Unlock the Power of eSignature Lawfulness for End User License Agreements

How to eSign a document: eSignature lawfulness for End User License Agreement

welcome to the contract teardown show from law Insider where legal experts tear down contracts from some of the most well-known companies and high profile Executives around the world in this episode attorney Akash kashup breaks down the Nintendo end user license agreement so let's tear it down hey everybody welcome back to the contract teardown show from line cider I'm Mike Weyland today I am here with a cash cash up a cash how are you today I'm doing good I'm doing good how are you pretty good we are going to talk about something that apparently my kids know because I have to buy them stuff all the time and this is the Nintendo switch family user agreement it covers the switch family Nintendo switch Nintendo switch Lite Nintendo switch OLED model which I'm pretty sure I have every one of those in my household right now Akash what is this document that we're looking at uh what's uh when are we going to see this kind of thing so this is a pretty pretty standard type of document it is a end user licensing agreement it's the way that most software and most appliances that use or rely on software are distributed it's basically a terms on which you're allowed to use the software and uh you know now a large portion of the hardware that you buy from Nintendo without actually obtaining ownership and that's something you'll see through this you'll see that when you get a subscription to word or acrobat you'll see that when you get a you know a streaming dongle for your television so it's it's pretty widespread now perfect we're gonna dig into it but before we do tell us about you Akash what about your practice when do you run into documents like this uh so I'm a I'm a corporate IP and immigration attorney I've been practicing for about six years and really with the intersection of intellectual property and uh corporate law you see a lot of these type of agreements where you have you know technology licensed out now whether that's in the form of an app or a website or you know actual software that is downloaded like um you know Adobe Acrobat or Microsoft Word and so this is a relatively um simple form of what are usually very very long and complex agreements so I thought this would be a good way to sort of go through some of the pitfalls when trying to make a a very simple uh end user license agreement yeah one of the themes that we're seeing in this show is this distinction between drafting for consumers and drafting for businesses my favorite part at beginning this thing is there's an all caps this applies to your use of the game console but then it says if you are under the age of 18 stop exclamation mark because my favorite thing is the idea that my children are wandering around the Nintendo website looking for where's that dang user agreement oh wait wait I cannot look at this user agreement it's my favorite um let's start sort of at the beginning in the license area in number one it talks about what what you get to have in terms of your use of the software and the content and in the last sentence it says uh you agree to not use the console in any unlawful manner or to access the consoles devices accounts or data of others including Nintendo without their or our consent what do you think about this language being used this unlawful manner this seems kind of broad it is on the it's both over Broad and overly narrow to make end up making it something of a legal nonsense uh so on the first aspect it's restricting itself to unlawful manners of of access and use um which is kind of silly because they're then carving an exception out for unlawful conduct and unlawful conduct is stuff that you know Nintendo is not involved with you know third-party Publishers are not involved with that's just stuff that the government says is not okay so in essence all this does is create areas where the end user license agreement is giving you permission to act in an unlawful manner which is uh a little bit silly uh beyond that uh this last portion of the of the sentence where it says the data of others including Nintendo without their our consent this is something you see a lot when people are trying to shrink down contract language uh to be more friendly or to be more light but it makes it very confusing because they've combined essentially two groups of subjects and two groups of objects in this sentence so where it says data of others including Nintendo that's combining Nintendo's own data and the data of users of the software and then they've combined the aspect of consent so it's unclear the way this is constructed if there's a situation where a user consents to let you use software but Nintendo isn't asked or Nintendo doesn't weigh in or even if an Nintendo decides that no you're not going to be able to give permission is that controlled by that's language or not yeah so yeah a weird question on that I'm noticing as I look through this normally when we're looking at a two businesses are doing a deal you have this long definition section at the beginning that tells you what all these terms mean and I you know I I see words like console or capitalized I'm expecting to see some contextual definitions but I look at this sentence and it talks about the use of uh software and console and uh content and I I don't see a lot of distinction between what those words mean is that an expansive sentence is that a narrow sense I I don't know what do you think about the lack of definitions for these terms that seem really important in terms of the IP I I think it's it's a huge problem in this agreement and that's another thing that people do when they're trying to make it very you know customer facing and we're going to try to avoid legalese but you have these three terms that are used in sometimes similar and sometimes distinct ways and the definitions aren't clear so the concept you know the capitalized term console is defined uh you know up above as this Nintendo video game console which is the console now given that the actual you know device that you're you're buying It's a combination of Hardware uh pre-loaded software and you know internal circuitry that sort of rides the line between what portion of that is hardware and what portion of that is software is not going to be you know easily separable into what's a console and what software and the definition of software includes