User Generated Content and Facebook's Terms of Service
With the rise of social media websites in recent years as a major sector of the information technology industry, the interplay between contract and intellectual property has become an increasingly important area of law. User generated content includes but is not limited to photographs, video, text, and a wide range of personally identifying information posted to social media websites by their users. This is typically addressed through a website’s Terms of Service contract, a type of boilerplate contract addressing the relationship between a site and its users that a user is required to agree to when creating an account on a particular site. This paper focuses on analyzing the various legal issues arising from the clause in Facebook’s Terms of Service contract discussing ownership and licensing of the intellectually property interest in user generated content. Specifically, this paper argues that this clause of the contract is poorly drafted in several respects, giving rise to the potential for costly litigation in the future as well as threats to Facebook’s current business model. Additionally, this paper presents several suggestions for changes in the drafting of the Terms of Service contract that could address these issues.
This paper will focus on the legal significance of the clause in Facebook’s Terms of Service contract relating to who holds intellectual property rights over user generated content posted on Facebook. The term user generated content refers to a wide range of “data, information, or media” that is created by members of the public and contributed by them to websites, where it then displayed to other internet users “in a useful or entertaining way.”1 Recently, the growing willingness of the public to place their intellectual property on the internet for all to see has driven the rise of social media from relative obscurity a few years ago to a multi-billion dollar industry today. The issue of ownership and licensing of this user generated content, primarily media like photographs and videos, stands at the center of this trend and remains a wildly underanalyzed area of law given its current and future importance to a growing sector of the economy.
In considering the role of contract law in handling user generated content in social media, it is most appropriate to analyze this issue in the context of the industry’s most prominent player, Facebook. This paper will argue that the drafting of the portion of Facebook’s terms of service contract concerning user generated content is deeply flawed in ways likely to give rise to litigation and alienate the site’s user base. In response, this paper will suggest several simple changes or clarifications of the language in this clause that would largely resolve these problems. While the analysis and recommendations to follow will focus on Facebook, the issues explored here have broad implications throughout the industry. Virtually all of the major players in social media, including the likes of YouTube, Twitter, and Instagram, all employ a Terms of Service agreement with similar provisions to that of Facebook. 2 The same principles that apply to Facebook’s Terms of Service are generally applicable to its peers within the industry, and thus viewing Facebook as a model case offers a valuable insight into emerging legal issues affecting an increasingly broad sector of the economy.
This paper will begin with a brief introductory discussion of the relevant clause of the terms of service contract as it is currently written, explaining the intellectual property interests it creates and what parties are purported to hold these interests. I will then move on to the main body of the paper, addressing the primary legal issues this clause raises: First, the rights of third parties to whom Facebook has transferred its license for a user’s content when that license is terminated by the user deleting the content from Facebook, including the issue of who is responsible for enforcing this termination on the third party. Second, the potential that the extraordinary degree of control Facebook seeks to exert over user created content may render its terms of service substantively unconscionable. Third, the effect of efforts by some Facebook users seeking to unilaterally modify the terms of service agreement as relates to user created content through posts on Facebook invoking a variety of statutes, treaties, or the “subject to your privacy and application settings”7 language in the agreement itself. Next, I will discuss potential changes to the language of the Terms of Service contract that could resolve these issues. Finally, I will conclude with a discussion of the broader business implications for Facebook of unsettled law in the area of user created content, and the importance of adopting more comprehensive and robust terms of service language in a market where consumers are increasingly aware of intellectual property issues.
II. FACEBOOK’S TERMS OF SERVICE CONTRACT
A “Terms of Service” contract is the legal document defining the rights and duties of a website relative to its users, along with the user’s rights and duties relative to the website. Virtually all websites offering services to the general public employ some form of a Terms of Service contract. Facebook is no different; it employs a lengthy terms of service contract containing a wide range of provisions detailing its relationship with its users. One of the most important and potentially contentions sections of the Facebook Terms of Service contract is the clause governing the licensing by Facebook of user generated content posted on its website. The language of this clause in the Terms of Service contract is as follows:
“You own all of the content and information you post on Facebook, and you can control how it is shared through your privacy and application settings. In addition:
For content that is covered by intellectual property rights, like photos and videos (IP content), you specifically give us the following permission, subject to your privacy and application settings: you grant us a non-exclusive, transferable, sub-licensable, royaltyfree, worldwide license to use any IP content that you post on or in connection with Facebook (IP License). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.
When you delete IP content, it is deleted in a manner similar to emptying the recycle bin on a computer. However, you understand that removed content may persist in backup copies for a reasonable period of time (but will not be available to others).”8
Roughly speaking, this clause can be said to contain four main propositions: First, there is a statement that a user retains ownership of their own intellectual property. This is important, as it establishes that this clause relates to a license rather than a transfer of ownership. Second, there is a list of what sorts of content the clause applies to. This list is framed in non-exclusive language and encompasses all forms of user generated content that could be posted on Facebook. Third, there is the substance of the license that the clause creates between Facebook and its users. This license primarily gives Facebook the right to use this content for any legitimate purpose, as well as the right to transfer this license to a third party. Fourth and finally, there is an explanation of how the license can be terminated. This allows a user to end the license by removing their content from their Facebook page, and obligates Facebook to stop using the content thereafter.
Though the contract as a whole continues for several additional pages, containing nineteen clauses in total, this clause is the controlling portion of the contract for issues of use and licensing of user generated content and will be the focus of this paper.
