict

users'

behavior

and

their

ability

to

litigate

any

disputes

with

a

Web

site.

In

analyzing

the

implications

of

contracts

for

Web

site

users,

this

article

examines

whether

courts

have recognized

a

distinction

between

on-

line consumers,

interactive

users,

and

"passive

media

users"-

online

readers,

listeners

or

viewers

who

engage

in

little,

if

any,

of

the

activity

traditionally

required

to

form

contracts.

Case

law reveals

a

frequent

de facto

exemption

from online

agreements

for

passive

media

users,

but

not

highly

interactive

users.

This

exemption

could

be

formally

rec-

ognized

to

benefit

all

parties

to

a

contract.

"That

[the

plaintiffi

either

didn't

read the

agreement

or

didn't

see

it

may

be

unfortunate

for

him,

but it

does

not

change

the

outcome.

[He]

is

bound

by

the

terms

of

the

website's

user

agreement."'

When

viewers

turn

on

the

television,

they

are not

legally

bound

to

arbi-

trate,

rather than

litigate

in

court,

any

disputes they

might

have

with

the

network.

The

simple act

of

turning

on

the

radio

does

not

prohibit

listeners

from

singing

to

a

friend

the

songs

they

heard.

By

purchasing

a

newspaper,

a

reader

is

not

agreeing

to

let the

publisher

sell

personal

*Roy

H.

Park

Fellow

and

Ph.D.

student,

School

of

Journalism

and

Mass Communica-

tion,

University

of

North

Carolina

at

Chapel

Hill.

1

Burcham

v.

Expedia,

2009

WL

586513

at

*4

(E.D.

Mo.

Mar.

6,

2009).

information.

Yet

as

media

converge

digitally,

readers,

viewers

and

lis-

teners

are

required

to

enter

into

contracts.

Online

contracts,

typically

in

the

form

of

"terms

of

use," accompany

virtually

every

Web

site,

blog

or social

network

site

on

the

Internet.

2

The

agreements

typically

involve

obligations

regarding

how

the

par-

ties

will

settle

disputes,

licensing (and

sub-licensing)

of

a

user's

copy-

righted

work,

restrictions

on

use

of

the

Web

site

and

of

the

site's

content,

limitations

on

a

Web

site's

liability,

and

notifications

regarding

how

the

user's

personal

information

can

be

used.

3

These

contracts

are

known

as

"browsewrap"

and

"clickwrap"

agreements.

A

clickwrap

agreement

is

electronically

presented

and

requires

an individual

to

click

on

a

but-

ton

indicating

assent

(agreement

to

the

terms)

prior

to

downloading

software

or

accessing

a

Web

site.

4

Browsewrap

agreements

dictate

that

any

additional

"browsing"

past

the

homepage

constitutes

acceptance

of

proposed

terms

located

on

the

Web

site.

5

The

terms

are

often found

by

clicking

on

hyperlinks

labeled

"Legal"

or

"Terms

of

Use.

6

'See,

e.g.,

Nancy

Kim,

Clicking

and

Cringing,

86

OR.

L.

REV.

797

(2007);

Mark

Lemley,

Terms

of

Use,

91

MINN.

L.

REV.

459

(2006);

Juliet

Moringiello,

Signals,

Assent

and

Internet

Contracting,

57

RUTGERS

L.

REV.

1307

(2005).

In

the

case of

most

blogs,

even

if

the

blog

author

does

not

require

an

online

agreement,

readers

are

subject

to

the

terms

of

use

imposed

by blog

hosting

services

such as

Blogger,

WordPress

or

Live

Journal.

See,

e.g.,

Blogger,

Terms

of

Service, http://www.blogger.com/terms.g

(last

visited

Mar.

4,

2010);

Google,

Terms

of

Service,

http://www.google.com/accounts/TOS

(last

visited

Mar.

4,

2010);

WordPress,

Terms

of Service,

http://en.wordpress.comtos/

(last

visited

Mar.

4,

2010);

Facebook,

Bill

of

Rights and

Responsibilities,

http://www.facebook.comgroup.

php?gid

=

69048030774#!/terms.php?ref

=

pf

(last

visited

Mar.

4,

2010).

3

See,

e.g.,

Blogger,

Terms

of

Service,

supra

note

2;

Google,

Terms

of

Service,

supra

note

2;

WordPress,

Terms

of Service,

supra

note

2;

Facebook, Bill

of

Rights

and

Respon-

sibilities,

supra

note

2.

4

See

Oracle

USA

v.

Graphnet,

2007

WL

485959

at

*1

(N.D.

Cal.

Feb.

12,

2007);

Kim,

supra

note

2,

at

799.

According

to

Judge

David

0.

Carter

of

the

United

States

District

Court

for

the

Central

District

of

California,

"The

term

'clickwrap

agreement'

is

borrowed

from

the

idea

of'shrinkwrap

agreements,'

which

are generally

license

agreements

placed

inside

the

cellophane

'shrinkwrap'

of

consumer

software

boxes

that,

by

their

terms,

become effective

once

the

'shrinkwrap'

is opened."

Stomp,

Inc.

v.

NeatO,

LLC,

61

F.

Supp.

2d

1074,

1080

n.II

(C.D.

Cal.

1999).

'See

Southwest

Airlines

Co.

v.

Boardfirst,

LLC,

2007

U.S.

Dist.

LEXIS

96230,

2007

WL

4823761

at

*5

(N.D. Tex.

Sept.

12,

2007)

("Browsewraps

may

take

various

forms

but

typically

involve

a

situation

where

notice

on a

website

conditions

use

of

the

site

upon

compliance

of

certain

terms

or

conditions, which

may

be

included

on

the

same

page

as

the

notice

or

accessible

via

a

hyperlink.").

See

also

Register.com,

Inc.

v.

Verio,

Inc.,

356

F.3d

393

(2d

Cir.

2004);

Specht

v.

Netscape

Comm.

Corp.,

306

F.3d

17

(2d

Cir.

2002);

Pollstar

v.

Gigmania

Ltd.,

170

F. Supp.

2d

974

(E.D.

Cal.

2000).

6

See

Juliet

Moringiello

&

William

Reynolds,

Survey

of

The

Law

of

Cyberspace:

Elec-

tronic

Contracting

Cases

2007-2008,

64

Bus.

LAW.

199,

200

(2008).

406

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

The

shift

from

obligation-free

access

to

media

to

binding,

complex,

contractual

terms

upon

every

Web

site

visit

is

problematic.

7

Edith

Warkentine

wrote:

People who

sign

standard

form

contracts

rarely

read them.

Counsel

for

one

party

(or

one

industry)

generally

prepare standard-form

contracts

for

repetitive

use

in

consecutive

transactions.

The

party

who

has the

greater

bargaining

power

usually writes

the

standard

form

contracts

and

often

presents

it

for

signature

on

a

"take

it

or

leave

it"

basis.

8

Wayne

Barnes

asserted:

Through

a

few

clicks of

the

mouse,

consumers

are

agreeing

in record

num-

bers

to

unfavorable,

one-sided

terms

in

adhesion

contracts.

These

include

many

of

the

standard

favorite

terms

of

businesses,

such

as

arbitration

clauses,

damage

limitations, and

warranty

disclaimers.

But,

in

the

online

and

software

contract

context,

it

also

increasingly

includes

new

creations

such

as

spyware

clauses

and

severe

license

restrictions.

9

One

of

the

problems

inherent

in

online

user

agreements

is

that

they

purport

to

bind

an

individual

accessing a

Web

site

regardless

of

whether

the

user

knows

he

or

she

has

entered

into

an

agreement

or

has

knowl-

edge

of

the

specific

terms.

10

Professor

Mark

Lemley

wrote,

"Ten

years

ago,

courts

required

affirmative

evidence

of

agreement

to

form

a

con-

tract.

No

court

had

enforced

a

'shrinkwrap'

license,

much

less

treated

7

Victoria

Ekstrand,

in

2002,

noted

the

distinction

between

traditional

and

digital

media

in

her

survey

of

the

user

agreements

of

the

top fifty

news

organizations

in

the

United

States.

Victoria

Ekstrand,

Online

News:

User

Agreements

and

Implications

for

Readers,

79

JOURNALISM

&

MASS

COMM.

Q.

602

(2002).

Ekstrand

stated:

The

contracting

of news

on

the

Web

represents

a

fundamental

shift

in

the

way

consumers

receive

their

news.

Rather

than

engaging

in

a

traditional

sale

of

information

-

in

which

the

publisher

receives

payment

for

a

printed

newspaper

-

today's

online

news

publishers

often provide

free

content

in

exchange

for

tacit agreement

to

an

online

user

agreement.

Under

such

agreements,

news

consumers

often

agree

not

to

redistribute

content,

expect

reliability,

or

submit

offensive

material.

In

return,

users

are

given

permission

to

access

news

content,

provided

they

abide by

the

terms.

Id.

at

602-603.

'Edith

Warkentine, Beyond

Unconscionability:

The

Case

for

Using "Knowing Assent"

as

the

Basis

for

Analyzing Unbargained-for

Terms

in

Standard

Form Contracts,

31

SEATTLE

U.

L.

REV.

469, 469

(2008).

9

Wayne

Barnes,

Toward

a

Fairer

Model

of

Consumer

Assent

to

Standard

Form

Con-

tracts:

In

Defense

of

Restatement

Section

211(3),

82

WASH.

L.

REV.

227, 228 (2007).

1

°See,

e.g.,

Burcham

v.

Expedia,

2009

WL

586513

(E.D.

Mo.

Mar.

6,

2009).

407

a

unilateral

statement

of

preferences

as

a

binding

agreement."

1 1

Re-

cently,

however,

"[M]

ore

and

more

courts

and commentators

seem

will-

ing

to

accept

the

idea

that

if

a

business

writes

a

document

and

calls

it

a

contract,

courts

will

enforce

it

as

a

contract

even

if

no

one

agrees

to

it,"

Lemley

wrote.

12

Additionally,

empirical

and

scientific

research

have

demonstrated

that

an

individual's

cognitive

limitations

and

the

de-

sign

and

presentation

of

standard-form

contracts

significantly

frustrate

an individual's

ability

to

properly

read

and

understand

standard-form

contracts.

13

Contract

doctrine

is

designed

to

protect

the

expectations

of

the

par-

ties.

14

With

that

in

mind,

does

it

make

sense

to

enforce

contracts against

a

party

with

no

contractual

expectations?

The

purpose

of

this

article

is

to

explore

the

implications

of

online-agreement

jurisprudence

for

"passive

media

users,"

a

group

defined

for

purposes

of

this

research

as

consist-

ing

of

readers,

viewers

and

listeners

who

make use

of

a

Web

site

for

informational,

research

or

entertainment

purposes

only,

without

con-

tributing

content

or

otherwise

interacting

with

a

Web

site.

The

issue

of

whether

passive

media

users

are

bound

by

terms

of

use

is

important

because

these

users

are

most

likely

to

fail

to

realize

they

have

entered

into

binding

contracts.

Nearly

every

person

on

the

Internet

is,

at

some

point,

a

passive

media

user.15

For

example,

by

merely

clicking

on

a

link

to

a

story

on

The

New

York

Times

online,

a

user

is

purportedly

bound

by

the

Web

site's

terms

of

use,

which include

restrictions

on

what

a

user

is

permitted

to

do

with

The

New

York

Times

content,

limitations

on

the

legal

remedies

available

to

the

user

in

any

dispute

with

the

Web

site,

16

and pronouncements

of

user

consent

regarding

what

The

New

York

Times

is

permitted

to

do

with

the

users

data/personal

information.

17

Thus,

terms

and

conditions

drafted

to

benefit

the

Web

site,

not

to

protect

users'

fair

use

rights

to

use

copyrighted

material

or

to

protect

user

privacy,

will

determine

the

rules

ULemley,

supra

note

2,

at

460

(citations

omitted).