you know large parts of Hardware as well when you when you scroll down there and the concept of content doesn't have a definition at all which is really strange in this part of the agreement where it's talking about content that you're obtaining but content doesn't have a definition here and you know even when you look at how you know the the market for media Works content is is basically a catch-all that means different things in different contexts is an image content is a sound recording content it's a screenshot content it's it's very contextual and did not have a definition for something like that especially when it's the subject of this operative Clause is is troubling I'm going to ask a dumb question uh something that I should probably know as a parent which is how are how is the content uh agreement being made right like I'm imagining my kids are downloading games you know they do this on their XBox a lot where they'll just go on and they'll download a game um or they'll go to a store and they'll they'll buy a game as rare as that is now um are they doing a new content IP authorization relationship uh each time they go get a game or is is this covering every Future download that they're gonna do so it's possible that every software could have a different Eula uh in ela like this is really something that if you if you get your kids you know let one of these switches for for Christmas if they open it and they turn the power on this they've agreed to this and you have a limited window in which you can return the device to wherever you bought it from otherwise you know it's it's ratified and it's done and actually uh it would be applicable on you as the purchaser uh that's what this this disclaimer language up here means it um you know this is if you're under the age of 18 stop you need to get your parent your legal guardian to read and accept this agreement what that means is that because this language is put on uh on a screen when they turn on the device and they didn't show it to you you are considered to have accepted it on their behalf it's a it's a very uh sneaky way of doing it but it's it's how the software industry has been working for many decades now so I don't see it see it changing anytime soon yeah yeah and we'll get to the dispute section on that I I want to go back to this definitions issue um because you have this question of authorization in here they're using unauthorized a lot I I don't know how to think about authorization who's allowed to to make the decisions around that what do you think about the use of the word or the lack of the definition of the word authorization in this document it's again this is one of those things they're trying to make it simple but also preserve you know a whole lot of discretion and it's unclear whether this actually makes an enforceable agreement because when something is authorized or unauthorized in this agreement like you can see in section two where it says that uh you're not allowed to make unauthorized modifications of the console or the software the distinction between which they've not really drawn or use an unauthorized device devices again an undefined term so what's a devices a paperclip a device who knows and the main issue here though is what constitutes authorization isn't spelled out so who can give the authorization how the user is notified whether something is authorized or isn't not authorized um taking a really basic example you've got this um this video game console and you'll have other people selling uh their own cheaper versions of controllers or memory cards or whatever and it's difficult to know what constitutes an authorization this is a different device that you're using with the the console that's in this agreement is using a device like that going to void the the agreement or put you in violation of these terms and how do you know if this device is authorized it's it's unclear and because of the ambiguity this authorizes these distinctions between authorized conduct and unauthorized conduct and authorized devices and unauthorized devices can most likely be stricken out if they're not careful in how they're enforcing it well let's say I'm mad about it let's say I don't like some of the terms in here I want to go to the dispute resolution section that's down in seven um I'm seeing we've talked about before in on the show this this right to opt out in 30 days which is really you know chat EPT we talked about had a similar thing where a you're supposed to know that thing exists and B you're supposed to send a physical letter somewhere to kids who are downloading anyway um what do you think about section seven I'm seeing a few issues in the dispute resolution section what's what's jumping out of you well um the first would be you know the the right to opt out now one issue is again that 30-day period it's really not effective especially because a lot of these consoles they're marketed to and geared towards children so you have that one layer of you know of abstraction where you're going to lose time between a child starting you know turning on the console having an issue and you know actually getting this agreement in front of parents and then that that 30-day period that's ticking from the time that you buy it so let's say you do some uh you know some Black Friday shopping uh you're really looking at by the time the console is turned on if they turn it on Christmas morning you're looking at one day to send out a mail saying I don't want this uh this mandatory arbitration sticking on so that's it's it's especially for something marketed to children that's just too onerous um again if a reasonable judge is looking at this and they try to stick you too closely to that period they could end up losing the section of the agreement let me jump you to see because I think this is I want to read it um it talks about so 7A is this list of it's basically the arbitration Clause it lists out what's going to happen if you have a dispute or a claim and there's there's a question about what those two words mean uh that we can talk about but 7A says you know arbitration you're going to arbitration let me read c section 7A does not apply to any claim in which a party is attempting to protect its in intellectual property rights I.E Nintendo such as its patent copyright trademark trade secret or moral rights but not including its privacy or publicity rights is that my kids uh or two that may be brought in small claims court um 7c is pretty