Saturday, June 9, 2007

Egregious EULA and TOS Clauses Part II

***Judge Robreno faulted the Second Life TOS on numerous grounds:

  • lack of mutuality. The TOS gave Linden Research the right to terminate users "for any reason or no reason," the right to invoke several one-sided remedies to protect its own rights, and the right to modify the TOS at any time, including the arbitration provision.
  • excessive arbitration costs. Up-front costs for arbitration were significantly greater than the costs of filing a federal court action.
  • venue in California.  The TOS unreasonably demanded that Second Life users travel to California to  arbitrate claims  commonly involving minimal sums.
  • confidentiality agreement. The gag order on arbitration proceedings called for by the TOS allows Linden Research to accumulate knowledge about arbitrations involving the TOS, while individual plaintiffs must begin from scratch in every case.
  • business realities. Judge Robreno said that Linden Research made no showing that such a one-sided agreement was necessary to conduct its business

 The court denied Linden Research's motion to compel arbitration, holding that the Second Life terms of service agreement -- which called for arbitration -- was procedurally and substantively unconscionable.
The court concluded, the Second Life TOS seeks to impose a one-sided dispute resolution scheme that tilts unfairly, "in almost all situations," in Second Life's favor.

The facts that I want to note is that 99.9% of all of these EULAs and TOS agreements favor the business establishment, leaving the user with NO rights, and NO way to dispute the EULAs or TOS other than not using the website, or software.  It is also important to point out that most of the TOS agreements fall in the category of just plain unlawful practices when it comes to the use of all of their services.  None of their TOS in my opinion would hold up in court.  Just like the EULA the company could change the TOS at any time, and the user is automatically meant to accept ALL contents regardless if they had seen the new TOS agreement or not.  Even if the person agreed to a TOS or EULA the day before, and a new one was released the next day you were still bound by the new agreement. 
The TOS is on most websites, If you have a company name, then you have a TOS. you may even have both a TOS and a EULA, some have several different versions depending on software, or use of a certain online product like games, webtools, file tools, etc, and as you know most read like a book, and most contain about the same content, while others contain even more outlandish content.  But the facts are that even the Courts are noticing how badly written these EULAs and TOS's are.  They are also taking notice at how many rights are being taken away from the users.  So many of the agreements are being revoked by the Courts before they even get started on the Court cases.  If you have a TOS agreement then you need to read it as if you were on the side of the user.  Plus you need to take into consideration the above points that were made by the Courts in California.  Some will argue that this case was held in California, and their laws are much different from other States.  Well this is just the case to a certain extent.  Judges all over can smell a bad EULA or TOS.  They could have a case in your State, and come to the same agreements as the Judge did in California.  Show the down right stupidity, and the lack of user rights in a TOS, or a EULA, and watch that judge explain why he/she faulted them.  make a EULA or TOS agreement that contains unlawful practices and watch the courts make a spectacle out of you, or a example out of you for other companies to learn from. 
This however is not all the software, and website companies fault though.  Yes I know you will say "yes it is." But it's not.  It is the users fault too because most never read the EULAs or the TOS agreements.  I am willing to bet that most of you don't even know what you agreed to in them.   When you give the "I agree" ok it is just like saying their practices are ok by you.  You are telling them they can get you to agree to anything just so long as you get to use their website or software.  You don't care about the agreement.  Do you care?  Are you even worried that one day a far fetched agreement might fall though the cracks, and the Courts may give the agreement the "OK".  Does this bother you?
Oh and here is you something to think about,  in a small town a man went to the neighborhood software store, and bought a software, and took it home.  Between the time of taking the wrapper off, and installing the software, their was a  EULA and or a TOS on a website he had to agree too.  Part of it read that the software company owned all works created by their software.  The other part was if he did not agree, then don't install the software.  So he didn't.  He took wrapper and all back to the software store.  They refused to give him a refund.  They said the software was opened and they could not accept the software back for that reason.  They had a no refund policy, and the guy was out of some major bucks.  I think it was in the 300 dollar range.  He took them to court, and in his dispute he said the agreement and the whole nine yards of the TOS and use of their website was not on the outside of the wrapper.  If it had of been he never would of bought the software.  Apparently part of the software also was linked to a website that was owned by the software maker.  He was hit by three TOS agreements before he even began to install the software.  The Judge ruled in favor of the purchaser because he said that it is not the purchasers fault that the software has the rules about the ownership of the works created by him were owned by the software company.   He had every right not to accept the TOS, or the EULA if he did not like them.  Then the judge says it is not right for the software store to put a burden of lost of payment on the purchaser when it is the fault of the software company's TOS and or EULA.  So the guy won his case because the Judge said that refund policy puts a bad burden on the buyer.
I can see this as a problem too if your trying to buy software and it cost major money, and the EULA or TOS agreement is lame, so you return it, and purchase another software.  If you eat the cost of the first one, and say you paid like 329 bucks for the first software, and another 289 bucks for the second.  That is 618 bucks for just one software if you ate the cost of the first one. 
Take-it-or-leave-it user policy is a policy that a person has to accept as is, and they can't dispute, or make changes to the policy regardless if they are capable of doing so.  Hopefully most of you are aware that when signing a contract you are, or you can make changes to the contract and sign or initial those changes you made.  It is then up to the person, or business to read over your changes, and accept or deny your changes by also not including their initials, or including them in the areas they accept the changes.  Then you have the burden of going back over the contract seeing what was accepted, and possibly making changes so that the contract is acceptable for both sides.  This is a law in every State that I know of.  You have the right to change any contract.  They don't necessarily have to accept it as you have written, but they can not deny you the right to change the contract. 
A EULA or a TOS is a contract between a company, and a person(s) or between two person(s),  As I had said in Part one of this subject... EULAs or TOS agreements put duress on the person having to accept the terms.  Because it gives them a Take-it-or-leave-it option only.  Some people agree only because they have no choice but to agree they need the software, or they need to use the website tools.  Some software and or website tools have either certain tools, or certain perks that no other website tool, or software has included. 
Surprise Terms are terms buried in TOS or EULAs that are hard to find.  They can be buried under headings not related to the heading, or placed in a spot in the agreement unrenowned to the reader. They may be in very small text, or be included in a paragraph that reads like a book. The paragraph may not be related to the surprise term at all.  There is nothing in the text that brings attention to the agreement regardless of how important the text may be.  Anything related to the important text is not set in bold, has no clear heading of the subject, is buried, or hard to find in the agreement, and most likely would not bring concern to the person deciding to agree or not to the TOS or EULA.  It is intentionally buried in the full text of the agreement.

