Terms, Conditions and Notices: To Read or Not to Read Posted by Adam Grant on Mar 03 2016

 

 

 

The popularity and growth of free mobile applications has far out-paced that of paid apps. Although developers still continue to produce and publish an impressive number of free products, some companies have begun to monetize their services by converting many of their popular products from free to paid apps.

 

As consumers’ reliance on mobile apps continue to steadily increase, the question of the developer’s rights and duties surrounding these conversions was recently brought before California Courts. In Handy v. LogMeIn, Inc., the plaintiff asserted that the transition of a free app into a paid service constituted unfair competition and false advertising by its creators.

 

In the above-mentioned matter, the plaintiff began using “LogMeIn Free” in 2009 to access a computer remotely from another computer, and later purchased a similar product called “Ignition” for $29.99 to access computers remotely from a smart phone or tablet.   Approximately four years later, the defendant released a paid version of the application called “LogMeIn Pro” at the cost of $49 per year and informed users of both “LogMeIn Free” and “Ignition” on January 21, 2014 through an announcement on their website that they would gradually be migrating users of said services to the new version of the service with a free six-month trial. The notice goes on to state that further details and options for “Ignition” users were forthcoming.  Ten days later, on January 31, 2014 and again on February 14, 2014, the defendant sent notices to “Ignition” customers, through both email and in-product notifications that stated regardless of whether or not they accept the free six-month trial of “LogMeIn Pro,” they may continue to utilize said product for as long as the company maintained it.

 

In his complaint, the plaintiff claims that he did not know that there was a chance that the defendant would discontinue the “LogMeIn Free” service, and had he known this, he would not have purchased “Ignition.” Furthermore, plaintiff contends that the inaccurate notice posted the defendant’s website on January 21, 2014 regarding the migration of “Ignition” accounts to the newer product, misled consumers into believing that said service was to be discontinued thereby coercing them into subscribing to the new pro version of the service.

 

The Court found that the defendant was able to sufficiently show that in order for the plaintiff to download the original “LogMeIn Free” software in 2009, plaintiff would have had to accept the terms and conditions on the defendant’s website which not only reserved the defendant’s right to terminate the service at any time, but also “the right to charge fees for any future versions of or updates to the products.” Additionally, contrary to plaintiff’s assertions that defendant’s January 21, 2014 notice led him to believe that “Ignition” services were discontinued, defendant was able to produce detailed logs of the plaintiff’s regular, continued and uninterrupted use of the “Ignition” from January 2014 through August 2015, logging into the service over 800 times.

 

The Court ultimately found that the defendant submitted sufficient evidence and provided ample legal notice to users to disprove the plaintiff’s assertions of false advertising and unfair competition during the transition period from free to paid services. This decision is not only a big win for mobile app developers and web proprietors, but it more importantly underscores the indispensability of timely and clearly communicated legal and privacy policies and notices to end-users of mobile apps, IoT devices, websites and other services.