Inconspicuous Browsewrap Agreement Still Not Binding, but Clickwrap Agreement Upheld

Aug 6, 2014 8:45:16 PM

There has been little guidance since the Zappo’s opinion back in 2012 regarding the validity of browsewrap and clickwrap agreements and the elements necessary for these agreements to be upheld. Just recently, however, the Northern District of California decided a class action case between the plaintiffs (Tompkins) and the defendants being a personal genetics company, 23andMe, who filed a motion to compel arbitration. The court held that the customers must go through arbitration because 23andMe’s clickwrap agreement containing the terms of service (which included an arbitration provision) was accepted when the customers created accounts or registered their DNA kits with 23andMe. Additionally, the court found that 23andMe‘s browsewrap terms of service agreement did not bind website visitors or customers who only purchased a DNA kit without creating an account or registering a kit.

The product at issue in the instant case was a personal genome service that consists of a DNA saliva collection kit (“DNA kit”) and DNA test results containing genetic information from the saliva sample. Customers first purchase these kits online at the company’s website, who then sends the customer a kit and returns the sample to the company. To view the results of the saliva sample, the customer has to create an account and register their kits. Once their results from their kits are ready, they are posted to the customer’s created personal genome profile, and an email is sent to the customers notifying that their results are ready to view.

At the time of checking out when purchasing a DNA kit, there was no terms of service provided, other than the link at the bottom of the website page containing a link to the terms of service. The court reasoned at the time of purchase of the kit “the terms of service on the 23andMe’s website closely resembled a browsewrap agreement and provided insufficient notice to customers who bought DNA kits because at the time of checkout the website “did not present or require acceptance of the terms and service.” The court cited cases with similar holdings, such as Hines v. Overstock.com, where a website does not direct users to the terms of service or where a link to the terms of service is not prominently displayed, a browsewrap agreement is not enforceable.

The court did, however, find that the terms of service were accepted when the customers or users created their personal genome profile or registered their DNA kits with 23andMe because the customers have to click “I ACCEPT” to the terms of service in order to complete registration. The customers tried to argue that this acceptance was ineffective because “they had already paid for the DNA kits and received no additional consideration for accepting the terms of service.” The court concluded that there was adequate consideration for the customers’ acceptance of the terms of service when registering because prior precedent has held that a company’s agreement to accept arbitration provides acceptable consideration to its customers. Additionally, the court determined that the customers received adequate notice with regards to the terms of service where each customer “clicked a box or button that appeared near a hyperlink to the terms of service to indicate acceptance of the terms of service. This required affirmative assent on part of the customers with regards to the terms of service.

This case is likely to be appealed to the 9th Circuit Court of Appeals and it will be interesting to see if this decision is upheld. This case has reinforced past precedent regarding the enforceability of browsewrap and clickwrap agreements, as well, as the enforceability of arbitration clauses in website service agreements.

Brian Powers

Written by Brian Powers

PactSafe CEO & Founder