Pinterest’s New Terms Expand Indemnity, Ban Commercial Use, Prevent Users Suing Cold Brew Labs

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On Saturday, March 24, 2012, Pinterest emailed users to say it was updating its Terms of Service.  Make no mistake – this is a pretty significant re-write, and kudos to Pinterest for making both sets readily available so we can compare and contrast them.  The “proposed” terms come into effect on April 6, 2012 and while they attempt to bring clarity, there are areas that will concern Users, particularly if they are artists themselves.

Key points.

  1. The controversial Indemnity language has been expanded, not limited.
  2. Commercial use of the Site is now banned completely.
  3. Users must forfeit their rights to fair use of Pinterest Content, but User Content is fair game.
  4. Users cannot sue Pinterest, either individually or as part of a class action.
  5. There are some hints at the future innovations.

 1. The Controversial Indemnity Language Has Been Expanded, Not Limited.

This is the section most Users have expressed concern about, despite equivalent provisions appearing in most social network terms and conditions.  Nonetheless, after the attention brought to them by Kirsten Kowalski’s blog post last month, Pinterest founder Ben Silbermann called Ms. Kowalski and reassured her of the company’s bona fides.  Many had expected that to translate into a more limited indemnity provision when new terms were published, but they will be disappointed: the new language (clause 8 ) replaces the obligation to “defend” Pinterest (and its officers, directors, employees, agents) with an obligation to indemnify those same people for all the old situations as well as, now, for “suits, proceedings, disputes, demands, liabilities” and, of course, “costs”.

2. Commercial Use Of The Site Is Now Banned Completely.

Under the new Terms of Service, Pinterest only licences Users to even view the Pinterest website if they are doing so for personal, non-commercial use, which is then said to mean “to express yourself, discuss public issues, report on issues of public concern, engage in parody and as expressly permitted by the features of the Service [whatever that means]” (clause 2(a)).  It’s repeated in the Acceptable Use Policy.  Previously the restriction on commercial use applied only to use of the Mobile Software, so its extension to the Site might be for consistency only.  Either way, it seems odd to ban viewing of the Site if someone thinks it’s going to be helpful to them making money.  Looking for feedback on your photography?  Want to find out which aspects of your new fashion line are popular with consumers?  Apparently you’re not allowed to visit pinterest.com to do so.  Pinterest is still working on how to monetize their Site, and this doesn’t really seem to help them.

3. Users Must Forfeit Their Rights To Fair Use Of Pinterest Content, But User Content Is Fair Game.

When seeking to justify the Pinterest business model, commentators have pointed to two factors:  the DMCA (see below); and fair use.  Leaving aside the fact that these protections only extend as far as the US border and no further, you would think that Pinterest would like to engage the fair use argument.  Not so much.  In order to continue using the Service after April 6, 2012, Users must “agree not to use, modify, reproduce, distribute, sell, licence, or otherwise exploit the Pinterest Content without [Pinterest's] permission” (clause 2(b)), even though fair use would allow Users to do so in many circumstances.  In case this restriction isn’t clear enough, the point is made again in the Acceptable Use Policy, where Users agree not to “engage in” the “use” or “display” of any part of the Service, the Pinterest name, trademark, logo, the layout and design of “any” page without Pinterest’s “express written consent”.  Users can’t even mention the Pinterest name or URL in the meta data of their website unless Pinterest has given its express written consent.  That’s a remarkable set of restrictions on User’s rights.

Fair use is only a defense to copyright infringement, not breach of contract; so by continuing to use the Service after April 6, you become contractually bound to give up most of your fair use rights.  Is it reciprocal?  Does Pinterest similarly waive its right to fair use of your Content.  No.  Furthermore, Users specifically grant Pinterest a license to use, display, reproduce, re-pin, modify, rearrange and distribute User Content anywhere in the world and to allow others (including other Users) to do the same.  (This is more or less the same position as under the old Terms.)  Even if you delete your Content, Pinterest can still do all of these things (except “use”, oddly) for any Content that has been re-pinned by even a single User.  Once User Content has been re-pinned, it’s gone and you’ll likely never regain control over it.

