Canva

Mark Miller: 

You and I have been discussing, will we ever see anything that’s not onerous or incomprehensible. This looks like something written by people for people. 

Joel MacMull: 

That’s exactly right. We have seen some real dogs over the last two months and this was a pleasant surprise.

And what’s really interesting about it, and we’re going to hopefully get into this, is that you’ve got your main terms of use and then one of the hyperlinks, of course is their content license. The content license here, given the nature of the service, it essentially is a design platform is near and dear to my heart because of course it implicates intellectual property, namely matter that would be copyrightable, matter that is licensable, matter that may be amenable to trademarks and they’ve really done, to their credit, a bang up job to simplify what, even based on the handful of other agreements we’ve looked at to date, is just a morass of nonsense. Hat tip to our friends down in Australia.

Mark Miller: 

The thing that you and I have always looked for, which shows up here is, can you talk to me in language I can understand. One of the things they’ve done is they’ve had a little bit of lawyerese in their paragraphs, and then underneath each section is a big blue box that says, this is what we just said.

Joel MacMull: 

Yeah. Yeah. And I thought that was great. I really did. I thought that was great. It makes it digestible for the layperson. The interesting thing is as I was reading these blue boxes, is what does that mean for the paragraphs above it, and it’s overall enforceability. Because while presumably nothing is contradictory, you can appreciate that that which appears in the blue boxes is certainly less fulsom than that which appears above it. And so I wonder if for purpose of enforceability, would there ever be a tension there internally in the document?

Now for as good as the document is, it’s not perfect. I thought maybe we would quickly go through both the main agreement and the content license agreement. 

Mark Miller: 

Let’s start with the main agreement and we can bang through that pretty quickly because it’s damn good. Sure, sure. One of the things that I like here is they say, look, if you want to use our service and say that, you’re doing it for your company, then use your company email address and that will be binding for us.

Joel MacMull: 

Right. A number of these that we’ve looked at have that implicit acknowledgement, which is that if you’re doing this on the basis of the corporation, you are essentially attesting that you have permission to do so. What’s nice about that, and it’s a smart tactic, I think, is that, it essentially forces you to communicate from a corporate email address, which certainly puts them, that is Canva, in a position of saying this is not an individual, this is a corporation. It’s a nice way to reinforce the fact that you are, frankly, from a lawyer’s perspective, binding the corporation.

Mark Miller: 

The next one that I think is really fun because you and I have talked about this before. How enforceable is it when they say you shall not decompile, reverse engineer, or attempt to derive source code or modify. If I remember correctly, in a previous episode you said in the United States, that’s not enforceable.

Joel MacMull: 

You’re talking about paragraph two, using the Service, sub e right. Restrictions on use of the service? Yes. 

This was interesting to me because yes, in the absence of contracting it a way, right, there’s a common theme again, it’s not unlawful to reverse engineer something. What this is saying is by virtue of using this tool, you are going to agree not to do these things, which of course is a copy, replicate, decompile, et cetera.

 Can I go to Roman Numeral VI here, which I thought was very interesting.

I had not seen this before. And it says among the things that you shall not do, or do through a third party, is use a virtual VPN to circumvent geographic based pricing or content access. And I thought that was really, really interesting. I thought it was interesting enough that they included it, and I think it’s really smart, which is that I’d never thought about this before.

Obviously, when you’re dealing with the first world and the second world, forget the third world for a second, you’re going to have different price points for your services. And I thought that that was something that I had not seen before, and I thought that was some really sort of smart lawyering on their part.

Mark Miller: 

Well, think about it. ESPN would want to do that because they’re doing blackout markets, right? And so that if I’m in New York, but I’m using a VPN, that makes me look like I’m coming out of Texas, then I can watch the Yankee games. 

Joel MacMull: 

I just thought it was good, it was some good lawyering. 

Mark Miller:

What I was impressed with, again, this is a nice document from a user point is dispute resolution. First line, if you have a dispute arising out of these terms, contact us here and we’ll attempt to work with you to resolve the dispute. 

Joel MacMull: 

There is this notion though of private arbitration, particularly for individuals, although to their credit, they do have some seemingly some nice relationships with Netflix, and AMC and some other studios. So they’re obviously gaining traction. But I always cringe a little bit when I see the American Arbitration Association, that’s going to be our preferred forum.

 What a lot of people don’t realize, and listen, even court is not absolutely free typically to walk into, is that these arbitral forms, they’re a business. So you want to file your claim before an arbitration tribunal, and that’s true of the AAA or really anyone else. 

