Electronic Agents under the Law

Reconciling the Promise of Agency Law Doctrine with Contract, Tort and Property Law Restrictions on Electronic Agent Deployment

Some Looming Issues•Business practice divergence

• Who should utilize electronic agents • Content providers vs. users

•Substantial transaction efficiency & marketing opportunity enhancement captured by e-agents

•Use threatening to web content and service providers (disintermediation, “excessive” price visibility)

•However, restrictions on consumer use of electronic agents have substantial anti-competitive impact

Laws Applicable to eAgency•Uniform Electronic Transactions Act (UETA)

•Electronic Signatures in Global and National Commerce Act (E-SIGN)

•Uniform Computer Information Transactions Act (UCITA)

•Other laws potentially governing use of eAgents

• Tort-tresspass, IP-infringement, Antitrust

Growing Significance of Electronic Agents

• Relatively new legal concept

• Legal recognition of electronic agents needed to legitimize emerging electronic commerce methods (manifestation of mutual assent)

• Common implementation (user interface to process consumer transactions on business-to-consumer (B2C) electronic commerce websites)

• Bots offer great potential for customer satisfaction & economic efficiency, are often denied website access

• Seller implementation of electronic agents

• Buyer implementation of electronic agents

Bots vs. Search Engines• Bots

•Bots serve as loyal agents for the benefit of the consumer user

•focus their efforts much more closely on satisfying only user criteria

•tendency towards personification - the essence of loyalty expected of a traditional human/human-directed agents

• Search Engines•significant methodological flaws in the indexing, ranking and presentation of search results

•search results are also intentionally skewed to rank some results more highly than would be produced by objective ranking metrics

•Search engines perform much closer to the original, primitive conception of electronic agents as mere tools

Bots vs. Search Engines

•Key difference between bots and search engines

•Bots are more likely to produce results consistent with primarily addressing the consumer needs while search engines are more likely to produce results biased by their technical flaws & other sources of conflicts of interest

Traditional vs. eAgency Law

•UETA envisions that the computer and information science communities will continue innovating to refine electronic agents

•Laws foresee electronic agents may evolve away from “tools”

•Roles such as negotiation, making judgments & value assessments

Traditional vs. eAgency Law

• Eventually capable of implementing negotiation through the assessment of tradeoffs among various contract terms

• Computer science & IST communities are pushing the envelope of electronic agents to employ judgment using expert systems and artificial intelligence

Traditional vs. eAgency Law

• Public Policy Context Electronic Agents

• UCITA & UETA accept agency law

• Each envisions automated, mechanical or computerized communications

• Act as substitutes for human agents in:– Negotiation or conclusion of contracts – Principal is bound by acts of eAgents in same

situations as if human agents used

Electronic Agent under UETA

• Computer program, or electronic or other automated means

• Used by a person to initiate an action or respond to electronic messages or performances

• On the person’s behalf • Without review or action by an individual • May manifest assent to a record or term after

an opportunity for review

Automated Transactions

• Contracts formed without human intervention by one or both parties

• Assent may occur after eAgent starts performance– Delivery of licensed information or – Making a payment due

• Enabling review - communication must be in form that reasonably configured eAgent could be technically capable of using

Role of Humans vs. eAgents• eAgents are semiautonomous

– Humans generally write & configure underlying software

– Humans & firms are principles benefited by eAgent activities

• eAgents may – Perform preliminary negotiations – Information delivery & discovery – Create contracts through mutual assent

• Offer, acceptance, document processing

– Performance of contracts• Deliver electronic performances, incl Payments• Document processing

Bots

• Shopping bots scour web info on goods given human’s predetermined specifications

• Can site limit information discovery? – Consumers approach “perfect info” – Auction or shopping sites consider listings are

proprietary data

• eBay v. Bidder’s Edge (N.D.Cal.2000) – Bots trespass w/ continually requests for listing

updates – Do “terms & conditions” of website use prevent

automated comparison shopping?

Why are ‘Bots Important?

• ‘Bots Share Information Advantages Traditionally Held by Primary Aggregators with Secondary Aggregators for Shopping Benefit of Clients

• ‘Bots Focus Search Engine Technology and Legal Rights on Databases – Impact Rights to Post and Aggregate

Content

Why are ‘Bots Important?

• Emerging Legal Issues Span Various Fields– Tort, Intellectual Property, License Assent

& Restrictions, Consumer Protection, Antitrust, eAgency

• Expect Significant Impact of ‘Bots & Regulation on: – Content Aggregation, P2P Technologies &

Markets, Monitoring Website Infringement, Automated Bargaining

Economic Impact of Bots• Perfect Competition Model & Efficient

Markets Presume Perfect Information• ‘Bots Rely on Network Effects to

Reduce Search Costs, Increase Comparisons, Approach Perfect Info

• ‘Bots Facilitate “Bidding Profits to Zero” – But, shopper’s price-tunnel vision arguably

ignores relevance of service

• Information Asymmetries Undermine Market Clearance, cause Adverse Selection

What are Sustainable Business Model(s) for Bots?

