Recently in contract law Category

Slashdot tells us that a company associated with Jon Lech Johansen (a/k/a 'DVD Jon') has released a beta version of software called 'doubleTwist', which will 'free your media', and does various semi-useful things, including circumventing the DRM on Apple iTunes files and converting them to MP3 format.

Of course, use of the doubleTwist software is subject to an End User Licence Agreement, Terms of Service agreement, and Privacy Policy.  If/when you read them, a stench of rank hypocrisy lingers in the air, as does a suspicion that DVD Jon has sold out, and taken on many characteristics of the evil corporations he's waged war against.  Amongst other things, the agreements allow the use and collection of personal information for delivering targeted advertising (despite their website describing doubleTwist as having 'no adware'), and prohibits users from circumventing DRM used by doubleTwist -- even though doubleTwist circumvents DRM used by other companies.

Relatively non-controversial parts of these agreements are not excerpted for copyright reasons.  Not that DVD Jon seems to give a damn about copyright...

In my last posting, I talked about the problem of people purporting to license material under a Creative Commons licence, where they had no right to do so.  One such scenario is:

• A finds a copyright picture of a cat on the Internet;
• A inserts a humorous caption, and publishes the resulting captioned picture on flickr under a Creative Commons licence which permits commercial re-use;
• B finds the picture on flickr, and starts selling t-shirts with the picture on them, not realising that they are infringing copyright;
• C, the person who owns the copyright in the original picture, finds out that B is infringing their copyright and sues B.  (Yes, they could also sue A, but lets assume B has deeper pockets and is a more attractive target)
  

If you're B, what do you do?  You're reusing the captioned picture in good faith and in compliance with the terms of the CC licence, it's not your fault that the licence is invalid because A didn't know or didn't care that they couldn't validly license the picture.  Now you've got a very pissed off copyright owner suing you and trying to take your house, and it's A's fault.

So what do you do?  You sue A.  Except that the terms of the CC licence try very hard to prevent you from doing that.  See for example cl 5-6 of the CC Attribution 3.0 unported licence:

5. Representations, Warranties and Disclaimer

UNLESS OTHERWISE MUTUALLY AGREED TO BY THE PARTIES IN WRITING, LICENSOR OFFERS THE WORK AS-IS AND MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE WORK, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF TITLE, MERCHANTIBILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, ACCURACY, OR THE PRESENCE OF ABSENCE OF ERRORS, WHETHER OR NOT DISCOVERABLE. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO SUCH EXCLUSION MAY NOT APPLY TO YOU.

6. Limitation on Liability. EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE LAW, IN NO EVENT WILL LICENSOR BE LIABLE TO YOU ON ANY LEGAL THEORY FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF THIS LICENSE OR THE USE OF THE WORK, EVEN IF LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

This is serious stuff.  The version 1.0 licences expressly warranted that 'to the best of Licensor's knowledge after reasonable inquiry ... Licensor has secured all rights in the Work necessary to grant the license rights hereunder and to permit the lawful exercise of the rights granted hereunder ...'  The post-1.0 licences basically say 'I give you the right to reuse this stuff, but I refuse to say whether I'm the copyright holder, and if I'm not, you can't sue me.'

The disclaimer and limitation of liability clauses aren't air-tight, or at least not in all cases.  If there was fraud involved, they wouldn't be effective.  There may be applicable warranties which are implied by statute which the licensor can't contract out of.  A court might hold that these clauses aren't sufficient to contract out of liability in negligence.

The paper which I referred to in my previous posting explores these issues in more detail.  The deletion of warranties after the 1.0 licences has a lot of history (involving much dummy-spitting and beating of chests), and I don't defend everything that the 1.0 licences warranted -- they went too far in some areas.  But I think that the post-1.0 licences have gone too far in the other direction -- by disclaiming warranties as to the validity of the licence, and attempting to contract out of all liability, IMHO they disclaim too much to be useful, or at least, they disclaim too much to fulfil their stated goals.

This has got to be, without exception, the absolute dumbest browse-wrap licence I've ever seen.  For those not familiar with the term, a 'browsewrap' licence is a purportedly contractual agreement that many websites like to pretend that you have agreed to be bound by, simply by using their website.  e.g. 'By using this website, you agree we own your soul.'

This particular browsewrap agreement is on the website of Dozier Internet Law PC.  Amongst other things, it claims that viewing the HTML source of their website is an infringement of copyright.  As they purport to be 'The Lawyers for Internet Business', they ought to know that the enforcability of browsewrap agreements is a very grey area, ought to know that many of their intellectual property claims are insane, and generally ought to know better.

Then again, this is the same law firm who has threatened to sue people for posting copies on the Internet of cease-and-desist nastygrams which they've sent out.

Other coverage of this issue is at Slashdot, Techdirt, and the Consumer Law & Policy Blog.

Here's part of one of the stupidest clauses:

Dozier Internet Law, P.C. has a lot of intellectual property on our site. For instance, we are the creators of all of the text on this website, and own the "look and feel" of this website. We also own all of the code, including the HTML code, and all content. As you may know, you can view the HTML code with a standard browser. We do not permit you to view such code since we consider it to be our intellectual property protected by the copyright laws. You are therefore not authorized to do so. In addition, you should not make any copies of any part of this website in any way since we do not want anyone copying us. We also do not allow any links to our site without our express permission, except that you must maintain the link in our Copyright Infringement Warning Button as it is designed. The name "Dozier Internet Law, P.C.", and similar derivatives of it, constitute our trademark and servicemark, and should not be used in any manner without our permission.

