Articles Posted in Internet Law

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In the current business world, parties may be separated by great distances and may never meet face-to-face. During the course or interactions, their communications may only be online, leading to a constant trade of contracts over e-mail.  So, when it comes time to sign the contracts, a meeting may not be feasible, and instead, an electronic signature may be needed to finalize the transaction.  Electronic signatures or “e-signatures” are those substitutes for a traditional “wet signature.” We have mentioned in passing some ways these signatures can be formed, but it leaves the question of what exactly can be an e-signature? To what extent can it be used? What are the benefits of using an electronic signature, and how might it be detrimental to your business arrangements?

What can be used as an electronic signature?

An electronic signature can be any sufficient substitution for a wet signature. This ranges from typing the individual’s name in a signature box, to signatures placed onto the electronic document through some sort of tablet device, or a checkbox in a click-wrap agreement stating: “I Agree.” There are even some cases where biometric data is being used as an electronic signature, such as fingerprint or facial image. Furthermore, while these could be used as electronic signatures, digital signatures differ, as they rely on a form of encryption to validate the authenticity of a document. These are then affixed to electronic documents, again, like a click-wrap agreement, or a contract that has been transmitted electronically. There are business services that facilitate and authenticate these signatures, e.g., DocuSign, that allows the tagging of the signature pages in the document. However, there are some limitations on what can be an electronic signature. As part of ESIGN (United States Electronic Signatures in Global and National Commerce Act), voice recordings for an oral agreement do not work as electronic signatures.

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With the ever-increasing dominance of cameras in our society, we might never think to ask “can someone find me from a picture?”  How futuristic would it be, to snap a picture of someone’s face and see their social media? To use a face like a business card? While technology may not be at that point, the law seems to be ahead of the curve. Currently, there are two lawsuits regarding the “tagging” of a person’s image online through social media due to one state’s law protecting biometric privacy, and how that affects us in interstate commerce. So, what is this law? What are the details of the lawsuits? How might this affect interstate commerce in general?

What are the lawsuits about?

The law itself comes out of Illinois, prompted by biometric additions to payment systems. Biometric data itself is quite common. It could include an individuals’ face, voice, fingerprint, retina scan, or blood type.  Anything that comes from the individual’s body that is recorded could qualify. This would then be used to determine the person’s identity or recorded for their own use, like in a health-monitoring app. The law requires any entity that is collecting this type of information, both tell the individuals, and explicitly obtain their consent.

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So, now you’ve registered and gotten everything you need for your drone. What now? Well, it depends on what you plan on using your drone for.  Maybe it’s a gift for a child or a friend. Maybe you’d just like to use it for fun. However, as we briefly touched upon in our last post, there are requirements and restrictions placed on your drone if those actions are for commercial use.  So, what qualifies as a commercial act? What has to be done regardless of commercial or non-commercial uses? What uses would require a business to register and go through the whole process, and which uses would allow an individual to operate freely?

Non-Commercial Use

Part of the reason there are fewer restrictions on non-commercial use of drones is due to the special rule of model aircraft.  This would have the drone operate under different, less restrictive rules, and while still requiring the drone be registered with the FAA if it is within the weight range of 0.55 LBS to 55 LBS, it is generally exempted from onerous requirements.

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In our ever-evolving world, there are always new technologies and new opportunities.  Why invest in a person when a machine can do the work for its useful life? Why hire a taxi driver when the car can drive itself? How could you pay for a helicopter or carrier fees when a drone can deliver the goods on its own?  However, as with all things, life is not that easy. If you plan on using drones or Unmanned Aircraft Systems (UAS), then there are some facts you need to know, as the Federal Aviation Administration (FAA) has set forth restrictions. So, what do you need to fly? How do you register a drone? Who can fly a drone?

Who can fly a drone?

In order to fly for commercial purposes it is required that the business have: (1) a Section 333 grant of exemption; (2) a Certificate of Waiver or Authorization; (3) a registered drone; and (4) a pilot with an FAA airman certification. This is a unique qualification for businesses only and hobbyists or recreational drone use would be allowed without having to jump through these requirements.

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In general, Section 230 of the Communications Decency Act is not only one for defamation, but entails a few exceptions where liability can be imposed on an interactive computer service (e.g., Facebook, Twitter, Tumblr).  So, there are situations where an online business may be held responsible for another individual’s actions.  How can we know whether we will be held liable for a third party’s actions?  How can we avoid potential liabilities?

What can an interactive computer service be held liable for?

From a practical perspective, Section 230 is not an absolute shield for interactive computer services.  There are certain cases where an exception has been applied by the courts.  First, there is an exception for certain types of information.  Specifically, there is an exception for intellectual property.  For example, Section 230(e) determines the effect on other laws, including, an explicit omission of coverage for intellectual property protections.  In essence, liability for defamation may not carry over, but liability for any copyright infringement may carry over, as well as any issue of criminal law, such as obscenities.  Similarly, this can be demonstrated in Gucci America Inc. v. Hall & Associates, where the court determined, from the plain meaning of the statute, that it would not bar plaintiff’s trademark infringement claims against defendants.

