Terms of Use (TOU) are, in effect, a contract between the users and the provider of a website. In the “olden” days (like 1992!), when websites were static and information was simply transmitted from the provider to the user, there was no need to set out explicit terms for the interaction. Today, many websites are interactive and information is as much transmitted from the user to the provider as the other way round. And regardless of whether a website allows for the posting of user generated content, technology allows website providers to collect data and information about its users. For these reasons, TOU are a necessity for most sites. Here are five important issues that should be addressed when drafting TOU.
1. TOU Should Define Permitted User Behavior
For any interactive website, it is important to define what users are allowed to do. If they can upload comments, photos, videos or music, you should reserve the right to delete that material or those comments, and terminate access to the service if users engage in any kind of infringing behavior. (This is also important for DMCA safe harbor purposes, see below.) The TOU can also include language prohibiting inflammatory, slanderous or libelous statements. Depending on your target audience and the amount of personal information your users will upload, you should also consider language prohibiting or limiting the use by those younger than 13 years old, so as to avoid violations of the Children’s Online Privacy Protection Act.
2. TOU Should Comply with DMCA Safe Harbor Provisions
The Digital Millennium Copyright Act (DMCA) contains a safe harbor provision for online service providers if they follow a few relatively straightforward steps. The online service provider must put in place a notice and takedown scheme in line with the DMCA regulations. A notice and takedown scheme allows someone who finds infringing material on a website to give notice to the service provider, who then is obligated to take it down. It also allows for counter-notice, if the person who uploaded the content wishes to challenge the legal status of the material. For someone writing a TOU for an online service provider, the most important thing is to clearly state that a notice and takedown scheme is in place, and designate and provide the contact information to an agent of the company who deal with such notices. Being DMCA compliant can insulate a service provider from claims for copyright infringement related to content posted by its users.
3. TOU Should Disclose Provider Behavior
You may use your website to collect information from and about your users. Many websites use cookies, a technology that tracks user behavior across many interactions with a site. Such use will need to be disclosed in the TOU, and, if you aim for your service to be used outside of the United States, you may have to consider international laws and regulations. If you will be collecting more personalized information from your users, especially personally identifiable information (PII), you will need to disclose that as well, and have a separate privacy policy. This is especially important for any social networking site where users share personal details (like Facebook), any website that mines user data for advertising purposes (like Google), any website on which users need to create personalized logins by providing personal details to the service provider, and any website that processes commercial transactions (and collects names, addresses, credit card and other information). In addition to legal reasons, the disclosure of your behavior is an effective way to build trust with your users.
4. TOU Should Carefully Lay Out Other Significant Terms
Any TOU needs to include legal terms that protect the service provider in the case of a dispute. These include warranty disclaimers, indemnification against use that violates the TOU, arbitration agreements, choice of law clauses, and clauses limiting damages. Although all of these can tilt quite heavily in favor of the service provider, when drafting a TOU you must be careful not to be so unfavorable to the users as to make the terms unconscionable and thus unenforceable. In one of the most famous cases of such unconscionability, a court struck down as unconscionable a provision that required arbitration in a venue convenient only to the provider.
5. You Should Reserve the Right to Change the TOU
Working online, where technological change is fast and, indeed, expected, it is important to reserve the right to change the TOU to match any unexpected technological updates. Although such changes can be made unilaterally, that is, without the input of your users, to maintain a good relationship with the users and to avoid courts holding your TOU to be an illusory contract and thus unenforceable, you should give your users notice and allow them to opt out before changes to your terms of use go into effect.
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Considering these issues when drafting your website’s Terms of Use will serve you well in creating a meaningful agreement with your users. The most important thing is to tailor the language in the TOU specifically to your service. Although you may use a template for inspiration, you should never use someone else’s TOU as your own. And be mindful of issues around privacy and data security, issues that are becoming increasingly important to all business owners in this digital world.
*Thanks to Christoffer Stromstedt for his contribution to this article.