• Bot Innovation Unsustainable w/o Effective Revenue Model – Innovation constantly needed to refine search, retrieval,

analysis & retain unfettered data access For Free then Fee once Audience is Captivated

– Online Infomediary or Personal Shopping Asst. • Fee for Service

– Fixed/Variable per transaction, metered as what?!?– Micro-Payments would permit initial growth

• Subscription Model• Eyeballs & Ad referrals enable mass personalization• Slotting Preferences • PII Profiling for Resale

‘Bots are Subset of Search Engine Architecture

• ‘Bots have Many Operations & Legal Issues Similar to Search Engines– EX: IP, Affiliation, Linking, Framing, Caching

• Shopping Bot a/k/a/ Crawler, Spider • Autonomous Software Performs Search,

Selection, Arrangement, Analysis, Linking • Low Cost, Operates in Representative

Role, Functionality Enabled by Network Effects

Disincentives to Tolerate Uncontrolled Bot Activity

• Bots Could “Bid Profits to Zero” • Historical Reluctance to Revealing

Proprietary Information • Game Theory: Bargaining Strength

Compromised • Direct Comparisons: Sales Lost to

Competitors • Eyeballs Diverted from Preferred Order of

Impressions• Bots Maliciously Invade Server Space

– Could be indistinguishable from hack/attacker

Three Models of ‘Bot Interaction for Content Sites

• Benign Tolerance – Broaden exposure, increase traffic & sales

• Cooperative – Negotiate linking agreements & ‘Bot

affiliation, slotting fees – these approach form as distribution agreements

• Hostile Opposition – Active technical & legal maneuvers to

prevent ‘Bot probes, internalize value of postings, suppress non-competitive terms

Are Bots Cyber-Trespassers?

• Trespass to Chattels, Land or Sui Generis • CompuServe v. Cyber Promotions, 962 F.Supp.1015

(S.D.Oh.1997) (spam is trespass)• Thrifty-Tel, Inc. v. Bezenek, 46 Cal.App.4th 1559 (1996)

(misappropriation of long distance service) • eBay v. Bidder’s Edge, 100 F.Supp.2d 1058

(N.D.Ca.2000) (PII, trespass, site congestion) • Register.com v. Verio, 126 F.Supp.2d 238 (SDNY 2000)

(enjoined extraction of WHOIS info from dom. name registrar, congestion)

• Ticketmaster v. Tickets.com, (C.D.Cal.3.27.00) • Computer Fraud & Abuse Act, 18 USC §1030• Intel v. Hamidi (Cal.S.Ct.2003) (no trespass to chattel

unless email harms target computer server)

Do Bots Infringe IP?• Kelly v. Arriba Soft, 2002 US App.LEXIS 1786

(9th Cir.2002) (Thumbnails - fair use) • BT v. Prodigy, (UK patent on hyperlink) • A&M v. Napster, (contributory infringement,

central database) • NBA v. Motorola, 105 F.3d 841 (2d Cir. 1997)

(state misappropriation narrowed) • DMCA anti-circumvention • Other Linking, Framing & Caching Restraints • Sui Generis Database Protections (e.g., EU)

Antitrust & Consumer Protection

• Monopolization of Essential Facility • Refusal to Deal – bar info access to

‘Bots • Preventing Price Comparison is

Anticompetitive, Erects Barriers to Entry• Search Results Biased by Slotting Fees

– Unfair & deceptive trade practice in obfuscating ‘Bot’s bias

• Non-Objective Search Results Anti-Competitive

eAgents under Agency Law

• UETA, E-SIGN & UCITA Encourage Equivalence of Electronic Agents

• Disclosure of Principles vs. Agents – Anonymizer conceals principal’s identity

• Principal’s Rights/Needs to Use Agents • Third party’s Rights to Refuse to Deal

w/ Particular Agents or Classes of Agents

Robot Exclusion Standards • Industry Convention (standard) as respect

method to exclude search engines, bots & spiders from copying or indexing content

• Defined & Tutorals:• http://www.robotstxt.org/wc/norobots.html• http://www.searchengineworld.com/robots/ • http://www.dwfaq.com/Tutorials/Miscellaneous/robot_

txt.asp

• Google’s index avoidance recommendation• http://www.google.com/webmasters/remove.html

Enforceable Contracts Require Mutual Assent

• Mutual Assent Arises when:– Offer, acceptance, consideration, legal

objective, S/F (writing vs. oral)

• Website Terms & Conditions – Licenses (EULA) are contracts too!– Enforceability of shrink/click/browse wraps – Nature of terms included (e.g., adhesion,

waive fundamental rights) – Robot exclusion?

e-Contracting Departures from Traditional Practice

• Mutual Assent can be Implied from the parties’ conduct

• Implication strongest when regularly & objectively discernable– EX: everybody expects to pay taxi fare

• Implication weaker in other contexts– EX: Tickets (cruise, sporting event), claim

checks (pkg., coatroom), open source (Linux)

e-Contracting Departures from Traditional Practice

• The 4 Wraps: Shrink; Click; Box; Browse• Shrink-Wrap Software Agreements

– Accept standardized terms or return to decline

– Pro CD v. Zeidenberg, 86 F.3d 1447 (7th Cir.1996) (shrink wrap license use restriction enforceable)

• Increasingly enforceable because ubiquitous • UCITA mass-market licenses

– Consumer must have opportunity to review & archive terms

e-Contracting Departures from Traditional Practice

• Click-Wrap Agreements – Software licenses appear when

installed – Specht v. Netscape

• Online license terms accessible before download & installation of software or receipt of content

• eAgents “work” for content provider• Terms in the Box

– Retaining hardware purchase implies acceptance of software license

– Gateway 2000

Browse Wrap/Click Free

• Mutual Assent implied from mere browsing

• Everyone surfer knows that there are terms & conditions for website use

• BUT, stealth terms seldom equivalent to terms negotiated by market equals, risks unknown – Cause surprise, unconscionable, adhesion,

take-it-or-leave-it• EX: Robot Exclusion Standard?!?