Can a Clause Permitting a Website Operator to Unilaterally Change the Terms of the Website User Agreement Be Enforced?
The clickware or browseware on many websites contain clauses permitting the operator to unilaterally change the terms of use. For example, a number of websites that I reviewed recently, and that offer services throughout the U.S. or North America, contain clauses along these lines:
"We may amend, modify or update these terms of use at our sole discretion, and all users
shall be bound by any such amendment, modification or update. We may, but are under no
obligation, to provide notice of any amendment, modification or update of these terms of use."
Are clauses like this enforceable? The answer is . . . it depends.
On one hand, many website customers would argue that because this kind of clause gives so much discretion over the terms of the contract to the website operator, there really has been no agreement at all -- no meeting of the minds as to the terms of the contract. Others would argue that because the website owner can modify his obligations at will, the website owner has offered by real "consideration", so the contract is illusory.
California courts have held that such discretion does not necessarily make a contract invalid, because it is assumed that the party with the discretionary power -- in this case, the website operator -- has a duty to exercise its discretion in good faith and in accordance with fair dealing. So even if the agreement permits a material term, like the price, to be modified, as long as the actual modification that is made is reasonable or in proportion to some objective standard, the right to modify will generally be upheld. (fn1) For example, California courts have upheld contracts in which banks have reserved the right to increase interest rates on a loan, as long as the increases that were actually imposed were determined to be reasonable. (fn2)
However, in many cases, website operators have attempted to insert entirely new terms in later versions of an agreement that were not present at the time that the customer used a website or agreed to its contractual terms. I have seen cases where subsequent terms of use added such items as arbitration clauses (fn3), forum selection clauses (fn4), choice of law clauses (fn5), or attorneys fees' (fn6) provisions.
Some California cases have held that such added terms may not be enforceable -- despite the presence of a unilateral modification clause. Here are some examples:
On March 10, after some delay, the expected committee hearing the hearing on the House version of the bill finally occurred. The hearing began with testimony from a rocker, a member of the Smashing Pumpkins, who expressed appreciation for the contribution of radio to his career, before coming out in favor of broadcast royalty payments. The head of the recording industry association RIAA similarly testified that "This year radio will spin almost a billion songs in the United States, leading to billions from advertising. The payment to artists and labels for the use of those recordings, however, will not amount to a penny. As George Carlin famously said, what a ratio." He also stated that because U.S. laws prevent payment for radio performances, U.S. performers are also denied payments when their songs are played in foreign countries, even when these countries require their radio stations to compensate domestic performers.
Carafano v. Metrosplash.com was a CDA case with an extreme fact pattern. In Carafano, an unknown person posted a personal profile of actress Christianne Carafano, who used the stage name Chase Masterson, on Matchmaker.com, a dating website. The profile stated that "Chase529" was "looking for a one-night stand" and like "hard and dominant" men with "a strong sexual appetite" and that she "liked sort of being controlled by a man, in and out of bed." The profile listed two of Carafano's movies and included pictures of her. The profile also provided her home address and telephone number. Shortly after this posting, Carafano began to receive sexually explicit messages on her voicemail. She also received a highly threatening and sexually explicit fax that also threatened her son. Feeling unsafe in her home, she and her son stayed in hotels away from Los Angeles for several months. 339 F.3d 1119, 1121 (9th Cir. 2003).
At face value, nothing about these definitions appears to limit "copyright management information" to digital or other electronic information. However, the earliest District Court cases decided that Congress had intended to limit this provision to "automated copyright management systems functioning within a computer network environment." IQ Group, Ltd. v. Wiesner Publishing, LLC, 409 F.Supp.2d 587, 596 (D. New Jersey 2006); Textile Secrets International, Inc. v. Ya-Ya Brand Inc., 524 F.Supp.2d 1184 (C.D. Cal. 2007). Among technological measures that these decisions indicated would qualify under this standard were electronic envelopes and digital watermarks. This interpretation was followed, without significant comment, in another recent Southern District of New York decision. See Silver v. Lavandeira, Southern District of New York, 08 Civ. 6522 (JSR) (January 7, 2009 Magistrate's Report and Recommendation). 
Currently, while over-the-air radio broadcasters pay royalties to songwriters, they are not required to pay royalties to music performers. For example, when "Soul Man" is played on over-the-air radio, Isaac Hayes and David Porter, the songwriters, are compensated. Sam Moore and Dave Prater--the duo of Sam & Dave who sang "Soul Man," are not. (fn2)
A recent suit brought by the Associated Press (AP) highlights the "Hot News" doctrine, which can be used to obtain protection against the unauthorized copying and redistribution of factual information that is otherwise not covered by the Copyright Act. In Associated Press v. All Headline News Corp., Southern District of New York, 08 Civ. 323 (PKC), the AP bought suit against the All Headline News Network (AHN). AP claimed that AHN copied or rewrote breaking news stories that AHN obtained from the Internet which had originally been authored by AP, and then resold these stories to newspapers, Internet Web portals, digital signage networks and other distributors of news content. (fn1) 
