Startup companies have to prioritize and it may be tempting to put the website terms of use on the bottom of the list.  After all isn’t there a pretty low chance anybody will ever read the words much less there will ever come a time to enforce them? The first part may be true but it is misguided to believe that well-crafted terms of use are not important.  Invest the time and energy it takes to design comprehensive terms of use for your website and your company will be in a far better position to protect its legal interests down the road.

The Main Ingredients 

The terms of use govern activity on your website or online service (the “site”) and are designed to be posted on your site. The principal purpose of the terms of use is to form a legal contract between your company and your site users intended to protect your company and reduce your potential liability. To be effective, the terms of use must be carefully drafted and customized to reflect the nature of your business and the particular features and content of your site. The following are some of the key considerations when preparing terms of use:   

• Protect Proprietary Rights.  Include terms to assert broad proprietary rights over the content made available on your site, whether proprietary to you or to your third-party service providers.  It is equally important to describe narrowly and precisely any license or right to use the content that you intend to grant to your site users.  At a minimum, your terms of use should prohibit unauthorized use and reproduction of the content on the site (e.g., text, pictures, graphics, and underlying code) and asserts your (or your service providers’) intellectual property rights in and to the content. 

• Be Mindful of User-Generated Content.  Specific legal issues arise when users are allowed to post or generate content on a site.  If your site provides such capabilities, include specific restrictions in your terms of use about what users may upload or post on your site or create by using your site.  Also make sure to become familiar with and comply with the Digital Millennium Copyright Act of 1998 (DMCA) and the Communications Decency Act of 1996 in order to take advantage of safe harbors for online service providers permitting user-generated content. For more information on the DMCA safe harbor, please click here and for more information on the CDA protections, please click here.  

• Impose Appropriate Restrictions.  Develop an expansive list of do’s and don’ts for your site to mitigate risks stemming from user conduct and speech.  To provide just a flavor, you should prohibit site users from engaging in the dissemination of defamatory or discriminatory speech, the uploading of infringing content, and the introduction of viruses or malware.  Your terms of use should anticipate and restrict as many undesirable user behaviors as possible that are of course, applicable to your specific site.     

• Include Protective Provisions.  Include protective provisions (e.g., disclaimers of warranty, limitation of liability, and user indemnification obligations) to limit your company’s exposure to liability and potential damages. These provisions are legal in nature and must be structured appropriately in consultation with an attorney to be enforceable in court.  Grabbing boilerplate language off the internet is risky and will likely not provide the desired protection.

• Consider Specific Requirements/Additional Terms.  Keep in mind that specific terms may be necessary if you charge users for access to your site or for information or services provided through your site, if your site is hosted or frequently accessed outside the United States, or if you operate in a highly regulated industry (e.g., financial services) and are subject to any industry-specific laws or regulations. This list is by no means exhaustive and your terms of use should be customized to comply with the requirements applicable to your business. 

Best Served With A Click

Remember that enforceability of your terms of use is not presumed and therefore it is critical to consider not only what your terms of use say but also how they are presented to users. We encourage you to consult with an attorney about your terms of use to ensure that the provisions you include will be adequate to address industry requirements, your business model and operations, and the specific and unique legal risks your young business will face now and in the future. Outlined below are some steps you can take to increase the likelihood that a court will find your terms of use enforceable:

• Maximize Visibility.  Users must have notice of your terms of use to be bound by them. Prominently display a link to the terms of use on your home page and always on pages where users have the ability to upload content.

•  Clickwrap is the tree that falls next to a reliable witness.  Some websites post the terms of use on their homepage and do not require any action from a user-these are called “browsewrap” terms of use. Court have generally found that browsewrap terms of use are not enforceable against an end user when the end user did not have actual or constructive knowledge of the terms of use in order to assent to the terms. To the extent possible, require users to check a box or click a button to indicate they have read and agree to your terms of use before users are allowed to access any substantive portions of the site and add language to this effect next to the applicable box or button with a hyperlink to the terms of use (e.g.,  I have read and agree to the Terms of Use). If the user does not check the box or the button to indicate their assent to the terms of use, the user should not be permitted to proceed to using the site. These are called “clickwrap” terms of use and have been generally found enforceable by courts. If you ultimately decide that you want to implement browsewrap terms of use, to increase the likelihood of enforceability, ensure that the terms of use are (1) consciously posted on your homepage so that users have actual knowledge of the terms of use and (2) accompanied by separate and conspicuous notice that the site is governed by the terms of use and that aces to and use of the site constitutes acceptance of the terms of use.

• Accessibility, readability, consistency, updates.  Strive to make your terms of use easily accessible by using standard or large print, a readable format, and plain English wherever possible.  Your terms of use should be consistent with your site’s privacy policy, data security policy, and any other publicly available statements made by your company.  Also make sure to periodically review your terms of use and notify users of any changes.