1

2

Id.

13

See

Shmuel

Becher,

Behavioral

Science

and

Consumer

Standard

Form

Contracts,

68

LA.

L.

REV.

117

(2007);

Melvin

Aron

Eisenberg,

The

Limits

of

Cognition

and

the

Limits

of

Contract,

47

STAN.

L.

REV.

211

(1995).

1

4

See

1

RICHARD

A.

LORD,

WILLISTON

ON

CONTRACTS

§

1:1

(4th

ed.

2010)

(citing

MCA

Television

Ltd.

v.

Pub.

Interest

Corp.,

171

F.3d

1265

(11th Cir.

1999)).

l"The

fragmented

nature

of

the

medium

ensures

that

at

some

point

most

Internet

users

will

click

on a

news

story

without

any

further

participation.

For

example,

one

of

the

most popular

social

media

Web

sites,

Twitter,

acts

as

a

link

super-feeder,

exposing

individuals

to

multiple

sites

(and

thus,

multiple

terms

of

use

agreements)

each

day.

16

The

New

York

Times,

Terms

of

Service,

http://www.nytimes.com/ref/membercenter/

help/agree.html

(last

visited

Dec.

2,

2009).

17

The

New

York

Times,

Privacy

Policy,

http://www.nytimes.com/ref/membercenter/

help/privacy.html

(last

visited

Dec.

2,

2009)

(incorporated

by

reference

into

The

New

York

Times

Terms

of Service).

408

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

applied

to

those

who

get

their

news

from

The

New

York

Times

online

and

countless

other

Web

sites.

Additionally,

if

passive

media

users

are

held

to

violate

a

Web

site's

terms

of

use,

they might

even

be

charged

with

violation

of

a

computer

misuse

statute

such as

the

Computer

Fraud

and

Abuse

Act.

I

"

Terms

of

use

disputes

with

passive

media

users

are

being

played

out

both

in

the

courts

and

in

threatened

litigation.

19

Maura Larkins,

who

maintained

a

watchdog

Web

site

for

San

Diego

schools,

was

threatened

with

a

lawsuit

for

reproducing

a

small

amount

of

material

from

a

fo-

rum

thread

from

SchwabLearning.org's

message

board.

2

°

She received

a

cease-and-desist

letter

from

the

company

that

owns

SchwabLearnig.org.

The

Citizen

Media

Law

Project

reported

that

the

letter

contained

a

clam

"that

reproducing

message

board content

without

permission

was

a

vi-

olation

of

the

GreatSchool's Terms

of

Use.

[The

letter]

further

indicated

that

GreatSchools

would

take

legal

action

if

Larkins

failed

to

remove

the

content

within

two

business

days."

21

Online

consumers

most

likely

realize

that

purchases,

to

some

degree,

involve

the

formation

and

execution

of

contracts.

Users

of

highly

in-

teractive

Web

sites are,

at

numerous

points

in

their

interaction

with

a

Web

service,

made

aware

of

some

terms,

obligations

and

restrictions

on

behavior. Can

the

same

be

said

for

the

itinerant

user

simply

read-

ing

content

after

clicking

a

link?

This

article

examines

whether

courts

have

either

implicitly

or

explicitly

recognized

a

distinction

between

con-

sumers

entering

into

transactions;

interactive

media

users

who

create

and

upload

content

on

Web

sites

and

communicate

with other

users; and

passive

media

users

who

engage

in

little,

if

any,

of

the

activity

tradi-

tionally

held

to

signal

the

assent

necessary

to

bind

parties

contractually.

The

article

also

examines

other

factors considered

by

courts in online

agreement

disputes

and

the

resulting

implications

for

passive

media

users.

1818

U.S.C.

§1030(a)(2)

(2001).

See

also

United

States

v.

Drew,

259

F.R.D.

449

(C.D.

Cal.

2009)

(holding

that

violating

MySpace.com's

terms

of

use

does

not

constitute

a

violation

of

the

Computer

Fraud

and

Abuse

Act,

a

theory

advanced

by

the

prosecution);

Guajome

Park

Acad.

v.

Duperry,

No.

06-0658

H

RBB (S.D.

Cal.

filed

Dec.

11,

2006);

Christine

Galbraith,

Access

Denied:

Improper

Use

of

the

Computer

Fraud

and

Abuse

Act

to

Control

Information

on

Publicly

Accessible

Internet

Websites,

63

MD.

L.

REV.

320

(2004);

Llewellyn

Joseph

Gibbons,

It's

Nobody's

Business,

But

You

Still

Cannot

Lie

About

It:

Criminalizing

Innocent

Attempts

to

Maintain

Cyber-Privacy,

30

OHIO

N.U.

L.

REV.

377 (2004);

Orin

Kerr,

Cybercrime's

Scope:

Interpreting

"Access"

and

"Authorization"

in

Computer

Misuse

Statues,

78 N.Y.U.

L.

REV.

1596, 1596

(2003).

19

See

Wargo

v.

Lavanderia,

No.

08-664752

(N.D.

Ohio

filed

July

14,

2008)

(dismissing

a

defamation

claim

for

lack

of

personal

jurisdiction

over

the

author

of

Web

site

comments

and

noting

the

Web

site's

terms

of

service

regarding

choice

of

forum).

2

°GreatSchools,

Inc.

v.

Maura Larkins,

Citizen

Media

Law

Project,

http://www.

citmedialaw.org/threats/greatschools-inc-v-maura-larkins

(last

visited

Dec.

4,

2009).

2

1

id.

409

The

article

analyzed

the

fifty-six

relevant

federal

and

state

cases

within

the

past

five

years

that

significantly

addressed

terms

of

use

or

technology.

22

Given

the

rapidly

evolving

nature

of

online

agreements,

the

search

was

limited

to

the

years

to

ensure

relevance.

Cases

analyzing

offline

and/or

paper

standard-form

contracts

or

those

providing merely

a

cursory

review

of

online

agreements

are

beyond

the

scope

of

the

article

and

were

not

analyzed.

Ultimately,

this

article

concludes

that

although

courts

have

not

recog-

nized

an

explicit

passive

media

user

exception

to

online

agreements,

the

factors courts

consider

relevant

in

determining

whether

to

bind

a

party

to

an

online

agreement

provide

strong

support

for

a de

facto

exemption

of

passive

media

users

from online

agreements

in

most

contexts.

But

the

finding

comes

with

a

warning:

Media

users

of

highly

interactive

Web

sites,

such

as

social

network sites and

Web

sites

that

allow

users

to

create

profiles,

are

likely

to

bind

themselves

to

the

terms

of

use

by

their

participation.

The

article

argues

that

the

de

facto

exemption

should

be

explicitly

recognized

by

courts

in

order

to

remove

ambiguity

in

the

on-

line

contracting

process

and alleviate

the

contractual

burden

from

those

least

likely

to

realize

they

are

bound

by

law.

The

first

part

of

this

article

describes

passive

media

users

and

how

they

can

be

different

from

other

individuals

online.

The

second

part

pro-

vides

a

brief

review

of

online

contract

formation

and

problems

regarding

their

enforcement.

The

third

and

fourth

parts

analyze online-agreement

cases

within

the

past

five

years

to

determine

if

and

how

courts

distin-

guish

between

the

types

of

parties

to

online

agreements,

what

other

factors courts

consider

in

online-contract

adjudication,

and

the

implica-

tions

for

passive

media

users.

The

article

concludes

with

reasons

why

the

de

facto

exemption

from

online

agreements

for

passive

media

users

should

be officially

recognized by

courts.

PASSIVE

ONLINE

MEDIA

USERS

Readers,

viewers

and

listeners

of

traditional

media

-

print

publi-

cations,

television

and

radio

-

are

almost

all

passive.

Save

the

occa-

sional

letter

to

the

editor

or

phone

call

to

the

disc

jockey,

the

traditional

media

experience

requires

little

interactivity

or

negotiation

and,

thus,

little

room

for

contract

formation.

Since

contracts

were

not

a

part

of

a

22

The

primary

tool for

research

was

Westlaw,

using

the

search

(BROWSEWRAP

"BROWSE

WRAP"

CLICKWRAP

"CLICK

WRAP"

"TERMS

OF

USE"

"TERMS

OF

SER-

VICE"

"ONLINE

AGREEMENT")

&

WEBSIT!)

&

(CONTRACT!

ASSENT!

AGREE!)

&

da(last

5

years)

in

the

ALLCASES

database.

Efforts

were made

to

supplement

the

re-

search

using

refined searches,

various

bibliographies

and

secondary

source

references.

410

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

traditional

media

experience,

readers,

viewers

and

listeners

have

little

reason

to

expect

to

be

contractually

bound

by

their

media

use.

Arguably,

the

same

can

be

said

for

many

online

media

users,

at

least

to

the

extent

that

an

online

media

experience

mirrors

traditional

media

use

-

in

other

words,

the

passive

online

media

user.

For

the

purposes

of

this

article,

"passive

online

media

user"

will

be

defined

as

any

reader,

viewer,

listener

who

makes

use

of

a

Web

site

for

informational,

research

or

entertainment

purposes

only,

without

con-

tributing

content

or

otherwise

interacting.

A

passive

media

user's

main

activity

is

browsing,

not

a

financial

transaction

or

communication

with

others.

Examples

of

passive

media

users

are individuals

reading

news

Web

sites

and

blogs,

and

individuals

browsing

(but

not

contributing

to)

social

networking sites,

discussion

boards,

instant

messaging

or

other

media

that

do

not

require

financial

transactions,

communication

with

other

users,

or

content

creation

for

use.

A

passive

media

user

would

be

an individual

clicking

on

and

reading

a

news

story

on

The

New

York

Times

Web

site.

Because

courts

have consistently

enforced

contracts

that

required

af-

firmative

action

from

the

user,

23

media

users

who

consent

to

contracts

by

clicking,

typing

initials,

and

the

like

at

any

point

in

their

media

use

are

excluded

from

the

definition

of

"passive

media

user."

Thus,

many

participatory

forms

of

media,

such

as

social

network

sites,

will

only

be

used

by

passive

media

users

to

the

extent

they

can

be

passively

viewed

without

an

explicit

assent

to

terms

of

use.

Users

actively

engaging

such

Web

2.0

sites

are referred

to

here

as

"interactive

media

users."

This

class

of

user

would

be

anyone

who

creates

a

profile

or

account

on

Face-

book,

Flikr,

Craigslist

or

other

sites

on

the

participatory

Web.

The

class

would

not

include

Web

site

users

simply

browsing

the

publicly

available

portions

of

those

sites.

It

is

important

to

note

that

passive

media

users

are

classified

ac-

cording

to

how

they

use

Web

sites.

Thus,

an

individual

could

be

an

interactive

media

user

on

a

social

network

site

and moments

later

be

a

passive

media

user

by

clicking

on

the

link

to

a

story

on

Salon.com.

This

article

also

includes

an

analysis

of

transactional

consumers,

who

are arguably

even more

likely

than

interactive

media

users

to

re-

alize

they

are

entering

into

contracts

online.

The

term

"transactional

consumer"

is

defined

here

as

any

individual

who

engages

in

a

finan-

cial

transaction

or

commercially

while

using

a

Web

2 3

See,

e.g,

Oracle

v.

SAP,

2008

WL

5234260

at

*7

(N.D.

Cal.

Dec.

15,

2008)

("Plaintiffs

have

stated

a

claim

for

breach

of

contract, based

on

the

existence

of

the

clickwrap

agreement.

Many

courts

have

found clickwrap

agreements

to

be

enforceable.");

Haustein

v.

Softwrap

Ltd.,

2007

WL

2404624

at

*3

(W.D.

Wash.

Aug.

