Earlier this month, Dropbox spawned a new kerfuffle in internet-land with changes to its Terms of Service (TOS).

The outrage was fast and furious.  A nice deal of blog and Tumblr and other commentary zeroed in on changes Dropbox announced to its TOS before the 4^th of July holiday, and in particular how this or that provision “won’t hold up in court”.  See for example J. Daniel Sawyer’s commentary here.

Sawyer was referring to language in the TOS for cloud-server services granting ownership rights to Dropbox or other cloud services.

At least I think that’s what he was referring to, because the Dropbox TOS did not actually grant those ownership rights to Dropbox.  Dropbox’ TOS – like similar TOS for SugarSync and Box.net – granted limited use rights to enable Dropbox to actually provide the service.  Here is the offending provision:

… you grant us (and those we work with to provide the Services) worldwide, non-exclusive, royalty-free, sublicenseable rights to use, copy, distribute, prepare derivative works (such as translations or format conversions) of, perform, or publicly display that stuff to the extent we think it necessary for the Service.

To be clear, if Dropbox actually claimed ownership rights to customer files – and actually provided for the same in its TOS – there’s no particular reason such a grant “won’t hold up in court”.   There are certainly cases of unenforceable contracts – contracts that are fraudulently induced or in contravention of public policy, for example – but a fully and clearly disclosed obligation in exchange for a mutual commitment of service is enforceable. Continue reading