crafty what do you think about the way it it sort of seems to be exempting anything Nintendo cares about right so the the only thing that the only party that's going to really have uh IP that is this has a commercial IP so so patents copyright trademark that's all commercial IP and the only person that's going to have that on the table is going to be Nintendo uh they're the ones that are providing something new that can be copywritten uh you know your kid playing the console or you know even uh an adult streamer that's that's using a console that's not going to involve anything that you can patent the ability to protect by copyright is pretty much pretty much negligible um same thing with with trademarks because it's not like you're going up and giving them your brand name the only brand name that's really going to be involved in this is going to be Nintendo or you know one of their Publishers or imprints or what have you uh the thing that that is going to be involved is your right to privacy is going to be uh your right to publicity to write not to be granted publicity and that is all on the user side so what they've done is they've created what looks like an exclusion for intellectual property but what it really is is an exclusion for commercial intellectual property and in the case where it's a b2c contract between a business and an actual user uh that business intellectual is all going to be on one side of the transaction and the non-business is going to be all on the other side of the transaction so it's pretty clever pretty one-sided yeah let's get practical uh as we rap and think about this thing nobody's reading this okay my I don't even know that my kids face this I don't know that there was a month you know my kids are not are you 18 yes or no no go tell your parents to read this document I'm not reading the document either nobody's reading this thing I I'm thinking of contract as as sort of a social tool maybe the purpose in this thing is to say all right it all goes to crap later we need a way to defend our rights and here's just a nice well if that's going to be true why not just make a really long hard document you know nobody's going to read it or if you're saying the good is no we we want people to actually read this well then make it an in-app thing that you know gamify it like you do everything else it seems like this is kind of the worst of Both Worlds where it's it's too complicated to read and it's too simplistic to be effective am I reading that right what's what's your take on if you're going to do consumer contracts like this so this is something that is really tricky for a lot of eulas because there are a lot of Hoops that they have to jump through to avoid being considered you know contracts of adhesion uh and that was kind of a huge bit of jurisputance in the early software age where you had a lot of these contracts just thrown out because they were classic you know open the shrink wrap and if you've opened up the shrink wrap around your your desktop you've agreed to these terms or you put in the CD and you automatically have agreed to these terms so there has to be a certain level of Simplicity just to make it seem legit when they're going to court um it can't be something that looks like you know nobody on Earth would ever read this it can't be like one of those uh you know a t receipts that's like three reels long um because that a judge is not going to look at great they're going to say this and say look you've got here you've got a 14 year old that's you know trying to play Mario Kart and on the other side you've got this massive multinational company with branches and markets you know across the world and a horde of lawyers uh We're Not Really Gonna gonna construe these this you know legalese against that 14 year old kid um but on the other hand they do want you know predictability they want to know that we've made this game by giving it to you know 100 000 kids we're not diluting it and we're they certainly don't want to get into the headache of managing a separate relationship with each and and every different uh consumer that's that's you know the other side of consumer contracts you don't want to have a unique relationship with your consumers you want to have something that you can standardize and deal and manage and bulk and a lot of companies end up falling on one side or the other um and because you'll never really know if your contract is too simple or is too open it's it's hard to get a gauge on that you can't really tell what side you're going to fall on until you're in court and it's too late um but it does seem like you know this this particular Eula uh Nintendo's Fallen very far on the on the over simplistic side and uh while this whole contract they may be able to preserve you know there is an Eula I see a lot of places where if there's not really careful lawyering they could end up getting red pens you know cutting the large Parts out that is interesting I know we've got a lot of contract drafters watching this who are thinking about how to do these well so I appreciate you bringing it to us uh Akasha people want to connect with you to learn more about your work and more about how to draft documents like this uh what's the best way to connect with you okay uh so uh you can reach me at my at my firm uh that's at kpalegal.com uh and you know more specific to you know providing support for these type of agreements uh there's a new initiative that that I've started uh thelegalowls.com where you know we do handle this sort of bulk uh agreement Drafting and uh you know providing support to a lot of of lawyers and firms that are you know trying to to make sure that the nitty-gritties get get handled while maintaining their case loads that's sort of a an of council Outsourcing solution yeah no that's great we'll make sure to include uh links to that over at loinsider.com resources we'll have the blog post for this conversation and also if you want to be a guest on the contract teardown show and beat up documents as we do email us we are at community at lawinsider.com we'll see you all next time thank you again thank you thanks so much for tuning in to this episode of the contract teardown show from law Insider if you're enjoying the show please feel free to rate subscribe and leave a review wherever you listen to your podcasts that helps others find the show we really appreciate it thanks again for listening and we'll catch you in the next episode [Music]