17,

2007)

("Other courts

have

held

that

'clicking'

agreement

to

the

terms

of

a

contract

is

an

'assent'

for

purposes

of

contract

analysis.").

See

also

Lemley,

supra

note

2,

at

476.

411

site. Examples

of

transactional

consumers

are individuals

using

eBay,

Amazon

or

Paypal;

downloading

software;

or

making other

common

e-

commerce

transactions.

It

should

be

emphasized

that

this

definition

in-

cludes

not

only

those

who

actually

make

financial

transactions

but

also

those

engaging

activities

commonly

associated

with

commercial

trans-

actions,

such

as

downloading

trial

or

free

software

or

placing

orders

for

tangible

goods

at

no

cost.

Passive

media

users

are

most

likely

to

fail

to

realize

they

have

entered

into

binding

contracts

because

their

main

online

activity

-

browsing

-

is

not

a

traditional

method

of

accepting

an

offer.

Additionally,

users

who

browse

are

less

likely

to

actually

be

presented

with

the

terms

of

use,

compared

to

users

who

must

click-through

terms

to

access

Web

pages.

Although

many

terms

in

online

agreements

are

more

relevant

to

the

activities

of

interactive

media

users

and

transactional

consumers,

passive

media

users

can

still

be

greatly (and

negatively)

affected

by

online

agreements.

All

online

users

leave

a

trail

of

browsing

habits,

IP

addresses

and

user

preferences

that

are

typically

covered by

a

Web

site's

privacy

policy

and

incorporated

into

the

terms

of

use

by

reference.

24

This

information

can

be

used

in

a

way

that

violates

a

user's

privacy

and

can

harm

the

user

financially

25

Many

terms

of

use

also

contain

dispute

resolution and

choice

of

law

and

forum

clauses,

2 6

meaning

any

dispute

with

the

Web

site

will

be

subject

to

the

Web

site's

terms if

the

plaintiff

accessed

the

Web

site.

Thus,

passive

online

media

users

seeking

to

bring

defamation

or

privacy

claims

could be forced

to

litigate

in

the

Web

site's

state

of

choice.

Even

if

a

Web

site use

is

casual

or

fleeting,

users

are

purportedly

still

bound

by

terms

of

use.

Thus,

this

potential

for

harm

exists

for

one-

time

visitors

to

Web

sites

as

well

as

for

users

who

spend

only

a

brief

amount

of

time

on

a

Web

site.

An

individual

reading

a

single,

brief

story

online from

The

New

York

Times

could

be

harmed

by

terms

of

use

in

many

of

the

same

ways

as

a

user

who

created

a

profile

and

extensively

used

the

same

Web

site.

24

See

Allyson

Haynes,

Online

Privacy

Policies:

Contracting

Away

Control

Over

Per-

sonal Information?,

111

PENN

ST.

L.

REV.

587,

594 (2007).

2 5

See,

e.g.,

DANIEL

SOLOVE,

THE

DIGITAL

PERSON:

TECHNOLOGY

AND

PRIVACY

IN

THE

INFORMATION

AGE

(2004);

Paul

Ohm,

Broken

Promises

of

Privacy:

Responding

to

the

Surprising

Failure

of

Anonymization,

57

UCLA

L.

REV.

(forthcoming

2010).

2

6

See,

e.g.,

Blogger,

Terms

of

Service,

supra

note

2

(stating,

"These

Terms

of Service

will

be

governed

by

[California

law],

without

giving

effect

to...

your

actual

state

or

country

of

residence. Any

claims,

legal

proceeding

or

litigation

arising

in

connection

with

the

Service

will

be

brought

solely

in

Santa

Clara

County, California,

and

you

consent

to

the

jurisdiction

of

such

courts"

[emphasis

added]).

412

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

Victoria

Ekstrand

found

that

online news

sites

(some of

the

most

likely

to

be

"passively

used")

contained

a

great

number

of

restrictions.

2 7

For

example,

most

of

the

Web

sites

she

analyzed contained

restrictions

on

the

use

of

site

material,

such

as

prohibitions

on

modifying,

publish-

ing,

transmitting,

reproducing

or

creating

new

works

from,

distributing,

performing, displaying

or

in

any

way

exploiting

the

content

of

the

Web

site.

28

These

agreements

also

contain

limitations

on

liability

for

the

in-

accuracy

of

the

site's

content and

for

any

damage

caused

to

computers

or

a

user's business

or

financial

interest

by

the

site.

29

Thus,

online

agree-

ments

can

have

significant

implications

for

even

passive

online media

users,

provided

these

terms

of

use

are

enforceable.

A

REVIEW

OF

ONLINE

AGREEMENTS

The

contract

is

the

method

of

autonomous

legal

ordering

in

society.

Richard

Lord

in

Williston

on

Contracts

wrote,

"[A]

contract

enables

par-

ties

to

project

exchange

into

the future

and

to

tailor

their

affairs

accord-

ing

to

their

individual

needs

and

interests;

once

a

contract

is

entered,

the

parties'

rights

and

obligations

are

binding

under

the

law."

30

The

basic

definition

of

a

contract

is

deceptively

simple:

It

is

merely

a

promise

or

promises

enforced

by

law.

31

Further

inspection reveals

an

exceptionally

complex

and

nuanced

area

of

law.

What

are

"promises?"

What

does

it

mean

to "enforce"

a

contract? When

are

contracts bind-

ing

upon

individuals?

A

full

examination

of

these

questions

is

outside

the

scope

of

this

article.

However,

as

a

review,

the

elements

of

a

valid

and

binding contract

include

an

offer,

acceptance,

capacity

to

form

a

contract,

consideration

(the

bargained

for

legal

benefit

and/or

detri-

ment),

a

manifestation

of

mutual assent,

and

legality

of

object

and

of

consideration.

3

2

Online

agreements

in

the

form

of

terms

of

use

constitute

a

subset

of

what

are

known as

"standard-form"

contracts.

Unlike individualized

agreements

tailored

to

the

specifics

of

a

particular

deal,

standard-form

contracts

are

one-size-fits-all,

whereby

their

individual

terms

are

not

negotiated

by

the

parties.

33

These

typically take-it-or-leave-it

contracts,

27

Ekstrand,

supra

note

7,

at

608-10.

2

Id.

at

608.

2

9

Id.

at

611.

30

LORD,

supra

note

14,

at

§

1:1

(citing

Transport

Workers

Union

of

America

v.

South-

eastern

Pennsylvania

Transp.

Auth.,

145

F.3d

619

(3d

Cir.

1998)).

3

1

See

RESTATEMENT

(SECOND)

OF

CONTRACTS

§

1

(1981)

(defining

contracts

as

"a

promise

or

a

set

of

promises

for

the

breach

of

which

the

law

gives

a

remedy,

or

the

performance

of

which

the

law

in

some

way recognizes

as

a

duty").

32

See

Perlmuter

Printing

Co.

v.

Strome,

Inc.,

436

F.

Supp.

409,

414

(N.D.Ohio

1976).

3

See

RANDY

BARNETT,

PERSPECTIVES

ON

CONTRACT

LAW

141

(3rd

ed.

2005).

413

also

known

as

contracts

of

adhesion,

present

a

number

of

problems, both

theoretically

and practically.

In

theory,

contracts

are

a

"meeting

of

the

minds."

34

Yet,

in

the

case

of

standard-form

contracts,

usually

at

least

one

party

has

little

idea

exactly

what

he

or

she

is

agreeing

to,

if

the

contract

was

read

at

all.

35

Practically,

standard-form

contracts

are

highly

efficient

and

allow

businesses

to

manage

risk

and

solve

disputes.

36

Yet,

these

contracts

are

usually

long,

filled

with

legalese,

and contain

terms

that

benefit

the

drafter

at

the

expense

of

the

parties

agreeing

to

the

terms.

3

7

There

is

no

clear consensus

on

how

to

resolve

the

problems

presented

by

online

agreements.

Yet

the

issue

has

received

much scholarly

at-

tention.

To

paraphrase

Professor

Wayne

Barnes,

neither

standard-form

contracts

nor

articles

about

standard-form

contracts

are

anything

new.

38

Barnes

found

that

"notwithstanding

the

voluminous

treatment

of

stan-

dard

form

contracts

in

the

literature,

there

is

no

uniform

line

of

thought

regarding appropriate

treatment

of

such

contracts."

39

The

sizeable

body

of

scholarly

literature

concerning online

agreements

generally

finds

that

such

contracts

can

be

problematic

and potentially

detrimental

to

indi-

viduals

outside

a

commercial

context.

4

"

Of

course,

the

same

has

been

said

for

all

standard-form

contracts.

4

1

Professor

Juliet

Moringiello

asserted

that

"[i]t

is

a

basic

rule

of

con-

tract

law

that

in

order

for

a

contract

to

be

formed,

the

parties

to

the

34

Minster Farmers

Coop.

Exchange

Co.,

Inc.

v.

Meyer,

884

N.E.2d

1056, 1061

(Ohio

2008)

(finding

"[a]

meeting

of

the

minds

as

to

the essential terms

of

the

contract

is

a

requirement

to

enforcing

the

contract") (citing

Episcopal

Retirement

Homes, Inc.

v.

Ohio

Dept.

of

Indus.

Relations,

575

N.E.2d

134,

137

(Ohio

1991)).

3

See

Warkentine,

supra

note

8,

at

476.

3

6

See

E.

ALLEN

FARNSWORTH

ET.

AL.,

CONTRACTS

368

(2001)

(stating

that

standard-

form

contracts

allegedly

"reduce

uncertainty

and

save

time and

trouble;

they

simplify

planning

and

administration

and make superior

drafting

skills

more

widely

available;

and

they

make

risks

calculable

and 'increase

that

real

security

which

is

the

necessary

basis

of

initiative

and

the

assumption

of

foreseeable

risks")

(citing

Morris

R.

Cohen,

The

Basis

of

Contract,

46

HARV.

L.

REV.

553, 558

(1933)).

37

See

Warkentine,

supra

note

8,

at

476.

3

8

Barnes,

supra

note

9,

at

228.

3

9

Id.

4

°See,

e.g.,

Robert

A.

Hillman

&

Jeffrey

J.

Rachlinski,

Standard

Form

Contracting

in

the

Electronic

Age,

77

N.Y.U.

L.

REV.

429,431

(2002);

Kim,

supra

note

2,

at

798;

Lemley,

supra

note

2,

at

460;

Moringiello,

supra

note

2,

at

1309;

Warkentine,

supra

note

8,

at

476.

41

See

Nathan

Isaacs,

The

Standardizing

of

Contracts,

27

YALE

L.J.

34

(1917);

Friedrich

Kessler,

Contracts

ofAdhesion-

Some

Thoughts

About

Freedom

of

Contract,

43

COLUM.

L.

REV.

629

(1943);

Karl

Llewellyn,

Book

Review,

52

HARV.

L.

REV.

700

(1939);

John

E.

Murray

Jr.,

The

Standardized

Agreement

Phenomena in

the

Restatement

(Second)

of

Contracts,

67

CORNELL

L.

REV.

735

(1982);

Todd

D.

Rakoff,

Contracts

of

Adhesion:

An

Essay

in

Reconstruction,

96

HARV.

L.

REV.

1174

(1983);

W.

David

Slawson,

The

New

Meaning

of

Contract:

The

Transformation

of

Contracts

Law

by

Standard

Forms,

46

U.

PITT.

L.

REV.

21

(1984).

414

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

contract

must

reach

a

meeting

of

the

minds.

Because

a

contract

is

a

consensual

relationship

both

parties

to

the

contract

must

agree

to

be

bound."

42

However,

Moringiello

found

that

the

traditional

rules

of

con-

tract

law,

"based

on

the

ideal

of

two

humans

meeting

in

person

to

agree

to

terms,

have

been

modified

almost

to

the

point

of

non-existence."

