Terms of Service and Clarity

Update: 1/26/2019: Unity has updated its terms.

Over the past week, the video game world has been closely following the tumultuous relations between Improbable, Unity and Epic Games centering on an interpretation of an update (or clarification) of Unity’s Terms of Service. This case has brought into the spotlight an ordinary and extremely common contract: Terms of Service Agreement.

Defined as a set of regulations which users of a site or service agree to follow in order to use the service provided, Terms of Service are governed under contract law. While some might think of contracts as a formal document, written and signed in the office of a lawyer, real estate office, or other room with topaz-colored walls, in the internet age Terms of Service (TOS) serve the same function as these traditional methods.

TOS on internet sites and other platforms are typically clickwrap agreements. These require a computer user to assent to the terms and conditions of the site by clicking a dialog box to proceed with use or transaction. A related concept is a browserwrap where the terms and conditions are hyperlinked at the bottom of the page and by use of the page the actor communicates their assent to the terms. Other forms include sign-in wrap and scrollwrap agreements.

Courts have traditionally found these contracts enforceable, meaning that the service provider and the online user are legally obligated to the terms set within the agreement, when three conditions are met. First, the user has had an opportunity to read the terms. Second, the user has manifested unambiguous acceptance of those terms. And third, the terms have been clearly presented to the user. Presenting, in this context means not only allowing the user to read the document, but also doing it in a way that can be understood by the average user. It falls to the creators of the agreement to ensure they are clearly communicating what is expected of the user and what their obligations are. When evaluating a contract, courts will make their determination while staying within the four corners of the writing, independent of the creator’s intention.

Providing clear TOS agreements will satisfy the third requirement by courts if a disagreement over the meaning of the terms is brought to court. But before stepping foot in a lawyer’s office or courtroom (again probably with topaz walls) a clear TOS can benefit both providers and users.

It serves as insulation from litigation. If the Terms of Service are clear and easy to understand for a user, good intentioned users that will investigate what is and is not allowed on a platform and come to the correct answer rather than bungle forward. Relatedly, if more users understand what is allowable it can cut down on resources needed to police the violations of the terms.

Consumer image and opinion can be affected by an unclear or contentious Terms of Service Agreement. Drawing from the current controversy of Improbable and Unity, unclear understandings of Terms and Service can have ramifications beyond an individual user. Customers that are not using a site may avoid future engagement, following the fear that other similar users are uncertain of their future with the platform. Another example comes from digital imaging service Matterport changed its Terms of Service only to be met with a wave of consumer confusion, forcing the company to roll back the changes.

Finally, it is advisable for international and forward-looking service providers to offer clear terms complying with the General Data Protection Regulation (GDPR) promulgated by the European Union and California’s first-in-the-U.S. privacy regulatory regime. GDPR affects American companies handling the data of E.U. citizens and levels fines and penalties for those companies who do not comply. The regulation led many tech companies to update their Terms of Services and privacy policies in Spring of 2018. As mentioned in a previous post on this blog, simply gating services from EU users is not a good solution.

In the swirling vortex of the internet, which at times seems a lawless wasteland akin to The Good, the Bad, and the Ugly, there is still doctrine. The agreements that individuals and service providers enter into give a specific code of obligations and restrictions where one thing is clear: clarity is king.