III. LEGAL ISSUES
In analyzing the impact of the intellectual property clause of Facebook’s Terms of Service contract on the relationship between Facebook and its users, the legal issues which one must consider can be broken down roughly into three main categories. First, there is the question of how to interpret ambiguous language in the clause regarding Facebook’s power to assign its license of users’ content to third parties, and how this relates to a user’s right to terminate the license of this content to Facebook. Second, as with any contract where vague terms threaten to create an outrageously one-sided relationship between parties, the issue of a potential for unconscionability challenges to the terms of the contract must be taken into consideration. Third, many Facebook users have taken it upon themselves to attempt to redefine the contractual relationship between them and the website through the use of so-called privacy statements. It is important to address what legal effect, if any, these efforts at self help have on the enforceability of the Terms of Service contract as it is now written. The following section will address the significance of each of these issues in turn.
a. Assignment of intellectual property rights under Facebook’s Terms of Service contract and the duties of third parties
The first major topic to address in an analysis of the legal issues surrounding the Facebook Terms of Service contract is the interpretation of the contractual language itself. Specifically, it is important to determine the effect of the language purporting to give Facebook the right to transfer its license of a user’s intellectual property to third parties, and how this relates the right of users to terminate the license by deleting their content from Facebook. The problem here arises from the fact that, when transferring interests under a contract to third parties, a sharp distinction is typically made between assignment of rights and delegation of duties.9 Under the general theory of contract law, an assignee takes an interest in the rights granted under a contract but does not take on the duties, while a delegee takes on the duties but not the rights.10 A transfer of both the rights and duties to a third party, essentially substituting the third party for the original party, generally constitutes novation and thus requites an agreement among all parties to the original contract.11 Since the latter is clearly not the case here, the question of intellectual property rights under Facebook’s Terms of Service must depend on an analysis of assignment and delegation.
In considering the application of these principles to the present situation it is first necessary to look to the language of the clause itself. Under the Terms of Service contract, Facebook is granted a right to transfer or sub-license user generated content to third parties.12 Facebook’s license is terminated if a user deletes his content from the Facebook website. Additionally, Facebook takes on the duty to delete a user’s content from its computer servers within a reasonable period of time after a user terminates this license. This creates a problem, in that under the theory of assignment versus delegation, a transfer of rights under a contract does not necessarily carry with it a transfer of duties. A third party, having been assigned the right to user a licensed piece of intellectual property under this clause, could very well claim that it was not bound by the duty to delete this content once the license was terminated. The fact that the interest being hypothetically transferred in this case is a license only serves to complicate matters further. By its very nature, a license permits only a limited use of a given piece of intellectual property, thereby involving elements of both rights and duties.13 However, given that under the Facebook Terms of Service, the granting of the license in question by users to the company represents the consideration for the contract on the part of the user, it seems safe to assume that from the perspective of Facebook, this license is more in the character of a right than of a duty. Accordingly, the transfer of this license to a third party would likely be considered an assignment of rights rather than delegation. Ultimately, the nature of the contractual relationship between Facebook, its users, and third parties depends on whether the duty to delete user generated content following the termination of the license to that content is interpreted by courts as being a part of the license itself, or if this is a separate duty undertaken by Facebook under the Terms of Service contract. If the former is the case, there is little cause for concern; users could freely delete their content from Facebook and third party assignees would be obligated to cease its use. However, if the latter is the case, then a third party may well feel entitled to continued use of a user’s content even after that user’s license with Facebook had been terminated. In this case, should a user stumble upon their content in use elsewhere after believing the license to be terminated, they would likely file suit against Facebook. This could lead to a publicly damaging legal battle and a possible finding of unconscionability, as will be addressed later in this paper.
The lack of any terms relating to the enforcement of a user’s intellectual property rights against a third party assignee following the termination of their license of this content to Facebook introduce additional ambiguity into the application of the Terms of Service contract. Even if a third party assignee shares in Facebook’s duty to delete user generated content following license termination, users remain in an apparently weak position. Under the contract as written, there are no terms obligating Facebook to disclose to users when their content has been sold or otherwise transferred to a third party. As a result, users who have deleted their user generated content from Facebook, and thus terminated the license allowing Facebook or its assignees to use this content, would have no way of knowing whether the third parties had actually stopped using the content and deleted it. Given the potentially damaging effect of a user’s content being used by third parties without the user’s knowledge or consent,14 it is deeply troubling that users having already terminated their license of content to Facebook, might not know their content remained in use elsewhere until stumbling upon it by chance. After all, a user who does not know their rights are being infringed cannot take action to remedy the situation.
Yet another problematic ambiguity in this clause arises from the language that, “This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.”15 Specifically, the question of what actions by what parties qualify as “sharing with others” has a significant impact on the meaning of the clause as a whole. Unfortunately, this is not a defined term in the contract, leaving readers with little guidance as to how it is to be interpreted. In general, there are two ways in which this term can be interpreted; either it refers only to sharing among users, or it also encompasses sharing by Facebook with third parties. The first interpretation is based on the colloquial usage of the word “share” on the Facebook website, where it refers to the act of one user posting content onto a second user’s profile page. If the first user were to then delete her profile, the content would remain on the second user’s page, and Facebook would need to maintain the license with the first user in order to host this content on its servers without being in violation of the first user’s copyright. Ultimately, though users might prefer their content to be entirely scrubbed from the website upon deleting their accounts, this form of ongoing license is not particularly harmful to the users nor does it change the underlying contractual relationship between them and Facebook. On the other hand, under the second possible interpretation, this language has profoundly problematic implications for the relationship between Facebook and its users. If sharing a user’s content with a third party invokes the “shared with others” language in the contract, Facebook would be able to effectively convert what on the face of it appears to be a limited license granted at the discretion of the user, into an indefinite license for both Facebook and the third party, with no control remaining in the hands of the user. Such an interpretation would result in a fundamentally different contractual relationship than what the Terms of Service initially appears to create, and could form the basis for an unconscionability challenge. Unless this ambiguity is addressed through a more precisely drafted contract, it is likely to be the source of litigation at some point in Facebook’s future.
b. Unconscionability and Facebook’s Terms of Service contract
Moving on, no analysis of a contentious term in a contract can be complete without addressing how this term related to the question of unconscionability. In general terms, unconscionability is a claim that can be raised by a plaintiff seeking to have the court invalidate all or part of a contract that he or she has previously accepted but now seeks to contest.16 It is a longstanding remedy with roots in equity, and focuses on the enforcement of fair dealing in contract.17 Unconscionability is divided into two subcategories: procedural unconscionability and substantive unconscionability, the first relating to flaws in the bargaining process of the contract and the second relating to the content of the contract. 18 Each of these two forms of unconscionability embodies a unique line of precedent and must be considered independently before a determination can be made as to whether the intellectual property clause of Facebook’s Terms of Service contract would be ruled unconscionable.