43

Moringiello

cited

as

an

example

courts'

increasingly

strict

adherence

to

the

"objective

theory

of

contract,

which holds

that

the actual

state

of

mind

of

the

parties

is

irrelevant.

44

One

of

the

largest

bodies

of

litera-

ture

regarding

online

contracting

focuses

on

the requirement

of

mutual

assent

-

the

intent

to

be

bound

by

a

contract

manifested

in

the

process

of

offer

and

acceptance.

4

5

In

Burcham

v.

Expedia,

the United

States

District

Court

for

the

East-

ern

District

of

Missouri

found

that

'[c]ourts

presented with

the

issue

[of

online

agreements] apply

traditional

principles

of

contract

law

and

focus on

whether the

plaintiff

had

reasonable

notice

of

and

manifested

assent

to

the

online

agreement.

46

Specifically

regarding

browsewrap

agreements,

the

court

noted

that

other

courts

"have held

that

'the

va-

lidity

of

a

browsewrap

turns

on

whether

a

website

user

has

actual

or

constructive

knowledge

of

a

site's

terms

and

conditions

prior

to

using

the

site.

'47

Thus,

in

order

to

be

bound,

parties

need

not

have

a

"meeting

of

the

minds."

Rather,

a

"reasonable

communication"

of

the

terms

will

suffice.

42

Moringiello,

supra

note

2,

at

1311.

4

3

Id.

44

Id.

(citing

Hotchkiss

v.

Nat'l

City

Bank

of

N.Y.,

200

F.

287,

293

(S.D.N.Y.

1911),

aff'd,

201

F.

664

(2d

Cir.

1912),

aft'd,

231

U.S.

50

(1913);

Woburn

Nat'l

Bank

v.

Woods,

89

A.

491, 492

(N.H.

1914).

This

rule

is

sometimes

tempered

by

the

unconscionability

doctrine,

under

which

a

party

will

not

be

bound

to

contract

clauses

to

which

he

is

deemed

to

have

agreed

if the

clauses

are

particularly

one-sided,

see

U.C.C.

§

2-302,

Official

Comment

1,

or

if the

clauses

are

unfairly

surprising,

see

RESTATEMENT

(SECOND)

OF

CONTRACTS

§

211

cmt.

c.

(1981).

45

See

Warkentine,

supra

note

8,

at

476.

See

also

Kim,

supra

note

2,

at

798;

Lemley,

supra

note

2,

at

460;

Moringiello,

supra

note

2,

at

1311.

462009

WL

586513

at

*2

(E.D.

Mo.

Mar.

6,

2009)

(citing

Feldman

v.

Google,

Inc.,

513

F.

Supp.

2d 229,

236

(E.D.

Pa.

Mar.

29,

2007)).

See

also

Specht

v.

Netscape

Comm.

Corp.,

306

F.3d

17,

28-30

(2d

Cir.

2002)).

47

Id.

at

*8

(citing

Register.com,

Inc.

v.

Verio,

Inc.,

356

F.3d

393,

429

(2d

Cir.

2004);

Molnar

v.

1-800-Flowers.com, 2008

WL

4772125

at

*7

(C.D.

Cal.

Sept.

29,

2008)

(stating

that

"courts have

held

that

a

party's

use

of

a

website may

be

sufficient

to

give

rise

to

an

inference

of

assent

to

the

terms

of

use

contained

therein");

Southwest

Airlines

Co.

v.

Boardfirst,

LLC,

2007

U.S.

Dist.

LEXIS

96230, 2007

WL

4823761

at

*5

(N.D.

Tex.

Sept.

12,

2007);

Pollstar

v.

Gigmania

Ltd.,

170

F.

Supp.

2d

974,

982

(E.D.

Cal.

2000)

(stating

that

"the

browser

wrap

license

agreement

may

be

arguably valid and

enforceable").

415

The

reasonable

communication

requirement

serves

as

a

substitute

for

a clear

manifestation

of

assent

to

the

contract.

48

Thus,

a

reasonable

communication

of

terms

gives

rise

to

what

is

commonly

referred

to

as

the

offeree's

"duty

to

read.

49

In

other

words,

if the terms

of

a contract

are

reasonably

communicated,

the

offeree

cannot

then

absolve

himself

or

herself

from

liability

by

failing

to

read the

terms

of

the

contract.

The

offeree

had

a

legal

duty

to

read them.

The

substitution

of

"reasonable

notice"

for

a

"meeting

of

the

minds"

as

a

requirement

for

contract

formation

is

based

on

the

adoption

of

the

objective

theory

of

contracts.

Under

this

theory,

the

intent

of

the parties,

for

example,

"I

thought

I

was

agreeing

to

'X,"'

is

irrelevant.

5

"

Instead,

the

contract

is

formed

based

on

what

a

reasonable

person

would

have

been

led

to

believe

in

the

relevant

context

(an

objective

standard).

1

Ian

Rambarran

and

Robert

Hunt

observed

that

"[c]lick-through

and

browse-wrap

agreements

fulfill

the

notice

requirement

in

different

ways."

52

While

notice

for

clickwrap

agreements

can

be

satisfied

by

using

code

to

prevent

a

user

from

proceeding

without

first

having

the

opportu-

nity

to

review

the

contract,

notice

in

browsewrap

agreements

"is

given

through

conspicuous

display

of

the

contract.

53

Nancy

Kim

wrote,

"Currently

courts

purport

to

find

assent

where

none

exists

in an

attempt

to enforce

contracts

that

provide

a

net

benefit

to

society.

Yet,

while

a

finding

of

constructive

assent

sometimes

may

be

necessary

to enforce

socially

desirable

contracts,

certain

parameters

should

be

set

around

such

a

legal

fiction."

54

Her

conclusion

is

consistent

with

many

other

scholars

who

find

the

issue

of

constructive

assent

problematic.

For

example,

Edith

Warkentine

stated

that

"[a]

s

a

corollary

to

finding

assent

to

contract

formation,

traditional

contract

doctrine

imposes

on

the

parties

a

'duty

to

read.'

55

Warkentine

noted

that

the

practical

result

of

this

duty

is

that

"if

a

party

objectively

manifests

assent

to

be

bound

to

a

contract

(for

example,

by

signing

a

written

contract

document),

a

court

will

almost

automatically

find

assent

to

all

terms

contained

in

the writ-

ing."

56

Thus,

parties

will

find

little

relief

in

defenses

like

"I

didn't read

it"

4

See

Moringiello,

supra

note

2,

at

1314.

4

9

Id.

50

Barnes,

supra

note

9,

at

228.

"See

Moringiello,

supra

note

2,

at

1314.

"

2

Ian Rambarran

&

Robert

Hunt,

Are

Browse-Wrap

Agreements

All

They

Are Wrapped

Up

To

Be?,

9

TUL.

J.

TECH.

& INTELL.

PROP.

173, 176

(2007).

5

3

Jd"

54

Kim,

supra

note

2,

at

799

(citing

Richard

Craswell,

Property

Rules

and

Liability

Rules

in

Unconscionability

and

60

U.

CHI.

L.

REV.

1,

9-10

(1993)).

"Warkentine,

supra

note

8,

at

476.

5

6

Id.

416

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

or

"I

didn't

understand

it."

57

Warkentine

advocated

a

"knowing-assent"

analysis

for

standard-form

contracts,

which,

regarding

an

unbargained-

for

term,

would

require

"(1)

that

the

unbargained-for

term

be

conspic-

uous;

(2)

that

the

importance

of

that

term

be

explained

so

that

the

adhering

party

understands

its

significance;

and

(3)

that

the adhering

party

objectively

manifests

its

assent

to

that

term

separately

from

its

manifestation

of

assent

to

undertaking

a

contractual

obligation."

5

8

Yet,

notwithstanding

all

of

the

academic

attention

paid

to

the

prob-

lems

with

terms

of

use,

courts

seem

to

be

struggling

less

than

schol-

ars

with

the

enforcement

of

terms

of

use.

In

their

2007-08

survey

of

electronic-contracting

cases,

Juliet

Moringiello

and

William

Reynolds

noted

that

"wrap"

agreements

do

not

present

novel

legal

issues,

only

novel

facts,

which

the

courts

have

handled through

analogy.

59

They

found

that

the

law

of

electronic

contracting

has

matured

to

comport

with

traditional

contract

law,

stating,

"An

offeree

who

'signs'

an

agree-

ment

by

hitting

the

'I

accept'

button

is

bound

to

its

terms

just

as

much

as

will

someone

who

signs

a

paper

contract.

Repeat

and

sophisticated

players

will

be

more

likely bound

by

more

ambiguous

forms

of

assent

than

will

innocent

ones."

6

0

In

a

of

Internet

contracting

cases,

Moringiello

and

Reynolds

asserted

that

"the

question

has apparently

become

one

of pro-

cedure

(whether

notice

was

properly

given)

rather

than

one

of

substance

(whether

the

terms

were

unfair

in

some

sense).

61

They observed

that

57

Id.

58

Id.

at

473.

5 9

Moringiello

&

Reynolds,

supra

note

6,

at

218.

60

1d.

See

also

Chundner

v.

TransUnion

Interactive,

626

F.

Supp.

2d

1084

(D.

Or.

2009);

eBay, Inc.

v.

Digital Point

Solutions,

Inc.,

608

F.

Supp.

2d

1156 (N.D.

Cal.

2009);

Exceptional

Urgent

Care

Center

I,

Inc.

v.

Protomed

Med.

Mgmt.

Corp.,

2009

WL

2151181

(M.D.

Fla.

July

13,

2009);

Jackson

v.

American

Plaza

Corp.,

2009

WL

1158829

(S.D.N.Y.

Apr.

28,

2009)

(stating

"A

'terms

of

use'

or

'terms

of

service'

contract

is

often

entered

into

by clicking

an

'I

agree'

button

on

a webpage");

Riggs

v.

MySpace,

2009

WL

1203365

(W.D.

Pa.

May

1,

2009);

Davis

v.

Dell,

2007

WL

4623030 (D.N.J.

Dec. 28, 2007);

Hauenstein

v.

Softwarp

Ltd,

2007

WL

2404624

(W.D.

Wash.

Aug.

17,

2007)

(stating,

"Plaintiff's

assent

to

the terms

of

the

License

Agreement,

manifested

through

his

'clicking'

the

'I

agree'

button,

binds

him

to

the

terms

of

the

License Agreement"); Oracle

USA

v.

Graphnet,

Inc.,

2007

WL

485959

(N.D.

Cal.

Feb.

12,

2007);

Recursion

Software

v.

Interactive

Intelligence,

425

F.

Supp.

2d

756, 783

(N.D.

Tex.

2006)

(finding

"that

clickwrap

licenses,

such

as

at

issue

here,

are

valid

and

enforceable

contracts");

Adsit

Co.

v.

Gustin,

874

N.E.2d

1018

(Ind.

Ct.

App. 2007);

Jallali

v.

Nat'l

Bd.

of

Osteopathic

Med.

Exam'rs,

908

N.E.2d

1168

(Ind.

Ct.

App.

2009);

Fieldtech

Avionics

&

Instruments

v.

Component

Control.com,

262

S.W3d

813

(Tex.

App.

2008).

6

'Juliet

Moringiello

&

William

Reynolds,

Survey

of

the

Law

of

Cyberspace:

Internet

Contracting

Cases

2004-2005,

61

Bus.

LAW.

433,

434

(2005).

417

"[a]

pparently

it's

okay

to

hang

the

other

side,

as long as

you've

given

it

proper

notice

of

your

intent

to

do

so."

6

2

Regarding

distinctions

made

by

the

courts,

Lemley

found

that

"virtu-

ally

all

of

the

courts

that

have refused

to enforce

a

browsewrap

license

have

done

so

to

protect

a

consumer."

