The New PayPal Terms of Service: probably not that big of a deal

laptopIf you’re already a PayPal user then you, along with millions of others, probably noticed an email in your inbox last week about some changes PayPal is making to its “Legal Agreements,” meaning its User Agreement, Acceptable Use Policy and Privacy Policy. If you’re like 90 percent of the millions who received this email, you probably didn’t read it. Hey, it’s ok. Why? Because, we did read it. We read it like it’s our JOB. (It sort of is our job.) We’ll give you the high points here, because that’s what friends are for.
If you are one of the special ones who actually read the changes (high five!), you might have some concerns. We’ll give our take on why you should or shouldn’t be worried here as well.
NB: There are a number of changes regarding transfer limits, eligibility of accounts and safety. You should read those for yourself. We’ll just focus here on the Intellectual Property bit, because that’s the name of our game.
In a hurry? Skip on down to “What this all means.”
What the new text says

“When providing us with content or posting content (in each case for publication, whether on- or off-line) using the Services, you grant the PayPal Group a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, sublicensable (through multiple tiers) right to exercise any and all copyright, publicity, trademarks, database rights and intellectual property rights you have in the content, in any media known now or in the future. Further, to the fullest extent permitted under applicable law, you waive your moral rights and promise not to assert such rights against the PayPal Group, its sublicensees or assignees. You represent and warrant that none of the following infringe any intellectual property right: your provision of content to us, your posting of content using the Services, and the PayPal Group’s use of such content (including of works derived from it) in connection with the Services.”

“PayPal Services” is defined as all of PayPal’s “products and services and any other features, technologies and/or functionalities offered by us on our website or through any other means.” So, basically it means whenever you use PayPal to do what PayPal does.
What’s changed
It appears that this “new” language isn’t all that new. Paragraphs 15.5 of PayPal’s User Agreement (in effect since November 18, 2014), says this:

15.5 License Grant from You to PayPal; IP Warranties. Subject to section 15.6, when providing PayPal with content or posting content using PayPal Services, you grant us a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, transferable, and sublicensable (through multiple tiers) right to exercise any and all copyright, publicity, trademarks, database rights and intellectual property rights you have in the content, in any media known now or in the future. Further, to the fullest extent permitted under applicable law, you waive your moral rights and promise not to assert such rights against PayPal, its sublicensees or its assignees. You represent and warrant that none of the following infringe any intellectual property or publicity right: your provision of content to PayPal, your posting of content using the PayPal Services, and PayPal’s use of such content (including of works derived from it) in connection with the PayPal Services.”

As you can see, the text is largely the same. For context and clarity, however, it’s important to also consider paragraph 15.6. Paragraph 15.6 specifically applies to those using PayPal’s services as Merchants and specifically grants PayPal a license to use your trademark and the right to sublicense in specific circumstances (ie, to identify you as the seller and for other uses only if you consent to them.)
15.6 License Grant from Merchants to PayPal. Section 15.5 notwithstanding, if you are a Merchant using PayPal Merchant services, you hereby grant us a worldwide, non-exclusive, transferable, sublicensable (through multiple tiers), and royalty-free right to use and display publicly, during the term of this Agreement, your trademark(s) (including but not limited to registered and unregistered trademarks, trade names, service marks, logos, domain names and other designations owned, licensed to or used by you) for the purpose of (1) identifying you as a merchant that accepts a PayPal service as a payment form, and (2) any other use to which you specifically consent.
What this all means
This means that you are giving PayPal a license to use any content you post in connection with their services. You are also granting PayPal the right to sublicense any content you post in connection with their services. As a Merchant, you are also granting PayPal a license to use your logo (or other trademarks), and the right for them to sublicense that license.
Here’s the thing though, you agreed to both of those things long before this “change” in the policy. Moreover, this language isn’t too much different than that of Facebook or other sites to which you may post content in a personal and business capacity. You still own the copyright in all of your content. You also still own your trademark (if you have one).
We don’t want to speculate too much about what PayPal may be seeking to do with the license they have over your content, but chances are, the use won’t be offensive to the average PayPal account holder or Merchant. We’re pretty sure that PayPal is smart enough to know that it wouldn’t have any customers if it was looking to have a license for the copyright in the e-book about kung-fu kittens that you sold on your site using PayPal. They probably just want to make sure that you can’t come after them once your Kung-fu Kitten logo is stored on their database, or is somehow generated by PayPal in connection with your sale. Of course, to be sure of PayPal’s intentions, we’d need to ask PayPal. Which brings us to our next point…
What we think is going on
This is purely conjecture, but PayPal’s reference to its split with eBay in connection with this changes hints at big changes in their service offerings in the near future. It’s likely they will be launching some kind of online selling platform a la’ eBay, or Etsy and making these changes now will help them cover their wealthy, corporate behind. Given the (somewhat ill-founded) reaction to this “change” in their terms, it’s also likely that they’ll be explaining themselves in plain english before these changes take effect in July.
It’s important to make yourself aware of changes like this when they occur, but it’s also important to make sure you really understand what the changes are and how they affect you and your business. A lot of people seem to have gotten themselves in a tizzy about this new change in particular. Getting in a tizzy is exhausting and takes time away from actually running your business. If you are curious or troubled by these types of changes in the future feel free to look to us to weigh in. After all, it’s our job.

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