US Court Of Appeals Rules On Enforceability Of Browsewrap Agreements

The US Court of Appeals for the Ninth Circuit, in Nguyen v Barnes & Noble, Inc, 2014 WL 4056549 (9th Cir Aug 18, 2014) (Nguyen), has affirmed the Central California District Court’s decision to not enforce a browsewrap agreement in which the user did not have sufficient notice of the website’s terms of use. The term “browsewrap”, describes an “agreement” between an entity operating a website and a user of that website, the terms of which are located on a specified section or page of the website. Often such terms are said to become effective upon purchasing an item or merely visiting the website, even if the user has not read the terms. A browsewrap agreement is similar to the concept of a “clickwrap” licence which is used in online purchases of software applications. The main difference between the two is that a clickwrap agreement requires a positive action from the user, such as clicking an icon or checking a box, in order to confirm that the user has read and understood the terms. In Nguyen, the plaintiff purchased a computer tablet from the Barnes & Noble’s website during a special sale event. Barnes & Noble subsequently cancelled the plaintiff’s order, stating that they were out of stock of the particular device. The plaintiff then commenced a proceeding in California Superior Court on behalf of himself and a putative class of consumers alleging that Barnes & Noble had engaged in deceptive business practices and false advertising. Barnes & Noble argued that according to the terms of use on its website (Terms), the plaintiff was required to settle this dispute by way of binding arbitration. The Terms were located on a webpage accessible via a hyperlink located at the bottom left-hand corner of every page of the website and appeared in a similar location during online checkout. The plaintiff never clicked on the hyperlink and as a result never read the Terms. The Terms stated that they take effect upon the user visiting any area of the website, or creating an account, or making a purchase via the website. The District Court held that the plaintiff did not have sufficient notice of the Terms. Therefore, the plaintiff did not agree to the Terms and was not bound by the arbitration clause. In upholding the District Court’s decision, the Court of Appeals stated that:

Where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on —without more — is insufficient… [Emphasis added]

The underlined portion of the text above suggests that the Court of Appeals in Nguyen would have been more likely to find that the plaintiff had agreed to the Terms had Barnes & Noble required a positive action from the plaintiff to indicate his acceptance of the Terms. For more information, see: http://tinyurl.com/nnkpjvd Summary by: Thomas Wong