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I have been working on a SaaS product for about a year and a half (on and off, among other projects). Lately I have gotten serious about the product. While doing a routine evaluation of competitors out there who are attempting or have launched a product similar to mine, I came across one in particular who had very direct and threatening language in their terms and conditions, something along the lines of:

"If you are a competitor and are accessing the site, you agree you are liable for no less than one million US dollars"

In no way do I agree to that obviously, but what line must one cross before one can be legally liable for monetary damages simply for accessing a site? Is this even enforceable?

EDIT

I found the term browsewrap agreement for these terms of use where acceptance is predicated on simply visiting the site.

The questions arising from all this are:

  1. Does visiting a site again after viewing its terms of use constitute acceptance of those terms?
  2. Can a website's terms of use prohibiting competitors from visiting their site be legally enforceable?
  3. Can a website legally demand and be awarded whatever monetary damages it claims its owed by violating its terms?
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After reading this, can't get this friends episode out of my head. Oh - my eyes! youtube.com/watch?v=Rgk_qTc_7AI – jimg Jan 30 at 15:59
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I know the question might seem silly, but I think the question has merit especially to those of us who are developers and not lawyers. If I can set up a website, put terms like "by accessing this site you agree you owe us one million dollars", then start suing visitors by IP, I can make way more money than a patent troll. – Joe A Jan 30 at 16:44
Yes, but the enforce-ability is suspect, especially if the site does not have a specific splash page obscuring content unless the visitor specifically acknowledges the conditions. Even in that scenario, protection isn't guaranteed since IP <-> individual linkage could be bypassed by browsing through an anon network. But IANAL and I'm certain that less enforceable conditions have appeared in courts and won. – jimg Jan 30 at 17:19
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Good news. Your competitor is an idiot. This is the digital version of a kid saying to his brother "if you come in my room, you owe me a million dollars." What's he going to do, file suit and say "Judge. They owe me a million dollars" "Really? Why?" "BECAUSE I SAID SO." – Chris Fulmer Jan 30 at 21:30
Funny thing is, I'm glad there's competition. It validates my idea. I had the idea before they launched. – Joe A Jan 30 at 22:46
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6 Answers

up vote 6 down vote accepted

I won't focus on whether the browsewrap terms are enforceable. On this topic, please see Online Terms can be Binding, even if You don’t have to Click!

I will focus on the $1 million provision. This is a liquidated damages provision. Such a provision is enforceable only if:

  • Actual damages would be difficult to ascertain; and
  • The amount specified is an approximation of what actual damages would be.

It is not clear wither the first criterion has been satisfied. However, I can write with confidence that the second criterion has not been satisfied. Accordingly, this liquidated damages provision would not be enforced - which agrees with the common-sense reaction that the provision is preposterous on its face.

Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.

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Thank you so much for your awesome answer, specifically with regards to question #3! This was the key sticking point for me, that a site can simply claim a specific monetary damages amount they say was incurred by a breach of terms. If that were the case why not demand one billion? One trillion? – Joe A Jan 30 at 21:46
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Puts pinky to mouth One miilllliioonn dollars.... – corsiKa Jan 31 at 15:50
Indeed, add up enough trillions, and user payments for violating the TOS could be rerouted to pay off the national debt! – Dana Shultz Jan 31 at 19:47
up vote 3 down vote

Browserwrap conditions are also subject to various interpretations, but consider the following from the wikipedia entry:

A browse-wrap agreement can be formed by use of a web page or a hyperlink or small disclaimer on the page. It may only be enforced if the browsing user assents to it.

Simply visiting the site doesn't fit the assent model - otherwise, they could sue google from visting their site and telling the world (and their competitors) about their awesome product.

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up vote 1 down vote

Conveniently, most jurisdictions separate business entities and people, so while your business may be their competitor, it is you, not your business, that is accessing their site.

In fact, it is impossible for your business to access any website, given that it is not a physical entity, but merely a notional legal entity.

Of course, IANAL, IMHO, YMMV, etc.

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That's worse. A website can dubiously classify you, an individual, as a competitor, for example if you were an employee of the company, then sue you personally. – Joe A Jan 30 at 20:39
No, because an individual is not a competitor, even if they run a business that is. In reality, my argument is deliberately facetious, but only to match the "terms" mentioned by the O/P. – Steve Jones Jan 31 at 8:36
up vote 1 down vote

Firstly I don't think

  1. They can identify you as a competitor with enough proof.
  2. Such claim is useful as it intends.

But, I also don't think this is a shrinkwrap as per the wikipedia case. The word "accessing" may mean different from "viewing". You can view any public pages on their site freely, but you may need signing up or providing contact info to access the private area.

In such case you know your intent before accessing, and you should have an opportunity to review the terms and conditions before accessing the private area.

You have accepted the terms so you should be prepared to be bind. Though the claim of a million dollar sounds ridiculous, they should have right to claim something.

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Thank you for your answer. I agree about viewing vs accessing, and a site should be able to protect itself against scraping. However, I disagree with your last statement. In no way is viewing a site accepting of its terms. Could you imagine if sites started putting language in their terms like "usage of the site constitutes you will owe us one million dollars". Even if they tracked your IP, subpoenad your ISP and got your name and address, how could they enforce such a ridiculous clause? – Joe A Jan 30 at 19:44
up vote 14 down vote

That's absurd.

If you want to get into the technicalities, that would probably be considered a shrinkwrap license which requires you to break the license (open the shrinkwrap, visit the site) just to read the license.

If those are your competitors, congrats. Imagine how they treat their customers.

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+1 for how they treat their customers. – Wayne Werner Jan 30 at 13:53
up vote 6 down vote

I suspect the goal here is to scare competitors rather than to provide a basis for litigation. In my limited opinion, it seems highly unlikely to be successfully enforced. What injury do you cause simply by accessing the site?

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Thanks. They do sound incredibly paranoid. – Joe A Jan 29 at 22:58

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