If you are an individual and there are different fees that apply whether you’re an individual or whether you’re a company, let’s assume you’re doing this on an individual basis. The cost to file with these arbitral forums, which are private forums and which are a business is at least a few thousand dollars. So what I suspect is 99% of the users reading this, at least those that are not lawyers, don’t appreciate that there’s a cost associated right from inception to even be heard by one of these arbitral forums.

Mark Miller: 

I wasn’t aware of that, and you and I have been through six or seven episodes. This hasn’t come up. 

Joel MacMull: 

That’s right. Now you’ll see that the rest of the dispute resolution also provides for the recovery of costs and things like that. But I’m saying even to get your foot in the door and be heard, you’re out a couple of grand.

Mark Miller: 

Okay. You’ve got a couple that are off of the main document. 

Joel MacMull: 

I actually have a few with the main documents. 

Number one is that I said earlier, as good as the agreement is, it’s not perfect. And look at, for example, paragraph two, it talks about using the service and then it also talks about in that first bubble there, it talks about Canva for education.

What I was not crazy about, is the language in that blue box which says our free Canva for education plan for students is compliant with all the laws that apply to children using an online service. I don’t know why, and not withstanding the fact that that’s sort of the layman’s definition as we talked about earlier… why would you stick your neck out like that? 

I think that goes too far and I think it’s unnecessary. It says too much and it’s entirely unnecessary. 

Mark Miller: 

When you’re looking at that, the words that you are opposed to, if I can use that term, is all the laws.

Joel MacMull: 

Is compliant with all the laws. It just goes too far. Because those laws may be constantly changing. 

 Paragraph nine talks about Canva intellectual property. One of the things that says is you assigned to Canva any suggestions, ideas, enhancement requests, or other feedback you provide to Canva relating to the service or Canvas products.

Now interestingly, they’re in the blue box below that. They say, listen, we receive, recommendations on our tool all the time. You agree that certainly to the extent that we make modifications consistent with your recommendations, we own that content. From a lawyering perspective, I think that’s smart.

Paragraph 12, your indemnity obligations. We’ve read indemnification agreements before, but this one. If you read it carefully has, and this is consistent with, it’s what I’ll call blue box language, right, the simple language below. You not only have a duty to indemnify Canva, which means that if a finding is made against Canva and it’s determined that it’s your fault, there’s an immediate duty to also defend. So the first line says you agree to the extent permitted by law to defend, indemnify and hold harmless Canva. 

Now, what’s the difference? The difference is, as far as I’m concerned, is that there’s an immediate duty if Canva is essentially pled in a lawsuit for infringement to during the course of the defense of the action pay for its defense.

Now then the question arises. Who gets to choose the defense? Does Canva get to choose the defense or do I as the party paying for it, get to choose the defense? You may be obligated to pay for it. But me Canva gets to choose who it is. 

So you can imagine that Canva’s going to choose the best of the best. The priciest of the AmLaw 100 law firms I’m sure is going to come running to Canva’s defense and someone similarly situated like myself, but who makes exponentially more is going to be charging, you know, $3,000 an hour at the top level to defend Canva in this lawsuit. And there’s probably little, little that a user can do. 

Now some courts will say, and have said there’s got to be a reasonableness standard. Amazon, for example, which we looked at the other day, was a duty to defend, which is, thanks, we’ve got enough cash. We’ll pay for our defense, but you’ll essentially pay for us on the backend pursuant to the indemnification. But this one is essentially contemporaneous as the proceedings are ongoing.

Mark Miller: 

We’re dealing with an international company here that has offices in Australia, major headquarter offices in Australia and United States. And so they have added an export restrictions paragraph. What is that about? 

Joel MacMull: 

Well, I thought this paragraph was interesting. This really goes to international sanctions. This basically says the service is subject to trade sanctions and laws and regulations that govern the import, export and use of the service. It would seem to me that just by virtue of those trade embargoes and other sanctions that, that these services may not be used by residents of those countries. 

Mark Miller: 

One of the things I’d ask then, Joel, is you’ve got a headquarters in Australia and you have a headquarters in United States, let’s simplify it like that. Is subject to trade sanctions and laws under what country?

Joel MacMull: 

That’s actually settled in paragraph E, which is, they say if your billing address is in any country accept the United States, you’re basically contracting with the Australian arm, which then I have to assume would mean. But see, it doesn’t say that. It’s an interesting question because earlier in the document it says, under governing law and jurisdiction, these terms will be governed by and construed in accordance with the laws of the state of California without regard to its conflict of law provisions. So I, I take that back actually. I think regardless of where you are in the world, the laws of California would apply.

 At the end of the day, you may be contracting with an Australian entity as set forth in paragraph E, but the prevailing laws will be added the United States and specifically the laws of California.