4. Users Cannot Sue Pinterest, Either Individually Or As Part Of A Class Action.

One of the most significant changes is the introduction of an Arbitration Clause in clause 11.  Put simply, Users are now required to forewarn Pinterest of any dispute (limiting the ability of Users to secure favorable jurisidction outside California by suing somewhere else first) and must agree “to resolve” (not simply to try to resolve) any claim, dispute or controversy by arbitration.  Pinterest will pay your fees, but if their aggregate liability is limited by clause 10 to only $100 (that’s right, one hundred US dollars) most Users will probably decide that trying to enforce your rights is hardly worth the effort.  If your claim is for an injunction or some other equitable relief, but not for damages, then you can petition a Court for that limited purpose, but you must forfeit your right to join in a class action or any other representative action, and you agree to waive your right to a jury trial.

In two places, Pinterest requires Users to agree that it is “passive”.  First, in clause 11(b), it is to try to make the argument that Pinterest operates only in California and therefore no other Court has jurisdiction to hear any dispute involving Pinterest (in effect giving California exclusive jurisdiction even though the word “exclusive” is no longer used).  Second, in clause 9 (Disclaimers), Users must agree that Pinterest is a “passive conduit”.  This would appear to be directed at establishing Pinterest’s eligibility for the DMCA (and possibly the European E-Commerce Directive) safe harbor, which is lost if the service provider is not “passive” (although I don’t see why they’ve said “conduit” instead of “host”).  I also don’t see the DMCA argument being as watertight as some others do, particularly until the Second Circuit gives its opinion in Viacom v. YouTube, but that’s for another post another time.

5. There Are Some Hints At Future Innovations.

The current Terms include a warning that “your visual collection will be publicly viewable by all visitors to the Site and the [iTunes] Application”.  In the new Terms, there is a reference in clause 1(c) to “public or semi-public areas of the Service”.  Is Pinterest planning Diaspora*-style groups, as Google did with Circles?  Some Users have expressed an interest in being able to make some of their pins available to restricted groups, so it would appear that Pinterest is at least considering it.

Another new reference is in the provisions regarding the Mobile Software (which, by the way, you can only install on a single mobile device – clause 7(a)).  This identifies “security-related features of the Mobile Software, features that prevent or restict use or copying of any content [not Content] accessible through the Mobile Software, or features that enforce limitations on use of the Mobile Software”.  Perhaps this is to protect Pinterest Content, but it would be interesting if User Content was going to gain more protection if viewed on a mobile device than on the Site.

6. Conclusion

The big takeaway from 1, 3 and 4 above is that Users are in a worse position than non-Users when it comes to the misuse of content on Pinterest.  If a non-User owns content and wants to make a claim against Pinterest, they can do so under normal rules:  they have a right to sue for damages, they can assess where to sue, they can claim Pinterest is active in the infringement and therefore cannot hide behind the safe harbor exemptions from liability, they do not have to limit their damages claim and they owe no indemnity.  A User, however, has given up all of these rights.  So if you are a User and your artistic works are being infringed on Pinterest, you have agreed not to sue them for damages – you must arbitrate.  You have agreed to limit your recovery to $100, in total.  You have agreed not to argue that any Court other than one in California can assert jurisdiction over Pinterest.  You have agreed to a broad indemnity.

Will these new Terms take the sting out of the User criticism that has recently been directed at Pinterest?  I doubt it.  But what many netizens don’t realize when criticizing Pinterest, is that most social networks have similar, or worse, terms and conditions.  It is harsh for so many questions to be asked of Pinterest when they are simply following the beaten track.  Nonetheless, if it means the Site and Services improve and become more popular, then all the better in the long run.

