KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on your reputation and non-disparagement provision
September 21, 2021
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Comment on your reputation and non-disparagement provision from article on September 17, 2021
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Ken
Here is one way alarm agreements can address disparagement:
NEGOTIABLE TERMS: Subscriber acknowledges the provisions of this Agreement are negotiable, and that meaningful opportunity to negotiate the terms hereof exist. For example, prior to signing, Paragraph 45 may be deleted by so stating on Page 1. No interpretation of this Agreement shall be construed against the drafter, and no claim shall be made that it is a 'form contract' or one of adhesion. Subscriber acknowledges reading and understanding this Agreement. Paragraph and Section headings are for convenience only.
CONFIDENTIALITY AND MUTUAL NON-DISPARAGEMENT: Subscriber agrees that its relationship with Company is and shall remain confidential. No party hereto shall, without prior written consent of the other(s), publish or communicate in any manner any comment, review, recommendation, evaluation, or report of the other unless required by law, and no party hereto shall refer to the other(s) in any written or electronic forum for any reason. Because a violation of this provision would result in damages that may be difficult to prove the parties hereto agree that a party violating this provision shall be liable for damages in the amount of $5,000 as and for liquidated damages and not as a penalty, and no actual damages need be proved. Additionally, any party hereto required to commence any lawsuit or arbitration to enforce this provision shall be entitled to injunctive relief and its legal fees.
Thanks
Anon
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Response
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Problem is that a non-disparagement provision is not only unenforceable, it’s illegal. The Consumer Review Fairness Act of 2016 prohibits companies from including provisions in their form agreements that ban or impose penalties on consumers who post negative comments or reviews. The Act also restricts companies from requiring individuals to assign ownership of the intellectual property rights in such negative comments or reviews.
I don’t know where the above provisions came from, but from the sophomoric legalese [“terms hereof”; “party hereto”; “parties hereto”] it looks like an attorney drafted it. What research was done and in what agreements the provision is suggested is unknown. Alarm contracts are “form agreements” and using a provision that says an apple is an orange isn’t going to work, in my humble opinion. If you call an Agreement a “Standard” agreement it likely going to be deemed a “form agreement”.
The Consumer Review Fairness Act of 2016, applies to written, oral or pictorial reviews, performance assessments, or other similar analyses of a person's or entity's goods, services or conduct and defines a "Form Contract" as a contract with standardized terms that is (1) used by a person or entity in the course of selling or leasing its goods or services; and (2) imposed on individuals without a meaningful opportunity for them to negotiate the standard terms. The following types of provisions are void, and it is unlawful to include such clauses in Form Contracts in effect on or after March 14, 2017:
* clauses that prohibit or restrict the ability of an individual who is a party to the Form Contract to engage in a Covered Communication;
* clauses that impose a penalty or fee on an individual who is a party to the form contract for engaging in a Covered Communication; and
* clauses that transfer, or require an individual who is a party to the Form Contract to transfer, to any third person any intellectual property rights in review or feedback content that the individual may have in any Covered Communication (collectively, the "Prohibited Clauses"). The Act does not, however, preclude clauses that an individual to grant a non-exclusive license to such Covered Communications.
Confidential and proprietary information can still be prohibited from disclosure and the law does not excuse defamation.
Including the non-disparagement provision in the form agreement risks enforcement proceedings by the Federal Trade Commission, and if it doesn’t act, the state Attorney General or any consumer agency. How’s this for one consequence? Having to notify all your subscribers who have signed a form agreement with a non-disparagement provision that the provision is not enforceable and they are free to malign you all they want on social media.
That’s why the non-disparagement provision was removed from the Standard Form Agreements.
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To order up to date Standard Form Alarm / Security / Fire and related Agreements, click here: www.alarmcontracts.com
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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