Regarding procedural unconscionability, Bragg v. Linden Research, Inc., provides an excellent example of the law of procedural unconscionability as applied to a website’s Terms of Service contract. In this case, a user of Linden Research’s Second Life 19 website brought an unconscionability challenge to a mandatory arbitration clause in the site’s Terms of Service contract as part of a dispute over ownership of virtual property. The court began its unconscionability analysis by addressing the relative bargaining power of the parties, concluding that it is in the very nature of a website’s Terms of Service to be a contract of adhesion, as all users must accept the contract as offered in order to use the site.20 As a further development of the unequal bargaining power analysis, the court also looks to the availability of “reasonably available market alternatives” to the website in question. 21 The court found that although competing sites existed, Second Life was the dominant player in this market, further diminishing a user’s bargaining power. In addition to unequal bargaining power, the court also points to another factor in determining the presence of procedural unconscionability, namely “the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.”22 In this case, Linden concealed its arbitration clause in an unmarked paragraph and failed to provide any detailed information regarding the arbitration process. These factors combined to create a clear finding of procedural unconscionability and largely motivated the court to rule in favor of the plaintiff.
On the other end of the spectrum, a more recent case against the same defendant illustrates the limits of purely procedural unconscionability. In this case, Evans v. Linden Research, users of the Second Life website brought a claim against Linden Research alleging, much like the prior case, that the “defendant unlawfully confiscated their virtual property.”23 The court in this case considered an unconscionability challenge by plaintiffs to portions of Linden’s Terms of Service contract, namely a forum selection clause and a mandatory arbitration clause. The primary distinction between this case and Bragg is that where Bragg contained evidence of both procedural and substantive unconscionability, the court in Evans found only procedural the procedural variety, with no signs of meaningful substantive unconscionability. In the intervening years between the two cases, Linden Research had altered its Terms of Service, removing much of the objectionable language that previously lead to a favorable verdict for the plaintiff. 24 Ultimately, the court rejected plaintiffs’ claims of unconscionability, citing the same “sliding scale” mentioned in Bragg. 25 In effect, this established a principle that procedural unconscionability cannot stand alone, and that a challenged clause in a website’s Terms of Service will remain enforceable unless some element of substantive unconscionability can be argued.
In applying these precedents to the clause in Facebook’s Terms of Service dealing with user generated content, from a procedural standpoint Facebook appears to be in a somewhat better position to defend itself from an unconscionability challenge than Linden Research was in Bragg. While one of the major factors motivating the court in Bragg to rule for the plaintiffs was the fact that Linden Research had hidden the challenged language within a clause unlikely to be noticed by a layman reviewing the contract prior to acceptance, this is not the case here. Rather, the clause in Facebook’s Terms of Service relating to the use and ownership of user generated content is clearly marked under the heading “Sharing Your Content and Information”26 and placed at the very beginning of the contract. The only aspect of this clause that could be said to contain hidden terms is the reference to uses’ privacy and application settings, essentially incorporating into the contract documents outside of its “four corners.” 27 However, these documents may be viewed by clicking on clearly visible hyperlinks, a step any conscientious user could be reasonably expected to take, and so can hardly be said to be hidden in the way that details of Linden’s arbitration policy were hidden in Bragg.28 That being said, like virtually all Terms of Service contracts, Facebook’s Terms of Service unquestionably represent a contract of adhesion, with little or no negotiating power for users. In this way, a certain degree of procedural unconscionability is unavoidable. Furthermore, Facebook is the dominant player in the social media industry, with few alternatives on the market offering similar services, militating in favor of a finding of unconscionability. Of course, as the holding in Evans demonstrates, the mere presence of procedural unconscionability alone is not sufficient for a court to strike down a challenged portion of a contract; substantive unconscionability must be addressed as well.
An analysis of potential substantive unconscionability in a contractual term is somewhat more complicated than that of procedural unconscionability. By its very nature, substantive unconscionability is a subjective determination by the court, essentially based on the perceived fairness of a challenged contract. The classic definition of a substantively unconscionable term was one that “no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other.”29 That is, unconscionability comes into play when a contract is so clearly one-sided that no reasonable party would accept it. However, inequality in the terms of a contract is not enough in and of itself to give rise to a finding of substantive unconscionability. Under one of the leading precedents regarding substantive unconscionability in the context of clickwrap contracts, Comb v. PayPal, “A contract may provide a ‘margin of safety’ that provides the party with superior bargaining strength protection for which it has a legitimate commercial need.”30 This should come as no surprise, as the very concept of for-profit business depends on the offeror of a contract deriving a greater benefit from a transaction than they expend in benefit of the offeree. Only where the terms of a contract give rise to “overly harsh or one-sided results that shock the conscience”31 do these terms rise to the level of substantive unconscionability. Ultimately, this standard is largely normative, as there is no binding statutory authority stating what degree of inequality in contract is too much inequality.
Applying these principles to the provisions of Facebook’s Terms of Service at issue here is a complicated proposition due to the nature of the contractual relationship it creates between Facebook and its users. While it is fairly easy to assess the fairness of a contract for the sale or exchange of goods and services, based on fair market value, in the present case it is far more difficult to determine the relative values of the rights and obligations of the parties to Facebook’s Terms of Service contract. What is the value to Facebook of receiving a transferable license to its users’ user generate content? What is the value to a user of maintaining a profile on the Facebook website? In all likelihood, this would vary significantly from user to user depending on the nature of the content they post and extent to which they avail themselves of the websites services. Of course, even if it were found that the contract disproportionately favored Facebook, this would not necessarily be enough to give rise to a finding of unconscionability alone if the degree of imbalance in terms fell within the “margin of safety” mentioned in Comb.32
Additionally, a significant portion of a substantive unconscionability analysis hinges on the answer to the question posed in the previous section of this paper regarding the rights of third parties to whom license to make use of user generated content is transferred. If the language in the Terms of Service contract granting Facebook the right to transfer its license to user generated content is interpreted as giving the recipients of this transfer an unlimited right to use this content for commercial purposes without the duty to cease its use if the user owning the content terminates the license to Facebook, there would be a strong argument for a finding of substantive unconscionability. A user would essentially be giving up rights roughly equivalent to an ownership interest in their user generated content in exchange for nothing more than the use of the Facebook website. Though it is up to courts to determine what shocks the conscience, it seems reasonably certain that such a profoundly lopsided contract would be found substantively unconscionable. On the other hand, if this language is interpreted such that the duty to cease the use of licensed user generated content passed to third party assignees along with the right to use this content, and Facebook was obligated to police the behavior of these assignees accordingly, it would be much more difficult to argue unconscionability here. All things considered, as long as the interpretation of this clause remains unsettled, there is a significant risk that this clause of Facebook’s Terms of Service contract could be ruled substantively unconscionable.