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21 Responses to “Pinterest’s New Terms Expand Indemnity, Ban Commercial Use, Prevent Users Suing Cold Brew Labs”

  1. Pinterest Fan says:

    I strongly disagree with your analysis in section 3: “Users Must Forfeit Their Rights To Fair Use Of Pinterest Content, But User Content Is Fair Game.” Section 2(b) expressly permits Users to use the Service, including Pinterest Content, “to allow you to express yourself, discuss public issues, report on issues of public concern, engage in parody and as expressly permitted by the features of the Service.” This language provides Users with a good deal of flexibility in using Pinterest Content, including fair uses of such content. You’ll also note that these permissible uses are carved out of section 2(a)’s restrictions: “Except as expressly provided in these Terms…”

    I also don’t agree that the new indemnity clause has, in fact, been “expanded.” Pinterest removed the obligation that Users “defend” Pinterest. In other words, Users are no longer required to go hire a law firm to defend Pinterest in the event of a claim. That is a significant departure from the indemnity clause in nearly every other TOS out there, and one that is actually beneficial for its Users. You’ll also note that Pinterest did not “replace” the obligation to defend with an obligation to indemnity in the new Terms; the old version of the Terms also required that Users “indmenify” Pinterest. Therefore, Pinterest actually narrowed the scope of the indemnity obligation significantly in the new version of the Terms.

  2. Thanks for the comment.

    As you point out, the starting point for the new ToS is a User is limited to using the Pinterest Content only “as expressly provided in these Terms”. A User’s rights are therefore based on contract, and not fair use. The fact that some of the express provisions in the Terms might also fall within the fair use definition doesn’t change the fact that Users have contracted out of asserting their fair use rights. You also don’t mention that the “express yourself” etc language is valid only if the use is personal and noncommercial, which is not a qualification for fair use.

    Regarding the indemnity, I didn’t say the obligation to defend had been replaced with an obligation to indemify (in fact I referred to the indemnity as having been expanded in the post heading and in Key Point 1). What I did say was that it had been replaced with an obligation to indemnify “those same people [i.e. same as the old indemnity] for *all the old situations as well as*, now, for ‘suits, proceedings, disputes, demands, liabilities’ and, of course, ‘costs’.”

    And regarding scope, are you really saying that the new obligation to indemnify for costs (which wasn’t in the old Terms and which explicitly includes costs of defense) is narrower than an obligation to defend? And what then of the new situations in which a User must indemnify Pinterest? The new language includes more than just “claims”: it now includes “suits, proceedings, disputes and demands”. The new language is broader than the old language.

  3. Pinterest Fan says:

    Thanks for your response, Gareth.

    To be clear, we’re talking very specifically about the User’s right to use Pinterest Content, and not photos from other Users (which is “User Content”) or photos from any third party. I hope we can agree that a TOS agreement between Pinterest and a User does not in any way “forfeit” that User’s fair use defense against any third party. With respect to Pinterest Content (i.e., the Pinterest logo, design elements of the service, etc.) it seems perfectly reasonable to me for Pinterest to grant a limited license to its proprietary content. And that license is actually quite broad, and includes several fair use elements that I’ve never seen expressly granted to Users on any other website.

    With respect to indemnification, I do believe that the scope of the new indemnity obligation is narrower for the following reasons: First, you reference the “new obligation to indemnify for costs.” However, the former terms required the User to indemnify for “expenses.” I fail to see any meaningful distinction between “costs” and “expenses.” If you have any doubts, note that both indemnification sections refer to the same example: “…including, without limitation, reasonable legal and accounting fees.” Second, the “suits, proceedings, disputes, demands” language was included in the former Terms (albiet indirectly) under the very broad “claims” language. Users are now provided with a narrow list of the types of claims for which they must indemnify Pinterest. Finally, I again stress the complete lack of a defense obligation under the new Terms. The fact that Users are not responsible for defending Pinterest is a significant change to the scope of the indemnity obligation that benefits Users and narrows the scope of the indemnification obligation greatly.

  4. alex says:

    I agree that other social networks have similar terms, but no other social network is quite like this. The platform is based solely on people hunting and gathering to bring them content. If people stopped placing photos on twitter or Facebook, they would still have the social interaction. This site can’t exist without people sharing IP all the time.

