by Patrick G. Mckenzie, Morris, Manning & Martin, LLP

The United States Court of Appeals for the Ninth Circuit (“Ninth Circuit”) recently held in Nguyen v. Barnes & Noble, Inc. that “browsewrap” agreements, even when conspicuous, are non-binding absent reasonable notice of their terms.

In Nguyen, plaintiff Kevin Nguyen ordered various items off of Barnes and Nobles’s (“B&N”) website during a “fire sale,” which were later cancelled by B&N due to lack of availability. Nguyen and others then brought a class action lawsuit against B&N for false advertising and deceptive business practices.

The website’s terms of use (“Terms of Use”) were part of a browsewrap agreement—a type of agreement where a website’s terms of use are posted via a hyperlink, typically located at the bottom of each webpage. This is in contrast to a “clickwrap” agreement, in which users must make some form of affirmative action (such as clicking a box) in order to manifest their assent to the terms. The Terms of Use included an arbitration provision, which B&N subsequently moved to compel.

The district court ruled, and the Ninth Circuit confirmed, that Nguyen had insufficient notice of the Terms of Use and lacked any “manifestation of assent.” As a result, the arbitration provision was held to be non-binding.

The Ninth Circuit reasoned that where a website provides its terms of use through a conspicuous hyperlink on every page, but otherwise does not provide notice to users of existence of the terms of use, or prompts them to take any affirmative action, it is insufficient to give rise to constructive notice. The record showed that Nguyen also lacked actual knowledge of the Terms of Use. Ultimately, B&N’s motion to compel was denied based on Nguyen’s lack of notice.

Practice Pointers:

• Web users need to be aware that just by using a website, the user might be entering into a binding agreement through the use of a browsewrap agreement.
• Website developers should be cautious when using browsewrap agreements that do not provide a conspicuous notice of the website’s terms of use.
• Clickwrap agreements, requiring affirmative action on behalf of the user, may be easier to show the user assented to a website’s terms of use.

The case is Nguyen v. Barnes & Noble, Inc., No. 12-56628, 2014 WL 4056549 (9th Cir. Aug. 18, 2014).

Patrick McKenzie is an associate at Morris, Manning and Martin, LLP.