To conclude this section, Facebook faces uncertain prospects if it finds its Terms of Service contract challenged on the grounds that it unconscionably deprives users of their control over user generated content. While both forms of unconscionability are present to some extent in this clause, neither is sufficiently extreme as to clearly make the contract prima facie unconscionable. In comparing procedural and substantive unconscionability, “[t]he two elements operate on a sliding scale such that the more significant one is, the less significant the other need be.”33 Procedurally, we have a fairly straightforward contract of adhesion, in which the dominant market position of Facebook gives users little room to bargain or seek alternate providers of social media services. On the other hand, this contract is neither inconsistent with the company’s representations, nor are terms deceptively hidden from users. Substantively, we are faced with two possibilities. Either this clause is an innocuous license of intellectual property content necessary for Facebook to display users’ posted content on their website, or it invests extraordinary powers in Facebook to grant virtually unlimited licenses of user data to third parties. If a court finds the former to be the case, the minor procedural issues surrounding the Terms of Service will likely be insufficient to support a finding of unconscionability. However, if the later is the case, a very strong case exists for the clause to be found unconscionable.
c. Attempted modification of Facebook’s Terms of Service contract by users
Over the past two years, a trend has emerged among Facebook users of posting on their profiles what has come to be known as a “privacy notice.”34 These privacy notices take the form of a block of text in which the user seeks to claim a greater degree of control over her user generated content than is provided for in Facebook’s Terms of Service contract. This trend has largely coincided with the time period immediately before and after Facebook’s initial public offering, when concerns spread that as a publicly traded company Facebook might back away from its relatively favorable stance towards user privacy in the interest of greater profitability. Though there have been many different notices of this type circulated over the years, their content is generally similar enough that analyzing a single example is adequate for the purposes of this paper. One example of a popular Facebook privacy notice circulated widely in 2012, and which the author of this paper has personally witnessed in use, is as follows:
“In response to the new Facebook guidelines I hereby declare that my copyright is attached to all of my personal details, illustrations, comics, paintings, photos and videos, etc. (as a result of the Berne Convention). For commercial use of the above my written consent is needed at all times!
(Anyone reading this can copy this text and paste it on their Facebook Wall. This will place them under protection of copyright laws.) By the present communiqué, I notify Facebook that it is strictly forbidden to disclose, copy, distribute, disseminate, or take any other action against me on the basis of this profile and/or its contents. The aforementioned prohibited actions also apply to employees, students, agents and/or any staff under Facebook’s direction or control. The content of this profile is private and confidential information. The violation of my privacy is punished by law (UCC 1 1-308-308 1-103 and the Rome Statute).
Facebook is now an open capital entity. All members are recommended to publish a notice like this, or if you prefer, you may copy and paste this version. If you do not publish a statement at least once, you will be tacitly allowing the use of elements such as your photos as well as the information contained in your profile status updates.”35
While there is a great deal of variety in format and content between different privacy notices, the vast majority of them can be described as being comprised of three main elements; a statement of a user’s intent to secure their privacy or intellectual property rights, a section of legal jargon varying from but roughly mirroring language from the Terms of Service contract, and a claim that Facebook’s Terms of Service contract is contrary to one or more sources of statutory law. Each of these sections embodies a distinct legal theory by which a party to a contract may seek to avoid or alter the application of the contract and must be analyzed independently of each other.
The first section commonly found in a Facebook user’s privacy statement is a general assertion by the user claiming a right to privacy or a right to exercise control over their user generated content. This may take the form, as in the above example, of a statement that the user attaches her copyright to the content, accompanied later on by an implication that failing to post a similar privacy statement effectively gives the website permission to use one’s content as it sees fit. Alternately, some other versions are more direct, prefacing the statement with the header “privacy notice,” often in all capital letters.36 On the face of it, one might be inclined to think language of this sort is purely descriptive or explanatory, and lacks any real legal significance in terms of affecting the contractual relationship between Facebook and the user posting the statement. Indeed, legal documents of all kinds are often rife with unnecessary language that has no operative effect. However, in this instance, that may not necessarily be the case: the Terms of Service contract states that the permissions a user grants Facebook are “subject to your privacy and application settings.”37 Given that “privacy” and “settings” are not defined terms within the Terms of Service contract, there is a fairly compelling argument to be made that Facebook has left itself open to users attempting to interpret these terms in a way that would allow them to exercise a significant degree of control over their user generated content in the name of privacy. By a declaration of this sort, a user is essentially seeking to change their relationship with Facebook, not by modifying the contract, but by invoking a previously unused term in the contract.
With that in mind, however, the actual effect of these purely declaratory statements of privacy or copyright is likely to be somewhat limited. To begin with, the language in the example statement provided above that the user declares his copyright to be attached to all of his user generated content is largely redundant when viewed in the context of the Facebook Terms of Service contract. The contract clearly states that users own all “content and information”38 posted to the site, and only purports to give Facebook a license interest in this content. Asserting copyright merely affirms a right all users already enjoy, and in no way changes the relationship between the users and the website.
Perhaps more significantly, arguing that the language in the Terms of Service contract subjecting Facebook’s control of user generated content to the privacy and application settings of its users gives users broad authority to set their own conditions limiting the use of their data is problematic when viewed in the context of the broadly accepted canons of construction. Under these canons, ambiguous terms are typically interpreted according to their plain meaning. An exception to this rule can be found in the concept that, “[w]hen great inconvenience or absurd consequences would result from a particular construction… that construction should be avoided, unless the meaning… be so plain and manifest that avoidance is impossible.”39 In the present contract, the term “privacy and application settings” could, through purely plain meaning interpretation, be seen as allowing users to set their own terms for the use of their data. However, interpreting the term in this way would effectively nullify the remainder of the Terms of Service contract, a clearly absurd result. Moreover, while the term is not present in the definitions clause of the contract, “privacy and application settings” is something of a term of art within the Facebook website, referring specifically to a page on which users are presented with a small number of options for controlling the use of their data. In effect, this language in the Terms of Service allows users only a limited range of choices for controlling access to their data, not the ability to declare whatever conditions they wish to impose on Facebook. Ultimately, it is unlikely that an effort to regain control of one’s user generated content through a simple assertion to that effect would be successful, at least not when based solely on the legal theory that the contract as written already allows for such an assertion of control.