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In a situation where an online forum allows creation of profiles with commenting capabilities, a user may take the initiative to defame an individual personally or professionally.  The user may perform illegal actions using the online forum’s website, and in attempting to retrieve damages he/she has suffered, the defamed individual sues the online forum for providing a platform for defamation.  However, Congress has provided an exception towards interactive computer services through Section 230 of the Communications Decency Act (CDA).  What does Section 230 of the CDA do?  What can you do, as an individual, to recover from defamatory material?

What is Section 230 of the CDA?

It’s a sub-part of a federal statute that essentially dictates that an online forum (e.g., Facebook, Twitter, Tumblr) is not liable as a publisher or speaker of online defamatory comments made by its users.  For example, if a defamatory comment was posted on Facebook, then Facebook would not be liable for the defamation.  Essentially, this would protect a website from anything that its users would publish.  This is not necessarily just towards defamatory content, although, it could be expanded to “any information” provided by an entity or person using the interactive computer service’s platform. There are, however, exceptions to this broad liability, as we’ll discuss in future blogs.  Also, the exact nature of a “publisher” is still unclear.  in general, there is a difference between a publisher, which initially produces the comment, and a distributor, which is not covered, that repeats the comment.

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A new economy has been developing for a while, opening a unique market, with new opportunities. This is what’s called the new “sharing” economy with an entrepreneur presenting a way to connect willing participants for an economic transaction.  This has evolved from something like Craigslist, to a more user-friendly and app-based operation.  Namely, this includes businesses like Uber, Lyft, and AirBnB.

Yet now, it has opened a question with Uber via a proposed settlement about whether the service providers are employees or independent contractors.  So, what happens when you begin to question the standards of a business operation?  To what end can you control the product to ensure that there is a strong method to your brand?  How long can a settlement keep service providers from claiming they are employees and not independent contractors?

The Business Model

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After establishing the issues of preemption and standing, how can you sue for violations of CAN-SPAM? Is there any way for spam to be combated by an individual?  Yes, there is by suing for fraud or deception, which are not explicitly covered under the CAN-SPAM Act.  So, how do you plead fraud?  And how much do you need to plead?

How to plead fraud to avoid preemption?

In ASIS Internet v. Subscriberbase, which was heard by the Northern District of California, the court examined preemption and the question of fraud in relation to a motion to dismiss that was filed by defendants.  Plaintiff was suing under the California Business & Professional Code Section 17529.5, otherwise known as the False Advertising Law.  In its claim, plaintiff pleaded the following three factors California has in a fraud claim: (a) misrepresentation; (b) knowledge of falsity; and (c) intent to defraud.  However, plaintiff left out reliance and damage in its claims.  In general, the CAN-SPAM Act does not coincide with laws that prohibit falsity or deception, as well as, some other laws that overlap with it, but are extended to subject matter outside of email.  Here, that aspect of CAN-SPAM was specified to state that a claim containing the common law elements of fraud would not be prohibited.  Hence, the court decided that the complaint satisfied fraud allegations, pending the question of if all the factors were required to be alleged in the complaint.

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So, now that we know more about preemption in the CAN-SPAM Act, then what more is there to consider?  There is actually quite a lot of other factors, namely standing.  Now that you know how the federal CAN-SPAM Act and state laws may interact, there leaves the question of “standing.”  Standing is essentially a way for individuals to claim that they can sue under the law.  Without standing, a lawsuit cannot occur.  So, can you sue as an individual under the law?  Can you sue as a business?  Who can sue?

Can an individual sue under CAN-SPAM?

In general, individuals likely cannot sue under this federal law.  We can revisit the case of Gordon v. Virtumundo where the plaintiff had setup a business to profit off of violations of anti-spam legislation.  He was a Verizon subscriber for his internet access, and had started his business through GoDaddy.  In the trial, the court revisited the standing provisions of the CAN-SPAM Act and made three determinations.  First, the federal statute was not made to stamp out all spam.  Second, it was not specifically implemented to allow private right of actions.  Third, plaintiff had not suffered adverse effects due to spam.

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Spam, for those lucky enough to be unfamiliar about it, are those unsolicited commercial emails that often clutter up inboxes with offers of sales and services that range from the reliable to the questionable.  Due to the issues presented to consumers, Congress, in its wisdom, enacted a law called the CAN-SPAM Act, and began enforcing it in 2004. First, what is the CAN-SPAM Act and what does it prohibit?  Second, as a federal law, does the CAN-SPAM Act override, or preempt those laws a state may already have in place?  How can you tell if that may happen?

What is the CAN-SPAM Act?

The CAN-SPAM Act places prohibitions on transmission of any email that contains false or misleading headers or “from” lines.  For example, a business that is not Facebook, and has nothing to do with Facebook, would be prohibited from sending an email with the subject “Your Facebook account has been compromised” or send an email from www.facebook.com.  In addition, this law places a requirement for three disclosures: (1) clear and conspicuous identification that the message is an advertisement or solicitation; (2) clear and conspicuous notice of the opportunity to decline to receive further commercial email messages from the sender; and (3) a valid physical postal address of the sender.  This is done, in part, due to the interest of the legislation in helping consumers under the principle that they should not be misled and should have a right to say no to unsolicited commercial emails.

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