Handled terribly, but the language itself is more expansive than necessary: Over-lawyering at its worst, preserving latitude for the company to such an extreme that, as we've seen, it gives fodder to the most imaginative fears and conspiracy theories of users, watchdogs and reporters.
The issues that bother me the most relate to rights of privacy and publicity (which I recognize vary between states). The right to use my picture to sell *anything* to people, without my knowledge or consent, and without any ability to opt out, is frankly obnoxious. To do so in ads without even disclosing that they're ads is misleading to users on both ends (and, as you said, likely to get the FTC on their backs). Why include such language in the first place?
Facebook itself does a far better job of explaining the permission sought, giving illustrative examples, and allowing users to opt out — if you dig deep enough into privacy settings. One of the most comforting aspects of what FB does is to only use profile pictures — most of which are probably visible to a billion people — and not any photos from within users' albums. That's a meaningful distinction.
Thank you Mike! As a social media lawyer and startup advisor, I've been facepalming for weeks over the lunacy of this flap. The amount of FUD stirred up by misinformed people and media that repeat stories like Kirsten's without consulting any Internet law experts is appalling. The creative community makes things worse by (rightly) being vigilant about policing photographers' copyrights within the boundaries of the law, while (wrongly) ignoring or misinterpreting the fair use doctrine or (worse) focusing on wholly irrelevant issues like those raised by Kirsten. Nothing to see here, people, move on.
Well, actually, there is plenty to see here, but it's all the same issues presented by every major UGC site since at least MySpace in 2003 (where I'm pretty sure we cribbed the TOS from first-generation UGC and social sites like GeoCities and Match.com) and Google Image Search. Pinterest is the latest variation on a theme, with some factual wrinkles that might affect the fair use analysis, but every single issue people are freaking about was explored and pushed to its limits by Google, Facebook, MySpace, YouTube, Flickr and more over the past decade, not to mention the newer generation of social media like Flipboard, Tumblr and Instapaper.
• Rep and warranty about right to post content: Standard.
• Indemnity: Standard, and virtually never enforced.
• Grant-of-license: Mostly standard. Some sites make it easier or harder to revoke the content license, but that's about it.
These issues make for good panel discussions at Internet law conferences and lectures by law professors, but none of them will destroy Pinterest and it's incredibly unlikely that they'd harm any individual user.