The second section commonly found in a Facebook user’s privacy statement post is composed of a body of quasi-legal terminology with which the user attempts to modify the Terms of Service contract. As can be seen in the example statement above, this section is typically an elaborate negation of the first sentence of clause in the Terms of Service contract handling user generated content, replacing the “you specifically give us the following permission…”40 language in the original contract with a variation on the “I notify Facebook that it is strictly forbidden to…”41 language found in the example privacy statement. The object here is to have the language in the privacy statement become binding, creating a new contractual relationship between Facebook and the user in which the user retains a greater degree of control over his user generated content. While it is uncontroversially accepted that a contract is not permanent and may be freely modified by its parties,42 this presents a unique situation in which one party to a contract is attempting to unilaterally modify the contract without the involvement of the other party, giving rise to a problematic legal situation.
Unfortunately for users hoping that this language would neutralize the clause in the Terms of Service contract granting Facebook the right to sell or otherwise transfer their user generated content to third parties, the bulk of relevant law takes a dim view towards enforcing unilateral modifications to contracts already in force. The general principle governing modification of contract is that a “valid modification of a contract must satisfy all the criteria essential for a valid original contract, including offer, acceptance, and consideration.”43 Of these three essential conditions, only offer is clearly present in any meaningful sense. Acceptance, on the other hand, is wholly absent. Without a manifestation of acceptance of the changes on the part of Facebook, the fundamental requirement that “[t]he minds of the parties must meet as to any proposed modification”44 is simply not met. Consideration is also problematic here. As the Terms of Service contract is essentially a clickwrap contract where users must accept before being able to make use of Facebook’s services, for a user to have even been able to post a privacy notice such as the one shown above, it is inevitable that he or she has already accepted the contract in its original form. At this point, the user is attempting to negotiate a contract with more favorable terms regarding user generated content than under the contract currently in force, without offering any consideration for this change in the relationship between the two parties, thereby failing to satisfy the third requirement of contract modification. Perhaps the casual ease with which users initially accept the Terms of Service and the lack of negotiation between parties at this stage leads some to believe that this contract can be modified through a similarly informal process, but the established principles of contract law strongly oppose the validity of a unilateral modification of the Terms of Service contract.
That being said, users seeking to exert a greater degree of control over their user generated content could very well argue that this is an exceptional circumstance where there was never really a meeting of minds in the first place, particularly in light of the discussion above of potential unconscionability in the Terms of Service contract. However, the concept of mutuality is so deeply engrained in the jurisprudence of contract law that even in the face of a flawed contract, unilateral modifications are still consistently found to be void. Courts faced with this issue have stated in no uncertain terms that “[a] party cannot, of course, unilaterally modify even unworkable provisions of a contract.”45 Regardless of whether the Terms of Service contract is flawed or otherwise unacceptable to Facebook’s users, an attempt at unilaterally modifying the contract will not have any effect on the user’s relationship with Facebook. The remedies available to users dissatisfied with a website’s Terms of Service are either to terminate the relationship between them and no longer use the website’s services, or to attempt to negotiate a new Terms of Service contract more favorable to their interests. Ultimately, unless an authorized agent of Facebook contacts a user and manifests acceptance of the modified contract, the section of a posted privacy notice at issue here remains only an offer with no legal significance.
The third and final means by which privacy statements attempt to wrest control of user generated content back from Facebook is a general invocation of a user’s statutory rights, typically including references to both domestic and international law. In the present example, three such sources of law are cited. Domestically, the privacy statement relies on Article I Section 308 of the Uniform Commercial Code. Within the scope of international law, two statutes are cited: the Berne Convention, and the Rome Statute. Before moving on to analyze the effect of these statutes, it is first necessary to set aside the last of these three sources as plainly inapplicable to the issue of control over intellectual property. One can only imagine that the “Rome Statute” cited in the privacy statement refers to the Rome Statute of the International Criminal Court, a statute focused on addressing the prosecution of war criminals. A thorough reading of this document reveals no mention of copyright or any other intellectual property related issue.46 Though Facebook may be guilty of a few ethical lapses, it is highly doubtful that its users seriously intend to claim its conduct rises to the level of a crime against humanity. Perhaps the authors of this privacy statement were under the belief that invoking the authority of the ICC is necessary for them to avail themselves of the protections of the Berne Convention also mentioned in this statement, or perhaps its presence is simply an artifact of a drafting process characterized by cumulative additions to the statement by Facebook users with limited grasp of the law. In any case, the Rome Statute has no bearing on the legal effect of the privacy statement.
Regarding the portion of the Uniform Commercial Code invoked by the example privacy statement, Article I Section 308, this section governs acceptance of a contract with reservation of rights on the part of the accepting party. The language of this section is as follows: “A party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved.”47 The commentary to this section of the UCC indicates that it is intended to allow a party to provisionally begin performance of a contract that is the subject of a pending dispute, without their acceptance and performance being used against them in the course of the dispute.48 In the present context, a user would likely invoke section 1-308 in the hope that this would allow him or her to continue using Facebook without necessarily abiding by the language of the Terms of Service contract.
However, this represents a flawed understanding of section 1-308 and would be unlikely to have the desired effect on the contractual relationship between the parties. A key issue here is that section 1-308 relates to the conduct of a party initially accepting or beginning performance under a contract. Here, users have already accepted the Terms of Service contract without reservation, and are only later attempting to retroactively take back rights already given up. Furthermore, section 1-308 merely permits a reservation of rights upon accepting a contract; nothing in this section allows a signatory to create altogether new rights for themselves under the contract. Even if a user were to somehow append a section 1-308 declaration onto his initial acceptance of Facebook’s Terms of Service, this would merely preserve their right to bring suit challenging the validity of one or more terms in this contract. It would not allow a user to introduce a wholly new set of contractual terms or otherwise unilaterally modify the contract. It is worth noting that section 1-308 of the UCC has a persistent following among certain members of the conspiracy theory community, who claim that invoking this section allows individuals broad powers to avoid being bound by contracts they sign.49 It is likely that the frequent presence of this reference to the UCC in Facebook privacy statements is due in large part to the influence of these groups’ questionable legal scholarship.