63

He

observed

that

the

type

of

party

to

a

contract

could

affect

its

enforceability.

"[C]

ourts

seem

to

be

creating

[a

division]

between

enforceability

against

businesses

and

enforceabil-

ity

against

individuals,"

64

Lemley

wrote.

This

distinction

is

important,

as

passive

media

users

are

one

step

further

away

than

transactional

consumers

from

commercial

entities

-

those

parties

who

derive

the

most

use

from

and

are

obligated

most

by

browsewrap

agreements.

6

5

If

courts

are

willing

to

consider a

party's

characteristics

as

relevant

to

a

contract's

enforceability,

then

the distinction

between passive

media

users

and

transactional

consumers

could

be

tenable.

Although

several

scholarly

articles

have

addressed

contracts and media

use,

66

none

has

expressly examined

to

what

degree

terms

of

use

can

bind

passive

media

users.

DISTINGUISHING

BETWEEN

TYPES

OF

PARTIES

IN

ONLINE

CONTRACTS

Twenty-four

of

the

fifty-six cases

analyzed

involved

disputes

between

businesses.

The

remaining

thirty-two

cases

involved

disputes

between

consumers

and businesses

or

consumers

who

transacted

for

a

Web

site's

services.

This

result

is

unsurprising

given

the

role

of

contract in

ecom-

merce.

6

'

These

distinctions

were

at

times

difficult

to

make

and,

in

some

instances,

seemed

inconsequential.

For

example,

some

of

the

parties

6

'

2

Id.

See

also

Harold

H.

Huggins

Realty

v.

FNC,

575

F.

Supp.

2d

696,

698

(D.

Md.

2008)

(enforcing

a

clickwrap

agreement

and

stating,

"Normally,

the user

is

informed

that

the

agreement

is

accepted

by

using

the

service

and

is

often

asked

to acknowledge

such

acceptance

through

clicking

a

radio

button

labeled

with an

affirmative

statement

such

as

'I

accept.'

While

clicking

on

'I

accept'

constitutes

the

user's

acceptance

of

the

website's

contract

under

the

terms

and

conditions

contained

therein,

such

clicking

may

in

reality

merely

reflect

a

desire

by

the user

to

simply

make

the

pop-up window

disappear.

In

this

sense,

these

contracts

are not

unlike many

other

consumer

purchase

contracts

in

that

they

may

not

be

read

by

the

party

agreeing

to

them

but

they

are

also

no

less

valid.").

6

'

3

Lemley,

supra

note

2,

at

462.

6

4

Id.

at

476

6

5

1d.

66

See

Ekstrand,

supra

note

7,

at

607-11;

Daxton

R.

Stewart,

The

Promise

of

Arbitra-

tion:

Can

It

Succeed

in

Journalism

As

It

Has

In

Other

Businesses?,

6

APPALACHIAN

J.L.

135,

136-37

(2006).

67

See

Southwest

Airlines

v.

Boardfirst,

2007

WL

4823761

at

*4

(N.D.

Tex.

Sept.

12,

2007)

(stating

that

"browsewraps

have

become

more

prevalent

in

today's

increasingly

e-driven

commercial

landscape").

418

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

acting

as

businesses

were

individuals

who

more

closely

resembled

con-

sumers

in

that

they

lacked

abundant institutional

resources

or

sophis-

tication.

68

Yet

the

cases

revealed

distinctions

between

parties,

both

in

language

and

in

result.

While

courts

did

not

recognize

passive

media

users

explicitly,

they

seemed

to

implicitly

recognize

this

class

of

users

in

the

scope

of

their

rulings.

However,

courts

explicitly

recognized

busi-

nesses,

consumers

and

offline

contracting

parties

as

separate

classes

of

parties

to

a

contract.

These

classifications

are

important

because

businesses

were seen

as

more

sophisticated

than

consumers

or

offline

parties.

Thus,

they

were

more

likely

to

be

bound

by

online

agreements.

Businesses

Mark

Lemley

stated

that

"courts

presume

that

businesses

know

what

they are

doing

when

they

access

another

company's

Web

site

and

are

therefore

more

likely

to

bind

them

to

that

site's

terms

of

use."

6

9

Moringiello

and

Reynolds

found

that

"courts

seem

willing

to

treat

busi-

nesses

as

fully

capable

of

protecting

themselves,

absent

some

form

of

trickery."

7

Those

observations

held

true

for

this

analysis.

71

Courts

typically

held

businesses

to

higher

standards

than

consumers

when

the

businesses

claimed

to

be

free from

terms-of-use

obligations.

In

MySpace

v.

The Globe.com,7

the

defendant,

"a

public

company

that

pro-

vides

internet-based

communications

services,"

was

accused

of

sending

more

that

400,000

unsolicited

e-mails

to

MySpace

users after creating

a

dummy

profile

-

an

activity

prohibited

by

plaintiff's

terms

of

use.

7

3

In

refusing

to

dismiss

plaintiff's

claim

for

breach

of

contract,

the

United

States

District

Court

for

the

Central District

of

California

stated

that

"the

contract

is

not

written

prolixly,

particularly

for

an

experienced,

sophisticated

business

entity

whose

area

of

expertise

involves

Internet

7

4

6 8

See,

e.g.,

Costar

Realty

Info.,

Inc.

v.

Meissner,

604

F.

Supp.

2d

757

(D.

Md.

2009)

(involving

a

dispute

between

a

software

licensor

and an individual

utilizing

real

estate

information

services,

presumably

for

commercial

purposes);

Feldman

v.

Google,

513

F.

Supp.

2d

229

(E.D.

Pa.

2007)

(involving

an

individual

attorney

with

his

own

firm

using

a

Web

sites

advertising

services);

Krause

v.

Chippas,

2007

WL

4563471

(N.D.

Tex.

Dec.

28,

2007).

6

9

Lemley,

supra

note

2,

at

460.

7

°Juliet

Moringiello

&

William

Reynolds,

Survey

of

the

Law

of

Cyberspace:

Electronic

Contracting

Cases

2005-2006,

62

Bus.

LAW.

195,

207

(2006).

71

See,

e.g.,

Costar

Realty

Info.

v.

Copier

Country

New

York,

2009

WL

3247431

(D.

Md.

Oct.

1,

2009);

Productive

People

v.

Ives

Design,

2009

WL

1749751

(D.

Ariz.

June

18,

2009);

Oracle

v.

SAP, 2008

WL

5234260

(N.D.

Cal.

Dec.

15,

2008);

Cairo

v.

Crossmedia

Servs.,

2005

WL

756610

(N.D.

Cal. Apr.

1,

2005).

722007

WL

1686966

(C.D.

Cal.

Feb.

27,

2007).

73

Id.

at

1.

74

Id.

at

*9.

419

Indeed,

a

business

need

not

be

a

corporate

body

to

be

held

to

a

seem-

ingly

higher

standard

of

sophistication

than

a

consumer.

Individuals

transacting

business

as

sole

proprietors,

as

small

unincorporated

busi-

nesses,

or

simply

as

amateurs

appear

to

be

more

susceptible

to

on-

line

agreements

than

individuals

acting

as

media

users.

In

Feldman

v.

Google,

5

the

federal

district

court

for

the

Eastern

District

of

Pennsyl-

vania

agreed

with

the

defendant's

characterization

of

the

plaintiff,

an

individual

using

Google's

advertising

service

to

promote

his

business,

as

a

"sophisticated

purchaser"

who,

according

to

the

court,

"had

full

notice

of

the

terms,

who

was

capable

of

understanding

them,

and

who

assented

to

them."

76

Thus,

courts

adopting

the

Feldman

reasoning

would

likely

conclude

that

a

"reasonably

prudent

internet

user"

would

have

some

degree

of

digital

literacy

in

order

to

have

knowledge

of

the

existence

of

terms

of

use.

7

It

is

important

to

note

that

even

in

disputes

between

businesses,

the

party

seeking

to enforce

the

contract

must

provide

evidence

that

the

other

party

actually

visited

the

Web

site.

In

Fractional

Villas

v.

Tahoe

Clubhouse,

7

1

the

federal

district

court

for

the

Southern

District

of

California

noted

that

"[b]ecause

the

plaintiff

cannot

show

[the

rival

business],

or

any

of

its

agents,

visited

the

site,

plaintiff

fails

to

show

that

[the

business]

accepted

the

forum

selection

clause."

7

9

Transactional

Consumers

Although

consumers

were

routinely

held

to

be

bound

by

online

agree-

ments,

courts

appeared

to

give

them

slightly

more

deference

than

busi-

nesses

when

deciding

whether

to

enforce

terms

of

use.

In

Hines

v.

Over-

stock.com,

s°

the

federal

court

for

the

Eastern

District

of

New

York

re-

fused

to

enforce

a

terms-of-use

browsewrap

agreement

against

a

con-

sumer

who

used

an

online

retailer.

In

this

dispute

over

a

restocking

fee,

the

consumer

stated

that

she

was

never

made aware

of

the

terms

and

conditions

sought

to

be

imposed

via

use

of

the

Web

site."

l

Specifically,

the

plaintiff

argued:

Because

of

the lawsuit,

I

later

learned

that

if

you

scroll down

to

the

end

of

the

Web

site

page

or

pages,

there

is

in

smaller

print

placed

between

"pri-

vacy

policy"

and

Overstock.com's

registered

trademark,

the

words

"site

513

F.

Supp.

2d

229

(E.D.

Pa.

2007).

76

Id.

at

240.

77

Id.

at

239.

782009

WL

465997

(S.D.

Cal.

Feb.

25,

2009).

79

Id.

at

*3.

80668

F.

Supp.

2d

362

(E.D.N.Y.

2009).

"Id.

at

365.

420

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

user

terms

and

conditions."

I

did

not

scroll

down

to

the

end

of

the

page(s)

because

it

was

not

necessary

to

do

so,

as

I

was

directed

each

step

of

the

way

to

click

on

to

a

bar

to

take

me

to

the

to

complete

the

purchase.

8

2

The

court

agreed

with

the

plaintiff,

finding

that

plaintiff

had

no

actual

or

constructive

notice

of

the

terms

and

conditions

of

use.

Particular

deference

seemed

to

be

given

to

the

plaintiff

as

a

consumer,

compared

to

a

business,

which

is

assumed

to

be

sophisticated

about contracts.

The

court

found

that

the

defendant

"does

not

explain

how

a

site-user

such

as

Plaintiff

is

made aware

of

the

Terms

and

Conditions."

8' 3

The

court

considered

it

crucial

that

the

plaintiff

"could

not

even

see

the

link

to

them without

scrolling

down to

the

bottom

of

the

screen

-

an

action

that

was

not

required

to

effectuate

her

purchase."

8 4

The

court

ultimately

found

that

"[v]ery

little

is

required

to

form

a

contract

nowadays

-but

this

alone

does

not

suffice."

8

5

Although

the

court's

analysis

in

Hines

seemingly

turned

on

the

promi-

nence

and placement

of

the

terms

of

use, when

contrasted

with

the

Feldman

court's

language

regarding

a

reliance

on

the

sophistication

of

users

to

discover

and

understand

the

terms

of

use,

the

court's protection

of

consumers

seems

to

indicate

a

paternal

care

for

the

potentially

less

sophisticated

party.

Indeed,

the

sophistication

of

an

individual

seems

to

be

judged

on

a

sliding

scale.

In

Druyan

v.

Jagger,

8 6

an individual

purchasing

a

concert

ticket

online

sought

to

recover

damages

based

on

allegations

that

the

defendants

intentionally

withheld

timely

notice

of

a

concert's

postpone-

ment.

The

federal court

for

the

Southern District

of

New

York

deemed

the

sophistication

of

the

individual

significant

in

determining

whether

to

bind

her

to

the

defendant's

terms

of

use.

