IPTF Sees Pushback on Potential Multistakeholder Process on Online Licensing Terms

Commerce has “never been looking to impose or propose” government regulation on licensing terms but was seeking to encourage private sector-led work, said NTIA Director-Internet Policy John Morris. He acknowledged during the meeting the IPTF proposed multistakeholder work on licensing terms best practices based on feedback it collected two years ago, but questioned whether the copyright landscape has changed to such a degree that such a process is no longer necessary. The consensus two years ago was that consumers didn't “have a clear understanding” of licensing terms due to the length and complexity of most end-user license agreements (EULAs) and terms of service, but there was resistance Tuesday “to the idea that the point of sale might be an opportunity to increase” consumers' understanding of copyright terms, Morris said. The federal government isn't interested in pursuing an “unwinnable battle” on licensing terms issues, but a lack of action could be a "missed opportunity" to improve the situation, he said.

The Entertainment Merchants Association believes “there is not a need to establish” best practices on license messaging, in part because it might “confuse the marketplace even more,” said President Mark Fisher. The IPTF's proposal appears to be an attempt to “excuse” consumers from their responsibility to read EULAs and terms of service, said Association of American Publishers General Counsel Allan Adler. Absolving consumers of that responsibility “bumps up against” the general rule of the marketplace to “let the buyer beware.”

The IPTF is “inventing a problem that doesn't really exist” by citing nonexistent consumer confusion over licensing terms, said MPAA Associate General Counsel-Copyright and Legal Affairs Ben Sheffner. Consumers wouldn't continue to buy access to content “if they thought they were being tricked,” he said. Consumers have turned away from “alternative means of accessing content” in recent years, a trend that could be reversed if policymakers aren't cautious, said Digital Media Association General Counsel Greg Barnes. The IPTF needs to ensure it's “responding to a demonstrated consumer harm” before it acts to create the multistakeholder process or other government action, said ACT│The App Association Senior Policy Counsel Brian Scarpelli.

Case Western Reserve University Law School professor Aaron Perzanowski said his paper in the January University of Pennsylvania Law Review shows that language in EULAs and terms of service that emphasize that a purchase entitles a consumer only to a license of a work’s digital copy conflicts with language in advertising that emphasizes ownership of the digital copy. Perzanowski said his research showed digital services' use of phrases like “buy now” misleads “a substantial number of consumers” about what rights they acquire in an online transaction. IPTF framed the Tuesday meeting around Perzanowski's paper, with other stakeholders frequently citing it during discussions.

Barnes and others noted what they said were faults in Perzanowski's findings. The study is an “interesting starting point” for discussions on how to improve licensing terms messaging, but is too limited in scope for IPTF and stakeholders to draw policy conclusions from, Barnes said. Perzanowski's short notice proposal could itself lead to additional problems, including increased consumer confusion because such notices would by necessity still be complex, Barnes said. License requirements “vary too much to be covered in one simple message” for the consumer and still accurately convey terms and conditions, Fisher said. “Buy now” is among the many terms that digital services have borrowed from the offline world to use as colloquialisms to effectively describe online activities, Sheffner said.

Perzanowski defended his conclusions, saying that describing “buy now” and similar terms as metaphors or colloquialisms proves his point that digital services haven't developed language to “succinctly describe” the true nature of online transactions to consumers. “If we want to construct a different kind of transaction, we need” to effectively communicate its terms to consumers, he said.

New York University School of Law professor Florencia Marotta-Wurgler and others said shortened and simplified terms are more helpful to consumers during online transactions than more detailed EULAs and terms of service. But even a simplified terms framework will require substantial testing before it can be used as a voluntary best practice, Marotta-Wurgler said. EULAs need to be flexible and simple enough for consumers with a nonlegal background to comprehend, said Public Knowledge Senior Staff Attorney John Bergmeyer. “We have a ways to go culturally” before simplified licensing terms can become the norm and have the same gravitas as more complicated terms, said University of Washington Law School professor Bob Gomulkiewicz. But “it can be done” and “we have to dedicate ourselves to actually do it,” he said.