As for the reference to the Berne Convention for the Protection of Literary and Artistic Works in the first paragraph of the example privacy statement, there is nothing inherently incorrect about this reference, but it is not likely to strengthen a user’s intellectual property rights in any meaningful sense. The Berne Convention is a widely adopted multi-lateral treaty governing the treatment of copyright among the majority of the world’s nations. In basic terms, the Berne Convention requires that all signatory states must recognize copyright protection for literary and artistic works regardless of the country of origin, and extend this protection to all eligible works without requiring any formal registration process.50 In the context of the privacy statement in question, this is cited to justify the user’s assertion that their copyright attaches to their user generated content. This is quite accurate, in that under the terms of the Berne Convention, all creative works are protected by copyright. However, there is nothing in the Terms of Service contract purporting to deny copyright protection to users’ creative works. Indeed, the fact that the contract specifically grants Facebook a license to use this content represents a clear recognition that users hold copyright to their own user generated content. Accordingly, an appeal to the Berne Convention does not provide users with any additional rights that they did not already possess before posting the privacy notice containing it.
To conclude this section, as internet commentators have suggested,51 it appears clear that privacy statements posted to Facebook fail to achieve their goal of increasing users’ control over their user generated content. In part this is due to pervasive misinformation about the extent to which Facebook controls this content, leading many users to believe that they needed to take steps to reclaim ownership of content wrongfully taken from them, while in fact the ownership interest had remained in their hands all along. To the extent that Facebook does exercise control over user generated content, attempts by users to unilaterally modify the Terms of Service contract are not an effective method of reclaiming these rights. The principle of offer and acceptance is at the very heart of contract law and simply does not permit one party to modify a contract without the other’s consent. Ultimately, the only real effect that privacy notices have is to demonstrate the extent to which Facebook users are concerned about their intellectual property rights, and their dissatisfaction with the current state of the website’s Terms of Service contract.
IV. POTENTIAL REMEDIES
Fortunately, despite the potentially serious flaws in the clause of Facebook’s Terms of Service contract handling the use and licensing of user generated content, there are several relatively simple changes in the drafting of this clause that could strengthen Facebook’s legal position and prevent a great deal of future litigation. For example, Facebook could add language to its Terms of Service more clearly defining the rights and responsibilities of third parties to whom a license for user generated content is transferred. As a complement to this change, Facebook could also add language stating which party is responsible for enforcing the terms of the contract against third party assignees. Finally, Facebook could take the dramatic step of doing away with the transferability of its license of user generated content altogether. Each of these three possibilities will be explored as follows.
First and foremost, if Facebook intends to continue retaining the right to sell licenses for user generated content to third parties, it is vital that it adopts more precise language governing the rights and duties of the parties involved in such a transaction. At present, the contract does not specify whether Facebook’s duty to delete user generated content after a license is terminated also attaches to third party assignees, creating the risk that third parties could claim an indefinite right to use content transferred to them by Facebook. Incorporating the following language or an equivalent thereof would largely close this gap in Terms of Service contract:
Should Facebook elect to assign the license you have granted it to a third party, said third party’s right to use your intellectual property content shall not exceed Facebook’s right to use the same content. A transferred license is subject to termination under the same conditions as the license you grant to Facebook. Upon deletion of your content from Facebook, third party assignees are obligated to cease the use of this content and delete their copies of it within a reasonable period of time.
This language would essentially guarantee users that any third parties brought into the contractual relationship through assignment of rights would not enjoy an unfair advantage over them. By clearly tying the rights of third parties to the rights of Facebook, users would be assured that the degree of control they currently exercise over their user generated content would not be diminished as a result of a transaction in which they were not participants. This addition would significantly reduce the chances of an unconscionability challenge to the Terms of Service contract, both by reducing the disparity in bargaining power and by eliminating the possibility of a substantively unconscionable indefinite license of user content, while at the same time costing Facebook nothing to implement. Furthermore, as Facebook’s current ad-based business model does not require the ability to transfer a potentially indefinite right to a third party, Facebook would lose nothing by making this change to its Terms of Service.
Having addressed the gap in Facebook’s Terms of Service relating to the rights of users versus those of third party assignees, it is necessary to consider the mechanism by which those rights would be enforced. In the contract as written, neither the clause at issue in this paper nor the general dispute resolution clause contain provisions for handling a dispute between users and third party business associates of Facebook. Given the high probability of this type of dispute arising over assignment to third parties of rights to user generated content, it is troubling that this gap has been left unfilled. Introducing language such as the following would go a long way to develop this otherwise under-drafted portion of the Terms of Service:
In the event that, following termination of your license of content to Facebook, a third party assignee continues to make use of this content in violation of your copyright, Facebook will make all reasonable efforts to enforce the terms of this contract against said third party, and will indemnify you for any damages caused by the third party’s violation of your copyright.
In effect, this language would shift the burden of policing third party use of user generated content to Facebook. While companies naturally prefer to avoid being exposed to unnecessary liability, in the present case it is difficult to envision a scenario in which Facebook could reasonably avoid bearing this liability. As Facebook is under no obligation to disclose what entities it transfers a user’s content to, or even whether the content has been transferred at all, it would be virtually impossible for users to police their own copyright. To operate under a contractual regime wherein one party’s ability to enforce its rights is limited to stumbling upon a breach by chance is to invite an unconscionability challenge. By taking on the burden of policing third party use of user generated content, Facebook would avoid this type of legal battle and in all likelihood be in no worse a position than it would be following a lawsuit over this provision in its Terms of Service. If the prospect of increased liability proved too objectionable, Facebook could instead take on a responsibility to notify users when their content was sold to third parties, so that users would be better able to police third party usage themselves.
