Recently, a California court dismissed a plaintiff’s claims that Instagram’s updated Terms of Services constituted a breach of the covenant of good faith and fair dealing implied in all contacts because Instagram took expanded rights over user’s photos.  Rodriguez v Instagram, LLC  (California Superior Court of San Francisco Case CGC-13-532875) (February 28, 2014). We have the following takeaways from the case:

  • This has little relevance to the growing case law on terms of use and changes to them.
  • The issue with online agreements, and changes to them, is whether the user has agreed to them.
  • Here the plaintiff did not plead the elements of any of her causes of action because she continued to use Instagram after it gave her notice that her continued use would constitute acceptance of the new terms.  She admits that she read the new terms, so she had notice, and she continued to use the service, so she agreed to them.
  • This would be a different case had she not gotten meaningful notice or had discontinued using the service after getting notice of the upcoming new terms.
  • There have been cases such as the Zappos case finding that a unilateral right to change material contract terms is unconscionable and can void the entire agreement.  But here, the changed terms provision provided for notice and affirmative assent by means of continued use after a certain prospective date.  That creates a new agreement, even if it has retroactive effect following the effective date of the new agreement.
  • If the service had been a paid service with a definitive term that both parties had agreed upon, such a notice and continued use change-of-terms provision would probably not be enforceable unless it also provided for some kind of termination and refund right.
  • The FTC has said many times that privacy policies, which may or may not be an agreement but are at least always representations by the publisher, cannot be retroactively materially changed without notice and consent.  Even that principle does not apply here since the plaintiff got notice and took the action that the notice explained would manifest consent.
  • Publishers and operators should not, however, read too much into this decision.  An outright unilateral right to change material terms will still void an agreement, and failure to get opt-in to new privacy practices contrary to the privacy policy in effect at the time the data was collected will still be a deceptive practice.  The key is to plan for and put into place a changed-terms provision that will pass muster, and that means meaningful notice or prospective changes and an enforceable method to establish assent.

BakerHostetler’s Privacy and Data Protection practice regularly counsels clients on privacy policies and online agreements, including with respect to updates and change-of-term provisions.  For more information contact the author.