Unconscionability means unreasonably unfair to one party, marked by oppression, or otherwise unacceptably offensive to public policy <an unconscionable clause> <finds the contract…to have been unconscionable at the time it was made —Uniform Commercial Code>

one-sided remedies to resolve disputes The best way to explain this is the TOS or EULA favors the company in all aspects when it comes to resolving issues it is "What the company wants" and you as the user have to agree to it regardless of whom is right, or how ever far fetched the remedy is.  They may dissolve your files, or take privy away from you, it doesn't matter if you did anything wrong or not. They have the right to do it regardless.  Most companies claim they have this right because they are supplying the service to the public etc.  But in court this would not hold up.  A one sided ruling that favors the "company only policy, their rules, take it or leave it"  does not resolve issues, it only creates new ones, and the new ones are mostly legal issues. 

If I ever had a EULA or and TOS disagreement dispute, yes I would take them to court.  I would take their whole ridicules TOS and EULA with me too.  I would note the size of the EULA or TOS, and pain staken note every rule they had in the agreement.  I would show the courts how they stripped my rights from me, and I would point out if I had any rights in my favor (most don't). I would also if I could, tell the courts that part of the suit is the company if found in my favor, would have to clean up their EULA and TOS for my State I live in, or nationwide.  (May not happen, but it's a nice thought.) 

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