Finally, perhaps the most elegant solution to Facebook’s contractual issues would be to simply remove the word “transferable” from the clause at issue here. That is, if Facebook were to simply give up the right to transfer its license of user generated content, all of the uncertainty in the interpretation of this clause, along with the risk of a finding of substantive unconscionability, would be unquestionably resolved. While it may appear to be a radical departure from conventional wisdom to suggest that a company give up a potentially valuable asset merely to avoid legal uncertainty, Facebook represents a special case. Despite having a clear right to do so, Facebook does not currently sell its users’ information or other user generated content, and claims that it does not intend to do so at any point in the future.52 Instead, Facebook derives its revenue from selling advertising space on its website. Thus, giving up the right to transfer license to user generated content would not actually result in a reduction to Facebook’s current revenues. Any loss would be purely a matter of accounting; a write-off of some portion of Facebook’s estimated net asset value that would not impact the operations of the company in any way. Furthermore, a move of this type would go a long way to alleviate the privacy concerns of users, surely encouraging them to post more content and generally have a higher degree of engagement with the Facebook community. This could in turn lead to higher traffic on the Facebook website and a proportional increase in advertising revenue. However, as a publicly traded company Facebook must also take into account the position its shareholders are likely to take, and the unnecessary write-off of any asset is likely to be met with opposition. With that in mind, a more conservative change to the Terms of Service contract may be best, favoring a redefining of the contractual relationship that does not impose any meaningful losses on Facebook.
Taking the three options above into consideration, one can see that there are several simple changes that could be made by Facebook in order to resolve potential legal challenges to its Terms of Service. While the latter of these options offers the simplest and most definitive solution, the various complications brought on by potential shareholder action over such an unprecedented course of action could make it less desirable than the alternatives. Rather, by drafting a revised Terms of Service agreement containing both a statement limiting the rights of third parties and a clear explanation of how these limits are to be enforced, Facebook should be able to retain the ability to assign rights to user generated content to third parties without the risk of running afoul of unconscionability or drawing the ire of its users.
In conclusion, the Facebook Terms of Service contract contains significant gaps in its drafting, which if not filled, pose a threat to its legal wellbeing. The clause at issue, as written, fails to adequately explain a great deal of its content, ranging from details of third party assignment of users’ intellectual property to the simple definitions of many of the terms it refers to. These ambiguities open the door to litigation over the extent of parties’ rights under the contract, and even raise the specter of an unconscionability challenge to the Terms of Service. Despite these threats, it is easy to see why Facebook has chosen to allow its Terms of Service contract to remain in such an underdeveloped state even as it has risen to be one of the most widely used websites in existence.
In this day and age, there is increasingly widespread hostility and suspicion towards overly complicated contractual language, particularly when used in contracts meant for consumption by laymen. Indeed, even among lawyers there is a growing movement against the type of formalistic, jargon-laden “legalese” that has traditionally been the defining feature of legal documents.53 After all, what rational person would want to be bound by a contract without understanding its terms? By reducing what could have been a lengthy and arcane discussion of intellectual property rights to a clause of only a few simple sentences, Facebook may well have intended to make its Terms of Service more accessible to users. However, when a contract is so gravely under-drafted that major issues of the contractual relationship are left to the discretion of the courts to interpret, this form of drafting has the exact opposite of the intended effect. In this case, no amount of careful reading on the part of users can reveal the true nature of the Terms of Service contract they are expected to accept. The absence of clear limits on the rights of Facebook and third parties over user generated content gives rise to wildly speculative interpretations of the contract by users, often leading them to believe their position is worse than it truly is, as evidenced in the privacy statements many users have chosen to post. Rather than simplifying Facebook’s legal position, this poorly drafted contractual language has complicated matters in ways likely to alienate users and lead to lawsuits.
However, potential future litigation is not the sole threat Facebook’s flawed Terms of Service contract poses to the company’s financial situation. Within the last year, as awareness of privacy issues relating to user generated content has spread, Facebook has lost roughly eleven million users.54 While one might expect such an exodus of users to be lead by the least engaged members of the social media community, the opposite has been the case. A study published in the journal of Cyberpsychology, Behavior, and Social Networking demonstrated that among a sample group of Facebook users and recent quitters, individuals showing signs of internet addiction and a high degree of what the study’s authors described as “conscientiousness” were more likely to delete their Facebook profiles over privacy concerns than any other subset of the surveyed users.55 That is to say, a trend is emerging where the users who pay the highest degree of attention to Facebook are the users most likely to permanently remove their user generated content from the site, with only the less engaged, more casual users reliably remaining on the site. The very demographic that a website with a business model based on maintaining high site traffic should be most interested in maintaining among its user base is the demographic most rapidly fleeing Facebook. Indeed, the number of users seeking to remove their profiles over privacy concerns has reached such a high level that the term “virtual identity suicide” is emerging in popular discourse to describe this phenomenon, and several websites have been created solely for the purpose of helping users of Facebook and other social networking sites quickly and efficiently delete all of the user generated content associated with their online profiles.56 Due largely to the cavalier attitude with which Facebook has treated concerns over its use of user generated content, the number of Facebook users has begun to decline precipitously.
Though a drop of eleven million users may not initially appear significant compared to Facebook’s overall user base estimated to be over 1.1 billion as of March of 2013,57 if this trend continues, it could pose a very real threat to Facebook’s business model. Given that, as discussed above, Facebook currently derives all of its profits from the sale of advertisements and states that it does not sell rights to user generated content, choosing to operate under a Terms of Service contract that gives it such a broad right to sell this content at the cost of alienating its users is a deeply questionable business decision. Though a variety of factors influence the value of a given advertisement, it is a basic principle that the more individuals view an ad, the more that ad is worth. As Facebook’s user base shrinks due to data use fears, its advertising revenue will shrink as well. Quite simply, using a Terms of Service contract that fails to provide robust protection for user generated content is needlessly costing Facebook money and will continue to do so in the foreseeable future. Ultimately, a balance must be struck between complexity and accessibility, so that the contract is complete enough to adequately provide for all likely contingencies in a user’s relationship with the website, while not becoming so complex as to be incomprehensible to the laymen to whom the contract is directed.
1 John Krumm, Nigel Davies, and Chandra Narayanaswami, “User-Generated Content.” <http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=4653465>
3 Lucian A. Bebchuk & Richard A. Posner, “One-Sided Contracts in Competitive Consumer Markets,” 104 Mich. L. Rev. 827 (2006).
4 Id. at 833.
5 Florencia Marotta-Wurgler & Robert Taylor, “Set in Stone? Change and Innovation in Consumer Standard-Form Contracts,” 88 N.Y.U. L. Rev. 240 (2013).
