Court to App Developer: Check your Terms of Use!

We've all been there. We download an application ("App") on our phone, we go through the prompts, completely ignore the Terms of Use prompt, and gleefully hit "Accept". Naturally, that is on us as users. But what about you, the App owner. What happens when you don't want to "burden" the user with the legalese, and you opt to stash those "pesky" Terms of Use in a corner of the site or App? Well, the Court of Appeals for the Ninth Circuit just gave us a great reminder that you should not do that.

In Wilson v. Huuuge, Inc., the Ninth Circuit was faced with an online gambling application (made by Huuuge) whose terms of use included an arbitration clause. Wilson filed suit against Huuuge in District Court, only to have Huuuge try to move the case to arbitration. Huuuge failed both at the District Court as well as the Court of Appeals. Why? Because Huuuge did not put the terms in a noticeable and clear way to the user. Specifically, Huuuge basically hid the Terms in two locations: (1) within the text under the application at the App Store; and (2) buried in a menu prompt within the App. At no time was the user forced to click through the Terms in order to proceed. Big mistake.

Figure C of the Court's opinion shows where Huuuge placed the link to the Terms when the user visited the App Store's page for the application.

This was problematic (to say the least) because users could download the application without ever seeing this part of the description in the App Store.

Huuge countered that it had put the Terms in a second location, inside the App. Yet this did not move the Court. For a user to see the Terms within the App, they had to navigate to Settings, and from there, access them.

Figure E of the Court's Opinion shows where the Terms were. Again, the Court rejected this argument. The Court's core holding stressed the need for owners to make their Terms visible to users, a practice that all App developers must take to heart. Specifically, the Court held:

Users are put on constructive notice based on the conspicuousness and placement of the terms and conditions, as well as the content and overall design of the app. Id. At 1177. For example, courts will not enforce agreements where the terms are “buried at the bottom of the page or tucked away in obscure corners of the website,” especially when such scrolling is not required to use the site. Id. (citing to Specht v. Netscape Commc'ns Corp., 306 F.3d 17, 23 (2d Cir. 2002)). Similarly, courts decline to enforce agreements where the terms are available only if users scroll to a different screen, Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362, 367 (E.D.N.Y. 2009), complete a multiple-step process of clicking non-obvious links, Van Tassell v. United Mktg. Grp., 795 F. Supp. 2d 770, 792-93 (N.D. Ill. 2011), or parse through confusing or distracting content and advertisements, Starke v. SquareTrade, Inc., 913 F.3d 279, 293 (2d Cir. 2019); Nicosia v. Amazon.com, Inc., 834 F.3d 220, 237 (2d Cir. 2016). Even where the terms are accessible via a conspicuous hyperlink in close proximity to a button necessary to the function of the website, courts have declined to enforce such agreements. Nguyen, 763 F.3d at 1178-79

As the Court held, this is the big lesson for any entity that has their own set of Terms (and Privacy Policy). You must make users click through them or see them as a best practice. If you have an arbitration clause, make it clear and conspicuous. Ensure that if you are taken to court, you can show that users had clear notice of what rights they were signing away when they opted to make music videos of their dogs.

Most people often fail to read the Terms of Use of their websites and Apps of choice, but trust me, when it gets to a Judge, they will read every line.