Minimally Viable Contracts

The term “Minimally Viable Product” is a product that has just the features necessary to allow it to be deployed.   No more.   The idea is that the company wants to build products that customers actually want.   What would happen if we took this concept and adapted it to legal practice, specifically in the contracts realm?   I am suggesting “Minimally Viable Contracts.”

Presently we have a web literally littered with contracts (EULAs, Terms of Service, etc) all of which include terms that go beyond the given transaction, overreaching into all manner of ways and methods.     Though they serve a very specific and technical purpose (facilitate the transaction) unlike standard technical protocols they are idiosyncratic, meaning that they take on the language and unique perspective of the drafter.    This represents more of a custom than a requirement from a practice perspective.   Presently, this ‘custom’ creates a great deal of constraint, especially in the context of the cloud.  Various ‘cloud providers’ each with their own set of terms end up with conflicting terms.  It is a mess.   In addition, the terms of these contracts are one sided and many of these terms are not even necessary.

The cloud is the perfect place to launch a ‘customer friendly” or at least neutral ‘minimally viable contract’ that would be used by all players.   This would minimize the cost of each provider creating their own contract.  Also it would be an effective place to begin dialing back the excesses we’ve come to see with terms of use.

Presently, I am developing a model for such a contract and intend to post additional pieces as I proceed.  I’d love to hear your thoughts.

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Craigslist, those sneaky bastards…

I’ve been following the Craigslist/PadMapper news.    As the situation has unfolded to include 3Taps,  Craigslist suing both companies claiming all sorts of legal infractions including the assertion that the User Generated Content on Craigslist is now owned by Craigslist (per the rights claims in the Terms of Use) citing those terms as:

“Any access to or use of craigslist to design, develop, test, update, operate, modify, maintain, support, market, advertise, distribute or otherwise make available any program, application or service (including, without limitation, any device, technology, product, computer program, mobile device application, website, or mechanical or personal service) that enables or provides access to, use of, operation of or interoperation with craigslist (including, without limitation, to access content, post content, cross-post content, re-post content, respond or reply to content, verify content, transmit content, create accounts, verify accounts, use accounts, circumvent and/or automate technological security measures or restrictions, or flag content) is prohibited. This prohibition specifically applies but is not limited to software, programs, applications and services for use or operation on or by any computer and/or any electronic, wireless and/or mobile device, technology or product that exists now or in the future.”

I have to remind myself that this is ‘Craigslist’ that ‘hippiesque’ community postings hub.   BUT reading this I am reminded that it is a corporation and compared to PadMapper and 3Taps it is an ‘800 pound gorilla.’   Nothing demonstrates that better than this language quoted above from their TOS and their lawsuit.  How can they not see how these terms are in direct conflict with the desires of their huge community of users.  Put simply,  the legal posture misses the forrest for the trees.  The community (Craigslist CUSTOMERS) get this,  of Digital Trends writes:

All that said, putting sites like PadMapper out to pasture is incredibly, incredibly anti-consumer. And it means that Craiglist has two choices: Either allow the likes of PadMapper to exist, or massively update your platform. I’m in favor of the former — slap a licensing fee on interested parties for all I care, and those that are truly getting traffic thanks to the database that Craigslist has created will pony up the cash. Sure, you’re feeding your competition in that scenario, but unless you’re willing to redesign your site for a pleasant and successful user experience then you may as well demote yourself from consumer-facing application to platform.

As something of a short term (but maybe long term) solution, PadMapper is promoting its own service, PadLister, where you can list a home for free on the site. The entire debacle is getting so much hype that PadLister’s name is rising. Considering the angry mob ready to charge with virtual pitchforks, this could easily have a negative effect on Craigslist.

It sounds childish to say this, but you’re being plain mean to users, Craigslist. Your site is chock-full of data I need, but your interface is an exercise in torture. Either give me the tools to effectively use your site or allow someone else to do it.

Craigslist is fundamentally about community, it’s success is because of community support and now it is biting the hand that feeds it . In the wake of this news and community uproar, I wondered if Craigslist would respond to their community,  attempt to mitigate this community relations disaster.  Perhaps  engaging with them to address complaints about the outdated platform.

Given the community uproar Craigslist’s lawyers ought to be urging their executives to ‘make love not war!’  Not so.  Yesterday, Craigslist ‘upped the ante’ by sneaking the following exclusive license clause in Craigslist posts:

Clicking “Continue” confirms that craigslist is the exclusive licensee of this content, with the exclusive right to enforce copyrights against anyone copying, republishing, distributing or preparing derivative works without its consent.

In his blog post, Jonathan Berger writes:

I don’t remember seeing this before at the bottom of the Craigslist posting form. I’m guessing this is the result of the Padmapper debacle?