6 Id. at 276.
7 Statement of Rights and Responsibilities, <https://www.facebook.com/legal/terms>, December 11, 2012.
9 “Third Parties and Assignments,” <http://contracts.uslegal.com/third-parties-and-assignments/>.
11 “Novations Law & Legal Definition,” <http://definitions.uslegal.com/n/novations/>.
12 Statement of Rights and Responsibilities, <https://www.facebook.com/legal/terms>, December 11, 2012.
13 See generally 38 A.L.R.5th 1 (Originally published in 1996).
14 Steven Hetcher, “User-Generated Content and the Future of Copyright: Part Two-Agreements Between Users and Mega-Sites,” 24 Santa Clara Computer & High Tech. L.J. 829, 848 (2008) (discussing a hypothetical scenario in which Facebook could sell its users’ content to “porno.com” under the current Terms of Service contract, potentially leading to use of this content in a manner highly undesirable to the users who ostensibly have an ownership interest in it).
15 Statement of Rights and Responsibilities, <https://www.facebook.com/legal/terms>, December 11, 2012.
16 Restatement (Second) of Contracts § 208 (1981)
17 Lucille M. Ponte, “Getting A Bad Rap? Unconscionability in Clickwrap Dispute Resolution Clauses and A Proposal for Improving the Quality of These Online Consumer “Products”,” 26 Ohio St. J. on Disp. Resol. 119, 129-130 (2011)
18 Id. at 131.
19 Second Life is a rather unique service, in essence combining elements of a traditional social media website with an interface comparable to a video game. Rather than posting text and pictures to one anther’s profile pages as in Facebook, users of Second Life interact with one another through a 3d virtual world.
20 Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593, 606 (E.D. Pa. 2007)
22 Id. (quoting Gutierrez v. Autowest, Inc., 114 Cal.App.4th 77, 7 Cal.Rptr.3d 267, 275 (2003).
23 Evans v. Linden Research, Inc., 763 F. Supp. 2d 735, 738 (E.D. Pa. 2011).
24 Id. at 741.
25 Id. at 740.
26 Statement of Rights and Responsibilities, <https://www.facebook.com/legal/terms>, December 11, 2012.
27 see Steven Hetcher, “User-Generated Content and the Future of Copyright: Part Two-Agreements Between Users and Mega-Sites,” 24 Santa Clara Computer & High Tech. L.J. 829, 845 (2008) (arguing that a key element of the holding in Bragg was that Linden Research made representations to users outside of the four corners of the Terms of Service contract, potentially contradicting terms in the contract itself).
28 But see Id. at 853 (arguing that a somewhat different previous version of Facebook’s Terms of Service contained unconscionably hidden terms)
29 Restatement (Second) of Contracts § 208 (1981).
30 Comb v. PayPal, Inc., 218 F. Supp. 2d 1165, 1174 (N.D. Cal. 2002).
31 Id. at 1172.
33 Id. at 1172.
34 “Facebook Privacy Notice,” <http://www.snopes.com/computer/facebook/privacy.asp>.
37 Statement of Rights and Responsibilities, <https://www.facebook.com/legal/terms>, December 11, 2012.
39 West’s ALR Digest Statutes k1405, ALRDG 361K1405
40 Statement of Rights and Responsibilities, <https://www.facebook.com/legal/terms>, December 11, 2012.
41 “Facebook Privacy Notice,” <http://www.snopes.com/computer/facebook/privacy.asp>.
42 See generally 17A Am. Jur. 2d Contracts § 507.
43 17A Am. Jur. 2d Contracts § 507.
45 In re Woodcock, 45 F.3d 363, 367 (10th Cir. 1995).
46 Rome Statute of the International Criminal Court, <http://www.icc-cpi.int/nr/rdonlyres/ea9aeff7-5752-4f84-be94-0a655eb30e16/0/rome_statute_english.pdf>.
47 § 1-308. Performance or Acceptance Under Reservation of Rights., Unif.Commercial Code § 1-308
49 see “Facebook Privacy Notice,” <http://www.snopes.com/computer/facebook/privacy.asp>; see also “The UCC Connection,” <http://freedom-school.com/the-ucc-connection.html>; “UCC 1-308 – Has this ever Worked?,” <http://www.dailypaul.com/143119/ucc-1-308-has-this-ever-worked>; and “Refusing A Non-Substantive Offer
(Nullify Commercial Law),” <http://keystoliberty2.wordpress.com/tag/ucc-1-308-remedy/> (all of the above providing a sample of the various conspiracies surrounding section 1-308 of the UCC).
50 “Summary of the Berne Convention for the Protection of Literary and Artistic Works (1886),” <http://www.wipo.int/treaties/en/ip/berne/summary_berne.html>.
51 Zach C. Cohen, “Don’t fall for fake ‘privacy’ notice on Facebook,” <http://content.usatoday.com/communities/technologylive/post/2012/06/dont-fall-for-facebook-privacynotice/1#.UnCNivk_uAp>.
52 “Does Facebook sell my information?,” <https://www.facebook.com/help/152637448140583>, July, 2013.
53 Bryan A. Garner, “Learning to Loathe Legalese,” <http://www.michbar.org/journal/pdf/pdf4article1085.pdf>, November, 2006.
54 Jamie Harris, “Facebook losing millions of users per month?” <http://www.digitalspy.com/tech/news/a476947/facebook-losing-millions-of-users-per-month.html> (“Over the past six months, it has been suggested that nearly 9 million users in the US and 2 million in the UK have quit Facebook.”)
55 See generally Stefan Stieger, “Who Commits Virtual Identity Suicide? Differences in Privacy Concerns, Internet Addiction, and Personality Between Facebook Users and Quitters,” <http://online.liebertpub.com/doi/pdf/10.1089/cyber.2012.0323> Volume 16, Number 9, 2013.
56 “Half of Facebook-Quitters Leave over Privacy Concerns,” <http://nakedsecurity.sophos.com/2013/09/18/half-offacebook-quitters-leave-over-privacy-concerns/>; see also Web 2.0 Suicide Machine <http://suicidemachine.org/> (the most popular and functional of these sites as of October 2013).
57 “Number of Active Users at Facebook Over the Years,” <http://news.yahoo.com/number-active-users-facebookover-230449748.html>