WeR1 v Cyberlink: Version control is crucial for contract management

Jan 26, 2015 3:24:38 PM

A recent case in Wisconsin Federal Court illustrates perfectly the importance of properly tracking versioning in order to increase defensibility of website legal agreements.

A quote from the opinion:

This case involves those terms and conditions that appear on internet websites and, more particularly, what happens when the provider has kept no copy of them and the customer claims not to have seen them. Through a website, WeR1 World Network signed up for data storage with CyberLynk Network, Inc. The parties do not dispute that they had a contract by which CyberLynk provided the storage to WeR1 in exchange for money for about eleven months. Instead, they dispute what the details of the contract were, as neither party memorialized the agreement. If WeR1's version of the facts is true, CyberLynk guaranteed safe and secure storage in exchange for payment from WeR1, without detailed terms and conditions or limitations of liability. If CyberLynk's version of the facts is true, detailed terms and conditions existed (even if WeR1's representative failed to read them) and WeR1 assumed the risk of a loss of data by CyberLynk and also agreed to limit its damages for any data loss.

CyberLynk is a company that provides internet data storage and hosting services. The process for signing up for CyberLynk’s services consisted of clicking through a series of webpages (also know as a clickthrough or clickwrap agreement). Upon arriving at the registration page, there was a button that stated above it “by clicking the button below you agree you have read and agree you have read and agree to the FTP Hosting Services Subscription Agreement.” After reading reviews on CyberLynk’s services, WeR1 Worldwide Network decided to sign up to use CyberLynk’s File Transport Protocol (“FTP”) hosting services. Cyberlynk’s website described the FTP hosting services as a “central location to store files” and that it was a “fast and secure method” to transfer files. Sometime after WeR1 had transferred its data to CyberLiynk’s server, an employee who was fired by CyberLynk deleted files that belonged to WeR1. WeR1 filed suit for breach of contract and negligence against CyberLynk. During the trial a representative for WeR1 stated that he “did not see any written agreement terms or any URL link to any written terms during the registration process.” Cyberlink counterclaimed stating that the WeR1 should have filed the complaint in

How did the parties try to prove what agreement was in place?

  • CyberLynk was not able to produce a copy of the FTP Agreement in effect at the time WeR1 signed up for the hosting service.
  • WeR1 did not have any written or saved version of the contract with CyberLynk.
  • CyberLynk tried to argue that terms and conditions were found using a hyperlink located above the acceptance button and were posted on the site years before WeR1 agreed to them.
  • Additionally, a copy of CyberLynk’s FTP Hosting Service Subscription Agreement that was posted 4 months after WeR1 subscribed to the service was produced and contained a disclaimer of liability provision that stated CyberLynk was not responsible for backing up data.

The judge wasn't buying it, stating that "there is a genuine dispute of material fact as to all claims at issue." What facts are those you ask?

  • WHAT VERSION OF THE TERMS AND CONDITIONS WAS IN PLACE?
  • WHAT DID IT SAY?
  • WHEN WAS IT CHANGED?

The judge sent the case back to the jury to make a determination with regard to all of these facts. Of course, this could have been easily avoided had CyberLynk been able to provide evidence that a certain set of Terms and Conditions were in place, and accepted by, WeR1.

Related: Best Practices for tracking and managing website legal agreements

 

Brian Powers

Written by Brian Powers

PactSafe CEO & Founder