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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.