Eighth Annual E-Commerce Best Practices Conference, Part 1
Stanford, CA, June 24, 2011

As my Twitter followers know, on June 24, I attended a full-day conference at Stanford University, the Eight Annual E-Commerce Best Practices Conference.  It was definitely worth going out to California to attend.  I was tweeting throughout, but I thought it’d be a good idea to gather the tweets together into a single blog entry.

There’s a lot to discuss, so I’ll break this down into four or five blog entries.  I’ll start first with the thought-provoking keynote speech.

United States District Judge Jeremy Fogel, of the Northern District of California, gave the keynote speech to the conference.  His main concern was the tension or even disconnect between (a) consumer experience of eCommerce (and the Internet in general), (b) the technologists who enable and profit from eCommerce, and (c) the applicable law.  The law is simply ill equipped to resolve this tension.  This isn’t a new concern by any means, but it was being expressed thoughtfully by a sitting federal judge who routinely hears technology cases.

What drives eCommerce lawsuits, according to Judge Fogel, is the consumer’s sense of “identity and expectation.”  He referenced a few celebrated cases in his own courtroom as examples.  To take one example, a woman sued Facebook after she was banned for being very aggressive in friending other users.  It was a pretty clear-cut violation of Facebook’s terms and conditions.  When she complained, she received what might be charitably described as a form email from the “Facebook Team.”  She even drove to Facebook’s headquarters–from Maryland–to complain in person but was turned away.  (There’s a pretty good summary of the facts in this story, http://www.allfacebook.com/facebook-lawsuit-banne-2010-09, which has links to the Complaint.  The case–now dismissed at the pleadings stage–was Young v. Facebook, Inc., Santa Clara County Superior Court Case No. 1-10-CV-178574, transferred to N.D. Cal. 5:2010-cv-3579.)

Judge Fogel’s point was that she sued not because she had some kind of coherent legal claim–she didn’t–but because Facebook wouldn’t listen to her.  Consumers expect that they’ll have a chance to tell their side of the story before losing what feels like (but isn’t really) a right.  Facebook’s attitude was simply that it was a private company that needed only to abide by its own contract with its users.  That’s legally correct, but it strikes such a dissonant chord with consumer expectations that it’s begging for a lawsuit.

Adding to the tension is the peculiar nature of many of the services provided over the Internet, such as those provided by Facebook, Google and Twitter.  They feel like a “commons”–i.e., a public space, like a town square or a street–but they are controlled by private entities for profit.  (Indeed, such service providers go out of their way to hide their natures.)  They feel like commons, but they are more like shopping malls.  When the plaintiff in the Facebook case had her account deleted, from her point of view, she was being kicked out of a commons.  From Facebook’s point of view, it was simply protecting its customers’ online experiences (so that the customers would continue to use Facebook’s online products).

Although the Facebook plaintiff’s lawsuit was legally crazy–it didn’t even make it out of the pleadings stage–it served to deliver an important message to Facebook that its customer service was pretty awful.

Of course, not all crazy lawsuits are beneficial.  Arguably, defending against them is simply part of the cost of doing business.  But what if, to avoid such lawsuits, the defendant changes an otherwise popular and good corporate policy?  That would be a market distortion:  a handful of litigious plaintiffs ruining it for everyone else.

Finally, Judge Fogel worried that judges lack the necessary context to make good decisions in technology cases.  Understanding the consumer experience is the easy part.  Understanding the technology–which is hidden from the consumer (and judge)–is much harder.  Complicating matters is the way in which Internet technology fits into legal categories.

Judge Fogel was asked to discuss one best practice, and he drew from perhaps his best-known eCommerce decision.  He thinks that a simple click-wrap license is not enough to make some of its more onerous provisions enforceable.  Such provisions must be sign-posted.  (As it turns out, the FTC might well agree.  I’ll be blogging about just this subject later, as it was discussed in a later panel at the same conference.)

Next in this series:
The first break-out panel I attended: “Secondary Liability: Converging Standards.”

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.