It

found

that

a

plaintiff

"who

avows

'concert

expertise'

and

familiarity

with

the

ticket-sales

busi-

ness,

and

now

alleges

that

she

has

been

using the

[defendant's]

website

for

approximately

5

years,

can

properly

be

charged

with

knowledge

of

the

site's

Terms

of

Use."

'

Consequently,

it

seems

unsophisticated

in-

dividuals

might

more

plausibly

deny knowledge

of

a

Web

site's

online

agreement.

82Id.

83Id.

at

367.

8

4Id.

85

id.

86508

F.

Supp.

2d

228

(S.D.N.Y.

2007).

"Id.

at

237.

421

Yet

this

paternalistic

distinction

is

limited, and

apparently

it does

not

extend

to

agreements

where

the

consumer

explicitly

indicates

as-

sent

through

activities

like

clicking."

8

In

Burcham

v.

Expedia,"

9

the

fed-

eral

court

for

the

Eastern

District

of

Missouri

found

that

an

individual

booking

a

room

on

the

Web

site

Expedia.com

assented

to

the

Web

site's

terms

and

conditions.

Although

the

court

had

sympathy

for

the

plaintiff,

thus

slightly

distinguishing

between

sophisticated

and

unsophisticated

parties,

it

declined

to allow

the

plaintiff's

self-confessed

ineptitude

to

influence

the

decision

to

bind

him

to

the agreement.

90

Even

minors

were

not

given

a

reprieve

from

online

agreements

if they

clicked

to

signify

assent.

InA.

V

v.

iParadigms,

9 1

the

United

States

Court

of

Appeals

for

the

Fourth

Circuit

affirmed

a

district

court's

decision

to

bind

minors

to

a

terms-of-use

clickwrap

agreement

notwithstand-

ing

their

asserted

infancy

defense,

which

renders

contracts

voidable

at

the

option

of

the

minor.

92

The

court

held

that

"plaintiffs

cannot use

[the infancy]

doctrine

as

a

'sword'

to void

a

contract

while

retaining

the

benefits

of

the

contract-high

school

credit and

standing

to

bring

this

action."

9

3

Offline

Contracting

Parties

A

few

parties

to

disputes

sought

to

enforce

terms

of

use

that

were

located

on

a

Web

site

that

was

not visited

by

the

other

party.

94

In

those

cases,

the

party

seeking

enforcement

argued

that

the

terms

were incor-

porated

by

reference into

a

separate

and/or

offline

contract,

such as

a

sales

contract.

Courts

did

not

accept

this

argument

for

consumers

and

"

8

See

Chundner

v.

TransUnion

Interactive,

626

F.

Supp.

2d

1084

(D.

Or. 2009)

(binding

an individual

to

a

clickwrap

agreement

as

part

of

a

credit monitoring

service

subscrip-

tion); Riggs

v.

MySpace,

2009

WL

1203365

(W.D.

Pa.

May

1,

2009)

(binding

an individual

media

user

to a

clickwrap

agreement

as

part

of

the

MySpace

registration

process);

Davis

v.

Dell,

2007

WL

4623030

(D.N.J.

Dec. 28,

2007)

(binding

an individual

to a

clickwrap

agreement

as

part

of

a

purchase

of

a

television);

Jallali

v.

Nat'l

Bd.

of

Osteopathic

Med.

Exam'rs,

908

N.E.

2d

1168

(Ind.

Ct.

App.

2009)

(binding

an individual

registering

for

a

licensing

exam

to

become

an

osteopathic

physician);

Adsit

Co.

v.

Gustin,

874

N.E.2d

1018

(Ind.

Ct.

App. 2007)

(binding

an individual

to a

clickwrap

agreement

as

part

of

a

purchase

of

armrest

covers).

892009

WL

586513

(E.D.

Mo.

Mar.

6,

2009).

90

1d.

at

*4.

91562

F.3d 630

(4th

Cir.

2009).

92

Id.

at

636.

9

3

1d.

9

4

See

Greer

v.

1-800-FLOWERS.COM,

2007

WL

3102178

(S.D.

Tex.

Oct.

3,

2007)

(questioning

whether

a

Web

site's

terms

of

use

agreement

is

binding

on a

consumer

making

a

purchase

using

the

telephone);

Hotels.com

v.

Canales,

195

S.W.3d

147

(Tex.

App.

2006).

422

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

did

not

bind

these

"offline"

consumers

to

online

agreements.

Business-

to-business

disputes

were

inconsistently

decided,

although

courts

con-

sistently

found

businesses

to

be

sophisticated

contracting

parties.

95

It

is

potentially

significant

that

it

was

individuals, not

businesses,

who

were

released

from

their

contractual

obligations.

In

Hotels.com

v.

Canales,

96

a

class-action

dispute

over

taxes

and

fees

charged

by

the

Web

site,

the

defendant

sought

to enforce

the

user

agree-

ment

against

a

class

of

plaintiffs

who

used

its

hotel

booking

service.

The

terms

of

use

were

accessed

through the

defendant's

Web

site

as

a

click-

wrap

agreement,

but

persons

making

reservations

by

phone

might

not

have

viewed

the

online

user

agreement.

The

Texas

Court

of

Appeals

noted

that

individuals

who

used

the

defendant's

service

through

the

Web

site

might

be

subject

to

the

agreement,

but

individuals

who

made

hotel

reservations

over

the

phone were

not.

9

8

Thus,

when

parties

are

contracting

offline

and

one

party

seeks

to

enforce

a

Web

site's

terms

of

use,

courts

evaluate

such factors

as

whether

reference

to

the

terms

was

"clear

and

unequivocal,"

whether

reference

to

the

terms

was

brought

to

the

attention

of

the

other

party,

whether the

other

party

consented

to

the

inclusion

of

the

terms,

and

whether

the terms

were

known

or

easily

available

to

the

contracting

parties.

9

Passive

Media

Users

It

is

significant

that

none

of

the

cases

analyzed

involved

a

passive

media

user.

While

several

interactive

media

users

-

those

maintaining

a reciprocal

relationship

with

Web

sites

or

engaging

in

high

levels

of

interactivity

with

Web

sites

-

were

involved

in

contractual

disputes,

100

all

of

them

either

registered

for

a

service

or

created

a

profile,

both

of

which

included

clickwrap

agreements

which,

as

has

been

addressed

previously,

consistently binds

all

types

of

parties.

Yet

it

is

clear

that

courts

are willing

to

make

distinctions based

on

the

type

of

party.

This

was often found

in

courts'

analyses

of

the un-

conscionability

defense

-

essentially

a

claim

of

unequal

bargaining

95

See,

e.g.,

Hugger-Mugger

v.

NetSuite,

2005

U.S.

Dist.

LEXIS

33003

(D.

Utah

Sept.12,

2005)

(finding

that

Web

site

terms

were

part

of

a

written

contract

between

two

busi-

nesses);

Affinity

Internet

v.

Consol.

Credit

Counseling

Servs.,

920

So.

2d

1286

(Fla.

Dist.

Ct.

App.

2006)

(finding

that

Web

site

terms

were

not

part

of

a

written

contract

between

two

businesses).

96195

S.W.3d

147

(Tex.

App.

2006).

97

Id.

at

150.

98

d.

at

156.

99

See

Hugger-Mugger,

2005

U.S.

Dist.

LEXIS 33003,

at

*14;

Greer,

2007

WL

3102178

(finding

that

plaintiff's

invocation

of

the

Web

site's

privacy

policy

also

mandated

assent

to

the

terms

of

use).

1

°°See,

e.g.,

Bowen

v.

YouTube,

2008

WL

1757578

(WD.

Wash. Apr.

15,

2008).

423

positions

and/or

hidden

terms

in

adhesion contracts

or

overly

hard

or

one-sided

results

that

"shock

the

conscience."

10

1

Moringiello

and

Reynolds

stated

that

the

case

of

Aral

v.

Earth-

link102

"reminds

us

that

sometimes

contracts

between

a

business

and

a

consumer

are

treated

differently

than

from

those between

two

busi-

nesses."

103

In

Aral,

the

California

Court

of

Appeal

refused

to enforce

a

class-action-waiver

clause

and

an

arbitration

clause

because

they

"are

unconscionable

where

the

case

involves

allegations

that

a

large

num-

ber

of

consumers

have

been

cheated

out

of

a

small

sum

of

money."

10

4

Moringiello

and

Reynolds

found

that

"[t]he

lesson

in

the

case

for

par-

ties questioning

the

enforceability

of

Internet

contracts

is

that

when

a

consumer

is

a

party

to

the

contract,

mere

notice

of

terms

might not

be

sufficient.

The

terms

themselves

must

also

be

reasonable."

10 5

Although

it

remains

to

be

seen

the

exact

standard

passive

media

users

will

be

held

to,

it

appears

that

their

defining

traits

will

play

a

significant

role

in

a court's

analysis.

OTHER

FACTORS CONSIDERED

IN

ONLINE

CONTRACT

CASES

In

addition

to

distinguishing

between

the

types

of

parties

in

online-

contract

cases,

courts

also

considered

numerous

other

factors

in

deter-

mining

whether

to

bind

parties

to

online

agreements.

Of

greatest

sig-

nificance

to

passive

media

users

are proper

notice,

interactivity,

timing

and

the

scope

of

the

terms.

Passive

media

users

are

least

likely

to

have

adequate

notice

of

online

agreements

because

online

agreements

are

typically

accessed

only

at

the user's

option

through

hyperlinks

on

a

Web

site's

home

page.

Browsewrap

agreements

are

typically

not

conspicu-

ously

or

affirmatively

presented

to

users.

106

Additionally,

courts

seem

more

likely

to

bind those

users

who

utilize

multiple

Web

site

features

to

online

agreements

rather

than

those

who

simply

click

links.

Finally,

passive

media

users

might

not

be

covered

by

the

scope

of

terms

of

use

because

they

are not

the

contemplated

users

of

the

Web

site's

services.

1 0

Feldman

v.

Google,

513

F.

Supp.

2d

229,

239

(E.D.

Penn.

2007)

(citations omitted).

10236

Cal.

Rptr.

3d

229

(Cal.

Ct.

App.

2005).

1

°

3

Moringiello

&

Reynolds,

supra

note

70,

at

205.

1

436

Cal.

Rptr.

3d

at

232.

1

°Moringiello

&

Reynolds,

supra

note

70,

at

205.

106

See

Andrea

M.

Matwyshyn,

Mutually

Assured

Protection:

Toward

Development

of

Relational Internet

Data

Security

and

Privacy

Contracting

Norms, in

SECURING

PRIVACY

IN

THE

INTERNET

AGE

80

(Anupam

Chander

et

al. eds.

2008)

(finding

that

"traditional

browsewrap

format

...

does

not

provide

the

requisite

notice to

users.").

424

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

Notice

Courts

considered

notice

the

most

important

factor

in

determining

whether

to

bind

a

party

to

an

online

agreement.

In

nearly

every

click-

wrap

agreement,

and

with

most

browsewrap

agreements,

notice

was

found

by

evaluating

the

prominence,

location

and

language

indicating

an

intent

to

bind

the

Web

site

user.

1

"

7

In

their

examination

of

Defontes

v.

Dell

Computers

Corporation,"'O

Moringiello

and

Reynolds

stated

that

"it

is

not

enough

that

the terms

can

be

found

somewhere;

the

terms

also

must

be

presented

in such

a

way

that

they

can

be

found

by

the

reasonable

user."

1

0

9

Clickwrap

agreements

were

nearly

uniformly

found

to

constitute

proper

notice

to

Web

site

users.

In

Adsit

Company

v.

Gustin,

110

for

ex-

ample,

the Indiana

Court

of

Appeals

Indiana

found

that

the

defendant's

policy

[G]ave

reasonable

notice

of

the

terms.

