Internet Service ProvidersInternet Service Providers

1. access to the internet

2. huge variety of content

3. email/instant messaging facilities

4. webspace to members

AOL – some facts and figuresAOL – some facts and figures

A Global view of AOLA Global view of AOL

1.1. 30+ million members world wide30+ million members world wide

2.2. 23.4 million members in Europe for AOL and CSi23.4 million members in Europe for AOL and CSi

3.3. 170 million emails sent per day.170 million emails sent per day.

4.4. 5.2 billion web URLs served a day.5.2 billion web URLs served a day.

5.5. 1.2 billion instant messages last Tuesday1.2 billion instant messages last Tuesday

6.6. 22,000 chat rooms are in use per day.22,000 chat rooms are in use per day.

7.7. 200 million stock quotes daily.200 million stock quotes daily.

A new medium - but similar legal challenges

The internet empowers individuals to publish to a The internet empowers individuals to publish to a wide audience without intermediaries wide audience without intermediaries

-- no traditional “editors” or “publishers”no traditional “editors” or “publishers”

- - instantaneous widespread distributioninstantaneous widespread distribution

In legal terms, the online world however is really the In legal terms, the online world however is really the same as the offline world, and users of the same as the offline world, and users of the internet should take responsibility for their internet should take responsibility for their actions. actions.

Purpose of terms and conditionsPurpose of terms and conditions

1. Set out the terms on which ISP is prepared to provide the service to the Consumer.

2. Reflect requirements of current (and where possible anticipate forthcoming) legislation

3. Allocate risk in order to be able to provide a product at an appropriate price.

This talk a brief overview of some of the topics we face as ISPs from a traditional legal rather than regulatory perspective.

Consumer contracts – subject to Consumer contracts – subject to consumer protection lawconsumer protection law

Unfair Contract Terms Act 1977

1. Terms restricting

2. liability for a breach no performance, or a substantially

different performance must be reasonable, in all the

circumstances.

“Unfair Terms in Consumer Contracts Regulations 1999”

1. Terms can be struck out by the Court if:

2. “contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”

3. Applies both to:

the content of the agreement

the language of the agreement

Certain Terms Implied by Law into all consumer contracts

1.1. Services will be carried out with reasonable skill Services will be carried out with reasonable skill and careand care

2.2. Goods:Goods:

3.3. 1.1. Conform to their descriptionConform to their description

4.4. 2.2. Satisfactory qualitySatisfactory quality

5.5. 3.3. Fitness for purposeFitness for purpose

6.6. Exclusions of these terms ineffective against a Exclusions of these terms ineffective against a consumerconsumer

Usual structure used by ISPs: Terms & Usual structure used by ISPs: Terms & Conditions + Community Guidelines / Conditions + Community Guidelines /

“AUPs”“AUPs”

Terms and Conditions / AUPsTerms and Conditions / AUPs

Some current legal issues: Are the terms incorporated?

The issues.

Use of Click wrap? Or simple link to terms.

consider what is practical for websites and ISPs.

One ISP’s attempt!

“Please note that this page will take up to 1 minute to download. If you don’t want to wait, please click “I agree” to accept our terms and conditions. You can view them later on the ISP home page”

Consumer Protection (Distance Selling) Regulations 2000

1. Another hot topic being addressed in the field of on line contracts

2. “Cooling off” period - for distance sales, particular information must be specified, and a cooling off period to enable a consumer to decide whether their purchase was rash and allow them to cancel without penalty:

3. Some ISPs believe it applies

“If you are a Consumer, and provided that your Account remains inactive for 7 days from the Effective Date, you may cancel the Service at any time during such 7 day period without incurring any obligation or liability to us. We will refund all monies you have paid to us within 30 days of receipt of your notification that you wish to cancel. If you choose to do this, please [follow instructions, phone, email, etc]. You cannot cancel pursuant to this Clause 6.1 once you have used your Account, eg. by taking any action under your password.”

Distance Selling Regulations Continued

1. others do not - may depend on how the service is delivered immediately on conclusion of the contract.

2. “You acknowledge that by accepting the terms and conditions of this Contract you will be deemed to have immediate provision of the Service by us to you. Accordingly you will have no right to cancel the provision of the Service under the Consumer Protection (Distance Selling) Regulations 2000.

3. The position is certainly different for ISP online shops!

Data ProcessingData Processing

1. Processing defined widely in Data Protection Act 1999 - includes storage of personal data

2. Processing is permissible if necessary:- for contractual performance.- For compliance purposes.- to protect vital interests of Data

Subject; or- with the freely given, informed

consent of the Data Subject.

