Click Here to Cloud: End User Issues in Cloud Computing Terms of Service Agreements - Challenges of Information Management Beyond the Cloud - page 102

exercise first sale rights. It is also difficult to conceive of first sale rights in virtual
environments as a recent court discussing the “reselling” of iTunes files observed:
“Put another way the first sale defense is limited to material items , like records, that
the copyright owner can put in the stream of commerce… Section109(a) still protects
a lawful owner's sale of her 'particular' phonorecord, be it a computer hard disk ,
iPod , or other memory device onto which the file was originally downloaded” [20].
The observation suggests that for device bound software such as a cell phone or e-
reader a user might indeed be an owner and have first sale rights in the accompanying
software even though those devices are typically made available to consumers
through a license with a similar restriction. As there is no physical element to cloud
service it would appear that first sale rights would not apply. In the absence of first
sale rights a cloud user might want to transfer or assign his or her access rights in their
cloud space. However, all four TOS reviewed also prevent the non-assignment of the
service to another user.

5 Unconscionability

Proactive users can best approach cloud computing TOS by identifying the various
provisions in the governing agreement and understanding the consequence or impact
of those provisions in order to better assess the desirability of one service over
another. A reactive approach is one where once faced with an undesirable
consequence or impact of a provision a user may attempt to have a court conclude that
the provision is void. One legal vehicle for this determination is to request that a court
rule the provision unenforceable because it is unconscionable. The determination of
unconscionability is a matter of law for the court to decide and is made on a case by
case basis. A court can void the entire agreement (if the entire contract is
unconscionable), strike a particular clause or clauses and leave the remainder of the
contract intact sans the offending language or leave the language as drafted but limit
the application of the clause(s) so as to rectify the unconscionable effect.
There are two aspects to the concept of unconscionability: procedural
unconscionability and substantive unconscionability. A number of courts require that
both elements be present before a provision or an entire contract is deemed
unconscionable. “The procedural component is satisfied by the existence of unequal
bargaining positions and hidden terms common in the context of adhesion contracts.
The substantive component is satisfied by overly harsh or one-sided results that
'shock the conscience'” [21]. Cloud computing TOS are not subject to negotiation so
the user is faced with a take-it-or-leave-it scenario choice of either accepting the
provisions of the license in total or foregoing use of the service. Such contracts are
known as adhesion contracts and satisfy the first element of procedural
unconscionability. An adhesion contract is a “standard-form contract prepared by one
party, to be signed by another party in a weaker position, usually a consumer, who
adheres to the contract with little choice about the terms” [22]. The question remains
whether the element of substantive unconscionability is present. Until 2011, one state
court held that a class action waiver and mandatory arbitration was per se