Facebook caused an uproar earlier this week when it was revealed that the social network had changed some key terms in its terms of use. The main objection to its revised terms surrounded Facebook’s new, perpetual right to use content uploaded to the site by its users… even after such users may have removed the content or terminated their accounts.

At first, Facebook responded to the outcry by reassuring people that it did not claim to own the content of its members.

Indeed, a look at Facebook’s terms of use expressly states that Facebook owns everything ‘except for user content’:

“Except for User Content and Applications/Connect Sites, all materials, content and trademarks on the Facebook Service are the property of Facebook and/or its licensors and are protected by all relevant IP laws and other proprietary rights (including copyright, trademark, trade dress and patent laws) and any other applicable laws.”

Okay, so YOU own your content. But under its revised terms, Facebook could do just about anything it wanted with your content… forever. Here’s what the new term said:

“You hereby grant Facebook an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to (a) use, copy, publish, stream, store, retain, publicly perform or display, transmit, scan, reformat, modify, edit, frame, translate, excerpt, adapt, create derivative works and distribute (through multiple tiers), any User Content you (i) Post on or in connection with the Facebook Service or the promotion thereof subject only to your privacy settings or (ii) enable a user to Post, including by offering a Share Link on your website and (b) to use your name, likeness and image for any purpose, including commercial or advertising, each of (a) and (b) on or in connection with the Facebook Service or the promotion thereof. You represent and warrant that you have all rights and permissions to grant the foregoing licenses.”

In response to the outcry about this term, Facebook did an ‘about-face’ and got rid of it.

Facebook still gets a perpetual licence to use your content, but if and when you remove that content, the licence expires. Now the term reads as follows:

“When you post User Content to the Site, you authorize and direct us to make such copies thereof as we deem necessary in order to facilitate the posting and storage of the User Content on the Site. By posting User Content to any part of the Site, you automatically grant, and you represent and warrant that you have the right to grant, to the Company an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to use, copy, publicly perform, publicly display, reformat, translate, excerpt (in whole or in part) and distribute such User Content for any purpose, commercial, advertising, or otherwise, on or in connection with the Site or the promotion thereof, to prepare derivative works of, or incorporate into other works, such User Content, and to grant and authorize sublicenses of the foregoing. You may remove your User Content from the Site at any time. If you choose to remove your User Content, the license granted above will automatically expire, however you acknowledge that the Company may retain archived copies of your User Content. Facebook does not assert any ownership over your User Content; rather, as between us and you, subject to the rights granted to us in these Terms, you retain full ownership of all of your User Content and any intellectual property rights or other proprietary rights associated with your User Content.”

So all is well, right? Not quite.

Let’s say you don’t mind Facebook making commercial use of content you upload to the site. Did you know that if Facebook uses such content, and Facebook’s use of that content infringes someone else’s intellectual property rights, and that someone sues Facebook… then Facebook can turn around and sue YOU for any loss its suffers from, say, the loss it incurs defending the lawsuit?

You see, under the indemnity term in Facebook’s Terms of Use, when you join Facebook, you also agree to indemnify the company (i.e. make good its loss) for any action taken against Facebook for a breach of the Facebook terms of use. That includes violating the warranty that you had the right to grant Facebook the right to commercialize any content you upload to its website.

Here’s the term that creates this scenario:

“You agree to indemnify and hold the Company, its subsidiaries and affiliates, and each of their directors, officers, agents, contractors, partners and employees, harmless from and against any loss, liability, claim, demand, damages, costs and expenses, including reasonable attorney’s fees, arising out of or in connection with any User Content, any Third Party Applications, Software or Content you post or share on or through the Site (including through the Share Service), your use of the Service or the Site, your conduct in connection with the Service or the Site or with other users of the Service or the Site, or any violation of this Agreement or of any law or the rights of any third party.”

Want to know how even the most law-abiding person may get caught by this?

Well, imagine you buy a limited, personal-use license to use a funny, royalty free image and put that image on your Facebook profile page. Facebook decides to incorporate the same image in its marketing. The owner of the image sees Facebook using the image – for which it doesn’t have a licence (because you never had the right to sub-licence the image to Facebook) – and successfully sues Facebook for copyright infringement.

Who does Facebook turn around and get to pay its damages, costs and expenses (including reasonable attorneys’ fees)?

That’s right – it’s you.

And that’s because, by uploading that image you effectively gave permission to Facebook to use the image, even though you did not have the right (under YOUR licence to the royalty free image) to do so. Which means you breached your warranty to Facebook that you had the right to grant the licence… obliging you to indemnify Facebook.

The problem isn’t your use of the royalty image, it’s the licence you effectively give Facebook under Facebook’s terms of use.

Here’s the thing, though, Facebook is NOT likely to change these terms. Why should it? It wants to use your content. And it wants to do so without risk. And if you want to use Facebook then you agree to their rules.

Bottom line: read the terms of use of any site you join, any software you download, and any purchase you make. Familiarize yourself with what the terms mean. When you understand what you are getting yourself into, you can take precautions in order to reduce your risk.

In this case, because you effectively give Facebook such a broad licence to use whatever content you upload to the site, you should only upload content to which you have unfettered rights.

And if you don’t understand the terms, consult a lawyer or… don’t go through with the membership, download or purchase!

Source: Brian Stelter, “Facebook’s Users Ask Who Owns Information,” The New York Times, February 16, 2009, Facebook’s Terms of Use

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This entry was posted on Friday, February 20th, 2009 at 1:00 am and is filed under Feature, Law. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.