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The average user ignores them, almost every " serious " website has one and the vast majority of internet entrepreneurs probably expend little thought when having theirs put together.

I'm talking, of course, about "terms of service" agreements that govern the use of websites.

In light of the criticism Adobe has received for a clause in the terms of service agreement it posted for its new Photoshop Express service, which forced it to apologise and make a change, I thought it would be appropriate to address the topic of these agreements.

Although some might question how terms of service agreements that most users don't read could have any legal standing, it's important to note that courts have upheld their enforceability.

Therefore, website owners should recognize that what they include and don't include in their terms of service could potentially have a tangible impact on their businesses.

Given that, if you run a website and haven't given much thought to your terms of service agreement, here are some practical tips:

  • Don't simply copy another service's terms of service. Although it's tempting to save time and money by copying an existing agreement from a website similar in nature to your own, you should not assume that another agreement will fully meet your needs and be suitable for your particular situation.

    At the most, another website's terms of service might be an appropriate starting point for your attorney (see the next item).

  • Get an attorney involved. Most people don't like dealing with attorneys but they do serve a purpose. Because terms of service agreements have generally been ruled enforceable, avoiding an attorney because of the costs is penny wise, pound foolish.

    Just as you probably wouldn't sell your company without having an attorney involved, you shouldn't post a terms of service agreement on your website if an attorney hasn't looked it over to make sure it adequately meets your needs and protects your interests.

  • Have some idea of what you want and need. To save money on attorney's fees, give thought to what you would ideally want your terms of service agreement to state in layman's terms and relay this information to your attorney.

    Not giving such thought to your terms of service agreement can have negative results even when an attorney is involved.

    In the case of Adobe, it appears that attorneys were given free reign and added clauses that probably shouldn't have been there in the first place.

    Had a non-attorney at Adobe reviewed the terms of service for Photoshop Express, the company might have realized that it had no real need for users to grant it a "a worldwide, royalty-free, nonexclusive, perpetual, irrevocable, and fully sublicensable license to use, distribute, derive revenue or other remuneration from, reproduce, modify, adapt, publish, translate, publicly perform and publicly display" user content.

  • Be fair. Sometimes attorneys go too far, and while I tend to heed my attorney's advice, I've also made it a habit of asking the attorneys I've worked with to be reasonably fair to the other parties involved, knowing full well that agreements that are patently unfair can become problematic.

    Sometimes the problems that can arise go beyond negative perceptions and have real legal implications. Linden Labs, the company that operates Second Life, learned this the hard way.

    On May 30, 2007, a Pennsylvania court ruled that a clause in the Second Life terms of service dictating that all disputes would be resolved via arbitration in California was "procedurally and substantively unconscionable" and stacked the odds in favor of Linden Labs "in almost all situations."

    The court ruled that the clause was unenforceable and that Linden Labs would have to deal with the issue in Pennsylvania federal court, not in the arbitration forum in California that would have almost certainly ruled in its favor.

    Thus, a patently unfair terms of service agreement cost Linden Labs time and money. As pointed out by Thomas O'Toole at BNA's E-Commerce and Tech Law Blog, "A fair reading of this case and Comb [another case] should lead counsel to reign in their natural impulse to write every single deal point in favor of their client and against the user."

In an age where more and more activities (both business and personal) are being conducted online and where the litigious nature of society seems only to be increasing, it's important for serious website owners to invest in their terms of service agreements.

Although many have paid little to no attention to this subject without consequence, the potential negative consequences when a terms of service agreement comes under scrutiny certainly outweigh the costs of taking care of business and having a solid one put together.

Drama 2.0

Published 1 April, 2008 by Drama 2.0

237 more posts from this author

Comments (2)


Don Q

It's Linden Lab, not Labs. Do your homework!

over 8 years ago

Drama 2.0

Drama 2.0, Chief Connoisseur at The Drama 2.0 Show

Don Q: you apparently didn't hear the news about their expansion. They now have more than one lab.

over 8 years ago

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