Mark Miller: 

Let’s deep dive into that just a little bit because it’s an interesting dilemma. What if Australia has sanctions against the country that the United States does not have? Am I breaking the laws of Australia?

Joel MacMull: 

And you’re talking about someone who is a resident of Australia. Yeah. So they’re sitting and let’s just make it easy. They’re actually sitting in Australia and Australian law says we’re not going to allow you to service, whatever that means any country, A-B-C country. . I see your point. I mean, notwithstanding, as the agreement is written that state of California/US laws would apply. 

My understanding of laws generally, or the common law tradition would suggest that that would be a violation of Australian law. Not withstanding that the agreement says that US law would apply, and assuming under your hypothetical that the US did not have a corresponding embargo or sanction against ABC Country.

Mark Miller: 

Yeah, it’s a nice little uh, circular kind of thing happening. 

There it is. When we’re looking at now, Section 15 M as in Mary, one of the concerns that you have is about changes to these terms. 

Joel MacMull: 

That’s right. That’s right. We’ve looked at this before and it bothers me. I find this, and, and I think it bothers you too, frankly, if I may be so bold.

We will provide you with reasonable advanced notice of any change to the terms that in our soul determination materially, adversely affect your rights or your use of the service. 

I’m troubled by that because of course, it’s the sole in our sole determination, you get to decide what’s going to affect my rights.

And putting aside how presumptuous it is, that someone else may determine what affects my rights. It does leave open in my humble estimation the opportunity to excuse intentional misconduct. Do you know what I mean? I struggle with that every time I see it.

Mark Miller: 

Now, we have seen this before. We have seen this consistently that as somebody’s sole discretion, we’re going to decide what’s going to affect you and not. 

Joel MacMull: 

That’s right. More importantly, we’ve seen courts uphold these provisions. I’ve looked at these in the last couple of weeks, locally here in New York in preparation for our podcast, and there are cases that say, that is not an unconscionable provision. There’s nothing wrong with it, and as a result of it, you, the user are on what we call inquiry notice. Yes, you may have not received actual notice because you didn’t look at it, you didn’t receive an email. But the assumption that courts may give by virtue of that language, you should have, insofar as you did not want to be bound by the new terms, you should have essentially read them prior to engaging with the service.

I’m always troubled by that. 

Mark Miller: 

One of the things that you wanted to take a look at closely was Canva’s content license agreement. 

Joel MacMull: 

From the standpoint of Canva, they need to button themselves up I think they do a decent job of that too.

 Depending on the level of service you subscribe to, there are different licenses in place. And so if you pay, not surprisingly, you are paying for certainly access to more design features, than you would otherwise receive under the free model.

But there are different conditions in terms that apply. 

Mark Miller: 

So let’s start in order with Section One, the basics. Anything that stood out for you there. 

Joel MacMull: 

Yeah, and I think this is interesting and it’s important to note, Item number three there says, if you create a Canva design with both free content and pro content, the stricter rules for pro content apply. 

What they’re saying is, is listen, if you are going to, if you’re going to essentially create a composite piece that’s going to have stuff that you paid for from pro and stuff that you got from free and stuff that I guess is your own creation, because that’s one of the cool things about the tool, is you can upload your own content. 

Under four it says, each pro content license allows you to use the content in one Canva design. So you must pay and obtain a new license each time you wish to use the same piece of content in a new design, including a design that has been magic resized. If you have a subscription, then a new license is automatically issued to you each time you export a new design containing that content. 

The reason why that’s relevant is that, the way I understand it is, is that each piece of content, I want you to think of like as like a, just like an individual circle or triangle or whatever it might be used.

And every time you’re going to be using that in a new design, you are effectively being granted a new license. And that’s important because as it goes on, as it talks about the rights that you have, there are limits. There are limits in terms of what you can do with that license.

 I think they do a pretty good job considering the complexity of the content. They talk about additional rights for client designs and it says you may transfer a Canva design containing content free or pro to a client. 

The first point basically says, You will enter into a written agreement with your client that stipulates that the client’s use of the Canva design must be only for their use. It must be in accordance with these terms. Which is interesting because of course, what that agreement provides in that same section is that is a single license that your client as a provider is not allowed to sub license. As a practical matter what that means. Then it says you’ll remain solely responsible and liable for your client’s compliance with these terms.

Please. Please. I mean, that’s not happening either. 

And a Canva design incorporating content can only be transferred to a single client. 

If I’m a marketing agency, I’m doing that once. I’m giving it to one client, but I can’t give it to another client, and that client in turn can’t sub license it downstream.

 You know, it’s one thing if you say it and enforceability is obviously in some cases, you know, further, much further down the road than what the language of the document may 

Mark Miller: 

I want to jump in and make a hypothetical here for you then please.