Claiming an exclusive license over user content is, until yesterday, unheard of and, in this case,  it is just dumb.    Moreover, sneaking in terms, after the fact, is plain wrong.  By doing this, Craigslist made it clear that they have officially moved to the dark side.

From a legal perspective claiming ownership (exclusive license) of the content copyright would make sense if there was a copyright to claim.   You can’t copyright facts so in a classified ad perhaps the only ‘copyrightable’ content is the descriptive wording of the ad .  The  ‘substance’ such as price, rooms, location (in the case of rental listings) is not subject to copyright.  Put simply, dumb move all the way around!  Timothy Lee of Ars Technica wrote an excellent analysis which concludes with the following insight:

“Craigslist fails to recognize that its users gain value by having their advertisements widely distributed and searchable. Instead of working to benefit its users by developing new, innovative features itself or encouraging third-party developers to do the same, Craigslist believes it can retain its strength in the market simply by clinging to its user’s content in a Gollum-like fashion.”

 

By standing with the interests of their community, Craigslist could benefit on the business side, too.   As it stands, they are giving up a tremendous opportunity for additional revenue.  As a user of Craiglists’ free service I would gladly pay a small fee to have my listing distributed more widely on other networks. Craigslist could have additional revenue from it’s users and additional revenue from partnering agreements with other networks by becoming a data broker on behalf of their listing users.

I know that this situation will likely be discussed at business schools and maybe it will even be written up as a business case study, in the future.   Depending on the outcome of the litigation, the litigation claims may be discussed in law schools.  It is unlikely that the discussion at the business school will be anything like the one at the law school.   Unfortunately, both will miss the point, that in their zeal to win they are really losing.

Name the Pink Elephants!

When we ‘accept’ terms of service ‘agreements’ we engage in this ceremony, ‘accept’ (as though we have a choice) contract terms that we neither read, understand nor accept.     In a word, ‘we lie.”

Biggestlie.com is an awareness campaign aimed at calling out this ‘pink elephant’ and with folks Pär Lannerö, Lars-Erik Jakobsson (icon), Gregg Bernstein, Carl Törnquist, Hanna Arkestål, Max Walter, Mattias Aspelund, Anders Carlman and CommonTerms are to trying to change the status quo.

Likewise, ProjectVRM recently posted ‘Coming to terms’ where Doc Searls who has been talking about this problem for quite some time states:

“We lie every time we “accept” terms that we haven’t read — a pro forma  behavior that is all but required by the calf-cow model of the Web that’s prevailed since 1995. We need to change that. And so we are.”

In the context of the web today not only has the relationship become compulsory,  but who your are dealing with is totally cloaked.  This ‘cloaked figure” (acting not only for itself but other cloaked figures) dictates all the terms of the relationship and on the other side there is just you (an individual).   Take this ONE factor of  compulsory relationship, with unknown parties, and alarm bells go off.

Let me give you an example:Mint.com.

First line in their TOS reads:

“This Agreement sets forth the terms and conditions that apply to your access and use of the Internet Web site located at http://www.mint.com (“Mint.com”), as owned and operated by Intuit Inc., a Delaware corporation, on behalf of those of its direct or indirect subsidiaries and/or affiliates, (collectively referred to as “Intuit”).”

Translation: This “agreement” is not between you and Intuit, Inc. RATHER this ‘agreement’ is AMOUNG you, Intuit, Inc. and ‘a whole bunch of other companies and people’ called *direct and indirect subsidiaries and affiliates. So every term that includes you granting rights to Intuit INCLUDES  granting it to all of these other folks too.  Oh, that is also true for every term that involves your agreement to limit Intuit’s liability for problems that arise.  That, too, extends to this faceless crowd known as  ‘direct or indirect subsidiaries and/or affiliates.’

*DON’T BE TRICKED BY MISLEADING LEGAL LANGUAGE: In this case people read subsidiary especially direct subsidiary and think that by law that means ‘companies under the direct control or owned by Intuit.” Often  the interpretation is quite broad especially when the language includes “indirect.” Likewise, the term “affiliate’ may make you think that the relationship is limited but actually it can include a broader and more ‘distant’ (relationally) group of people and companies.  When coupled with ‘indirect,’ the realm of possible parties could include just about any company and or person.

When we consider the Mint.com terms of service ‘agreement,” it is clear that privacy policies cannot be considered alone and often do not reflect the real story with respect to the use of your data.   All of these projects would be wise to consider the role of what I call the “anti privacy/ anti-people” policies aka “terms of service agreements.”  These terms of use allow  greater insight into not only the data privacy issue in general, but also that particular organization’s real commitment to their customers’ rights.   The terms of these agreements are at odds with the company’s marketing messages.   Don’t be misled, just because a law or policy make some assurance that your privacy is protected or information is not shared, it is  often not the way you think.  Privacy statutes often permit use of data, subject to consent, which is garnered by agreement to the terms of use.