To

complete

a

transaction,

a

user

must

accept

the

policy,

the text

of

which

is

immediately

visible

to

the

user.

The

user

is

required

to

take

affirmative

action

by

clicking

on

the

"I

Accept"

button;

if

the

user

refuses

to

agree

to

the

terms,

she

cannot

engage in

the

transaction.

1

Notice

was

established

for

browsewrap

agreements

in

several

ways.

In

Druyan,

the

United

States

District

Court

for

the

Southern District

of

New

York

found

notice

of

a

browsewrap

agreement

to

the

user

where:

To

purchase

her

tickets

from

[the

defendant],

the plaintiff

was

required

to

click

on

a

"Look

for

Tickets"

button,

immediately

above

which

appears

the

statement

"By

clicking

on

the

'Look

for

Tickets'

button

or

otherwise

using

this

web

site,

you

agree

to

the

'Terms

of

Use."'

Clicking

on

the

"Terms

of

Use"

link

presents the

full

Terms

of Use,

including

the

"Purchase

Policy"

0

See,

e.g.,

Burcham

v.

Expedia,

2009

WL

586513

(E.D.

Mo.

Mar.

6,

2009);

Facebook

v.

Power

Ventures,

2009

WL

1299698

(N.D.

Cal.

May

11,

2009);

Riggs

v.

MySpace,

2009

WL

1203365

(W.D.

Pa.

May

1,

2009);

Mazur

v.

eBay,

2008

U.S.

Dist.

LEXIS

16561 (N.D.

Cal.

Mar.

3,

2008);

Brazil

v.

Dell,

2007

U.S.

Dist.

LEXIS

59095

(N.D.

Cal.

Aug.

2,

2007);

Feldman

v.

Google,

513

F.

Supp.

2d

229,

239

(E.D.

Pa.

2007);

Hauenstein

v.

Softwarp

Ltd,

2007

WL

2404624

(W.D.

Wash.

Aug.

17,

2007);

Krause

v.

Chippas,

2007

WL

4563471

(N.D.

Tex.

Dec.

28,

2007);

MySpace

v.

The

Globe.com,

2007

WL

1686966

(C.D.

Cal.

Feb.

27, 2007);

Southwest

Airlines

Co.

v.

Boardfirst,

LLC,

2007

U.S.

Dist.

LEXIS

96230, 2007

WL

4823761

at

*5

(N.D.

Tex.

Sept.

12,

2007);

Motise

v.

Am.

Online,

346

F.

Supp.

2d

563

(S.D.N.Y. 2004);

Adsit

Co.

v.

Gustin,

874

N.E.2d

1018,

1023

(Ind.

Ct.

App.

2007);

Hotels.com

v.

Canales,

195

S.W.3d

147

(Tex.

Ct.

App.

2006).

1082004

WL

253560

(R.I.

Jan.

29,

2004).

109

Moringiello

&

Reynolds,

supra

note

70,

at

437.

110874

N.E.2d

1018

(Ind.

Ct.

App. 2007).

lllld.

at

1023

(citing

Feldman

v.

Google,

513

F.

Supp.

2d

229

(E.D.

Pa.

2007)).

425

and

a

link

directly

to

that

policy,

and

the

"Cancelled/Postponed

Events"

policy

and

a

link

directly

to

that

policy.

[The

defendant's]

Terms

of

Use

are

sufficiently

conspicuous

to

be

binding

on

the

plaintiff

as

a

matter

of

law.

1

2

Thus,

large

font

and

a

hyperlink

to

terms

"above

the

fold"

or

at

least

conspicuously

placed

seem

to

factor

strongly

into

court's

decisions

to

bind

Web

site

users

to

online

agreements.

In

Recursion

Software

v.

Interactive

Intelligence,"

3

the

federal

court

for

the Northern

District

of

Texas

examined

whether

disclaimers

of

im-

plied

merchantability

and

fitness

for

a

particular

purpose

were

done

in

a

conspicuous

manner.

According

to

the

Uniform

Commercial

Code

(U.C.C.),

"[A]

conspicuous

term

is

one

that

is

displayed

in

such

a way

that

a

reasonable

person

'ought

to

have

noticed

it."'

1

14

Moringiello

and

Reynold

found

that

"the

disclaimer

at

issue

[in

Recursion]

was

conspic-

uous because

it

was

written

in

capital

letters

and

because

the

License

Agreement

was

relatively

short.""

5

Also

important

in

establishing

notice

for

browsewrap

agreements

was

the

number

of

times

a

user had

visited

a

Web

site. Although

no

magic

number

was

mentioned

in

any

of

the

cases,

regular

visitors

and

those

who

had

visited

Web

sites numerous

times

were

more

likely

to

be

found

to

have

proper

notice

than

those

who

visited

infrequently.

116

The

ques-

tion

of

whether

a

user

who

visited

a

Web

site

only

once

will

be

held

to

have

notice

has

yet

to

be

answered.

117

Modifications

to

contracts

will

not

be

upheld

unless

a

party

had

proper

notice

of

the

modification.

In

Douglas

v.

United

States

District

Court,"'

an

individual

(notably

not

a

business)

contracting

online

for

long-distance

telephone

service

was

not

held

to

a

term

that

was

modified

by

the

Web

site

owner

without

any

notification

to

the

individual.

9

The

Ninth

Circuit

held

that

"a

party

can't

unilaterally

change

the

terms

of

a

contract;

it

must

obtain

the

other

party's

consent

before

doing

so.

This

is

because

a

revised

contract

is

merely

an

offer

and

does

not

bind

the

parties

until

it

is

accepted."

12

Thus,

the

court

found

that

"[t]he

district

112508

F.

Supp.

2d

228, 237

(S.D.N.Y.

2007).

113425

F.

Supp.

2d

756

(N.D. Tex.

2006).

1

4

U.C.C.

§

1-201(b)(10)

(2006).

llMoringiello

&

Reynolds,

supra

note

70,

at

206.

116

See

Register.com

v.

Verio,

356

F.3d

393

(2d

Cir.

2004);

Ticketmaster

v.

RMG

Tech-

nologies,

2007

WL

2989504

(C.D.

Cal.

Oct.

12,

2007);

Cairo

v.

Crossmedia

Servs.,

2005

WL

756610

(N.D.

Cal.

Apr.

1,

2005).

ll.See

Moringiello

&

Reynolds,

supra

note

61,

at

436.

118495

F.3d

1062

(9th

Cir.

2007).

1

91d.

12°Id.

at

1067.

426

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

court

...

erred in

holding

that

[the

plaintiffi

was

bound

by

the terms

of

the

revised

contract

when

he

was

not

notified

of

the

changes."

1

21

Interactivity

proved

to

be

significant

in

two

was.

First,

a

highly

inter-

active

Web

site

seemed

to

be

more

likely

to

subject

a

user

to

a

clickwrap

agreement.

122

Thirty-eight

of

fifty-six

cases

analyzed

clearly

involved

clickwrap

agreements.

Thirteen

cases

clearly

involved

browsewrap

agreements.

The

remaining

five

cases

were

not

clear

regarding

the

nature

of

the

contract.

Since

interactivity

requires

user

participation,

clicking

would

seem

the

appropriate

method

of

securing

assent.

Addi-

tionally,

the

interactivity

of

a

Web

site

helps determine

whether

a

court

can

exercise

personal

jurisdiction

over

a

user.

123

Although

a

full

analysis

of

personal

jurisdiction

and

online

agree-

ments

is beyond

the

scope

of

this

article,

it

is

sufficient

to

note

that

courts

possess

discretion

to

decline

to

exercise

jurisdiction

if

the

par-

ties'

freely

and

voluntarily

choose

a

different

forum.

124

In

other

words,

if

the

terms

of

use contain

a provision acknowledging

the

user's

con-

sent

to

jurisdiction

in

a

specified

forum,

then

binding

the

user

to

that

agreement

prohibits

the

user

from

denying

the

exercise

of

personal

ju-

risdiction

over

them.

Thus

a

high

level

of

interactivity

simultaneously

increases

the

likelihood

of

binding

the

user

to

an

online

agreement

and

establishing

a court's

personal

jurisdiction

over

a

user

within

a

specified

forum.

1

2

5

1

2

1

1d.

122

See,

e.g.,

Burcham

v.

Expedia,

2009

WL

586513

(E.D.

Mo.

Mar.

6,

2009);

Facebook

v.

Power

Ventures,

2009

WL

1299698

(N.D.

Cal.

May

11,

2009);

Riggs

v.

MySpace,

2009

WL

1203365

(W.D.

Pa.

May

1,

2009);

Bowen

v.

YouTube,

2008

WL

1757578

(W.D.

Wash.

Apr.

15,

2008);

Feldman

v.

Google,

513

F.

Supp.

2d

229

(E.D.

Penn.

2007);

Hauenstein

v.

Softwarp

Ltd,

2007

WL

2404624

(W.D.

Wash.

Aug.

17,

2007)

(finding

that

"[p]laintiff

has

to

register,

and

agree

to

terms

of

the

contract

before

he

could

ever

use

[defendant's]

products.

Plaintiff's

assent

to

the terms

of

the

License

Agreement,

manifested

through

his

'clicking'

the

'I

agree'

button,

binds

him

to

the

terms

of

the

License

Agreement.");

MySpace

v.

The

Globe.com,

2007

WL

1686966

(C.D.

Cal.

Feb.

27, 2007);

Nazaruk

v.

eBay,

2006

WL

2666429

(D.

Utah

Sept.

14,

2006);

Motise

v.

Am.

Online,

346

F.

Supp.

2d

563

(S.D.N.Y.

2004);

Hotels.com

v.

Canales,

195

S.W.3d

147

(Tex.

Ct.

App.

2006).

1

23

See

Bowen,

2008

WL

1757578:

The

general

rule

is

that

personal

jurisdiction

over

a

defendant

is

proper

if

it

is

permitted

by

a

long-arm

statute

and

if

the

exercise

of

that

jurisdiction

does

not

violate federal

due

process

.....

To

satisfy

due

process,

a

defendant,

if

not

present

in

the

forum,

must

have

"minimum

contacts"

with

the

forum

state

such

that

the

assertion

of

jurisdiction

"does

not

offend

traditional

notions

of

fair

play

and

substantial

justice."

Id.

at

*1

(citations omitted).

1

24

See

Riggs,

2009

WL

1203365

at

*3

(W.D.

Pa.).

12

5

See

Bowen,

2008

WL

1757578.

427

Timing

Courts

often

looked

to

when

the

terms

of

use

were

presented

to

the

user.

If

the terms

of

use

were

presented

before

the

user

was

allowed

to

use

the

Web

site,

the

user

will

likely

be

deemed

to

have

assented

to

the

agreement.

126

In

Burcham,

for

example,

the

federal

district

court

for

the

Eastern

District

of

Missouri

found

that

"[a]

customer

must

affirmatively

click on

a

box

on

the

Web

site

acknowledging

receipt

of

and

assent

to

the

contract

terms

before

he

or

she

is

allowed

to

proceed

using

the

Web

site.

Such

agreements

have

been

routinely

upheld

by

circuit

and

district

courts."

1

2

7

If

the

terms

of

use

are not

presented

until

after registration

or

use

of

the

Web

site,

the terms

of

use

are

less likely

to

bind

the

user.

In

Douglas

v.

United

States

District

Court,

the

Ninth

Circuit

would

not

enforce

a

modified

terms

of

use

because

"[p]

arties

to

a

contract

have

no

obligation

to

check

the terms

on

a

periodic

basis

to

learn

whether

they

have

been

changed

by

the

other

party."

128

Also,

in

Hines

v.