I am creating customized content for myself, and I’m just using Canva as a tool, what right do they have, enforceable right do they have, to tell me how I can use the content I created?

Joel MacMull: 

I want to make sure I understand your hypothetical properly. You are never then in turn giving that to a third party, right? 

Mark Miller: 

Oh, I am. I’m going to give it to the world. How can they say you can’t use our tool to create things to give away?

Joel MacMull: 

Because this Section 4A begins with the concept of a transfer. Okay? So a transfer suggests that you can do your own thing and you can put it on your website, for example, for the world. What you can’t do, is do your own thing, presumably sell it to your client or bake it into some service in which you’re being paid for, because at that point those restrictions kick in.

Mark Miller: 

Well, hell, what am I going to use their tool for, then, if I am a commercial artist that’s creating customized content for my clients? 

Joel MacMull: 

Then well, you can do it. But what they’re saying is you better be creating different different circles and triangles because you’re only allowed to do that once.

Mark Miller: 

I’m not buying it. Well, and I don’t mean, I’m not buying Canva, I’m not buying the idea. Every company that I’ve been with for the last five to seven years, the art department is using Canva, and what they’re doing is creating customized content for clients, for people that have asked for things, things like that.

And yes, it’s going to be used in multiple ways. I don’t understand how they intend to enforce this, for one, because all I’m doing is creating a JPEG or a png, and it’s not going to have Canva’s name on it, so no, it’s not right. , How are they going to prove that I created this with Canva? , 

Joel MacMull: 

I’ll tell you why it exists, I suspect, okay.

Canva has bought a bunch of licenses. Canva itself has acquired licenses to certain graphics. Mm-hmm. Those license agreements, invariably provide the limitation of use. So the limits that Canva is exposing on you I am certain are derivative of the license for certain design products that it itself has purchased.

Mark Miller: 

That makes a difference then. Okay. So if I’m going to use, so that’s assets provided by Canva from a third party… 

Joel MacMull:  

I remember some years ago being at a conference and hearing the legal department at Netflix. I guess there was some sort of popular show and some fans of the show, I guess, had created a bar, right? They were saying, come and we’ll celebrate, you know, and Netflix, and this lawyer in particular had a lot of fun with this. 

The talk was on appropriate cease and desist notices. The letter began and he showed it on the screen. “We love the fact that you love us, but you can’t use our name and it infringes our intellectual property. And here’s the purported dangers of you doing so.” And he talked about how that was a real success because rather than sending the standard pissy lawyer cease and desist, , he got compliance far, far more quickly, with sort of a softer tone. 

Mark Miller: 

They got a lot of positive publicity for the way that they handled that. 

Joel MacMull: 

That’s right. Yeah, they did. They were saying like, Netflix scores victory with even-handed cease and desist. You know, that kind of, those were sort of the headlines.

Mark Miller: 

Let’s tie this up. You and I have been on the hunt for something that was actually customer readable and consumable. Do you think we found it here? 

Joel MacMull: 

I have to say it’s very good. It’s very good, and I think the content license agreement is fair, although I don’t profess to understand from a business perspective all of its restrictions necessarily.

But as I said, given the complexity of the tool, or at least the intellectual property that the tool relates to, it is a whole world of complexity in terms of the rights that are being acquired, being licensed. I think they do a very good job. And of course, as we’ve already talked about, the main terms of service I think is really, really great in the way that it’s all laid out and certainly digestible for a layperson.

I think if nothing else, medium sized businesses this is a model. And certainly this is a model for businesses that are far smaller than that too, including some of my clients, but I think they do a really good job here in making this successful. 

Mark Miller: 

I want to remind people that you’re a lawyer, but you are not their lawyer. 

Joel MacMull: 

…at least not yet.

Mark Miller:

Thanks for joining us for this week’s “You’re kidding me… that’s in my EULA??” We’d appreciate your comments on today’s show page, located at WhatsInMyEULA.com. You’ll also find information on how to get in touch with Joel. While you’re on the page, tell us what other EULAs we should investigate. If we use your suggestion, we’ll give you a shoutout in that episode.

“That’s in my EULA??” is published weekly. Special thanks today to Katy, that’s with a ‘T”, Kadi, that’s with a “D”, Edwin, and Tracy for the awesome voiceover work at the beginning of the show. Music today is provided by Hash Out from Blue Dot Sessions. 

We’ll see you next week.

This was a Sourced Network Production.

If you’re interested in talking with Joel about some of the issues in this episode, shoot him an email.

Joel G. MacMull | Partner
Chair, Intellectual Property, Brand Management and Internet Law Practice
(973) 295-3652 | JMacmull@mblawfirm.com