3. Opt in v. Opt out. Address in the member agreement. Provide an easy means of changing preferences.

Tell Members how you will use their Tell Members how you will use their personal data - Marketing Usepersonal data - Marketing Use

““We encourage you to tell us what your We encourage you to tell us what your marketing preferences are for your personal marketing preferences are for your personal data. For this purpose, please note that unless data. For this purpose, please note that unless you "opt-out" you are agreeing that your name you "opt-out" you are agreeing that your name and address may be disclosed to selected third and address may be disclosed to selected third party suppliers of goods and services and party suppliers of goods and services and advertisers, who may use it to market to you advertisers, who may use it to market to you their products and services. You can opt-out at their products and services. You can opt-out at any time after you have completed the any time after you have completed the registration process by using Keyword: registration process by using Keyword: MARKETING PREFS.”MARKETING PREFS.”

Put information where user knows what is happening Put information where user knows what is happening with their personal data, and provide means to with their personal data, and provide means to change their marketing preferences.change their marketing preferences.

The AOL solution.

Include information up front in the terms:

Marketing Data

Make it easy for consumers to change their minds:

Limitation of liability clausesLimitation of liability clauses

A failure of ISP services could result in potentially huge losses for the consumer:

1) Lost emails?

2) Inability to access services through network failure?

Initial complaints dealt with through freephone customer services, escalation ultimately to Legal team

Consumers may claim that they should be compensated for such failures. How much risk should an ISP bear for (say) a consumer service which inherently depends on many components outside the direct control of the ISP?

Consumer based ISPs offer recently undreamt of

functionality at a low cost

1. A consumer ISP typically offers low cost access to the internet, proprietary content, specialist channels and email facilities

2. Flat rate – for a monthly subscription fee

OR

1. “free” (so-called) services, no subscription fee, and consumer pays for telephone charges

What sort of losses might be What sort of losses might be recoverable under law?recoverable under law?

Contract law on damages. Forms the basis of any analysis on breach of contract.

1. “Direct” loss such as may be fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself;

2. “Indirect” or “Consequential” losses such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach.

ISPs may receive various claims.

Contractual

“Your software ate my machine, I had to get a repairer in….” DIRECT

“I couldn’t access my email last Tuesday, lost £20K as a result...”

CONSEQUENTIAL

or Tortious

“An email sent by one of your members is is defamatory. I am suing you for damages”

ISPs generally seek to limit their liability for breach of contract

Limitation by amount

By reference to an absolute figure:

““£10,000 for any event or related series of events £10,000 for any event or related series of events and £25,000 for all events in any period ofand £25,000 for all events in any period of 12 12 months”months”

or by reference to a formula:

““the liability of ISP under this Agreement the liability of ISP under this Agreement (whether arising in negligence or otherwise) will (whether arising in negligence or otherwise) will not under any circumstances exceed an amount not under any circumstances exceed an amount equal to the fees owed to ISP by you during the equal to the fees owed to ISP by you during the six-month period preceding the time liability six-month period preceding the time liability arises, regardless of the cause or form of action.”arises, regardless of the cause or form of action.”

Bottom line: Will only work if Court decides they are Bottom line: Will only work if Court decides they are reasonable!reasonable!

What is a reasonable position?

1.1. If consumers want “guaranteed” performance, If consumers want “guaranteed” performance, then are they willing to pay for it?then are they willing to pay for it?

2.2. Limitations on liability help enable ISPs to Limitations on liability help enable ISPs to provide service at affordable prices. provide service at affordable prices.

3.3. ISPs such as AOL are easy to find, easy to sue, ISPs such as AOL are easy to find, easy to sue, and may have deeper pockets than the entities and may have deeper pockets than the entities responsible for unlawful behaviour on the web.responsible for unlawful behaviour on the web.

4.4. The issue is not academic. Current law makes The issue is not academic. Current law makes ISPs exposed to claims based on 3rd parties acts ISPs exposed to claims based on 3rd parties acts - hence a natural concern by ISPs to protect - hence a natural concern by ISPs to protect themselves by their terms and conditions. themselves by their terms and conditions.

Case study - DefamationCase study - Defamation

Key case: Godfrey v. Demon Internet

1. Claimant must prove The words of which they complain

have a defamatory meaning. The words refer to them. The defendant was responsible for

publishing them to a third party.

2. Defamation proceedings commenced against Demon.

Defence potentially available to Demon under the Defamation Act 1996:

1. Not author, editor or publisher; and

2. Took reasonable care; and

3. Did not know and had no reason to believe that what ISP does caused or contributed to publication.

1.1. The defence was potentially available as Demon held not to be The defence was potentially available as Demon held not to be an author, editor or publisher – ie they were only a “pipe”as an author, editor or publisher – ie they were only a “pipe”as only involved:only involved:

2. In processing, making copies of, distributing or selling any electronic medium in or on which the statement is recorded, or in operating or providing any equipment, system or service by means of which the statement is retrieved, copied, distributed or made available in electronic form.

