Category Archives: contract types

This Week on The Web for 2009-07-26

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Amazon’s Orwellian Behavior

As many are reporting, Amazon.com “recalled” an e-book remotely in response to a request by a publisher.  This is all kinds of scary and most folks are centered on the purely tangible nature of the problem.  I’m also concerned about the precent it sets, but I’m more concerned about the sapping of intellectual property rights that seems to be yet unexplored by these articles.

When you buy a book, you’re actually completing two transactions.  You’re purchasing the paper – the tangible product.  But you’re also buying a copy of the story itself – the intellectual property.  Each of these has distinct legal implications and over the years, laws have been developed to help protect not only the customer/consumer, but also the author and publisher.  The physical aspect protecting the consumer is that you have the ability to change your mind about your purchase (ie: you can return the book assuming you don’t damage it and that the transaction wasn’t noted as “all sales final” (though this isn’t an absolute bar to return)).  Retailers are likewise allowed to return what is returned to them – they have even more flexible return policies with their distributors.  And, as we’ve seen in the prior articles, folks are in an uproar about the idea that a retailer would come to your house to automatically take-back things you’ve purchased simply because their distributors wanted them to do so.

The other transaction – the one for the intellectual property – is much more interesting (IMHO).

Copyright is the protection most books are afforded.  When you buy a book, you have the right to read the story, burn/destroy the book, talk about the story with anyone, and heck, you can even resell the book (this is all part of what is known as the “first sale doctrine”.  What you can’t do is make copies of the book.  If you sell it to someone else, you can’t keep a copy for yourself, too (this is the issue with software, music, movies, etc being “shared” online).  But short of sale, the ownership in the copy is yours.  Therefore, it’s my argument that Amazon.com’s behavior amounts to theft – both of the tangible item AND the intellectual property.

The usual problem with pursuing this claim is that a service provider is smart enough to make device owners agree to some form of Terms of Service.  I would’ve thought that the Kindle ToS would have even been so bold as to allow Amazon an unrestricted right to do what they did.  But it doesn’t (Amazon Kindle ToS as of 2/9/2009):

Use of Digital Content. Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon as part of the Service and solely for your personal, non-commercial use. Digital Content will be deemed licensed to you by Amazon under this Agreement unless otherwise expressly provided by Amazon. [Emphasis added.]

I have other problems with this document, of course (such as the restrictions on resale).  But on its surface, Amazon grants a perpetual license to the purchased content.  So through their behavior, following their own Terms of Service, they’re in breach.  But we won’t hear about any suits as the ToS restricts claims to confidential arbitration and limits damages to the price of the device.

For its part, Amazon says that “We are changing our systems so that in the future we will not remove books from customers’ devices in these circumstances.”

[Update:  Amazon’s Herdener (the source of the above quote) actually said more:

These books were added to our catalog using our self-service platform by a third-party who did not have the rights to the books. When we were notified of this by the rights holder, we removed the illegal copies from our systems and from customers’ devices, and refunded customers. We are changing our systems so that in the future we will not remove books from customers’ devices in these circumstances.

This doesn’t really change anything.  Even if an unauthorized party sells you something they don’t own, so long as you don’t know that the item wasn’t theirs to sell, you retain ownership as a “bonafide purchaser.”  I’m glad to see that Amazon won’t remove books in the future, seeing that they weren’t supposed to do it in the first place.]

Facebook’s Voting on ToS

[Disclaimer:  While I’m a Facebook user, I do not know all of the ins and outs of this particular issue, as I’ve not paid too much attention since they rolled back to the old ToS.]

Facebook has announced that they plan to have members vote on the new Terms of Service they’ve been working on.  In fact, they even say that it’s been a group of Facebook lawyers and a group of law students.

Facebook lawyers, with the help of law students, have been reading the 3,000-plus comments, and the administrators of the original protest group against the terms of use changes are consolidating the feedback in a list of “key concerns,” according to Facebook. The company has also sought input from privacy, copyright, and Internet legal experts.

OK, so I’m glad that they’re seeking input from privacy and copyright experts, too.  Even more interesting, though, is that unless 7,000 people submit comments, they’re only going to take the response as advisory.

Facebook will hold a vote on any proposed change if at least 7,000 members submit comments. The results of the vote will be “advisory” if less than 30 percent of Facebook active users participate in the process. If 30 percent or more of active members vote, the results of the vote will be binding, according to Axten.

In theory, that’s very representative.  If the people don’t feel the need to vote, those that do shouldn’t be counted as a representative sample of the entire population.

But let’s also be honest and say that the average teenager does not have a complete understanding of copyright, privacy or any of the other potential legal issues strewn about a Terms of Service document.  To them, music has always been “free”, digital nannies are more effective at stopping them from copying Wikipedia articles for school papers than the fear of punishment, and privacy is something they can control through the use of fake identities online.  It’s not that they’re unable to comprehend, they just haven’t had to do so up to this point.  When given the choice of “Accept” or “Reject” when installing software… how many of you read the language and then click “Reject”?