So, I guess they'll now be suing me for:

1. Copyright infringement for viewing their HTML.  Which, incidentally, is not valid HTML, and isn't written particularly well either.  e.g. <meta name="KEYWORDS" content="keywords go in here">;
2. Linking to their website without their express permission.  Good luck with that;
3. Copying part of their website, because they don't want anyone copying them.  I wonder how they feel about criticism, ridicule and parody?; and
4. Using their name without their permission.  I'm shaking in my shoes.  Maybe if i say their name backwards, I can banish them to some other dimension?
   

Go on, I dare you.

After a seminar today run by Peter Black on the use of 'Web 2.0' in teaching, Peter and Jessica Coates tried to convince me that Facebook is not, in fact, crap, and is substantially better than Myspace; which is presumably, impliedly, crap.  Unless you're a ditzy teenager whose life ambition is to be on Paris Hilton's friends list and thereby gain some kind of incredibly lame validation.  But I digress...

Earlier in the seminar, I'd voiced my objection to the possibility that students might be compelled to become members of some of these 'Web 2.0' services to do mandatory assessment items in some subjects.  This would, of course, require those students to enter into a contractual relationship with those service providers, with associated legal liability and privacy risks.  It might also constitute third line forcing, which is per-se illegal in Australia, but that's a different issue.

The concerns I raised were largely dismissed as paranoia.  So, I got to thinking, exactly what is in the applicable contracts for a service like Facebook?  In this posting, I dissect the Facebook 'Terms of Use'...  You know, that massively long (over 6000 words), complicated, contractual document that nobody ever reads when they sign up.

Earlier in August, the New South Wales Supreme Court handed down its long-awaited judgment in the eBay Wirraway case -- more formally known as Smythe v Thomas [2007] NSWSC 844.  That judgment pre-dated the establishment of this blog, but it's quite a significant case -- at least so far as eBay buyers and sellers in Australia are concerned -- so it's worth a recap.

The facts, briefly stated, are that Thomas listed a rare and valuable Wirraway aircraft on eBay, with an auction duration of 10 days and a minimum price of $150k.  Smythe, after a phone conversation with Thomas (the substance of which was disputed) placed a bid for $150k and, there being no other bidders, "won" the auction.

[I'd rather buy a T-38, or a nice Embraer bizjet, but I digress...]

Thomas was unhappy because he was hoping to obtain $250k for the aircraft.  He refused to complete the transaction, and Smythe sued.  Thomas' defence was:

1. There was a contract (the eBay User Agreement) between Thomas and eBay, and between Smythe and eBay, but there was no contract or agreement between Thomas and Smythe;
2. The eBay listing was analogous to a classified advertisement -- i.e. an invitation to treat;
3. Even if there was offer and acceptance, the time for payment was to be negotiated and the agreement was therefore incomplete;
4. Smythe waived his right to bid on the auction, based on the content of the disputed phone call.

Rein AJ referred to a number of overseas cases in which online auctions have been discussed, the relevant provisions of the Sale of Goods Act 1923 (NSW), rejected each of Thomas' defences, and concluded that there was a valid and enforceable contract for the sale of the aircraft, and that it should be specifically performed.

Despite the fact that eBay were downplaying the potential effect on their business model and online commerce via eBay in Australia generally, it would seem that if Thomas had succeeded on any of his first three defences, it would have thrown a serious spanner into eBay's collective works.  It's reassuring to see that this didn't happen.

In July this year, Jetstar lost a case in the Victorian Civil and Administrative Tribunal concerning its terms and conditions of sale.  The case, Free v Jetstar Airways Pty Ltd [2007] VCAT 1405, involved a term of Jetstar's agreement:

JETSAVER FARE RULES

2.1 Subject to availability and payment of all applicable amounts, changes can be made to your Booking as follows. Changes to the origin and destination of travel are not permitted.
2.2 Your new fare will be at least the amount of the fare you originally purchased, and may be more. At the time your Booking is changed you must pay the difference (if any) between the fare you originally purchased and the fare available on the date of the change. This will apply to all date, time and name changes.
2.3 Date, time and Passenger name changes may be made by telephoning Jetstar Telephone Reservations ... A change fee* is payable for each change, for each passenger flight segment change ...
*Current Jetstar fees and a summary of fare types can be found at jetstar.com/faretypes.html.

The Applicant had booked two tickets to Honalulu for herself and her sister, for $437.39 per person return.  Afterwards, her sister became unable to travel and the applicant wanted to change her sister's ticket into her niece's name.  Jetstar would only do so if she paid a $75 change fee, plus the difference between what she originally paid for the tickets and what the tickets were currently selling for -- which was $600.93.  The Applicant paid under protest and brought proceedings in VCAT alleging the above terms, as applied to changes of name, were unfair terms within the meaning of the Fair Trading Act 1999 (Vic).  The Tribunal agreed and ordered a refund of the $600.93.

At the time, I predicted that Jetstar was likely to appeal, and to stop allowing name changes altogether.  I was right.  Not only is this a rather petulant act, it seemingly ignores the possibility that their new term:

Only date and time changes are permitted, subject to availability. Changes to the passenger name and changes to the origin or destination of travel are not permitted.

could very well be an unfair term as well.