3. As the operator of or provider of access to a communications system by means of which the statement is transmitted, or made available, by

a person over whom he has no effective control.

Why Demon failed.

However – on the facts of this case Demon could delete postings, and had not taken reasonable care by failing to remove posting once it had been made aware of it.

Case settled before reaching House of Lords.

Ramifications of Demon for ISPsRamifications of Demon for ISPs

Risk that review of 3rd party content could remove the defence:

Unfeasible for ISPs to monitor the vast volume of materials in practice?

Solution?

“By content, we mean the information, software, communications, images and sounds provided online. The content available through AOL is provided by AOL Inc. and its affiliates, our members, independent content providers and other third parties. In general, AOL Inc. does not pre-screen content available through AOL, but does reserve the right to remove or filter any that does not meet its standards or comply with the Community Guidelines.”

Manage the risks. The Importance of obtaining warranties and

indemnities.

A warranty - an assurance or promise in a contract the breach of which may give rise to a claim for damages

An indemnity - an undertaking by one person to meet a specific potential liability of another.

1. From Content partners in business to business deals.

2. From Consumers for the content they post – but actual protection given?

3. “If you are a Consumer, you must indemnify us against any claims or legal proceedings arising from the use of the Service under these Conditions (including, but not limited to claims in respect of defamation, breach of copyright or other intellectual property right infringement) which are brought or threatened against us by another person.”

Balance needs to be struck by ISPsBalance needs to be struck by ISPs

1. On receipt of a complaint, easy thing is to take down sites following receipt of a complaint, whether or not the complaint is justified:

2. ISPs may breach their contracts with subscribers.

3. argument that take down in breach of Article 10 of the Human Rights Act 1998, dealing with freedom of expression.

4. Solution – lies in terms and conditions, but also in effective “notice and takedown procedures”:

- Establish policy- Clear clauses for takedown

Warning on accounts/termination

“AOL Inc. may terminate your membership immediately without notice …. such as where you have breached one or more of your obligations in this Member Agreement and your breach is, in AOL Inc.'s reasonable discretion, especially serious. This kind of breach generally arises where applicable laws or third-party rights have been violated in some way, or your online conduct has adversely affected someone's (including AOL Inc.'s) interests or another member's use of AOL. Non-exhaustive examples include:-

(i) online behaviour - or the distribution of content - which is likely to infringe the criminal law or someone's rights;

(ii) the sending of unsolicited bulk e-mail;

(iii) behaviour which affects AOL Inc.'s ability to provide AOL; or

(iv) failure to pay charges in accordance with this Member Agreement”

Alternative route - build in flexibility

“Alternatively AOL Inc. may decide, in its discretion, to suspend your membership or to issue a warning to you instead of terminating your membership immediately. Non-exhaustive examples of activity which AOL Inc. may decide to treat in this way include:-

1. (i) non-critical breaches of AOL Inc.'s Community Guidelines;

(ii) online behaviour which causes annoyance, but which is not (in AOL Inc.'s opinion) serious or intentional.

1. If there is any subsequent breach, AOL Inc. will be entitled to terminate your membership immediately.”

E-Commerce Directive - how will it protect ISPs

1. Article 12 of the E-Commerce Directive which came into force on 8th May, 2000 requires that member states ensure that providers of any services at a distance by electronic means and at the individual request of a receiver of the services shall not be liable for the information transmitted where they are simply acting as a pipe.

2. However, ISPs are not liable for the information stored to the extent that the ISP does not have actual knowledge of the illegal activity or information, and that upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information

Devil in the detail, for which wait for implementing legislation, but appears not to progress the common law position under Demon

Conclusion

1.1. AOL experience as a family service - attempt to AOL experience as a family service - attempt to manage use going further than requirements of manage use going further than requirements of UK law. Some of the current issues highlightedUK law. Some of the current issues highlighted

2.2. Consumer protection legislation (naturally) Consumer protection legislation (naturally) construed in favour of consumer - a safety net.construed in favour of consumer - a safety net.

3.3. Terms and conditions and AUPs often therefore Terms and conditions and AUPs often therefore form part of an attempt to provide guidance to form part of an attempt to provide guidance to users as to what is acceptable, and to empower users as to what is acceptable, and to empower users to manage their online experience, and users to manage their online experience, and that of their children, through web site rating that of their children, through web site rating tools being implemented, as well as proprietary tools being implemented, as well as proprietary tools such as parental controls facility.tools such as parental controls facility.

4.4. ISPs are still a business, and their terms and ISPs are still a business, and their terms and conditions reflect this fact. conditions reflect this fact.