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Changing Terms of Service? Be Ready For A Class Action Lawsuit

July 26th, 2013

The second thing website operators do is to state that by continuing to use the service (or visit the website—presumably doing more than just reading the new terms of service) after the change in the policy, the consumer has magically agreed to the new terms—not just with respect to the data collected after the terms go into effect, but with respect to data previously collected.

The third thing some courts have done to bend over backwards to help out website operators is to simply say that terms in a TOS are not even a binding contract, but rather are a statement of policy. So to the extent that they bind the website operator, they are just a policy statement, and aren’t binding. But to the extent they do things like the Instagram TOS—effect an assignment of intellectual property rights under Title 17 of the United States Code, they are binding on the consumer/assignee. Pretty neat. The website operator isn’t bound and can change the “policy” anytime, but the consumer is bound to the contract.

The problem for website operators is what to do with those who opt out. If, for example you change your privacy policy, data use policy or copyright policy and people say “no,” you have effectively created two classes of information: information collected under the old policy, and information collected under the new. Making more changes creates more classes of information. Each bit of information must then be tagged with the appropriate limitations so you don’t use data collected under one policy or for one reason for purposes permitted by a different policy. If you don’t have the ability to segregate, tag or delete the data, then you may have serious legal problems.

And that’s one of the problems facing Instagram. According to the complaint, a user could only “opt out” of the new Instagram copyright policy by ceasing using the service entirely. But even then, the photos they had previously uploaded would not be deleted, although they would lose the ability to access them.

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Thus, the consumer would transfer their rights to their copyrighted photographs simply by doing nothing. Well, nothing except filing a class action lawsuit.

This is why you can be sure some customers will review anychanges of TOS or policy prior to posting, and they need to have appropriate means to effectively opt out of such changes.

The change in Instagram’s policy may not be as severe as noted. There is a legal distinction between disclaiming ownership and disclaiming ownership rights. When you post pictures on Instagram, you do transfer certain rights to Instagram, whether you mean to or not.

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Instagram has the right to host the pictures, to make cache copies, to display or transfer them to people to whom you direct, to make backup and storage copies, archival copies, to examine the photos for quality control and possibly other purposes, and to comply with lawful demands or court orders for materials. They may also have the right to remove or delete the photographs and to respond to demands related to infringement under the DMCA and other copyright law. They had these rights under the old policy, even though it didn’t say that. The policy change may simply be making explicit what the old policy made implicit.

Or maybe not. Maybe Instagram intends to make new uses of your pictures of your nacho cheese dip. It’s hard to say. If they are, they would be better off stating so clearly and distinctly. Maybe that would avoid a future class action lawsuit.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.


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One Comment | Read Changing Terms of Service? Be Ready For A Class Action Lawsuit

  1. Bernard Regier Says:

    Very enlightening article. In regards to policy statements/terms of service, why hasn’t Craigslist been sued up the wahoo for not allowing users to cancel their memberships? Of their many uncouth business practices, including complete lack of accountability and doling out strange, arbitrary punishments to out-of-line members(see customerservicescoreboard.com for 8-9 hundred horror stories), disallowing individuals to terminate service seems the most unlawful. I don’t know anything about contractual law or online regulations, but If I owned a store, I could refuse or restrict service to anyone or lock them out if necessary; what I CAN’T do is lock them in!Your thoughts? Repectfully,
    –Bernie R.

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