Overstock.com,

the

fed-

eral

district

court

for

the

Eastern

District

of

New

York

refused

to enforce

a

browsewrap

agreement

because,

among

other

things,

the plaintiff

was

allowed

to

use

the

Web

site

without

any

prompting

to

review

the

terms

of

use.

1

2

9

Scope

of

the

Terms

The

case

of

Truebeginnings

v.

Spark

Network

Services

130

illustrates

a

factor

that

could

be

relevant

to

passive

media

users

-

the

scope

of

the terms

of

use.

If

the

online

agreement

is

explicitly

limited

to

a

par-

ticular

type

of

activity

(purchasing)

or

user

(customer),

then

passive

media

users

would

not

be

bound

by

the

terms

of

use.

In

Truebeginnings,

the

plaintiff

operated

an

online

dating

service.

131

The

defendant

owned

126

See

Burcham,

2009

WL

586513.

See

also

Feldman,

finding

it

significant

that:

At

the

bottom

of

the

webpage,

viewable

without

scrolling

down,

was

a

box

and

the

words

"Yes,

I

agree

to

the

above

terms

and

conditions."

The

advertiser had

to

have

clicked

on

this

box

in

order

to

proceed

to

the

next step.

If

the

advertiser

did

not

click

on

"Yes,

I

agree"

and

instead tried

to

click

on

the

"Continue"

button

at

the

bottom

of

the

webpage,

the

advertiser

would

have

been

returned

to

the

same

page

and

could

not

advance

to

the next

step.

If

the

advertiser

did

not

agree

to

the

[defendant's]

contract,

he

could

not

activate

his

account,

place

any

ads,

or

incur

any

charges.

Plaintiff

had an

account

activated.

He

placed

ads

and

charges

were

incurred.

513

F. Supp.

2d

at

233.

127

Burcham,

2009

WL

586513

at

*2.

128

4 9 5

F.3d

1062, 1066

(9th

Cir.

2007).

129668

F.

Supp.

2d

362

(E.D.N.Y. 2009).

130631

F.

Supp.

2d

849

(N.D.

Tex.

2009).

1

3

1

Id.

at

851.

428

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

a

patent

for

"matching

compatible

profiles,"

which

potentially

covered

plaintiff's

Web

site.

In

preparation

for

potential

litigation,

a

user

as-

sociated

with

defendant's

law

firm,

gained

access

to

the

Web

site

and

accepted

the

Terms

of

Use

before

taking

screenshots

of

his

computer

monitor

as

part

of

an

investigation

to

determine

whether

plaintiff

was

infringing

on

defendant's

patent.

132

This

activity

is

prohibited

by

plain-

tiff's

terms

of

use.

Yet

the

online

agreement

was

drafted

in such

a

way

as

to

govern

only

the

"services

offered" by

the

Web

site,

which were defined

as

the

profile-

matching

service,

not

a

mere use

of

the

Web

site

(general

browsing,

for

example).

As

a

result,

the

district

court

for

the

Northern

District

of

Texas

found

that

the

defendants

were

entitled

to

summary

judgment

on

plaintiff's

breach-of-contract

claim

because

their

conduct was

outside

the

scope

of

the

terms

of

use.

133

Thus,

under this

court's

rationale,

any

passive

media

users

accessing

sites

whose

online

agreements

cover

only

interactive

activity

will

not

be

bound

to

the

terms

of

use.

IMPLICATIONS

OF

THOSE

CONSIDERATIONS

FOR

PASSIVE

MEDIA

USERS

The

relevant

case

law

indicates

that

passive

media

users

are

unlikely

to

be

bound

by

most

terms

of

use

agreements.

1 3

1

Yet

this

conclusion

is

only

implicit,

which

is

part

of

the

problem.

A

stringent

application

of

standard-form

contract

doctrine

could

still

result

in

enforcement

of

online

agreements

against

these

users

if,

for

example,

knowledge

of

the

terms

could

be

proven

ex

post

facto.

135

Additionally,

courts

failed

to

use

language

that

could be

relied

upon

by

individuals in

order

to

simply

access

Web

sites

without

fear

of

contractual

obligation.

Sophisticated

businesses

and

anyone

entering

into

clickwrap

agree-

ments

will

likely

be

bound

by

online

agreements.

Yet,

consumers

re-

ceive

more

paternalistic

treatment

from

courts,

which

will

only enforce

a

browsewrap

agreement

if

sufficient

notice

of

the

agreement

was

given.

1

3

2

Id.

at

852.

1

3

Id.

at

856.

13

4

Indeed,

it

appears

that

a

large

number

of

browsewrap

terms

of

use

agreements

may

not

legally enforceable

against

anyone.

In

an

empirical

study

of

seventy-five

Web

site

terms

of

use agreements

and

privacy

policies,

Andrea Matwyshyn

found

that

"terms

of

use

of

the

forty-nine

websites

in

the

sample

whose

terms

of

use

consisted

of

more

than

a

simple

copyright

notice

would

most

likely

be

deemed unenforceable

under

current

Internet

contracting

case

law."

Matwyshyn,

supra

note

106,

at

80.

13

'See

Southwest

Airlines

Co.

v.

Boardfirst,

LLC,

2007

WL

4823761

at

*5

(N.D.

Tex.

Sept.

12,

2007)

(finding

that

actual

knowledge

of

terms

of

use

supported

the

formation

of

a

binding

browsewrap

contract).

429

Courts generally

consider consumers

to

be

less

sophisticated

than

busi-

nesses.

Given

this

protective

tendency

of

the

courts,

passive

online

me-

dia

users

might

not

be

subject

to

terms

of

use

agreements

because

they

often

lack

notice,

are

typically

less

sophisticated

than

businesses,

and

might

lack

the

intent

to

contract.

In

2002,

Victoria

Ekstrand

conducted

an analysis

of

the

online-user

agreements

of

the

top

fifty

U.S.

daily

circulation

newspapers in

the

United

States.

l

"

6

She found

that

"[n]early

all

the

user

agreements

in

the

study

were found

by

clicking

on

small

type

found

at

the

bottom

of

the

home

page.

Half

of

the

fifty

online

news

user

agreements

stipulated

that

use

of

the

site

was

an

acceptance

to

the terms."

13 7

Given

that

the

terms

of

use

are

typically

buried

1 3

'

and

that

traditional

offline

media

entities

do

not

require

their

readers,

viewers

or

listeners

to

sign

contracts,

passive

media

users

largely

lack

the

typical

indicia

of

notice

to

bind

them

to

online

agreements.

Distinctions

regarding

sophistication

can

also

be

drawn

between

con-

sumers and

passive

media

users.

Consumers

often

have

long-standing

relationships with

online

retailers

such

as Amazon,

eBay

and

Half.com.

The

goals

of

content-based

Web

sites

and

e-commerce

retailers

are

not

necessarily

the

same,

as

viewers

are different

from

consumers.

Web

sites

seeking

viewers

are

successful

as

soon

as

a

visitor

accesses

a

page.

However,

Web

sites

seeking

consumers

are

only

successful upon

the

completion

of

a

transaction

for

goods

or

services.

Many

visitors

to

a

Web

site

have

no

intention

of

revisiting

the

Web

site

and

simply

browse

one

story, posting

or

page.

These one-time

visitors

are

more

likely

than

re-

turn

users

to

lack

the

desired sophistication,

at

least

with

regard

to how

that

Web

site

functions

and

where

it

places

its terms

of

use.

While

the

intent

to

form

a

contract

is

not

dispositive

of

being

bound

by

online

agreements,

1 3 9

it

is

worth

considering

the

implications

of

bind-

ing those

who

have

little

interactivity

with

a

Web

site

to

a

contract.

If

a

passive

media

user

accesses

a

Web

site

with

terms

of

use

buried

at

the

bottom

of

a homepage

and

simply

views,

reads

or

listens

to

online

con-

tent,

arguably

such

a

user

should

not

be

bound

by

the

online

agreement

for

the

simple

fact

that

he

or

she

didn't

have

the

intent

to

enter

into

an

agreement,

nor

did

he

or

she

have

actual

knowledge

of

the

terms.

To

13

6

Ekstrand,

supra

note

7.

1

3

7

Id.

at

607.

13 8

ld"

139

See,

e.g.,

Burcham

v.

Expedia,

2009

WL

586513

at

*3

(E.D.

Mo.

Mar.

6,

2009)

(finding

that

"[i]t

is

standard

contract

doctrine

that

when

a

benefit

is

offered

subject

to

stated

conditions,

and

the

offeree

makes

a

decision

to

take

the

benefit

with

knowledge

of

the

terms

of

the

offer,

the

taking constitutes

an

acceptance

of

the terms,

which accordingly

become

binding

on

the

offeree").

430

W.

HARTZOG

ONLINE

MEDIA

USERS

AND

TERMS

OF

USE

reiterate

the

thesis

of

this

article,

if the

goal

of

contracts

is

to

enforce

the

expectation

of

all

parties

to

a

contract,

140

then

it

makes

little

sense

to

enforce

contracts

against

a

party

with

no

contractual

expectations.

The notice

requirement

built

into

contract

doctrine

seeks

to

address

this

problem.

But

a

finding

of

notice

isn't

based

solely

on

the

placement

of

terms

on

a

Web

page.

Instead, the

case law

reveals

that

courts

also

look

at

the characteristics

of

the

party

charged

with

notice.

Businesses

and

consumers

usually

interact

in

a

way

that

engenders

a

relationship

such

that

the

parties

should

come

to

expect

contractual

obligation.

Users

are

encouraged

to click

signifying

assent

to

terms

that

create

a

contrac-

tual

relationship.

Businesses

often

negotiate

and

have

every

reason

to

seek

and

understand

the terms

to

any

agreement

they

enter

into.

However,

passive

media

users

engage

in

none

of

this

activity

and

have

little

in

common

with

businesses and,

to

an extent,

consumers.

Their

participation

is

limited

to

media

consumption

that

is

comprised

of

clicking

on

links

to

go

from

one

piece

of

content

to

the

next.

Money

does

not

change

hands,

true

relationships

are

not

formed,

and,

in

the

absence

of

conspicuous

agreements,

there

is

little

reason

for

users

to

believe

they

will

be

subject

to

contracts

that

remove

many procedural

and

substantive

safeguards

for

individuals,

such

as

personal

jurisdiction

and

the

right

to

seek

resolution

of

disputes

in

a

trial.

Yet

there

are

a

number

of

situations

in

which a

passive

media

user

could be

affected by

binding

terms

of

use.

Authors

of

copyrighted

mate-

rial

might

stumble

upon

their

work

republished

on

a

Web

site

without

authorization.

An

author's

initial

access

of

the

Web

site

purportedly

binds

the

author

to

the

jurisdiction

chosen

in

the

terms

of

use

to

resolve

a

lawsuit

for

copyright

infringement.

141

An

embarrassed teenager

might

discover

a

private

photograph

of

herself

published

on

her

favorite

Web

site,

only

to

find

that

the

Web

site

disclaimed

liability

for

any

harm

to

users

in

their

online

agreement.

Bloggers

wanting

to

republish

breaking

news

are

purportedly

bound

by

the

information

use

restrictions

imposed

by

Web

sites

that

they

might

have

only

visited

once.

142

The

broad

range

14

0

See

LORD,

supra

note

14,

at

§

1:1

(stating

"Contract

law

is

designed

to

protect

the

expectations

of

the

contracting parties")

(citing

MCA

Television

Ltd.

v.

Pub.

Interest

Corp.,

171

F.3d

1265

(11th Cir.

1999)).

141

See

Krause

v.

Chippas,

2007

WL

4563471

(N.D.

Tex.

Dec.

28,

2007)

(enforcing

a

forum selection

clause

in

a

browsewrap

agreement

because

the plaintiff

consented

to

the terms

of

use when

he

used

the

Web

site).

142

See

Internet