In a recent decision, a California federal court held that an arbitration provision contained in Viacom, Inc.’s browsewrap agreement was unenforceable and denied Viacom’s request to stay the case pending arbitration.[1] The court’s decision in Rushing v. Viacom, Inc. is consistent with “courts’ traditional reluctance to enforce browsewrap agreements against individual consumers.”[2]
Clickwrap versus browsewrap agreements
As companies continue to increase their online presence through websites and mobile applications, they often rely on “clickwrap” or “browsewrap” agreements to bind consumers to terms and conditions that govern consumers’ purchase and use of products from a website or mobile application. A clickwrap agreement requires a consumer to manifest assent by: (1) clicking an icon to that effect (e.g., a link or icon titled “I agree”) after being presented with a list of terms and conditions of use, or (2) “affirmatively acknowledg[ing] the agreement before proceeding with use of the website.” [3] In contrast, a browsewrap agreement is a set of terms, which is accessible via a hyperlink located on the pages of a website. Unlike a clickwrap agreement, a browsewrap agreement does not require a consumer to review the terms of the agreement or manifest assent to those terms and conditions through any affirmative conduct. Instead, a consumer assents to a browsewrap agreement simply by using the website.
Reluctance to enforce browsewrap agreements
Since browsewrap agreements do not require affirmative action by the user to agree to the terms and conditions of an agreement, courts have held that the validity of such agreements turns on whether the user had actual or constructive knowledge of those terms and conditions.[4] Courts consider a number of factors to determine whether the user had actual or constructive knowledge of the terms and conditions of a browsewrap agreement, including whether the agreement:
- is sufficiently conspicuous;
- is easily accessible; and
- adequately notifies the consumer that continued use of the website or application will act as a manifestation of the consumer’s intent to be bound by the terms and conditions of the agreement.[5]
Rushing v. Viacom, Inc.
In Rushing, Plaintiffs alleged that Viacom violated the federal Children’s Online Privacy Protection Act by tracking and selling children’s personally identifying information as children played the mobile game, Llama Spit Spit. Viacom responded with a request to stay the case pending arbitration, arguing that the matter should be resolved in arbitration pursuant to the terms of Viacom’s End User License Agreement (“EULA”). Although the EULA appears when users download and play the game, the Rushing court found that there was no evidence of actual or constructive notice because users had to click on a hyperlink titled “more” to review the arbitration provisions, and clicking on the hyperlink was not required to download the application. In concluding that the arbitration provisions of Viacom’s browsewrap agreement were unenforceable, the Rushing court emphasized that arbitration is a matter contract, and “[a] user cannot accept an offer through silence and inaction where she could not reasonably have known that an offer was ever made to her.”
Our take
Courts considering the enforceability of browsewrap agreements have consistently stated that the owners of websites and mobile applications bear the burden of putting consumers on notice of the terms and conditions to which they wish to bind consumers. While in some instances a browsewrap agreement may be upheld, companies that rely on this type of agreement assume a significant risk that the agreement will be unenforceable. Accordingly, unless a company’s business model simply cannot accommodate a clickwrap agreement, clickwrap agreements should be implemented.
[1] Rushing v. Viacom, Inc., N.D. Cal., 17-cv-04492-JD (Oct. 15, 2018).
[2] Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1178 (9th Cir. 2014).
[3] Id.; see, e.g., Zaltz v. JDATE, 952 F. Supp. 2d 439, 451–52 (E.D.N.Y. 2013); Fteja v. Facebook, Inc., 841 F. Supp. 2d 829, 838–40 (S.D.N.Y. 2012).
[4] Id. at 1176 (citing Van Tassel v. United Mktg. Grp., LLC, 795 F. Supp. 2d 770, 790 (N.D. Ill. 2011)); see also Sw. Airlines Co. v. BoardFirst, LLC, No. 06-CV-1891-B, 2007 WL4823761, at *4 (N.D. Tex. Sept. 12, 2007).
[5] Id. at 1177.