When a contract is written to include every known and unknown direct or indirect subsidiary and affiliate as FIRST party to the contract, who are third parties?  Does knowing this clever legal trick change the way you read their Privacy Policy?  Their terms of service agremeements?  More importantly,  does this fact change the way you think about Mint.com in general?   In that vein, efforts like BiggestLie.com hit the bulls eye because they highlight the inherent dishonesty and manipulation.  But it is not enough we need to understand it and demand change.

That said, efforts toward transparency and “iconization” of terms are actually quite  troubling. In an effort to simplify they often lack context and fail to address the larger more anti-customer framework housing these policies taking it as immutable.     Moreover, the messaging can be misleading.   For example, Aza Raskin’s  Privacy Icons includes the following statement under one of the  icons:

“Your Data is Used for the Intended Use,” “Mint.com uses your login information to import your financial data from your banks — with your explicit permission.”

With that statement alone, a person may be led to trust Mint.com in a way he or she would not if they also read the terms effectively turning third party data collectors into first parties with all the accompanying rights and privileges.

Context with  comprehensive understanding is critical. If they are exploiting my data, and they are honest about it; I will weigh the costs and benefits and make a decision on whether or not to agree. . What I am told in a privacy policy and in marketing messages, that my privacy is important to a company and as a result, they do not sell my data etc., I expect  the terms of service ‘agreement’  to support these claims.   When, instead, I see the sneaky  legalese, I present above, it is completely misleading.   The term ‘bait and switch’ comes to mind,  I am wondering out loud if this is a possible cause of action against some of these companies; especially those proclaiming to be  acting on the customer’s behalf, while maintaining terms as egregious as the blatantly  privacy exploitative companies.   It seems  that companies who intend to market themselves as unique because they protect the customer need to back it up in their legal policies, agreements and practices.

For example let’s consider Personal.com:

Central to their business proposition is that they are unique in their approach to privacy and relationships with customers.   Reviewing their recently updated terms of service reveals clauses like this:

“You agree to defend, indemnify and hold Personal, its directors, officers, employees, agents and affiliates harmless from any and all claims, liabilities, damages, costs and expenses, including reasonable attorneys’ fees, in any way arising from, related to or in connection with your use of the Sites and/or Personal Service, your violation of these Terms or the posting or transmission of any materials on or through the Site and/or Personal Service by you, including, but not limited to, any third party claim that any information or materials you provide infringes any third party proprietary right.”

Translation: I as the user must indemnify this company and their affiliates for ANY claim that in ANY way is connected with my use of this service.

In general, I am not opposed to indemnification clauses because they aim to have the people responsible for certain conduct step up to the plate and deal with issues that arise from their failure to do just that, HOWEVER, I do not agree to provisions as broad and sweeping as this provision.  This folks, is what lawyers call ‘boilerplate’ that is drafted as broadly as possible forcing the other side to narrow it and customize it to suit the context of the situation.   The problem here is that you don’t get to negotiate and even if you did you don’t have a legal department at your fingertips negotiating on your behalf.

If I were the lawyer for the people, I imagine the conversation would go something like this:

 Personal.com Lawyer:  “We put that provision in the contract because if your use of the services causes us to get sued then you should have to pay.”

Lawyer for the People:   “What could they possibly do to get you sued?”

Personal.com Lawyer:  “They could  (fill in the blank personal.com)”

Lawyer for the People:   “Personal, while you are thinking of ‘something’  people could do to get you sued, I’d like to remind you that in a business to business deal this provision would  not fly.   So trying to cram it down the throat of a customer is wrong!”

Second and more important, where is the Indemnity from Personal.com to the user?    If you are promising that your service offers something more than the others out there shouldn’t you stand behind that promise?   Not to mention, also that, in a typical business-to-business negotiation, the indemnity goes two way, a la ‘what’s good for the goose is good for the gander’.     That said, at a minimum, Personal should step up and provide an indemnification for damages arising from their failure to protect your data.

Once again, the Devil is in the details.   It is really terrific to see all of these efforts aimed at providing transparency of privacy or legal terms, pushing for awareness (and accountability, I hope) and new tools to foster customer understanding of those terms.  However, I think that ‘privacy policies’ and terms of service ‘agreements’  as they are commonly written reflect an utter and complete disrespect for the individuals’ importance and role in commercial relationships.   While it is not my goal to resolve this existential matter today, or in my lifetime perhaps, I believe that there is a lot to be gained by examining the matter thoroughly from the individuals’ side of the ‘agreement.’