So while I think it’s commendable that Facebook offer up it’s proposed ToS to the user population for a vote, I think it’s ultimately going to not be an effective means by which the “public” will get Terms of Service that are truly acceptable to them.  The simple truth is that Facebook is a service.   They offer it to the world for free and they have created a Terms of Service document which governs the user’s use.  If the user doesn’t like the ToS, they shouldn’t use the service.  Facebook should have some sort of internal moral compass to not do anything that’s a violation of their user’s rights (even if their users don’t fully understand such rights), but that isn’t a legal requirement.  At the end of the day, Facebook should post it’s Terms of Service in both legal and layperson’s terms – disclosing the good (and more importantly) the “bad”… in detail.

Hopefully, potential users can then make an informed choice about how they wish to use the service.

Separation Agreements and Releases

[Disclaimer:  This is one of my rare posts that talks about some heavy legal topics.  Remember that I’m not licensed, I’m not your attorney and nothing below is legal advice.  If you or someone you know is going through the stuff below, please contact an employment lawyer in your area for accurate and comprehensive legal advice!]

In this latest round of mass layoffs and terminations, we once again hear the rumblings of our old contract nemesis, the Separation Agreement and Release.

This is that document that the employer sticks in your face right after they’ve told you that you’re no longer working for them – and that they expect you to sign quickly or lose some types of benefits.  Apparently, Yahoo!’s instructions to get people to sign their Release has already found its way online [via Ask a Manager].  And even though we don’t see the language of the Release, even these bullet point slides aren’t exactly full of integrity.

So, what do you do if you’re going through something like this:

  1. Take a deep breath and relax.  It’s hard, I know (from experience).  But you have to be thinking clearly and not have an emotional response.  It’s what they’re counting on to get you to sign the document.
  2. Do NOT sign anything other than true exit paperwork at the moment of termination.  Read EVERYTHING!  The only thing you should be signing are documents saying that they provided you with certain copies of documents, certain pieces of information (ie: they told you when things had to be turned in for COBRA, etc).  Watch for anything that promises that you’ll take some form of action.
  3. In most states (check with an employment attorney to be sure what the rules are for your area), you have a certain number of days in which the employer MUST provide you so that you can get a Release or Separation Agreement reviewed by competent legal counsel.  In other words, they can’t force you to sign anything at the moment.
  4. Layoffs or terminations might immediately create BETTER circumstances for you on certain topics (such as the repayment of bonuses or relocation or education).  Don’t be swayed by veiled threats that you might have to repay something if you don’t sign the document.  In many cases, their election to end your employment also ends your obligation to repay (again, check with your attorney on this, and, again, it’s one of the reasons why you should still have kept copies of any prior contractual documents with your employer).
  5. In all, don’t panic.  In virtually all cases, you’re going to go through the five stages of grief.  NONE of these stages is a good time for you to be negotiating with someone else, especially as it concerns you.  Go home… take the rest of the day off.  Allow yourself a little time to emotionally recover.  Then start reading through the documents they gave you with a fine-toothed comb.  Contact legal counsel if you have complicating circumstances.
  6. Sign the Release once you fully understand the consequences of signature.  You might end up choosing to receive some sort of cash payout in lieu of something else (like the ability to sue later).  This is a business and legal decision that only you can make for yourself.  Run the numbers like you would any deal.  Approach it systematically and as impassionately as you can.  Ask for help.

Now, there are also a few things that I would watch out for in these types of agreements, too:

  • Any kind of forward-looking restriction on your ability to work somewhere else.
  • Read and re-read any claim release… especially if you’ve had or are having difficulties with an employment related legal issue with your company (again, call a local attorney for advice)
  • A restriction on your first-amendment rights to freedom of speech.  In most cases, you give up the ability to say negative things about your employer.
  • Changes to any pre-existing contracts you have with the employer.  They might try to entice you with a one-time cash payout.  Run the numbers (See #6 above) to see if it’s worth it to you.

Oh, and lastly, remember that you CAN negotiate Separation Agreements and Releases… but probably not with your immediate supervisior and not at the moment that they’re trying to walk you out of the building (see the Yahoo! stuff… they explicitly tell the supervisors not to negotiate).  Collect your things, gather the paperwork… and call their HR Department to arrange a face-to-face meeting in the immediate future BEFORE any deadline for signature arises.  Explain that you have some complicating circumstances that you’d like to address and clarify, so you’d like to talk with someone face-to-face about the Release before you sign.  If HR stonewalls you, call the Legal Department and ask for the Employment Law counsel on staff.  Explain the same thing to them and ask to meet with them.

I’m sorry if you have to go through this.  You are not alone.