  5. Please excuse brevity:

    Yes, only referring to Pinterest Content. Regarding the license, I’m not saying it’s more or less generous than other social network terms (aside from the metadata restrictions), just saying that Users are restricted to only the licensed uses, instead of legally permitted uses AND licensed uses.

    I think you’re agreeing with me that removing the obligation to defend doesn’t improve a User’s position over the former terms (the obligation to pay reasonable legal fees survives), but I still maintain that ‘disputes’, ‘proceedings’ etc are broader than ‘claims’, which at least implies a formal (perhaps even a legally binding submission).

    Thanks again for continuing to contribute – it’s great to discuss these issues in an open forum.

  6. Hi Alex. Thanks for commenting.

    I agree the difference between the Pinterest business model and those of other social networks makes attempts to lump them altogether unhelpful. The Pinterest model seems more similar to that of early YouTube (invite submissions of, and monetise, as much as you can in knowledge that much of it will infringe copyright (the analogy’s not perfect, admittedly)) hence my hesitation to say anything about its eligibility for DMCA protection until we see how broad or narrow the Second Circuit’s ruling in Viacom v. YouTube. We’ll see!

  7. Pinterest Fan says:

    Gareth,

    But the actions of other sites should be an important consideration when determining whether a story is warranted, especially to a sophisticated blogger like yourself. By using charged rhetoric like: Users must “forefeit” their fair use rights — which you now admit does NOT apply to Users’ own photos or any third party photos they use (which is very, very likely what most readers will assume you meant) — I think you are doing your readers a disservice by creating controversy on a topic that is both industry standard and likely completely unimportant to the vast majority of Pinterest Users.

    I also do NOT agree with you that removing the obligation to defend Pinterest doesn’t improve a User’s position. I’m arguing the exact opposite. In the former set of Terms, Users had an obligation to BOTH indemnify and/or defend Pinterest, presumably in Pinterest’s option. Removing one of those obligations necessarily narrows the scope of the indemnification obligation. You also erroneously referred to a “new obligation to indemnify for costs” (the former Terms called them “expenses”), which I have yet to see you acknowledge.

    We can agree to disagree over the definition of “claims.” From experience, I can guarantee you that “claims” has and would be interpreted far more broadly than “formal” proceedings. In any event, the point is likely moot. I am highly skeptical that Pinterest (or any other online service) has or would ever require a User to pay for third party claims against the site itself. Yet another reason why scaring Users with this story seems far more like provocative journalism than anything else.

  8. A major rewrite to Pinterest’s terms is definitely worth a blog post – it’s the hottest issue in social media right now (not just the site, but especially their terms). And I do open my comments by giving Pinterest “kudos” for its approach, and end by saying that if discussion imrpoves the site *and makes it more popular* it will be a good thing. I also note that other sites have equivalent or worse terms; a refrain I often cite when writing about social media sites.

    Regarding fair use: the statutory right to fair use is forfeited, and I am not “now admitting” that it applies only to Pinterest Content. The Key Points (and heading for the relevant section) makes the distinction between Pinterest Content and User Content and clearly states that the loss of fair use rights is in relation to Pinterest Content. In any event, it would be almost impossible for Pinterest to make Users forfeit rights to something that Pinterest had no rights in (i.e. User Content).

    We’ll also have to disagree, I think, on the obligation to defend. Unless you are saying that under the old policy a User would actually have to draft the written submissions, conduct depositions and present oral arguments in Court, then I really don’t see how dropping “defend” but keeping an indemnity for legal fees is advantageous. Pinterest would never, in a million years, require a User to step up and defend it: the obligation was never more than an obligation to pay for their defense. Dropping it changes nothing.

    Finally, if “claims” already encompasses all of the new language (proceedings, disputes, demands etc), perhaps you could explain why Pinterest thought it would be a good idea to insert extra, unnecessary language into what are supposed to be simplified Terms?

    The point of posts like this (and the myriad other posts on the same topic) are to help people find out about these things and have a view on them. Pinterest itself is clear that these “proposed” Terms are a work in progress, which, as a Pinterest Fan who I am sure got their email, you will already know. Knowing what flies in the real world and what won’t is just another part of that process.

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